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2017 (2) TMI 1195 - HC - Income TaxAssessment u/s 153A - Held that - In the present case, the AO virtually reappreciated the materials and documents that were part of the record filed by the assessee. A plain reading of the assessment order would show that no attempt was made by the AO to connect the fresh material and how it pointed out to any concealed income or led to any concealed income. The entire reliance upon the existing documents that were disclosed only reinforced that Kabul Chawla (2015 (9) TMI 80 - DELHI HIGH COURT ) and its reasoning was appropriately applied. For these reasons, the Court is of the opinion that the ITAT s reasons are sound on the question of applicability of Kabul Chawla (supra) and the additions made in these circumstances could not have been sustained. - Decided in favour of assessee
Issues:
Appeal against ITAT's order allowing assessee's appeals for AYs 2007-08 to 2012-13, but rejecting for 2012. Revenue contends ITAT misunderstood law declared by the Court in previous cases. Search at M/s. Kalra Group led to notice for AYs 2007-08, 2008-09, 2009-10, 2010-11, and 2012-13. AO added amounts based on seized materials. Assessee argued limitation under Section 153B had passed, and additions were not connected to seized materials. ITAT accepted these grounds citing previous cases. Analysis: 1. Assessment Year Appeals: The Revenue challenged ITAT's decision allowing the assessee's appeals for AYs 2007-08 to 2012-13. The search at M/s. Kalra Group premises led to notices for multiple assessment years. The AO added amounts based on seized materials, but the assessee contended that the limitation under Section 153B had expired, and the additions were not linked to the seized documents. The ITAT upheld the assessee's arguments, citing previous judgments. The Court found that the ITAT correctly applied the law established in previous cases like CIT v. RRJ Securities Limited and Kabul Chawla. The additions made without a connection to seized materials were unsustainable. 2. Applicability of Kabul Chawla and RRJ Securities Judgments: The Revenue argued that the assessments were incomplete as they did not consider the seized materials. However, the Court emphasized the importance of connecting additions to the seized material. The Court referred to the legal position outlined in Kabul Chawla, emphasizing that assessments under Section 153A should be based on seized material. The AO's failure to establish a link between fresh material and concealed income supported the ITAT's decision. The Court held that the reasoning in Kabul Chawla was correctly applied in this case. 3. Completion of Assessment Beyond Time: The Court noted that the question of assessments being completed beyond the time limit was crucial. However, it decided to keep this question open for a specific case, ITA No. 87/2017, as it was more appropriate for detailed consideration. Consequently, the Court dismissed the appeals, concluding that no substantial question of law arose. The ITAT's decision to reject the additions made without a connection to seized materials was upheld. In conclusion, the High Court dismissed the Revenue's appeals, upholding the ITAT's decision to allow the assessee's appeals for multiple assessment years based on the correct application of legal principles established in previous judgments like Kabul Chawla and RRJ Securities Limited. The Court emphasized the importance of connecting additions to seized materials and kept the question of assessments completed beyond time open for a specific case for further examination.
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