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2020 (2) TMI 158 - AT - Income TaxAssessment u/s 153A - AO's power to reassess returns of assessee for undisclosed income, which was found during search operation And with regard to material that was available at time of original assessment - Addition of Reduction of value of stock/inventory on account of brokerage and compensation - assessee failed to substantiate the above expenses u/s.37(1) either at the assessment stage or at the appellate stage - HELD THAT - . Since in the present case both the above additions are admittedly made during the course of inquiries at assessment stage under section 153A and original assessment was already completed on 25.07.2009 by proceeding the return under section 143(1), therefore, issue is covered by Judgments of Hon ble Delhi High Court in the case of CIT vs., Kabul Chawla 2015 (9) TMI 80 - DELHI HIGH COURT and Pr. CIT vs., Meeta Gut Gutia 2017 (5) TMI 1224 - DELHI HIGH COURT . The Departmental appeal stand dismissed.
Issues Involved:
Appeal against deletion of stock/inventory value reduction due to brokerage and compensation under Section 37(1) - Scope of provisions under Section 153A of the IT Act - Validity of additions made during assessment proceedings under Section 153A without incriminating material - Application of judgments by Hon'ble Delhi High Court. Analysis: Issue 1: Appeal against deletion of stock/inventory value reduction due to brokerage and compensation under Section 37(1): The dispute arose from the A.O.'s reduction of stock/inventory value due to brokerage and compensation disallowances. The assessee challenged these additions before the Ld. CIT(A), arguing that they were beyond the scope of Section 153A of the IT Act. The Ld. CIT(A) found that the additions were not supported by seized documents and were based on post-search inquiries, not undisclosed income. Citing the judgment in CIT vs. Kabul Chawla, the Ld. CIT(A) allowed the appeal, emphasizing the need for incriminating material for Section 153A additions. Issue 2: Scope of provisions under Section 153A of the IT Act: The A.O. had assessed the assessee under Section 153A/143(3) and made additions without incriminating material found during the search. The Ld. CIT(A) noted that the original assessment was completed before the search, and the additions lacked a nexus to undisclosed income or seized documents. Relying on the judgment in CIT vs. Kabul Chawla, the Ld. CIT(A) held that additions under Section 153A require specific incriminating material, which was absent in this case. Issue 3: Validity of additions made during assessment proceedings under Section 153A without incriminating material: The Hon'ble Delhi High Court's decisions in various cases, including CIT vs. Kabul Chawla and Pr. CIT vs. Meeta Gutgutia, were cited to support the argument that additions without incriminating material during Section 153A assessments are unjustified. The judgments emphasized the necessity of specific incriminating material for such additions. The Tribunal upheld the Ld. CIT(A)'s decision, dismissing the Revenue's appeal due to the lack of legal basis for the additions made during assessment proceedings without relevant incriminating material. In conclusion, the Tribunal dismissed the Revenue's appeal and the Assessee's cross-objection, affirming the Ld. CIT(A)'s order based on the principles outlined in the judgments by the Hon'ble Delhi High Court. The decision underscored the importance of incriminating material for additions under Section 153A of the IT Act, ensuring a fair and lawful assessment process.
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