SH. SANDEEP WADHWA,NEW DELHI vs. DCIT, NEW DELHI

The Ld. authorised representative submitted that this ground challenges the jurisdiction assumed by the assessing 4 & 5478/D/2014 Assessment year 2007-08 officer as no additions could have been made under section 153A of the Income Tax Act, 1961 since no incriminating material had been found during the course of search. It was submitted that the date of search is 19/10/2010 and thus the search year is financial year 2010 – 11 and the year under consideration was assessment year 2007 – 08. Our attention was drawn to pages 1 and 2 of the paper book which contain copy of computation of income and acknowledgement of return showing that the return of income was filed on 31/03/2008 under section 139 (4) of the Income Tax Act, 1961 and, thus, which had attained finality on 31/03/2009. It was further submitted that perusal of the assessment order would show that all the three additions were made in absence of any incriminating material having been found during the course of search upon the assessee. Our attention was drawn to pages 3 and 4 of the paper book which is assessee’s reply dated 23/10/2012 filed before the assessing officer pointing out that no incriminating document or material was found or seized which was relevant to the year under consideration and as such the assessment should not be disturbed. It was also submitted that this plea was also taken before the Ld. CIT (Appeals) and our attention was drawn to pages 116 to 120 of the ITA No. 5185/D/2014 & 5478/D/2014 Assessment year 2007-08 paper book wherein a request for deleting the disallowances/additions in absence of any incriminating material was made. It was also submitted that the Ld. CIT (Appeals) had called for a remand report from the AO wherein the assessing officer had accepted that no incriminating material had been found during the course of search. Our attention was invited to pages 6 to 9 of the impugned order wherein the remand report dated 16/06/2014 has been reproduced and wherein at page 7 it has been observed by the AO that he was free to make addition even in absence of any incriminating material. The Ld. authorised representative submitted that the Ld. first appellate authority had decided this issue against the assessee by holding that additions can be made under section 153A of the Income Tax Act, 1961 even in absence of incriminating material. It was submitted that the Hon’ble Delhi High Court in the cases of CIT versus Best Infrastructure (India) Private Limited in ITA No. 13/2017, Principal CIT versus Meeta Gutgutia and Others reported in 99 CCH 24 and CIT versus Kabul Chawla reported in 380 ITR 573 had held that any additions made under section 153A de hors any incriminating material was contrary to law. It was also submitted that ITAT Delhi bench in assessee’s own case for ITA No. 5185/D/2014 & 5478/D/2014 Assessment year 2007-08 assessment year 2006 – 07 had allowed the assessee’s appeal on identical facts and following the judgement of the Hon’ble Delhi High Court in the case of CIT versus Kabul Chawla (supra) in vide order dated 21st of January 2016. It was submitted that in view of the legal precedents as well as the undisputed fact that no incriminating material was found during the course of search, the impugned order was liable to be quashed.

In her rival submissions, the Ld. CIT DR, although supported the orders of the authorities below, could not controvert the aforesaid contentions of the Ld. authorised representative for the assessee.

We have considered the submissions of both the parties and have also perused the material on record. It is seen that ITAT Delhi has allowed the assessee’s appeal for assessment year 2006 – 07 in on identical facts and by following the ratio laid down by the Hon’ble jurisdictional High Court in the case of CIT versus Kabul Chawla (supra). During the course of arguments before us, the Department could not point out any distinguishing fact in the year under appeal. It is also seen that the Hon’ble jurisdictional High Court has reiterated the ratio laid 7 ITA No. 5185/D/2014 & 5478/D/2014 Assessment year 2007-08 down in CIT versus Kabul Chawla (supra) in the cases of Principal CIT versus Best Infrastructure (India) Private Limited (supra) and Principal CIT versus Meeta Gutgutia and Others (supra). Therefore, on an overall consideration of the facts as well as the settled judicial precedent, we allow the legal ground taken up by the assessee and hold that the assessment framed under section 153A, in absence of any incriminating material found during the course of search, is bad in law and cannot be sustained.

In the final result the appeal of the assessee is allowed whereas the appeal of the Department stands dismissed.