Facts of the Case

  • The Revenue filed multiple appeals challenging a common order of the ITAT dated 15.07.2021.
  • The ITAT had deleted additions made by the Assessing Officer for AYs 2008-09 to 2011-12.
  • The deletion was based on the finding that no incriminating material was found during search proceedings.
  • The assessments for the relevant years were already concluded (non-abated assessments).

Issues Involved

  1. Whether additions under Section 153A can be made without incriminating material found during search.
  2. Whether completed assessments can be disturbed in absence of such material.
  3. Applicability of precedents such as CIT vs. Kabul Chawla and PCIT vs. Meeta Gutgutia.

Petitioner’s Arguments (Revenue)

  • ITAT erred in holding that additions cannot be made without incriminating material.
  • ITAT wrongly relied on CIT vs. Kabul Chawla (380 ITR 573).
  • The issue is pending before the Supreme Court (SLP), hence reliance is improper.

Respondent’s Arguments (Assessee)

  • No incriminating material was found during search.
  • Assessments were already concluded; hence no additions permissible.
  • The issue is covered by binding Delhi High Court precedents.

Court Findings / Order

  • Both CIT(A) and ITAT recorded concurrent findings of fact that:
    • No incriminating material was found during search.
    • Assessments were completed (non-abated).
  • The Court reaffirmed principles laid down in:
    • CIT vs. Kabul Chawla
    • PCIT vs. Meeta Gutgutia
    • PCIT vs. Bhadani Financiers Pvt. Ltd.
  • Held:
    • No addition can be made under Section 153A in absence of incriminating material for completed assessments.
  • Result:
    • Appeals dismissed as no substantial question of law arises.

Important Clarification

  • The Court clarified that:
    • The judgment will be subject to the final outcome of the pending SLPbefore the Supreme Court.
    • However, till date, no stay exists on the binding precedent of Kabul Chawla.

Sections Involved

  • Section 153A – Assessment in case of search
  • Section 132 – Search and seizure

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

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