Facts of the Case

The present appeal was filed by the Revenue challenging the order of the Income Tax Appellate Tribunal (ITAT) dated 18 February 2021 for Assessment Year 2006–07.

The Assessing Officer had made an addition of ₹7 crores under Section 68 of the Income Tax Act. However, the ITAT deleted the said addition relying on the judgment in CIT vs Kabul Chawla.

The Revenue contended that ITAT erred both:

  • In deleting the addition on merits, and
  • In holding lack of jurisdiction under Section 153A without properly examining the case facts.

Issues Involved

  1. Whether addition under Section 68 can be sustained in absence of incriminating/seized material during search proceedings under Section 153A?
  2. Whether jurisdictional issues under Section 153A can be raised at any stage of proceedings?
  3. Whether ITAT was justified in deleting the addition despite remand in earlier proceedings?

Petitioner’s (Revenue) Arguments

  • ITAT wrongly deleted the addition of ₹7 crore made under Section 68.
  • ITAT failed to appreciate that the case was earlier remanded to the Assessing Officer for fresh adjudication on merits.
  • The jurisdictional issue under Section 153A was not decided in the earlier round, hence should not have been considered later.

Respondent’s Arguments

  • The additions made were not based on any seized or incriminating material found during search.
  • The case was squarely covered by the binding precedent of CIT vs Kabul Chawla.
  • Jurisdictional objections can be raised at any stage as they go to the root of the matter.

Court’s Findings / Order

  • The Court held that the present case is fully covered by the judgment in CIT vs Kabul Chawla, as no addition was based on seized material.
  • It reaffirmed that jurisdictional issues can be raised at any stage, even in appeal proceedings.
  • Since no substantial question of law arose, the Court dismissed the Revenue’s appeal.

Important Clarifications

  • No addition under Section 153A can be made in absence of incriminating material found during search.
  • Jurisdictional defects are fundamental and can be raised at any stage of litigation.
  • The ruling reinforces the legal principle laid down in CIT vs Kabul Chawla.

Link to download the order - https://delhihighcourt.nic.in/app/case_number_pdf/2022:DHC:1024-DB/MMH22032022ITA572022_220707.pdf

 

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