Case Law Details

Case Name : M/s DMA Investment Pvt. Ltd. Vs DCIT (ITAT Delhi)
Appeal Number : I.T.A. Nos. 5688-5691/DEL/2013 & I.T.A. Nos. 6326-6329/DEL/2013
Date of Judgement/Order : 05/04/2016
Related Assessment Year : 2006-07 to 2009-10
Courts : All ITAT (1731) ITAT Delhi (428)

Brief of the Case

ITAT Delhi held In the case of M/s DMA Investment Pvt. Ltd. vs. DCIT that in the present case, no incriminating material was found or seized during the course of search and seizure operation. Under the circumstances, the issue is covered in favour of the assessee by the decision dated 28.8.2015 of the Hon’ble Delhi High Court in the case of CIT vs. Kabul Chawla, ITA No. 707, 709 and 713/2014 wherein it was held that Completed assessments can be interfered while making the assessment under Section 153 A only on the basis of some incriminating material unearthed during the course of search or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. In the current case, AO has completed the assessment and made the addition without any incriminating material found during the search and seizure operation and the addition in this case was purely based on the material already available on record. Hence the addition is not sustainable.

Facts of the Case

A search and seizure operation was carried out in the case of Amtek Group of Cases. The assessee was covered u/s. 132(1) which is a group company of Amtek Group. Subsequently, the case was centralized with Central Circle-14, New Delhi. Accordingly, notice u/s. 153A was issued to the assessee on 26.9.2011. Thereafter, the AO completed the assessment at Rs. 50,000/- for making the disallowance u/s. 14A vide Order dated 29.10.2012 passed u/s. 153A/143(3). The assessee mainly challenged the validity of the order passed by the AO u/s 153A.

Contention of the Assessee

The ld counsel of the assessee submitted that the issue relating to upholding the validity of the order of assessment passed u/s. 153A on 29.10.2012, is squarely covered in favor of the assessee by the decision dated 28.8.2015 of the Hon’ble Delhi High Court passed in the case CIT (Central)-III vs. Kabul Chawla in ITA No. 707, 709, 713/Del/2014 wherein the Hon’ble High Court has held that if the additions are made, but not based on any incriminating material found during search operation, then these additions are not sustainable in the eyes of law. He further stated that the additions have no relation with any incriminating material found and undisclosed income or property discovered in the course of search and as such are bad in law being beyond the scope of jurisdiction u/s. 153A.

He further stated that during the year under consideration the Company has not conducted any business in real estate, but engaged in sale / purchase of shares. During the course of assessment proceedings, the AO found that assessee has made the investment of Rs. 3,23,05,820/- in shares and has earned dividend income of Rs. 7,29,200/- on account of investment and he applied the provisions of Section 14A which is not based on the basis of the incriminating material found during the search operation.

Contention of the Revenue

The ld counsel of the revenue submitted that the provision of section 153A has rightly been applied in the case of the assessee on the material available with them and further stated that the case of the assessee is covered against the assessee by the decision dated 23.5.2007 of the Hon’ble Supreme Court of India in the case of ACIT vs. Rajesh Jhaveri Stock Brokers Pvt. Ltd. in Appeal (Civil) No. 2830 of 2007 reported in 291 ITR 500 (SC). He further stated that in the case of CIT vs. Kabul Chawla the assessment was completed u/s. 143(3) and not under section 143(1), because on the date of search the said assessment has already been stood completed.

Held by ITAT

ITAT held that admittedly in the present case, no incriminating material was found or seized during the course of search and seizure operation u/s. 132 in the case of the assessee. Under the circumstances, we find that the issue is covered in favour of the assessee and against the Revenue by the decision dated 28.8.2015 of the Hon’ble Delhi High Court in the case of CIT vs. Kabul Chawla passed in ITA No. 707, 709 and 713/2014 wherein the Hon’ble High Court has held that Completed assessments can be interfered with by the AO while making the assessment under Section 153 A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment.

Respectfully following the precedent of the Hon’ble Jurisdictional High Court as aforesaid, we allow the appeal of the Assessee, because AO has completed the assessment and made the addition in dispute without any incriminating material found during the search and seizure operation and the addition in this case was purely based on the material already available on record. Hence, the addition in the case is deleted.

Accordingly appeal of the assessee allowed.

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