PRINCIPAL COMMISSIONER OF INCOME TAX(CENTRAL)-3 vs. GAHOI CHEMICALS PVT. LTD.

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ITA/301/2018HC DelhiDLHC01008691201814 March 2018Bench: HON'BLE MR. JUSTICE S. RAVINDRA BHAT,HON'BLE MR. JUSTICE A. K. CHAWLA2 pages
AI SummaryDismissed

What did the High Court hold?

The Tribunal deleted the additions made by the AO, following High Court rulings that stated the search assessment was not based on fresh incriminating material. The High Court agreed that the Tribunal correctly directed the deletion of amounts sought to be taxed.

What were the facts?

During a search of the Kurele Group, the assessee filed a return declaring a loss. The AO made an addition of Rs. 1,05,00,000 under Section 68, citing unestablished creditworthiness of a share applicant.

What were the issues?

Whether additions made under Section 68 during a search assessment are valid when not based on fresh incriminating material. Whether the AO can form a contrary opinion based on existing materials in a search assessment.

Which sections of the Income-tax Act were involved?

Section 68,Section 132

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$~44 * IN THE HIGH COURT OF DELHI AT NEW DELHI

+ ITA 301/2018 & CM APPL. 9809/2018

PRINCIPAL COMMISSIONER OF INCOME TAX(CENTRAL)- 3

..... Appellant Through: Mr. Sanjay Kumar, Standing Counsel for Revenue.

versus

GAHOI CHEMICALS PVT. LTD.

..... Respondent

Through: None.

CORAM: HON'BLE MR. JUSTICE S. RAVINDRA BHAT HON'BLE MR. JUSTICE A. K. CHAWLA

O R D E R %

14.03.2018

The Revenue is aggrieved by the ITAT’s order made in ITA 3049/Del/2013 for A.Y. 2005-06, whereby, the additions made by the AO during the course of search have been deleted.

Search of the premises of one Kurele Group of companies/firms was conducted on 19.01.2009. Notice was issued on 30.11.2009 to which the assessee filed the return declaring a loss of `10,73,507/-. The AO brought to tax a sum of `1,05,00,000/- under Section 68 in the course of search assessment on the ground that for the relevant year the credit worthiness of the share applicant has not been established. The additions were confirmed by the Appellate Commissioner, but, directed to be ITA 301/2018

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deleted by the Tribunal, which followed this Court’s rulings in Commissioner of Income Tax vs. Kabul Chawla, 380 ITR 573 and Commissioner of Income Tax vs. Meeta Gutgutia, 395 ITR 526. Since concededly the search assessment was completed not on the basis of fresh incriminating material seized or recovered in the search and seizure operation under Section 132 of the Income Tax Act, the AO relied upon the materials that were already on the record to form another opinion contrary to the view expressed in Kabul Chawla. Therefore, the Tribunal quite correctly directed the amounts sought to be brought to tax, be deleted. The appeal does not involve any question of law. It is accordingly dismissed. All the pending applications also stand disposed of.

S. RAVINDRA BHAT, J

A. K. CHAWLA, J MARCH 14, 2018 kks

ITA 301/2018

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