2022 (7) TMI 1090 - HC - Income Tax

Assessment u/s 153A - Addition u/s 68 - HELD THAT - Since no incriminating documents or materials had been found and seized at the time of search as relying on KABUL CHAWLA 2015 (9) TMI 80 - DELHI HIGH COURT when no incriminating material is found during the course of the search in respect of an issue, then no addition in respect of such an issue can be made in the assessment under Sections 153A and 153C - Decided in favour of assessee.

Summary

Issues:
Income Tax appeal arising from an order of the Income Tax Appellate Tribunal (ITAT) for assessment year 2010-11.

Analysis:
1. Condonation of Delay: The delay of 177 days in filing the appeal was condoned by the court upon application, and the appeal was allowed to proceed.

2. Background and Additions: The case involved a search and seizure operation against a company managed by individuals. The Assessing Officer made additions to the income of the assessee under Section 69B and Section 68 of the Income Tax Act based on documents discovered during the raid.

3. CIT(A) Order: The Commissioner of Income Tax (Appeals) allowed the appeal of the assessee, deleting the additions, stating that without incriminating material, the Assessing Officer cannot reassess completed assessments before the search date under Section 153A of the Act.

4. ITAT Decision: The ITAT dismissed the department's appeal, finding that the additions made were not based on incriminating material from the search. The ITAT observed that the assessment for the relevant year had finalized before the search date, and no new additions could be made without incriminating material.

5. Legal Precedents: The ITAT referred to previous judgments and legal positions, including the case of Commissioner of Income Tax vs. Kabul Chawla, emphasizing that additions can only be made based on seized material. The court cited legal principles related to assessments under Sections 153A and 153C of the Act.

6. Final Decision: The court concluded that since no incriminating material was found during the search, the issue favored the assessee. The judgment in Kabul Chawla was followed, and the appeal was dismissed along with all pending applications.

This detailed analysis covers the issues, background, legal arguments, and the final decision of the court in the Income Tax appeal case, providing a comprehensive understanding of the judgment delivered by the Delhi High Court.