Facts of the Case

  • The Revenue filed appeals against the order of the Income Tax Appellate Tribunal (ITAT) dated 12 July 2021.
  • The ITAT had dismissed the Revenue’s appeals concerning assessment years where no incriminating material was found during search operations.
  • The search and seizure operation was conducted under Section 132 of the Income Tax Act.
  • 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 of the Income Tax Act without any incriminating material found during search?
  2. Whether completed (non-abated) assessments can be disturbed under Section 153A in absence of seized evidence?

Petitioner’s Arguments (Revenue)

  • The Revenue contended that the ITAT erred in holding that additions cannot be made under Section 153A without incriminating material.
  • It was argued that similar issues are pending before the Supreme Court in various cases, including appeals arising from other High Court decisions.
  • The Revenue sought reconsideration of the settled legal position.

Respondent’s Arguments (Assessee)

  • The assessee relied on settled law laid down in judicial precedents.
  • It was submitted that no incriminating material was found during the search.
  • Since the assessments were already completed, no addition could be made under Section 153A.

Court’s Findings / Judgment

  • The Delhi High Court held that the issue is already settled by its earlier decision in CIT v. Kabul Chawla (2016) 380 ITR 573 (Delhi).
  • The Court observed that:
    • The assessments had attained finality prior to the search.
    • No incriminating material was found during the search.
  • Therefore, no addition can be made under Section 153A in respect of non-abated assessments.
  • The Court further noted:
    • Mere pendency of appeals before the Supreme Court does not dilute binding precedents in absence of any stay.
  • The Court relied on Supreme Court rulings:
    • Kunhayammed vs State of Kerala (2000) 6 SCC 359
    • Shree Chamundi Mopeds Ltd. vs Church of South India Trust (1992) 3 SCC 1
  • Result: Appeals filed by the Revenue were dismissed.

Important Clarification

  • Section 153A does not permit reassessment of concluded assessments unless incriminating material is found during search.
  • Pending appeals before the Supreme Court do not operate as a stay unless specifically granted.
  • The principle in Kabul Chawla continues to hold the field.

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

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