Facts of the Case

The Revenue filed multiple appeals challenging a common order dated 15 July 2021 passed by the Income Tax Appellate Tribunal (ITAT) relating to Assessment Years 2008-09 to 2011-12.

The ITAT had deleted additions made by the Assessing Officer under Section 153A, holding that such additions were not based on any incriminating material found during the course of search.

The Revenue contended that the ITAT erred in relying on judicial precedents and deleting additions without examining merits.

Issues Involved

  1. Whether additions under Section 153A can be made in respect of completed (non-abated) assessments without any incriminating material found during search.
  2. Whether reliance on precedents like CIT vs Kabul Chawla was justified despite pending SLP before the Supreme Court.

Petitioner’s Arguments (Revenue)

  • The ITAT erred in law by holding that additions cannot be made without incriminating material found during search.
  • The Tribunal wrongly relied on the judgment in CIT vs Kabul Chawla.
  • The issue is pending before the Supreme Court; therefore, reliance on the said judgment is improper.

Respondent’s Arguments (Assessee)

  • No incriminating material was found during the search for the relevant assessment years.
  • The assessments were already concluded (non-abated) and hence cannot be disturbed without fresh incriminating evidence.
  • The issue is squarely covered by binding precedents of the Delhi High Court.

Court’s Findings

  • Both CIT(A) and ITAT recorded concurrent findings that no incriminating material was found during the search.
  • The Court reaffirmed the legal position laid down in:
    • CIT vs Kabul Chawla (2015) 380 ITR 573 (Del)
    • PCIT vs Meeta Gutgutia (2017)
    • PCIT vs Bhadani Financiers Pvt. Ltd. (2021)

Court Order / Final Decision

  • The High Court held that no substantial question of law arises.
  • All appeals filed by the Revenue were dismissed.

Important Clarification by Court

  • Although the issue in Kabul Chawla is pending before the Supreme Court, there is no stay on the judgment.
  • The present decision shall abide by the final outcome of the Supreme Court in the pending SLP.

Sections Involved

  • Section 153A of the Income Tax Act, 1961
  • Section 132 of the Income Tax Act, 1961 

Link to download the order -https://delhihighcourt.nic.in/app/showFileJudgment/MMH09112022ITA4362022_103851.pdf

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