2020 (8) TMI 95 - AT - Income Tax

Assessment u/s 153A - Addition made u/s 68 - whether in the absence of any incriminating material, can any addition be made in the hands of the assessee? - HELD THAT - We have to see the discovery of incriminating material vis-a-vis two stages of assessment i.e. abated and non-abated assessment. It is not the dictate of KABUL CHAWLA 2015 (9) TMI 80 - DELHI HIGH COURT that in the absence of any incriminating material, in any of the years, no additions can be made. The Hon ble High Court is very clear in its findings. So, to apply the principle laid down by the Hon ble High Court (supra), it is the first step to find whether the proceedings had abated or non-abated and also to determine any incriminating material was found or not. AR before us has pointed out that no incriminating material was found and also that the proceedings are non-abated. In these facts and circumstances, following the dictate of Hon ble Delhi High Court in Kabul Chawla (supra), we hold that no addition u/s 68 of the Act is warranted. - Decided in favour of assessee.

Summary

Issues:
Cross-appeals against CIT(A) order under section 153A r.w.s 143(3) for assessment years 2010-11 & 2011-12; Deletion of additions u/s 68 of the Income-tax Act; Interpretation of provisions of section 153A; Application of Hon'ble Delhi High Court decision in Kabul Chawla case.

Analysis:

1. Background:
- Cross-appeals filed against CIT(A) order for assessment years 2010-11 & 2011-12 under section 153A r.w.s 143(3).
- Assessee's appeals dismissed as issue became academic due to re-assessment proceedings.
- Revenue's appeals against CIT(A) order for assessment years 2010-11 & 2011-12 heard together.

2. Deletion of Additions u/s 68:
- Assessing Officer made additions u/s 68 in the hands of the assessee.
- Assessee contended no incriminating material found justifying the additions.
- CIT(A) deleted the additions based on Hon'ble Delhi High Court's decision in Kabul Chawla case.
- Revenue appealed against CIT(A)'s findings.

3. Interpretation of Section 153A:
- Search u/s 132 conducted at assessee's premises leading to proceedings u/s 153A.
- Assessing Officer made additions u/s 68 in assessment order under section 153A r.w.s. 143(3).
- Hon'ble Delhi High Court's decision in Kabul Chawla case emphasized the assessment proceedings under section 153A.

4. Application of Kabul Chawla Decision:
- Hon'ble Delhi High Court's decision outlined the assessment process under section 153A.
- Emphasized the importance of incriminating material and distinction between abated and non-abated assessments.
- Tribunal held that in absence of incriminating material and non-abated proceedings, no addition u/s 68 warranted.

5. Conclusion:
- Following the principles of the Hon'ble Delhi High Court in Kabul Chawla case, no addition u/s 68 was justified.
- Assessee's appeals allowed, Revenue's appeals dismissed.
- Order pronounced on 31st July, 2020 by ITAT Delhi.

This judgment clarifies the interpretation of section 153A in light of the Hon'ble Delhi High Court's decision in Kabul Chawla case, emphasizing the necessity of incriminating material for making additions u/s 68. The distinction between abated and non-abated assessments is crucial in determining the validity of such additions, ensuring a fair and lawful assessment process.