No incriminating material unearthed during search – no addition could be made on matters which were examined earlier during original assessment

Pr. CIT Vs Marichika Properties (P) Ltd. (Delhi High Court)

Since no incriminating material was unearthed by AO during the course of search operation under section 132, therefore no addition could be made during the relevant assessment year under section 153A by reopening the assessment on the matter which was examined earlier during original assessment concluded under section 143(3). 

FULL TEXT OF THE HIGH COURT ORDER / JUDGMENT

The revenue’s grievance is with respect to the ITAT’s impugned order deleting the additions made consequent to an assessment pursuant to search and seizure proceedings under section 153A.

The search and seizure proceedings in respect of the assessee were carried out on 26-9-2011. The assessing officer issued notice under section 153A and in the final assessment completed on 3-7-2012, determined the total income of Rs. 1,10,83,618. It involved an add back under section 40(A) of the Income Tax Act. The order was confirmed by the Commissioner (Appeals) who partly allowed the assessee’s contention. The assessee thereafter approached the ITAT.

The ITAT by the impugned order accepted the assessee’s contention and in the course of its order relied upon the reasoning of a Division Bench of this Court in impugned order in CIT v. Kabul Chawla (2016) 380 ITR 573 (Delhi).

Learned counsel for the revenue contends that in the facts of this case, Kabul Chawla could not be per se applied because the earlier assessment was completed under Section 143(1). It was urged that in the course of search proceedings, the material discovered showed that the assessee had acquired agricultural income and had paid amounts in excess of Rs. 20,000 in cash.

This court is of the opinion that the revenue’s contentions are insubstantial. Unlike section 148 which permits re-assessment for a completed previous year, in case tangible material available subsequently and which also further distinguishes between the return filed under section 143(1) on the one hand and the scrutiny assessment on the other hand under section 143(3), section 153A makes no such distinction. In other words, the basic premise on which Kabul Chawla was decided, i.e., that in the course of search and seizure proceedings there should be some new material forthcoming to permit addition in the section 153A Block assessments, would squarely apply. Consequently, the revenue’s contentions cannot be accepted.

No question of law arises.

Appeals are accordingly dismissed.