Facts of the Case

  • The Revenue filed appeals against the order of the Income Tax Appellate Tribunal (ITAT) dated 12 July 2021.
  • ITAT had dismissed the Revenue’s appeals relating to Assessment Years covered under search proceedings.
  • The dispute arose from additions made under Section 153A despite no incriminating material being found during the search conducted under Section 132.
  • The assessments in question had already attained finality prior to the date of search (non-abated assessments).

Issues Involved

  1. Whether additions can be made under Section 153A in absence of incriminating material found during search.
  2. Whether completed assessments (non-abated) can be reopened without any seized evidence.
  3. Whether the ITAT was correct in relying on settled judicial precedents.

Petitioner’s Arguments (Revenue)

  • ITAT erred in holding that additions under Section 153A require incriminating material.
  • Reliance was placed on pending matters before the Supreme Court, including cases like APAR Industries Ltd..
  • It was contended that the issue is not final as similar matters are sub judice before the Supreme Court.

Respondent’s Arguments (Assessee)

  • The issue is already settled by the Delhi High Court in CIT vs Kabul Chawla (2016) 380 ITR 573 (Delhi).
  • No incriminating material was found during the search.
  • The assessments were completed and had attained finality; hence, no additions can be made under Section 153A.

Court Findings / Order

  • The Delhi High Court held that the issue is no longer res integra and is covered by its earlier judgment in Kabul Chawla.
  • It was observed that:
    • No incriminating material was found during search.
    • The assessments were non-abated (already completed).
  • Therefore:

No addition can be made under Section 153A in absence of incriminating material.

  • The appeals filed by the Revenue were dismissed.

Important Clarifications

  • Mere pendency of similar issues before the Supreme Court does not dilute binding precedents unless stayed.
  • The Court relied on Supreme Court judgments:
    • Kunhayammed vs State of Kerala (2000) 6 SCC 359
    • Shree Chamundi Mopeds Ltd vs Church of South India Trust (1992) 3 SCC 1
  • Binding precedents continue to apply unless specifically stayed or overturned.

Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2022:DHC:444-DB/MMH03022022ITA202022_225325.pdf

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