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Income Tax Appellate Tribunal, DELHI BENCH: ‘F’, NEW DELHI
Before: SHRI BHAVNESH SAINI & SHRI O.P. KANT
ORDER PER O.P. KANT, AM:
This appeal by the revenue has been preferred against order dated 25/10/2016 passed by the learner CIT(Appeals)-28, New Delhi [in short the Ld. CIT(A) for assessment year 2008-09, raising following grounds:
1. That the Ld. CIT(A) has erred in law and on facts in holding that no additions could have been made as no incriminating material suggesting earning of any undisclosed income was unearthed during the search operation.
2. That the Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs.7,70,00,000/- (Actual amount as per Balance Sheet/P&L Account is Rs.8,70,00,000/- but wrongly mentioned in assessment order/appellate order as Rs.7,70,00,000/-) made on account of unexplained cash deposits u/s 68 of the Act, without property appreciating the facts and circumstances of the case.
3. (a) The order of the CIT(Appeals) is erroneous and not tenable in law and on facts. (b) The appellant craves leave to add, alter or amend any/all of the grounds of appeal before or during the course of hearing of the appeal.
2. Briefly stated facts of the case are that in the case of the assessee, a search and seizure operation under section 132 of the Income-tax Act, 1961 (in short ‘the Act’) was carried out by the Investigation Wing of the Income-Tax Department on 20/01/2014 along with other cases of the “Sharp Group”. Consequent to the search proceeding, the Assessing Officer issued notice under section 153A of the Act and completed assessment on 31/03/2016 under section 153A read with section 143(3) of the Act after making addition of ₹ 7,70,00,000/- as income from undisclosed sources under section 68 of the Act and addition of interest on FDR of ₹ 7,41,764/-. On further appeal, the Ld. CIT(A) following the decision of the Hon’ble Delhi High Court in the case of CIT Vs Kabul Chawla, 126 DTR 130, held that no addition could have been made in the instant case in view of non-abated case and no incriminating material found during the course of the search, accordingly deleted both the additions. Aggrieved with the additions deleted by the Ld. CIT(A), the Revenue is in appeal before the Tribunal raising the grounds as reproduced above.
We have heard the rival submission of the parties on the issue in dispute and perused the relevant material on record. We find that the Ld. CIT(A) has deleted the addition of unexplained cash credit under section 68 of the Act on the ground that assessment for the year under consideration had been already completed before the date of the search and no incriminating material has been found in the course of the search and this issue in dispute was squarely covered by the decision of the Hon’ble Delhi High Court in the case of CIT versus Kabul Chawla. The relevant finding of the Ld. CIT(A) is reproduced as under: “4.1 Ground No. 1 to 1.2 taken by the appellant is that the AO while making the assessment under Section 143A can make addition only on the basis of some incriminating material unearthed during the course of search and that routine addition on account of issues not related or emigrated from the search proceeding cannot be made in the search assessment order passed. The A.O has duly considered the issue and has held that section 153A does not restrict the assessment or reassessment only to incriminating documents seized.
4.2 I have considered the fact of the case, finding of the assessing officer and the submission of the L.d A.r.. In this case the A.O has made addition of Rs. 7.70 Crores under section 68 of the Act , whereas in the earlier assessment order passed under section 143(3) of the Act, the cash creditors were accepted to be genuine. Further it has been held that the interest income from the FDR has to be treated as Income from other sources whereas in the earlier assessment order the same was treated as business receipts. It is settled legal position after the decision of the HonTile Jurisdictional High Court in the case of CIT V Kabul Chawla order dated 28.08.2015 , that no addition can be made to the income already assessed if no incriminating material was unearthed during the search. Even in those cases where the assessment had been completed under summary scheme under section 143(1) and time limit for issue of notice under section 143(2) had expired on the date of search, it will be considered that there was no assessment pending. Therefore, addition could be made only on the basis of incriminating material found during search.
4.3 The issue in question was considered by the Hon’ble jurisdictional High Court order in case of CIT V Kabul Chawla 61 Taxmann.com 412 (Delhi) . On a conspectus of Section 153A(1) of the Act, read with the provisos 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.”
Before us, the learned DR could not controvert that no assessment was pending on the date of the search and no incriminating material has been found during the course of the search qua the addition made. This issue in dispute being a squarely covered by the decision of the Hon’ble Delhi High Court in the case of Kabul Chawla (supra), we do not find any infirmity in the order of the Ld. CIT(A) on the issue in dispute and accordingly we uphold the same. The grounds of the appeal of the Revenue are accordingly dismissed.
In the result, the appeal of the Revenue is dismissed. Order pronounced in the open court on 17th March, 2020.