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Facts
The assessee filed a NIL income return for AY 2011-12. Following search and seizure operations, the AO completed the assessment under Section 153A/143(3) making significant additions. The Ld. CIT(A) quashed this assessment, holding that since no incriminating documents were found during the search for the relevant year, the assessment under Section 153A was without jurisdiction, relying on Delhi High Court precedents. The Revenue appealed this order.
Held
The Tribunal determined that the assessment year was an abated assessment year, a point not disputed by the assessee's representative. Consequently, the CIT(A) erred in quashing the assessment order solely on the basis of a lack of incriminating material, thus allowing Ground 1 of the Revenue's appeal. As the CIT(A) had not addressed the merits of the disallowances, the Tribunal remanded the case back to the AO for a de novo assessment on these remaining issues (Grounds 2 to 9), which were allowed for statistical purposes.
Key Issues
Whether the CIT(A) was correct in quashing an assessment under Section 153A for an abated assessment year due to the absence of incriminating documents found during a search. And whether the matter should be remanded to the AO for a fresh assessment on the merits of the disallowances.
Sections Cited
143(3), 153A, 127, 139, 144, 143(1), 143(2), 142(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH, F: NEW DELHI
Before: SHRI CHALLA NAGENDRA PRASAD & SHRI BRAJESH KUMAR SINGH
Date of Hearing 08.10.2025 Date of Pronouncement 31.12.2025 ORDER
PER BRAJESH KUMAR SINGH, AM,
This appeal has been preferred by the Revenue against the order of the Ld. Commissioner of Income Tax (Appeals)- XXVI, New Delhi, [hereinafter referred to as the ‘Ld. CIT(A)] dated 24.01.2017 pertaining to Assessment Year 2011-12, arising out of Assessment order dated 30.03.2015 passed under Section 143(3)/ 153A of the Income-tax Act, 1961(hereinafter referred to as ‘the Act’) passed by the ACIT, CC- 14, New Delhi (hereinafter referred to as ‘the AO’).
ITA No.- 1974/Del/2017 Sandur Bypass Projects Pvt. Ltd.
This appeal was earlier dismissed by the Tribunal vide order dated 28.08.2019 in on account of low tax effect. This appeal of Revenue figured at Sr. no. 88 of the list in the said order. Subsequently, on a Miscellaneous Application (M.A.) filed by the Department, the appeal was recalled by the Tribunal vide order dated 06.12.2023 in M.A. No. 71/Del/2020, wherein it was noted that the tax effect in this case was Rs. 89,42,259/-.
Brief facts of the case: The Assessee filed its return of income declaring NIL income on 20.12.2006. Search & Seizure operations were carried on 28.08.2012 on DSC Group including the assessee. The group during the year was engaged in the infrastructural development in India and abroad and carried its operation on BOT (Build Operate & Transfer) basis. The AO noted that the search operations were carried as the group was involved in heavy cross border transactions and funds have been channelized from the entities registered in abroad. This case was centralized with central circle- 14 by an order u/s 127 of the Act, vide CIT-III/Delhi/Cent./2013- 14/250 Dt. 23.04.2013. Notice under section 153 A was issued to the assessee on 04.06.2014. Vide letter dated 08.07.2014, assessee replied that the return filed on 29.09.2011 u/s 139 of the Act be deemed to be the return in compliance of notice u/s 153A of the Act.
3.1 The AO noted that the assessee remained non-compliant during the assessment proceedings and filed its submissions in the DAK on 12.03.2015, in 2
ITA No.- 1974/Del/2017 Sandur Bypass Projects Pvt. Ltd. response to the show cause notice issued u/s 144 of the Act dated 11.02.2015. The AO completed the assessment u/s 153A /143(3) on 30.03.2025 at a total income of Rs. 66,53,770/- as against the returned loss of Rs. 3,42,52,056/. The AO made disallowances amounting to Rs. 2,75,98,286/- as per the details in the assessment order.
Aggrieved with the said order, the assessee filed an appeal before the Ld. CIT(A). Before the Ld. CIT(A), the assessee raised a legal issue that since no incriminating document was seized during the course of search operation, no addition could be made to already completed assessment. The Ld. CIT(A) relying upon various decisions including the decision of the Hon’ble Delhi High Court in the case of CIT vs. Kabul Chawla 380 ITR 573 and in the case of CIT vs. MGF Automobiles Ltd. order dated 13.08.2015, held that the AO could not have proceeded to frame the assessment u/s 153A for the year under consideration, as no incriminating documents / assets were found during the search operation pertaining to this year. Accordingly, the Ld. CIT(A) held that the assessment framed was held to be without jurisdiction and allowed the legal ground of the assessee. In view of this fact, the Ld. CIT(A) did not adjudicate the other grounds of appeal, treating them as academic.
ITA No.- 1974/Del/2017 Sandur Bypass Projects Pvt. Ltd. 5. Aggrieved with the said order, the Revenue is in appeal before us on the following grounds of appeal:
“ 1. On the facts and in the circumstances of the case, the CIT(A) has erred in law in holding that the AO could not have proceeded to frame assessment u/s 153A of the Act as no incriminating documents/assets were found during the search without appreciating that the provision of section 153A of the Act does not stipulates any such conditionality.
2. On the facts and in the circumstances of the case, the CIT(A) has erred in law in allowing the appeal of the assessee without independently verifying the facts of the case, being a fact finding authority as mandated by the Delhi High Court in the case of CIT Vs Jansampark Advertising.
3. The CIT(A) has erred on facts and in law in deleting the Rs.8,83,058/- by reworking the amount of amortization for Rs.92,45,263 as against Rs. 1,01,28,321/-addition of phase II at addition of 4. The CIT(A) has erred on facts and in law in deleting the Rs.43.66.334/- by reworking the amount of amortization for Phase-1 at Rs.1,21,91,408/- as against Rs. 1,65,57,742/-.
The CIT(A) has erred on facts and in law in deleting the addition of Rs.7,53,28/- on account of non producing of bills for fixed assets. addition of 6. The CIT(A) has erred on facts and in law in deleting the Rs. 1,83,703/- on account of gratuity & leave encashment debited to Profit & Loss account.
7. The CIT(A) has erred on facts and in law in deleting the addition of Rs. 14,23,174 by disallowing 50% of legal & Professional debited to Profit & Loss account.
8. The CIT(A) has erred on facts and in law in deleting the addition of Rs.1,93,95,528/- by disallowing 50% of interest on term loan debited to Profit & Loss account.
9. The CIT(A) has erred on facts and in law in deleting the addition of Rs.5,93,200/- by disallowing 25% of watch & ward debited to Profit & Loss account.
10. The appellant craves leave to add, amend any/all the grounds of appeal before or during the course of hearing of the appeal.”
ITA No.- 1974/Del/2017 Sandur Bypass Projects Pvt. Ltd. 6. The Ld. CIT(DR) submitted that this is a case of abated assessment and, therefore, the Ld. CIT(A) erred in quashing the assessment proceedings in this case for the reason as stated by him. The Ld. CIT(DR) relied upon the assessment order and the grounds of appeal, in respect of the merits of the disallowances made in the assessment order.
The Ld. AR did not object to the above submission of the Ld. CIT(DR) that it was an abated assessment. However, he submitted that the assessee had filed relevant details vide letter dated 12.03.2015 which were not examined properly by the AO. In this regard, the assessee referred to the submissions made on page 5 to 14 of the paper book filed by the assessee in which various details in respect of which disallowances were made by the AO were filed before the AO which were not properly examined by the AO. The Ld. AR submitted that the assessee has made submissions on merits in respect of ground nos. 3 to 9 filed by the Revenue. In view of these facts, the Ld. AR submitted that the matter may be set aside to the file of the AO for fresh verification.
We have heard rival submissions and perused the material available on record. In this regard, the factual date-sheet chart submitted by the assessee is reproduced as under:
ITA No.- 1974/Del/2017 Sandur Bypass Projects Pvt. Ltd.
Date Particular 29/09/2011 ITR filed declaring a loss of ₹3,42,52,056/- [Pg. 1-3 of PB] 23/01/2012 Intimation Order u/s 143(1) of the Act was passed on 23/01/2012 restricting the loss to ₹75,01,535/- [Pg. 4-8 of PB] 30/09/2012 Time limit for the issue of notice u/s 143(2) of the Act, in this case for A.Y. 2011-12 28/08/2012 Seizure operation was conducted on DSC group including SBPL. 23/04/2013 Case was Centralized to Central Circle 14, New Delhi 04/06/2014 Notice issued to file ITR u/s 153A 08/07/2017 Reply filed that original ITR be treated as ITR u/s 153A. 20/11/2014 First Notice u/s 142(1) issued 30/03/2015 Assessment Order passed u/s 153A/143(3) of the Act making an addition of 2,75,98,286/- 8.1. The Ld. CIT(DR) submitted that the present assessment year is an abated assessment year which was not objected by Ld. AR of the assessee. After noting the above sequence of the events, it is held that it is an abated assessment and therefore the Ld. CIT(A) erred in quashing the assessment order for the reasons as discussed by him and summarized in above in para no. 4 of this order. We, therefore, allow the ground no. 1 of the appeal filed by the Revenue.
As noted above, the assessee did not appear before the AO and only filed written submissions, and the disallowances made by the AO were also not adjudicated by the Ld. CIT(A). Therefore, in the interest of justice and to give one
ITA No.- 1974/Del/2017 Sandur Bypass Projects Pvt. Ltd. more opportunity to the assessee, we set aside the order of the Ld. CIT(A) and restore the matter to the file of the AO for de novo assessment on the issues which are the subject matter of this appeal, in accordance with law. Accordingly, ground nos. 2 to 9 of the appeal are allowed for statistical purposes.
In the result, appeal of the Revenue is partly allowed.
Order pronounced in the open court on 31st December, 2025.