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IN THE HIGH COURT OF DELHI AT NEW DELHI
Rajiv Shakdher, Girish Kathpalia, JJ.
Assistant Commissioner of Income Tax, Central Circle-30, New Delhi - Appellant
Versus
M/s. Saluja Construction Co. Ltd. - Respondent
ITA 62 of 2021
Decided On : 11-09-2023
Condonation of Delay - Income Tax - The court condoned the delay of 113 days in filing the appeal by the appellant/revenue. The appeal concerned the Assessment Year (AY) 2008-09 and sought to assail the order passed by the Income Tax Appellate Tribunal. The court found that no incriminating material was found during the search, and therefore, no addition could have been made by the Assessing Officer with regard to the AY in issue, as it was a case of completed assessment. This principle was established in the judgment rendered by the coordinate bench of the court in CIT vs. Kabul Chawla, (2016) 380 ITR 573 and received the imprimatur of the Supreme Court in Principal Commissioner of Income Tax vs. Abhisar Buildwell, (2023) SCC Online SC 481.
Fact of the Case:
The appellant/revenue sought condonation of delay of 113 days in filing the appeal. The appeal concerned Assessment Year (AY) 2008-09 and sought to assail the order passed by the Income Tax Appellate Tribunal.
Finding of the Court:
The court found that no incriminating material was found during the search, and therefore, no addition could have been made by the Assessing Officer with regard to the AY in issue, as it was a case of completed assessment. The appeal was dismissed as no substantial question of law arose for consideration.
Issues: Delay in filing the appeal, addition to taxable income under Section 68 of the Income Tax Act, 1961, and the applicability of reassessment proceedings under Section 153A of the Act.
Ratio Decidendi: No addition could have been made by the Assessing Officer with regard to the AY in issue, as it was a case of completed assessment, and no incriminating material was found during the search.
Final Decision: The appeal was dismissed as no substantial question of law arose for consideration.
JUDGMENT
CM Appl.8570/2021 [Application moved on behalf of the appellant/revenue seeking condonation of delay of 113 days in filing the appeal]
1. This is an application filed on behalf of the appellant/revenue, seeking condonation of delay in filing the appeal.
2. According to the appellant/revenue, there is a delay of 113 days.
3. Mr Bhupinderjeet Singh, who appears on behalf of the respondent/assessee does not oppose the prayer made in the application.
4. The delay is, accordingly, condoned.
5. The application is disposed of in the aforesaid terms.
ITA 62/2021
6. This appeal concerns Assessment Year (AY) 2008-09.
7. Via the instant appeal, the appellant/revenue seeks to assail the order dated 20.04.2020, passed by the Income Tax Appellate Tribunal [in short, "Tribunal"].
8. The record shows that the Assessing Officer (AO) added to the taxable income of the respondent/assessee Rs.3,50,00,000/- albeit, under Section 68 of the Income Tax Act, 1961 [in short, "Act"], as according to him said amount represented undisclosed income.
8.1. The addition was made pursuant to a search and seizure operation, which took place at the respondent/assessee's premises on 12.01.2012 and 11.09.2013.
9. The record also shows that notices under Section 153A of the Act were issued on 08.07.2013 and 25.11.2014.
10. The record further discloses that on 23.03.2016, the assessment qua aforementioned AY under Section 153A was completed vis-`a-vis the respondent/assessee.
11. The assessed income of the respondent/assessee, after making an addition of Rs.3,50,00,000/- under Section 68 of the Act, was pegged at Rs.7,89,74,840/-.
12. Prior to the aforementioned assessment, the scrutiny assessment, was completed on 23.12.2010. The assessment order, as indicated above, was framed under Section 143(3) of the Act.
13. Given this position, the Tribunal concluded that since no incriminating material was found, the reassessment proceedings under Section 153A of the Act could not have been triggered without the discovery of such material qua the respondent/assessee. This aspect is captured, inter alia, in paragraphs 9 and 10 of the Tribunal's order. For the sake of convenience, the same are extracted hereafter:
"9. From the above, it can be concluded that, once a search takes place u/s 132 of the Act, the assessee is obliged to file returns for the six assessment years immediately proceeding the previous year relevant to the assessment year in which the search took place. Insofar as the completed assessment as on the date of the search are concerned, the same are to be repeated as increased by additions, only if, based on incriminating material found during the course of search. In other words, if no incriminating material is found during the course of search, then, the amount of total income determined under the earlier completed assessments is to be adopted in fresh assessments u/s 153A without making any further addition.
10. Juxtaposing these principles to the facts of the instant case, we find that the case of the assessee doesn't fall under the category of abated assessment. It falls under the category of completed assessments. In the completed assessment, it is an admitted position that if no incriminating material was found during the search, no addition is called for. In the instant case too, no incriminating material was found with regard to the addition made by the Assessing Officer."
[Emphasis is ours]
14. In our opinion, the Tribunal has taken the correct view. Sans the incriminating material, no addition could have been made by the AO with regard to the AY in issue, as it was a case of completed assessment.
14.1. This issue stands covered by the judgment rendered by the coordinate bench of this court in CIT vs. Kabul Chawla, (2016) 380 ITR 573. This judgment has received the imprimatur of the Supreme Court in Principal Commissioner of Income Tax vs. Abhisar Buildwell, (2023) SCC Online SC 481.
15. Given the aforesaid, no substantial question of law arises for consideratio
In the absence of incriminating material, no addition can be made by the Assessing Officer in a case of completed assessment under Section 153A of the Income Tax Act, 1961.
The main legal point established in the judgment is that additions under Section 153A of the Income Tax Act cannot be made without incriminating material gathered during the search, and completed ass....
Assessments under Section 153A of the Income Tax Act cannot be made without incriminating material found during a search, validating the deletion of additions based on lack of evidence.
Income assessments under Section 153A cannot be revised without incriminating evidence discovered during a search.
In the absence of incriminating material found during a search, completed assessments under Section 153A cannot be revisited, as upheld by prior judicial decisions.
In the absence of incriminating material found during a search, a completed income assessment cannot be arbitrarily altered under the Income Tax Act.
Assessment under Section 153a can only be made on the basis of seized material and no addition can be made under Section 153a if the assessment had attained finality prior to the date of search and n....
The requirement of incriminating material for making additions under Section 153A of the Income Tax Act, 1961, and the distinction between abated and non-abated assessments.
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