2019 (8) TMI 474 - HC - Income Tax

Assessment u/s 153A - HELD THAT - ITAT noticed inter alia that all the additions were not based upon any fresh materials seized during the course of search. That was the first ground for setting aside the order ; the ITAT also considered and decided in favour of the assessee on the merits of the additions. The approach of the ITAT of setting aside the search assessment on the ground that no fresh materials was seized or discerned in the course of search is correct and conform to the view taken by the Delhi High Court in the case of CIT (Central)-III vs. Kabul Chawla 2015 (9) TMI 80 - DELHI HIGH COURT . That judgment has been followed by various High Courts including this Court.

Summary

Issues:
1. Disallowance and additions made in re-assessment proceedings under Section 260A of the Income Tax Act, 1961.

Analysis:
The High Court addressed the issues raised by the Revenue regarding disallowance and additions made in the re-assessment proceedings under Section 260A of the Income Tax Act, 1961. The search conducted under Section 132 of the Act on the assessee's premises led to notices under Section 153A, resulting in search assessment orders for the block period between assessment years 2004-05 to 2010-11. The additions made were related to business loss, disallowance of substantial interest amounts, and unexplained cash entries in bank accounts. The Income Tax Appellate Tribunal (ITAT) observed that the additions were not based on any fresh materials seized during the search. This lack of fresh material was a primary reason for setting aside the order. Additionally, the ITAT ruled in favor of the assessee on the merits of the additions.

The High Court supported the ITAT's decision to set aside the search assessment due to the absence of fresh materials seized during the search, citing the judgment of the Delhi High Court in the case of Commissioner of Income Tax (Central)-III vs. Kabul Chawla. The High Court noted that this approach aligns with the view taken by various High Courts, including the present Court. As a result, the High Court concluded that no question of law arose in this case, leading to the dismissal of the appeal by the Revenue. The judgment emphasized the importance of fresh material in search assessments and highlighted the consistency of this principle across different High Courts.