PR. COMMISSIONER OF INCOME TAX (CENTRAL)- 2 vs. M/S KP POUCHES PVT. LTD

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ITA/643/2018HC DelhiDLHC01084147201828 May 2018Bench: HON'BLE MR. JUSTICE S. RAVINDRA BHAT,HON'BLE MR. JUSTICE A. K. CHAWLA2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that no substantial question of law arises from the ITAT's order. The ITAT had correctly applied the ruling in CIT vs. Kabul Chawla, (2016) 380 ITR 573. The principle established is that in search and seizure proceedings under Section 132 of the Income Tax Act, 1961, additions under Section 153A are permissible only if there is incriminating material found during the search. In the absence of such incriminating material, the additions made by the Assessing Officer based solely on inferences cannot be sustained. The Court upheld the ITAT's decision to cancel the amounts brought to tax, thereby affirming the relief granted to the assessee. The appeal filed by the Revenue was dismissed.

What were the facts?

The Principal Commissioner of Income Tax (Central)-2 (Revenue) appealed against the Income Tax Appellate Tribunal's (ITAT) order upholding relief granted to M/s KP Pouches Pvt. Ltd. (assessee) for Assessment Year 2007-08. The Assessing Officer had made additions based on inferences from search and seizure proceedings under Section 153A of the Income Tax Act, 1961. The Commissioner of Income Tax (Appeals) partially granted relief. Both parties appealed to the ITAT. The ITAT accepted the assessee's cross-objection and upheld the CIT(A)'s order regarding the cancellation of the amounts brought to tax. The ITAT's decision was based on the absence of incriminating materials seized during the search under Section 132, citing the precedent in CIT vs. Kabul Chawla.

What were the issues?

1. Whether the ITAT erred in upholding the cancellation of amounts brought to tax by the Assessing Officer, when such additions were based on inferences drawn from search and seizure proceedings under Section 153A of the Income Tax Act, 1961, in the absence of incriminating material seized under Section 132 of the Act. Assessee's contentions: The assessee argued, and the ITAT agreed, that in the absence of incriminating materials seized during the search proceedings under Section 132 of the Act, the additions made by the Assessing Officer under Section 153A were unsustainable. The ITAT relied on the ruling in CIT vs. Kabul Chawla, (2016) 380 ITR 573. Revenue's contentions: The Revenue's argument is implicitly that the additions were justified based on the inferences drawn from the search, and the ITAT's reliance on the absence of incriminating material was incorrect. No specific authorities or precedents were mentioned for the Revenue's arguments in the provided text.

Which sections of the Income-tax Act were involved?

Section 153A,Section 132

AI-generated summary — verify with the full judgment below

$~8 * IN THE HIGH COURT OF DELHI AT NEW DELHI + ITA 643/2018 & CM APPL. 22622/2018

PR. COMMISSIONER OF INCOME TAX (CENTRAL)- 2 ..... Appellant

Through: Mr. Zoheb Hossain, Sr. Standing Counsel for the Revenue.

versus

M/S KP POUCHES PVT. LTD

..... Respondent

Through:

CORAM: HON'BLE MR. JUSTICE S. RAVINDRA BHAT HON'BLE MR. JUSTICE A. K. CHAWLA

O R D E R %

28.05.2018

The Revenue questions orders of the Income Tax Appellate Tribunal (ITAT) which had upheld the relief granted to the assessee for Assessment Year 2007-08. The amounts were added by the Assessing Officer on the basis of inferences drawn in the course of search and seizure proceedings, pursuant to notice under Section 153A of the Income Tax Act, 1961 (hereafter ‘the Act’).

The CIT(A), whom the assessee approached, partially granted relief. Both parties approached the ITAT which accepted the assessee’s cross-objection and upheld the CIT(A)’s order with respect to cancellation of the amounts brought to tax. The ITAT ruled – correctly in the opinion of the Court – that in the absence of incriminating materials seized in the search proceedings under Section 132 of the Act, the amounts could not have been brought to

tax as they were in the present case; the ITAT applied the ruling in CIT vs. Kabul Chawla, (2016) 380 ITR 573.

No substantial question of law arises. The appeal is dismissed along with the pending application.

S. RAVINDRA BHAT, J

A. K. CHAWLA, J MAY 28, 2018 nn

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