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Income Tax Appellate Tribunal, “C” BENCH, DELHI
Before: MS. MADHUMITA ROY & SHRI NAVEEN CHANDRA
order passed by the Ld. CIT(A)-3, Gurgaon of different dates arising out of the orders passed by the DCIT, Central Circle, Karnal under Section to 1893/Del/2021 Kaushal Mittal Vs. DCIT, CC (AYs. 2011-12, 2012-13, 2014-15 & 2015-16)
143(3) read with section 153A(1)\(b) of the Income Tax Act, 1961 (hereinafter referred as “Act”) for assessment years 2011-12, 2012-13, 2014-15 & 2015-16 respectively. Since the issues involved in these appeals are inter-connected, hence, the appeals were heard together and disposed of by this common order for the sake of convenience, by dealing with the facts of the assessment year 2011-12, as a lead case.
The brief facts of the case are that a search and seizure operation under Section 132 of the Act was conducted at the business premises of M/s Vishnu Group of Cases, Kaithal and residential premises of its Directors on 12.01.2017. The assessee’s case was also covered under Section 132 of the Act. The case of the assessee was centralized by an order dated 24.9.2018 passed under Section 127 of the Act by the PCIT, Karnal. Thereafter, statutory notices under Section 153A of the Act was issued to the assessee on 27.9.2018 for filing the return of income for the year under consideration. The assessee has e-filed his return of income on 18.10.2018 declaring total income of Rs. 3,76,950/-. After complying the statutory obligations the assessment was finalized by making addition on account of undisclosed income to the tune of Rs. 10 lacs which was in turn confirmed by the Ld. First Appellate Authority. Hence, the instant appeal is before us. to 1893/Del/2021 Kaushal Mittal Vs. DCIT, CC (AYs. 2011-12, 2012-13, 2014-15 & 2015-16)
Relevant to mention that during the course of assessment proceedings, as per balance sheet of one M/s Indian Treat Ltd., assessee had made an investment of Rs. 10 lacs in the year under consideration in share capital and share premium of the said company.
The required documents and the source of such investments was directed to be furnished by the Assessee. Further, show cause as to why the said amount of Rs. 10 lacs would not be added in the hands of the assessee also issued and in response thereto the assessee replied that investment of Rs. 10 lacs with M/s India Treat Ltd. was made in the form of share capital and the same is also appearing in the balance sheet of M/s Kushal Impex for the year under consideration, copy thereof was duly submitted before the AO. Further that the copy of the ledger account of the said party namely Indian Treat Ltd., share account shown in Kushal Impex books was also furnished before the AO, in order to establish this particular fact that the investments so made by the assessee was duly disclosed in equity shares capital of Indian Treat Ltd. However, this particular case made out by the assessee was not found to be tenable, as the ledger account of India Treat Ltd. though filed, but not supported by the bank accounts statement, neither the assessee furnished the source of Rs. 10 lacs claimed to have been transferred to M/s Indian Treat Ltd.. Hence, treating the same as undisclosed to 1893/Del/2021 Kaushal Mittal Vs. DCIT, CC (AYs. 2011-12, 2012-13, 2014-15 & 2015-16) investment in the hands of the assessee, addition under Section 69 of the Act was made.
At the time of hearing of the instant appeal, Ld. Counsel appearing for the assessee joins issue here to this fact that it is a settled principle of law that the assessment made under Section 153A in respect of unabated year of assessment could only be made on the basis of incriminating material found and / or seized during the course of search, which is absolutely absent in the case in hand. No reference of incriminating material has been made by the AO while making additions in the hands of the assesse and therefore, relied upon the judgement passed by the Hon’ble Supreme Court of India in the case of Abhisar Buildwell passed CA No. 67580 / 2021 dated 24.4.2023, (2023) SCC Online SC 481and Hon’ble Delhi High Court in the case of CIT vs Kabul Chawla, reported as 380 ITR 573. The Ld. Counsel appearing for the assessee prayed for quashing of the assessment order, for lack of jurisdiction.
Per contra, Ld. DR relied upon the orders of the authorities below.
We have heard the rival submissions made by the respective parties. We further perused the records, materials placed before us to 1893/Del/2021 Kaushal Mittal Vs. DCIT, CC (AYs. 2011-12, 2012-13, 2014-15 & 2015-16) including the orders passed by the Hon’ble Supreme Court of India in the case of PCIT vs. Abhisar Buildwell passed in Civil Appeal No. 6580 of 2021. It appears from the assessment orders passed by the AO that admittedly no reference has been made by the AO while making addition of Rs. 10 lacs in the hands of the assessee under Section 69 of the Act.
Rather, the said investigation made by the assessee was duly recorded in the books of account maintained by the assessee. Having regard to this particular aspect of the matter, factually we are satisfied that the assessment order was finalized by making additions in hands of the assessee, is without jurisdiction particularly, in view of the ratio laid down in judgements passed by the Hon’ble Supreme Court in the case of PCIT vs. Abhisar Buildwell (Supra), Hon’ble Delhi High Court in the case of CIT vs. Kabul Chawla (Supra) and Hon’ble Gujarat High Court in the case of Saumya Construction (P.) Ltd, that in case no incriminating material is found during the course of search, the AO cannot assess or reassess taking into consideration the other material in support of complete assessment / unabated assessment. As no reference of any incriminating material has been made by the AO in the order of assessment impugned before us, it appears that no incriminating material has been found by the Revenue in order to justify the additions against the assessee. Hence, respectfully following the ratio laid down to 1893/Del/2021 Kaushal Mittal Vs. DCIT, CC (AYs. 2011-12, 2012-13, 2014-15 & 2015-16) by the Hon’ble Supreme Court of India in the case of Abhisar Buildwell (Supra), we find that the impugned order of assessment before us is not sustainable in the eyes of law the same is thus, liable to be quashed with the aforesaid observations. We therefore, quash the impugned assessment made by the AO.
Having regard to identical facts and circumstances of the other three appeals, the order passed hereinabove will apply mutatis mutandis.
In the result, all the 04 appeals filed by the assessee are allowed.
Order pronounced in the open court on 21.02.2025