PCIT Vs S.S. Con Build Pvt. Ltd. (Delhi High Court)
Summary: The Delhi High Court dismissed the Revenue’s appeal challenging the ITAT order deleting an addition of Rs.33,91,35,982 made under section 68 of the Income Tax Act, 1961 for Assessment Year 2007-08. The Revenue contended that section 153A did not impose a condition requiring incriminating documents or assets to be found during a search before an assessment could be framed and challenged the Tribunal’s reliance on Commissioner of Income Tax v. Kabul Chawla, (2016) 380 ITR 573.
In Kabul Chawla, the Delhi High Court had held that, in the absence of incriminating material, the Assessing Officer could not re-appraise and review assessments already completed and settled before the date of search under section 153A. The Revenue submitted that it had not accepted Kabul Chawla and that Special Leave Petitions challenging the decision were pending before the Supreme Court.
The High Court, however, noted that although Kabul Chawla had been challenged, there was no stay of that judgment. Relying upon the Supreme Court decisions in Kunhayammed and Others v. State of Kerala and Another, (2000) 6 SCC 359 and Shree Chamundi Mopeds Ltd. v. Church of South India Trust Association CSI Cinod Secretariat, Madras, (1992) 3 SCC 1, the Court dismissed the Revenue’s appeal as the controversy remained covered by the binding judgment of the predecessor Division Bench.
Cases Discussed
- Commissioner of Income Tax v. Kabul Chawla, (2016) 380 ITR 573 (Delhi High Court) — Relied upon by the ITAT and treated as binding by the High Court for the proposition that, in the absence of incriminating material, completed and settled assessments cannot be re-appraised under section 153A merely because a search has taken place.
- Kunhayammed and Others v. State of Kerala and Another, (2000) 6 SCC 359 (Supreme Court) — Relied upon in considering the effect of the Revenue’s pending challenge to Kabul Chawla where the judgment had not been stayed.
- Shree Chamundi Mopeds Ltd. v. Church of South India Trust Association CSI Cinod Secretariat, Madras, (1992) 3 SCC 1 (Supreme Court) — Relied upon with Kunhayammed while holding that the absence of a stay meant that the binding Delhi High Court precedent continued to govern the controversy.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. Present Income Tax Appeal has been filed challenging the order datedth April, 2021 passed by the Income Tax Appellate Tribunal [ITAT] in ITA No. 1986/Del./2016 for the Assessment Year 2007-08.
2. Learned counsel for the Appellant states that the ITAT has erred in deleting the addition of Rs.33,91,35,982/- made by the Assessing Officer on account of unexplained credit under Section 68 of the Income Tax Act, 1961(hereinafter referred to as ‘the Act’) on account of the fact that the Assessing Officer could not have proceeded to frame assessment under Section 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 stipulate any such condition.
3. Learned counsel for the Appellant further states that the ITAT has erred in placing reliance upon the judgment of this Court inCommissioner of Income Tax vs. Kabul Chawla, (2016) 380 ITR 573wherein it was held that in the absence of any incriminating material, the Assessing Officer cannot re-apprise and review the assessments already completed and settled before the date of search under Section 153A of the Act.
4. He states that the Revenue has not accepted the judgment of this Court inCommissioner of Income Tax vs. Kabul Chawla(supra) and has preferred Special Leave petitions which are pending adjudication.
5. Though the judgment of this Court has been challenged and is pending adjudication before the Supreme Court, yet there is no stay of the said judgment till date.
6.Consequently, in view of the judgments passed by the Supreme Court in Kunhayammed and Others vs. State of Kerala and Another, (2000) 6 SCC 359 and Shree Chamundi Mopeds Ltd. Vs. Church of South India Trust Association CSI Cinod Secretariat, Madras (1992) 3 SCC 1, the present appeal is dismissed being covered by the judgment passed by the learned predecessor Division Bench.
