Facts of the Case

The Revenue filed multiple appeals before the Delhi High Court under Section 260A challenging the ITAT order for AYs 2008–09, 2009–10, and 2010–11.

  • The Assessing Officer (AO) made additions under Sections 68 and 69C alleging unexplained credits and expenses.
  • These additions were made during assessment under Section 153A following a search under Section 132.
  • The CIT(A) and ITAT deleted the additions on the ground that:
    • No incriminating material was found during the search.
    • The assessments had already attained finality before the search.

The Revenue challenged this deletion relying on broader interpretation of Section 153A.

Issues Involved

  1. Whether additions under Sections 68 and 69C can be made in Section 153A proceedings without incriminating material?
  2. Whether completed (non-abated) assessments can be reassessed under Section 153A without new evidence?
  3. Whether reliance on CIT vs Kabul Chawla is justified?

Petitioner’s Arguments (Revenue)

  • Section 153A mandates assessment of total income for six years irrespective of incriminating material.
  • ITAT wrongly relied solely on CIT vs Kabul Chawla without examining merits.
  • The decision in Kabul Chawla is under challenge before the Supreme Court.
  • Incriminating materials were allegedly found during search.
  • Assessments had not attained finality as per Revenue’s interpretation.

Respondent’s Arguments (Assessee)

  • No incriminating material was found during the search.
  • Assessments were already completed and not pending (non-abated).
  • All transactions (share capital, premium, etc.) were properly documented and verified.
  • Additions under Sections 68 and 69C were unjustified and unsupported by evidence.

Court’s Findings / Order

The Delhi High Court dismissed all appeals filed by the Revenue and held:

  • Both CIT(A) and ITAT recorded concurrent findings that:
    • No incriminating material was found during search.
  • Assessments had attained finality prior to the search.
  • As per settled law in CIT vs Kabul Chawla (2016) 380 ITR 573:
    • No addition can be made in respect of completed assessments without incriminating material.
  • The Court emphasized:
    • Section 260A jurisdiction is limited to substantial questions of law.
    • Findings of fact by ITAT cannot be interfered with unless perverse.

Final Order

  • Appeals dismissed as devoid of merit.

Important Clarification by Court

  • Completed assessments (non-abated) cannot be disturbed under Section 153A without incriminating material.
  • Even if SLP against Kabul Chawla is pending, binding precedent must be followed in absence of stay.
  • Section 153A does not permit arbitrary additions without nexus to seized material.

Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2021:DHC:2802-DB/MMH09092021ITA812020_221337.pdf

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