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2020 (3) TMI 536 - AT - Income TaxAssessment u/s 153A - Whether no assessment was pending from the date of the search? - HELD THAT - The assessee in the statement of facts before Ld. CIT(A) has mentioned that original return was filed on 25.09.2010 showing total income of ₹ 83,685/- and the same was processed u/s 143(1) of the Act. It would show that the return was completed and no assessment was pending from the date of the search. The Hon ble Delhi High Court in the case of CIT vs. Kabul Chawla 2015 (9) TMI 80 - DELHI HIGH COURT held that Completed assessments can be interfered with by the AO while making assessment u/s 153A only on the basis of some incriminating material unearthed during the course of search which were not produced or not already disclosed or made known in the course of original assessment . The Hon ble Delhi High Court following the aforesaid decision took the same view in the case of Meeta Gutgutia 2018 (7) TMI 569 - SC ORDER . In view of the above, we do not find any infirmity in the order of the Ld. CIT(A) in allowing the appeal of the assessee.
Issues:
1. Validity of addition made by AO under section 153A of the Income Tax Act. 2. Interpretation of the judgment in CIT vs. Kabul Chawla regarding incriminating material for additions under section 153A. Analysis: 1. The appeal by the Revenue challenged the order of Ld. CIT(A) quashing the addition made by the Assessing Officer under section 153A of the Income Tax Act. The AO had added a sum of &8377; 2.07 crores to the assessee's income, representing share capital received from 7 parties, as the genuineness of the transaction was not proven under section 68 of the Act. However, the Ld. CIT(A) deleted the addition based on the argument that no incriminating material was found during the search operation, citing the judgment in CIT vs. Kabul Chawla. The Ld. CIT(A) held that since no incriminating material was unearthed during the search, no addition could be made under section 153A of the Act, thereby ruling in favor of the assessee. 2. During the hearing, the Ld. DR contended that section 153A does not require assessment to be limited to incriminating documents, while the counsel for the assessee reiterated their stance. The tribunal, after considering the submissions, found no merit in the Departmental appeal. It noted that the original return was filed before the search operation, and the assessment was completed under section 143(1) of the Act. Referring to the judgment in CIT vs. Kabul Chawla, the tribunal emphasized that assessments under section 153A can only be based on incriminating material not disclosed during the original assessment. Citing the decision in Meeta Gutgutia, the tribunal upheld the Ld. CIT(A)'s decision, as the appeal of the assessee was allowed in line with the precedents set by the Hon'ble Delhi High Court. In conclusion, the tribunal dismissed the departmental appeal, affirming the decision of the Ld. CIT(A) to delete the addition made by the Assessing Officer under section 153A of the Income Tax Act, based on the absence of incriminating material during the search operation and in accordance with the judgments in CIT vs. Kabul Chawla and Meeta Gutgutia.
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