DCIT, NEW DELHI vs. SH. GAURAV ARORA, NEW DELHI

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ITA 2032/DEL/2016Status: DisposedITAT Delhi15 November 2017AY 2009-103 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that since the original assessment was completed prior to the search and no incriminating material was found during the search, the addition made under section 2(22)(e) was not sustainable. The decision of the Delhi High Court in CIT vs. Kabul Chawla was relied upon.

What were the facts?

The assessee's original assessment was completed before a search action. Subsequently, a notice under section 153A was issued, and the Assessing Officer made an addition on account of deemed dividend. The assessee contended that the addition was not based on any incriminating material found during the search.

What were the issues?

Whether additions can be made under section 153A in the absence of incriminating material found during a search, when the original assessment was already completed.

Which sections of the Income-tax Act were involved?

Section 153A,Section 2(22)(e),Section 132

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, DELHI BENCH “B”, NEW DELHI

Before: SH. BHAVNESH SAINI & SH. L. P. SAHU

For Respondent: Ms. Rachna Singh, CIT DR, Ms. Rano Jain, CA
Hearing: 15.11.2017
1.

This appeal by revenue has been directed against the order of Ld. CIT(A)–XXX, New Delhi, dated 22.01.2016 for assessment year 2009-10.

2.

Briefly the facts of the case are that original return of income was filed on 15.03.2010 declaring income at Rs. 1,07,26,905/-. The case was selected for scrutiny and notice u/s 143(2) was issued on 01.09.2010. Assessment u/s 143(3) was completed vide order dated 13.12.2011 at returned income of Rs. 1,07,26,905/-. Subsequently, search and seizure action u/s 132 of the Act took place on 30.03.2012 and notice u/s 153A was issued on 05.08.2013. In response to the notice u/s 153A, return of income was filed on 06.09.2013, declaring total income at Rs. 1,07,26,905/-. Assessment u/s 153A was completed vide order dated 31.03.2015 at total income of Rs. 19,06,41,600/- after making addition on account of deemed dividend u/s 2(22)(e) of the IT Act of Rs. 17,19,14,701/-. The assessee challenged the validity of the assessment and above addition before Ld. CIT(A). The assessee apart from making various submissions submitted that addition u/s 2(22)(e) of the Act as deemed dividend would not be made in the hands of the assessee in the absence of incriminating documents found during the search and seizure action. The Assessee relied upon the decision of Delhi High Court in the case of CIT Vs. Kabul Chawla 380 ITR 573. 3. Ld. CIT(A) considering explanation of the assessee found that since original assessment u/s 143(3) was completed on 13.12.2011 prior to the search therefore, assessment was completed and no assessment was pending on the date of search. It was also found the addition made by the AO is not based on any incriminating documents/seized material found during the search and seizure action u/s 132 of the Act on 30.03.2012. Ld. CIT(A), therefore, found that since no assessment was pending at the time of initiation of action u/s 132 on 30.03.2012 and also addition u/s 2(22)(e) of the IT Act is not based on any incriminating documents, therefore, issue is covered against the revenue by judgment of Hon’ble Delhi High Court in the case of CIT vs Kabul Chawla (supra), the appeal of the assessee was accordingly allowed. 4. After considering the rival contention, we are of the view the issue is covered in favour of the assessee by judgment of Hon’ble Delhi High Court in the case of CIT vs Kabul Chawla (supra) in which it was held :

IT: Completed assessments can be interfered with by Assessing Officer while making assessment under section 153A only on the basis of some incriminating material unearthed during the course of search which was not produced or not already disclosed or made known in course of original assessment.

5.

Since in this case, original assessment was completed on the date of search and no incriminating material was found during the course of search to make addition u/s 2(22)(e) of the IT Act, Ld. CIT (A) correctly deleted the addition. In the result, appeal of the revenue is dismissed. Order pronounced in the open court on 17.11.2017. Sd/- Sd/- (L. P. SAHU) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER Date: 17.11.2017 @m!t

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