Facts of the Case

The present appeal was filed by the Revenue before the Delhi High Court challenging the order dated 18.08.2022 passed by the Income Tax Appellate Tribunal for Assessment Year 2010–2011.

The assessment concerning the respondent/assessee was conducted under Section 153A of the Income Tax Act, 1961. During appellate proceedings, the Commissioner of Income Tax (Appeals) deleted an addition amounting to ₹6,59,27,495/- on the ground that no incriminating material was found against the assessee during the search proceedings.

Issues Involved

  1. Whether additions can be sustained under Section 153A of the Income Tax Act, 1961 in absence of incriminating material found during search.
  2. Whether the order of the Tribunal deleting additions was legally sustainable.
  3. Whether any substantial question of law arises for consideration by the High Court.

Petitioner’s Arguments (Revenue)

  • The Revenue contended that the Tribunal erred in upholding the deletion of additions made during assessment under Section 153A.
  • It was argued that the assessment was validly framed and the additions ought to have been sustained.

Respondent’s Arguments (Assessee)

  • Although no appearance was recorded on behalf of the respondent, the findings in its favour were based on the reasoning accepted by the Commissioner (Appeals) and the Tribunal.
  • The core contention accepted was that no incriminating material was discovered during the search, hence additions could not be made under Section 153A.

Court’s Findings / Order

The Delhi High Court dismissed the appeal of the Revenue and held:

  • The issue involved was already covered by earlier judgments, including:
    • Principal Commissioner of Income Tax vs Alchemist Capital Ltd (AY 2009-10)
    • Principal Commissioner of Income Tax vs Bhadani Financiers Pvt. Ltd., 2021 SCC OnLine Del 4430
  • The Court observed that:

No substantial question of law arises for consideration.

  • Accordingly, the appeal was dismissed.

Important Clarification

  • The judgment reinforces the settled legal position that in absence of incriminating material found during search, no additions can be made under Section 153A for completed assessments.
  • The ruling follows binding precedents and maintains consistency in interpretation.

Sections Involved

  • Section 153A of the Income Tax Act, 1961 – Assessment in case of search or requisition

Link to download the order -https://delhihighcourt.nic.in/app/showFileJudgment/RAS03052023ITA2512023_124655.pdf

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