Facts of the Case
A search and seizure operation resulted in
proceedings under Section 153A of the Income Tax Act against the
respondent companies. During assessment, the Assessing Officer made additions
under Section 68 treating certain credits as unexplained.
The Income Tax Appellate Tribunal (ITAT) deleted
these additions, holding that there was no incriminating material discovered
during the search to justify the additions. Aggrieved by the ITAT’s order, the
Revenue filed appeals before the Delhi High Court under Section 260A.
Issues Involved
- Whether
additions under Section 68 can be made in assessments under Section
153A without incriminating material found during search?
- Whether
the ITAT was justified in deleting the additions made by the Assessing
Officer?
- Whether
any substantial question of law arose for consideration before the High
Court?
Petitioner’s Arguments (Revenue)
- The
Revenue argued that the ITAT erred in deleting additions made under
Section 68.
- It
was contended that the Assessing Officer had validly exercised powers
under Section 153A.
- Revenue
sought restoration of additions on the ground that the credits remained
unexplained.
Respondent’s Arguments (Assessee)
- The
respondents argued that no incriminating material was found during the
search to support the additions.
- They
relied on the principle laid down in CIT vs Kabul Chawla (2016) 380 ITR
573 (Del.).
- It
was submitted that completed assessments cannot be disturbed under Section
153A without fresh incriminating evidence.
Court Findings / Observations
The Delhi High Court observed that the ITAT had
correctly followed the principle laid down in CIT vs Kabul Chawla, which
governs the scope of assessment under Section 153A.
The Court further noted that in an earlier
connected matter involving the same assessee (Pr. CIT vs Best Infrastructure
India Pvt. Ltd., ITA 869/2017), similar additions under Section 68 had
already been upheld as unsustainable in the absence of incriminating material.
The Court held that the Revenue failed to
establish any substantial question of law.
Court Order / Final Decision
The Delhi High Court dismissed all Revenue appeals
and upheld the ITAT’s order deleting the additions made under Section 68 in
Section 153A proceedings.
Important Clarification
This judgment reinforces the settled legal
principle that completed assessments cannot be interfered with under Section
153A unless incriminating material is found during search proceedings. Mere
review or reassessment of concluded issues without fresh material is not
permissible.
Sections Involved
- Section
153A – Assessment in case of search or
requisition
- Section
68 – Unexplained cash credits
- Section 260A – Appeal to High Court
Link to download the order -
https://delhihighcourt.nic.in/app/case_number_pdf/2017:DHC:8952-DB/SRB30102017ITA9002017_124955.pdf
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