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Income Tax Appellate Tribunal, DELHI BENCH “C” NEW DELHI
Before: SHRI AMIT SHUKLA & SHRI B.R.R. KUMAR
PER AMIT SHUKLA, J.M.: The aforesaid appeal has been filed by the assessee against the impugned order dated 05.09.2017 passed by Commissioner of Income Tax (Appeals), Karnal for the quantum of assessment passed u/s.153A r.w.s. 143(3) for the Assessment Year 2008-09. In the grounds of appeal, the assessee has raised following grounds of appeal.
“1. That having regard to the fact and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in assuming jurisdiction and issuing of notice u/s 153A r.w.s. 153C of the Act, more so when the notice was issued in the name of non-existing entity. 2. That in any case and in any view of the matter, the assessment framed under section 153A(l)(b) of the Act, is bad in law and against the facts and circumstances of the case.
3. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of the Ld. A.O. in making disallowance of freight charges of Rs. 1,02,071/- u/s 37(1) of the Income Tax Act, 1961, that too in the proceedings u/s 153C of the Act, and more-so by alleging failure of the assessee to produce bills and vouchers.
4. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in making disallowance of Rs. 1,02,071/- is bad in law and against the facts and circumstances of the case.
5. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld Assessing Officer in passing the impugned order without giving adequate opportunity of being heard.”
At the outset, ld. counsel for the assessee submitted that only addition made by the Assessing Officer is on account of disallowance of freight charges of Rs.1,02,071/- which is beyond the scope and ambit of 153A/153C proceedings. Here in this case, search and seizure operation was conducted at various premises of SRS Group and proceedings u/s.153A r.w.s. 153C was initiated by issuance of notice dated 18.09.2014. On the date of search, the assessment for Assessment Year 2008-09 was unabated in terms of proviso to Section 153A, and therefore, no addition could have been made without any incriminating or seized material. Here in this case, the Assessing Officer has made disallowance of freight charge which is not based on any incriminating material or document, and therefore, in view of the decision of Hon’ble Delhi High Court in the case of CIT vs. Kabul Chawla, 380 ITR 573 (Del.), no addition could have been made, the finding of the ld. CIT(A) in paragraph 4.3 disregarded the judgment of Hon’ble Jurisdictional High Court in the case of Kabula Chawla (supra) is not justified.
On the other hand, ld. counsel has strongly relied upon the order of the Assessing Officer and Ld. CIT(A).
On perusal of the impugned order, we find that at the time of search admittedly the assessment for Assessment Year 2008-09 had attained finality and is to be reckoned as unabated assessment in terms of proviso to Section 153A. Now it is a well settled law by various judgment of Hon’ble Jurisdictional High Court in the case of Kabul Chawla (supra) and CIT vs. Meeta Gutgutia reported in 395 ITR 526 (Del.) that no addition can be made whereby assessment have attained finality prior to the date of search and are unabated, no addition can be made without any incriminating material. Here, in this case, there is no reference by the Assessing Officer that any document or material was found with regard to freight charges of Rs.1,03,071/-. The Assessing Officer has made the addition on the ground that the assessee has not provided any supporting bills and vouchers relating to freight bill charges. However, nowhere he has mentioned that there is any document found that these expenditure claimed by the assessee are bogus or non genuine.
5. Before ld. CIT(A), the assessee has relied upon the decision of Hon’ble High Court in the case of Kabul Chawla (supra) which has been turned down after observing as under:
“With regard to the reliance upon the decision of Kabul Chawla (supra) by the AR of the appellant, it is pertinent to note that unless the search would have been carried out, these details would not come to light and accordingly the reliance placed upon by the AR is not justified. Further, in this regard, different opinion has been taken by the Hon’ble Kerala High Court in dated 22.03.2016 differing from the decision of Kabul Chawla (supra).”
6. Since there are plethora of judgments of Hon’ble Delhi High Court and also other High Courts, principle laid down therein is favourable and would apply.
Moreover, it has been pointed out that in Assessment Year 2009-10 this Tribunal in assessee’s own case had decided exactly similar issue in the following manner.
“3. Facts relevant to adjudication of the case are that a search & seizure action in the case of SRS Group of companies was conducted on 09.05.2012. The notice u/s 153C in the case of the assessed was issued on 18.09.2014 for the assessment year 2009-10. It is an undisputable fact that the assessment year 2009-10 is not an abated assessment as per provisions of Section 153A.
4. The assessment for the assessment year 2009-10 has been completed u/s 143(3) vide order dated 26.12.2011.
The Assessing Officer made an addition on account of freight charges owing to the reason that the assessee has not produced the bills and the transactions are within the group companies.
In the background of the these facts that the regular assessment has already been completed u/s 143(3), the assessment has not been abated, the addition has not been made based on any incriminating material unearthed during the course of search or requisition of document or undisclosed income pertaining to the assessee found out during the search & seizure operation and in view of judgments in the case of CIT Vs Kabul Chawla 126 DTR 130 and CIT Vs Kurele Paper Mills Pvt. Ltd. 380 ITR 571 wherein it was held that the completed assessments cannot be interfered with by the AO while making the assessment u/s 153C in the absence of any incriminating material, the addition made by the AO is directed to be deleted.”
7.1 Accordingly, the addition of Rs.1,03,071/- is deleted.
In the result, the appeal of the assessee is allowed.
Order pronounced in the Open Court on 14th January, 2021