D-ART FURNITURE SYSTEMS PRIVATE LIMITED,NEW DELHI vs. DCIT CENTRAL CIRCLE-17, NEW DELHI

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ITA 371/DEL/2024Status: DisposedITAT Delhi28 August 2025AY 2007-083 pages

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

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessment years 2006-07 and 2007-08 were unabated, as a search action under section 132 was conducted on 19.10.2010, leading to section 153A proceedings. Following the landmark decision of the Hon'ble Apex Court in PCIT Vs. Abhisar Builwell P. Ltd. (2023) 454 ITR 212 (SC), the Tribunal noted that additions in unabated assessments must be based solely on seized or incriminating material. Upon perusal of the assessment discussion, the Tribunal found no evidence whatsoever to indicate that the Assessing Officer had made the impugned additions under section 68 based on any such incriminating material. Consequently, the Tribunal found it appropriate to delete the additions of Rs. 22,18,160/- for AY 2006-07 and Rs. 59,60,198/- for AY 2007-08. The ratio decidendi is that section 68 additions in unabated assessment years, initiated under section 153A, are invalid if not supported by seized or incriminating material.

What were the facts?

The assessee, D-Art Furniture Systems Pvt. Ltd., filed appeals against the orders of the Commissioner of Income Tax (Appeals)-27 (CIT(A)) for assessment years 2006-07 and 2007-08. These orders upheld additions made by the Assessing Officer (AO) under section 68 of the Income-tax Act, 1961. The additions amounted to Rs. 22,18,160/- for AY 2006-07 and Rs. 59,60,198/- for AY 2007-08. The assessment orders were dated 08.03.2022. The appeals before the ITAT were filed as ITA Nos. 370 & 371/Del/2024. The proceedings involved section 143(3)/147/250 of the Act. A search action under section 132 was conducted in the assessee's case on 19.10.2010, leading to section 153A proceedings.

What were the issues?

1. Whether the addition under section 68 for unexplained cash credits in unabated assessment years is valid when not based on seized or incriminating material? (Question of law, turning on Section 68 and Section 153A). Assessee's Contention: The learned counsel for the assessee relied on the Supreme Court's decision in PCIT Vs. Abhisar Builwell P. Ltd. (2023) 454 ITR 212 (SC) to argue that in unabated assessment years, additions must be based on seized or incriminating material. Revenue's Contention: The learned Senior Departmental Representative (Sr. DR) could not dispute the fact that the assessment years were unabated and that the Supreme Court's decision in Abhisar Builwell P. Ltd. applied. The judgment records no specific arguments from the revenue beyond this acknowledgement.

Which sections of the Income-tax Act were involved?

Section 68,Section 153A,Section 132,Section 143(3),Section 147,Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH: ‘B’ NEW DELHI

Before: SHRI SATBEER SINGH GODARA & SHRI MANISH AGARWAL

Hearing: 13.08.2025Pronounced: 28.08.2025

Date of hearing 13.08.2025 Date of pronouncement 28.08.2025 ORDER PER SATBEER SINGH GODARA, JM These assessee’s twin appeals & 371/Del/2024 for assessment years 2006-07 & 2007-08 arise against the Commissioner of Income Tax (Appeals)-27 [in short, the “CIT(A)”], New Delhi’s orders, both dated 24.11.2023 passed in case nos. CIT(A), Delhi-27/10009/2005-06 and CIT(A), Delhi- 27/10010/2006-07, involving proceedings under section 143(3)/147/250 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’); respectively. Heard both the parties. Case file perused.

2.

It emerges during the course of hearing with the able assistance coming from both the learned representatives that they have made section 68 unexplained cash credit additions of Rs.22,18,160/- and Rs.59,60,198/- in assessment orders, both dated 08.03.2022 for assessment years 2006-07 and 2007-08; respectively, as upheld in the CIT(A)’s lower appellate discussion.

3.

Faced with this situation, learned CIT(DR) could hardly dispute the clinching fact emerging from the case file that the impugned assessment years 2006-07 and 2007-08 are “unabated” one since the departmental authorities had carried out section 132 search action in assessee’s case on 19.10.2010, leading to initiation of Section 153A proceedings. And that hon’ble apex court’s recent landmark decision in PCIT Vs. Abhisar Builwell P. Ltd. (2023) 454 ITR 212 (SC) has settled the law that such 2 | P a g e an addition involving an “unabated” assessment has to be based on the seized/incriminating material only.

4.

From a perusal of the assessment discussion, we find that there is not even an iota of evidence indicating that the learned Assessing Officer has made the addition in assessee’s hands based on such an incriminating material. We thus find it a fit case to delete the impugned section 68 additions of Rs.22,18,160/- and Rs.59,60,198/- for assessment years 2006-07 and 2007-08 in very terms. Ordered accordingly.

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