2016 (3) TMI 1275 - HC - Income Tax

Validity of assessment u/s 153A - addition u/s 68 - no incriminating document was found and seized during the course of search - Revenue, sought to distinguish the judgement in Commissioner of Income Tax (Central)-III v. Kabul Chawla (2015 (9) TMI 80 - DELHI HIGH COURT) on the ground that it did not consider a situation where the original return was merely processed under Section 143(1) - Held that - The Court notes that the decision in Commissioner of Income Tax (Central)-III v. Kabul Chawla (supra) does deals with the said situation as is evident from para 3 of the said judgment read with the conclusion in para 37 (v). The Court is, therefore, not persuaded to frame any question of law in this appeal.

Summary

Issues: Appeal against ITAT order for Assessment Year 2005-2006 - Addition under Section 68 challenged - Interpretation of incriminating material - Reliance on Commissioner of Income Tax (Central)-III v. Kabul Chawla judgment - Distinction sought by Revenue - Dismissal of appeal.

Analysis:

1. The appeal before the High Court was against the ITAT order for the Assessment Year 2005-2006. The Assessee had originally filed a return showing a loss, which was later disclosed again after a search and seizure operation. The Assessing Officer made an addition under Section 68 of the Income Tax Act, 1961, which was contested by the Assessee on the grounds of lack of incriminating material. The CIT(A) accepted the Assessee's plea, leading to an appeal by the Revenue.

2. In the appeal before the ITAT, cross-objections were filed by the Assessee, citing the judgment in Commissioner of Income Tax (Central)-III v. Kabul Chawla. The ITAT relied on this decision and dismissed the Revenue's appeal while allowing the Assessee's cross-objections. The Revenue, through Mr. Dileep Shivpuri, sought to distinguish the Kabul Chawla judgment, arguing that it did not address situations where the original return was processed under Section 143(1) of the Act.

3. The High Court observed that the Kabul Chawla judgment indeed dealt with situations like the one at hand, as evident from specific paragraphs. The Court, therefore, declined to frame any new question of law in the appeal. Ultimately, the Court dismissed the appeal, upholding the ITAT order and the Assessee's contentions based on the interpretation of incriminating material and the reliance on the Kabul Chawla judgment.

This detailed analysis highlights the key legal issues, arguments presented, and the final decision rendered by the High Court in the case.