KARTIKAY NAYYAR,NEW DELHI vs. ACIT CENTRAL CIRCLE - 20, NEW DELHI

to 24/Del/2020 are five separate appeals by the assessee preferred against five separate orders of the CIT(A)-27, Delhi dated 18.10.2019, 16.10.2019, 16.10.2019, 16.10.2019 and 16.10.2019 for A.Y.2011-12 to 2015-16.

Since common grievance are involved in all these appeals with different quantum, all these appeals were heard together are disposed of by this common order for the sake of convenience and brevity.

The common grievance in respect of all these appeals relate to the addition made by the AO on account of foreign travelling expenses as unexplained expenditure u/s. 69 C of the Act in Assessment Order framed u/s. 153 A of the Act. 4. Briefly stated the facts of the case are that a search and seizure operation was conducted by the Investigation Wing of the Department on 18.11.2016 in Nayyar Group of cases. The assessee’s residential premises were also covered. Notice u/s. 153 A was issued and served upon the assessee in response to which the assessee filed his return of income. 5. During the assessment proceedings it came to the notice of the AO that the assesee has visited foreign countries. Accordingly he estimated the expenses and made the addition in the captioned assessment years. 6. Assessee challenged the assessment before the CIT(A) but without any success. 7. Before us the counsel for the assessee vehemently stated that since the search took place on 18.11.2016. The assessment years under consideration are completed assessment years and, therefore, any addition to be made u/s.153A of the Act has to be made on the basis of any incriminating material found at the time of search as held by the Hon’ble High Court of Delhi in the case of Kabul Chawla 380 ITR 573 and Meeta Gugutia in of 2017.

Per contra though the DR strongly supported the findings of the AO but could not controvert the fact that the impugned additions are de-hors incriminating material.

We have carefully considered the orders of the authorities below. The undisputed fact is that all the captioned assessment years are completed assessment since the date of search is 18.11.2016. It is not in dispute that the impugned additions are devoid of any incriminating material whatsoever found at the time of search. There is not even a whisper of any incriminating evidence found at the time of search basis which the AO made the addition. The ratio laiddown by the Hon’ble High Court of Delhi in the case of Kabul Chawla squarely apply on the facts of the case. The Hon’ble High Court concluded by holding as under :- “37. On a conspectus of Section 153 A(1) of the Act, read with the provisions thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under : i. Once a search takes place under Section 132 of the Act, notice under Section 153 A (1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise. iii. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs "in which both the disclosed and the undisclosed income would be brought to tax".

Finding parity of facts with the facts considered by the Hon’ble Delhi High Court in the case of Kabul Chawla (supra). We have no hesitation in directing the AO to delete the addition from all the captioned assessment years.

All the appeals under consideration are accordingly allowed. The order is pronounced in the open court on 21.06.2022.