2022 (7) TMI 1358 - HC - Income Tax

Assessment u/s 153A and 153C - incriminating material - ITAT, upon appreciation of the documents on record, concluded that the documents referred to by the AO as incriminating were admittedly not found from the address of the assessee - HELD THAT - ITAT, concluded that since no assessment was pending for the relevant assessment year 2010-11 on the date of search and no incriminating material was found during the course of search, the issue is covered in favour of the assessee by the judgment in the case of Kabul Chawla 2015 (9) TMI 80 - DELHI HIGH COURT and Meeta Gutgutia 2017 (5) TMI 1224 - DELHI HIGH COURT as well M/s Kapis Impex LLP 2020 (7) TMI 44 - ITAT DELHI Predecessor Division Bench of this Court in Kabul Chawla (supra) has held that if 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 of the Act. Though the judgment in Kabul Chawla (supra) has been challenged in connected matters and is pending before the Supreme Court, yet there is no stay of the said judgment till date. Accordingly, this Court finds no ground not to follow the said judgment. Keeping in view the aforesaid, this Court is of the opinion that the question of law raised in present appeal has been settled by earlier Division Bench in Kabul Chawla (supra) and no incriminating documents or materials had been found and seized at the time of search. - Decided in favour of assessee.

Summary

Issues:
1. Condonation of delay in filing the appeal.
2. Interpretation of Section 153A of the Income Tax Act, 1961.
3. Validity of additions made by the Assessing Officer without incriminating material.
4. Applicability of previous court judgments on similar issues.

Issue 1: Condonation of Delay
The delay of 177 days in filing the appeal was condoned by the court based on the averments made in the application, and the application was disposed of accordingly.

Issue 2: Interpretation of Section 153A
The appeal arose from an order of the Income Tax Appellate Tribunal (ITAT) concerning a search and seizure operation conducted by the Investigation Wing. The Assessing Officer issued a notice under Section 153A of the Act, resulting in additions to the assessee's income. The ITAT held that no incriminating material was found during the search for the relevant assessment year, and therefore, the additions made were not valid.

Issue 3: Validity of Additions without Incriminating Material
The ITAT concluded that the additions made by the Assessing Officer were not based on any incriminating material found during the search. The documents referred to did not pertain to the assessment year under consideration, and no unaccounted investment by the assessee was indicated. The ITAT dismissed the appeal, highlighting that the additions were made on presumptions without concrete evidence.

Issue 4: Applicability of Previous Judgments
The ITAT referred to previous judgments related to similar cases where appeals by the department had been dismissed. The ITAT emphasized that since no incriminating material was found during the search, and no assessment was pending for the relevant assessment year, the additions made by the Assessing Officer were not justified. The court cited the legal positions outlined in the judgments of Commissioner of Income Tax vs. Kabul Chawla and Principal CIT vs. Meeta Gutgutia, supporting the dismissal of the present appeal.

In conclusion, the High Court dismissed the present appeal, stating that the legal question raised had been settled by earlier judgments. The court emphasized that no incriminating documents were found during the search, aligning with the principles established in previous decisions. The appeal was dismissed along with all pending applications.