Facts of the Case

The Revenue filed multiple appeals under Section 260A challenging a common order of the Income Tax Appellate Tribunal (ITAT) for Assessment Years 2008–09 to 2010–11.

The Assessing Officer (AO) had made additions under Sections 68 and 69C on account of alleged unexplained credits and expenses during assessments framed under Section 153A following a search under Section 132.

However:

  • The original returns had already been processed under Section 143(1).
  • No notices under Sections 143(2) or 148 were issued.
  • Therefore, assessments had attained finality prior to the search.
  • Both CIT(A) and ITAT found that no incriminating material was discovered during the search.

Issues Involved

  1. Whether additions under Sections 68 and 69C can be made in assessments under Section 153A without incriminating material.
  2. Whether completed (non-abated) assessments can be reopened under Section 153A in absence of new evidence.
  3. Whether reliance on CIT vs Kabul Chawla was justified despite pending SLPs.
  4. Scope and interpretation of Section 153A in search cases.

 Petitioner’s Arguments (Revenue)

  • ITAT erred in deleting additions made under Sections 68 and 69C.
  • Section 153A mandates assessment of total income for six years, irrespective of incriminating material.
  • ITAT wrongly relied on CIT vs Kabul Chawla without examining merits.
  • The said judgment has not attained finality as SLPs are pending before the Supreme Court.
  • Incriminating material was allegedly found during search and should justify additions.

Respondent’s Arguments (Assessee)

  • No incriminating material was found during the search proceedings.
  • All transactions, including share capital and premium, were fully disclosed and supported by documentary evidence.
  • Identity, creditworthiness, and genuineness under Section 68 were duly established.
  • Assessments had already attained finality prior to the search.
  • Additions under Section 153A cannot be made without fresh evidence.

Court’s Findings / Reasoning

  • The High Court emphasized that under Section 260A, interference is limited to substantial questions of law.
  • Both CIT(A) and ITAT recorded concurrent findings of fact that no incriminating material was found during search.
  • Such findings cannot be disturbed unless perverse.
  • Assessments had attained finality prior to the search.
  • No evidence was found linking alleged unexplained income.
  • Additions under Section 153A must be based on incriminating material.
  • The Court reaffirmed the legal position laid down in CIT vs Kabul Chawla (2016) 380 ITR 573.

Court Order / Final Decision

  • All appeals filed by the Revenue were dismissed.
  • The Court held that:
    • No substantial question of law arises.
    • Additions under Section 153A are invalid in absence of incriminating material.

Important Clarification

  • Even if SLPs against CIT vs Kabul Chawla are pending, the judgment continues to hold binding value unless stayed.
  • Section 153A does not permit arbitrary reassessment of concluded matters without fresh evidence.
  • Distinction between:
    • Abated assessments – can be reassessed fully
    • Non-abated (completed) assessments – only based on incriminating 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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