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Income Tax Appellate Tribunal, DELHI BENCH “D”: NEW DELHI
Before: MS. SUCHITRA KAMBLE & SHRI PRASHANT MAHARISHI
(Del) of 2016 for assessment year 2008-09 is filed by the ld. Dy. Commissioner of Income Tax against the order of the ld. Commissioner of Income Tax (Appeals)-30, New Delhi, raising following grounds of appeal:-
“(a) On the facts and in the circumstances of the ease, the Ld. C1T(A) had erred in law and on facts in directing the AO to delete additions made on account of client code modification, disallowance u/s 37 of the Act, disallowance u/s 40a(ii), disallowance u/s 14A of the Act and shifting of income under Pro Trading. (b) On the facts and in the circumstances of the ease, the Ld. C'1T(A) had erred in law and on facts by relying on the decision in the case of Sh. Kabul Chawala b\ the jurisdictional High Court which has not been accepted by the department and SLP against the same has been filed before Hon’ble Supreme Court. Page | 1
(c) On the facts and in the circumstances of the ease, the Ld. CIT(A) had erred in law and on facts in arriving at the conclusion that the words ‘total income’ as used in Section 153A would only mean undisclosed income discovered from seized / incriminating material. (d) On the facts and in the circumstances of the case, the Ld. CIT(A) had erred in law and on facts in adopting a restrictive and pedantic interpretation of the scope of assessment u/s 153 A r.w.s.l53C of the Act. (e) On the facts and in the circumstances of the ease, the Ld. CIT(A) had erred in law and on facts in arriving at the conclusion that the words ‘total income’ as used in section 153A would only mean income unearthed during search when the decision of the Hon’ble High Court of Karnataka in the case of Canara Housing Development Company Vs. DCIT dated 09-08-2014 has held that total income includes income unearthed during search and any other income. (f) That the order of the C1T(A) is perverse, erroneous and is not tenable on facts and in law. (g) That the grounds of appeal are w ithout prejudice to each other. (h) That the appellant craves leave to add, amend, alter or forgo any ground(s) of appeal either before or at the time of hearing of the appeal.”
Further (Del) of 2016 is also filed by the Assessing Officer for assessment year 2009-10 against the order of the ld. Commissioner of Income Tax (Appeals)-30, New Delhi, dated 17.03.2016 raising following grounds of appeal:-
“(a) On the facts and in the circumstances of the case, the Ld. CIT(A) had erred in law and on facts in directing the AO to delete additions made on account of client code modification, disallowance u/s 37 of the Act, disallowance u/s 40a(ii) and disallowance u/s 14A of the Act. (b) On the facts and in the circumstances of the case, the Ld. CIT(A) had erred in law and on facts by relying on the decision in the case of Sh. Kabul Chawala by the jurisdictional High Court which has not been accepted by the department and SLP against the same has been filed before Hon’ble Supreme Court. (c) On the facts and in the circumstances of the case, the Ld. CIT(A) had erred in law and on facts in arriving at the conclusion that the words 'total income’ as used in Section 153A would only mean undisclosed income discovered from seized / incriminating material. (d) On the facts and in the circumstances of the case, the Ld. CIT(A) had erred in law and on facts in adopting a restrictive and pedantic interpretation of the scope of assessment u/s 153A r.w.s.l53C of the Act.
(e) On the facts and in the circumstances of the case, the Ld. CIT(A) had erred in law and on facts in arriving at the conclusion that the words 'total income' as used in section 153A would only mean income unearthed during search when the decision of the Hon'ble High Court of Karnataka in the case of Canara Housing Development Company Vs. DCIT dated 09-08-2014 has held that total income includes income unearthed during search and any other income. (f) That the order of the CIT(A) is perverse, erroneous and is not tenable on facts and in law. (g) That the grounds of appeal are without prejudice to each other. (h) That the appellant craves leave to add, amend, alter or forgo any ground(s) of appeal either before or at the time of hearing of the appeal.”
Brief facts of the case shows that for assessment year 2008-09 the assessee company filed its return of income on 30.09.2008 showing taxable income of Rs.21,50,25,602/-. Search on Arora Group took place on 18.01.2008 and proceeding under Section 153A of the Income Tax Act, 1961 (the Act) was initiated. Subsequently assessment was completed u/s 143(3) of the Act on 31.12.2009 determining total income of the assessee at Rs.21,66,89,670/-. Further on 30th March, 2012 search u/s 132 of the Act was conducted on J.P. Group. This group is engaged in the business of trading in equity, commodity derivatives etc. Therefore, notice u/s 153A of the Act was issued on 5.08.2013. Assessee filed its return of income on 2.09.2013 declaring taxable income of Rs.21,50,25,602/-. Assessment u/s 153A of the Act was passed on 30.03.2015 determining total income of Rs.64,51,80,340/-.
For assessment year 2009-10 also notice u/s 153A of the Act was issued. The return of income was filed on 15.03.2010 declaring income of Rs.26,27,38,510/- which was assessed u/s 143(3) of the Act on 23.12.2011 at same income. The assessment order u/s 153A of the Act was passed on 30.03.2015 determining total income of Rs.61,37,60,920/-.
Both these appeals were filed before the ld. CIT (Appeals). The ld. CIT (Appeals) found that at the time of search no assessment was abated and, therefore, the addition should be based on any incriminating document. He found that none of the additions are based on incriminating documents. Therefore, respectfully following the decision of Hon’ble Delhi High Court in CIT Vs. Kabul Chawla 61 taxmann.com 412 (Del.) he allowed the appeals. Even on the merits, he allowed the appeal of the assessee.
Therefore, Revenue is in appeal before us. The major ground of the appeal of the Revenue is that the ld. CIT (Appeals) has erred in relying on the decision of CIT Vs. Kabul Chawla (supra) for deleting the above addition. This decision of the Hon’ble Delhi High Court has not been accepted by the Revenue and SLP is pending before the Hon’ble Supreme Court. The learned [CIT]–DR also relied the same.
The learned Authorized Representative submitted that though the decision might not have been accepted by the Revenue, the assessee is entitled to rely upon the same. He submitted a detailed note on the issue.
We have carefully considered the rival contention and perused the orders of the lower authorities. Admittedly for both the years at the time of search i.e. on 30th March, 2012 assessment years 2008-09 and 2009-10 both were not pending assessments, but are concluded assessments. In case of completing assessments addition can only be made on the basis of incriminating material found during the course of search. In the present case the several additions made by the learned Assessing Officer were not shown to be made on any incriminating material found during the course of search. Even before us the learned [CIT]–DR could not show us that incriminating material based on which above additions have been made. The ld. CIT (Appeals) has deleted the addition relying upon the decision of the Hon’ble Delhi High Court in CIT Vs. Kabul Chawla 380 ITR 573 (Del). On careful perusal of para No. 37 of that decision as well as finding of the learned CIT (Appeals) we are of the view that in absence of any incriminating material qua the respective additions shown by the Revenue he has rightly deleted the addition. In view of this, both these appeals on all the grounds, filed by the learned Assessing Officer, are dismissed.
Order pronounced in the open court on : 30/01/2020.