2022 (4) TMI 1547 - HC - Income Tax

High Court upholds ITAT order, dismissing appeals on additions by assessing officer, emphasizing assessments based on seized material.

PR. Commissioner Of Income Tax (Central) -2 Versus Lkg Builders P. Ltd. & Anr., M/s Pegasus Softech (P) Ltd., M/s King Buildcon Pvt. Ltd., M/s Alankar Saphire Developers (P) Ltd, Believe Developers And Promoters Pvt. Ltd., Witness Builders Pvt. Ltd., M/s Vinman Estates (P) Ltd., Alankar Saphire Developers (P) Ltd, M/s Gee Gee Buildtech (P) Ltd., M/s Pegasus Softech (P) Ltd., Ashutosh Developers P. Ltd., Lakshya Consultants Pvt. Ltd., M.M. Buildcon Pvt. Ltd., Vinman Estates (P) Ltd., Witness Builders Pvt. Ltd., M.M. Buildcon Pvt. Ltd., Alankar Saphire Developers (P) Ltd.

The High Court dismissed the appeals challenging the ITAT's order, which deleted additions made by the assessing officer. The Court held that as the ... Assessment u/s 153A - addition based on seized material or not? - competency of AO to consider all the material that is available on record - as per revenue ITAT erred in deleting the additions made by AO relying upon the judgment of this Court in the case of CIT Vs. Kabul Chawla, [2015 (9) TMI 80 - DELHI HIGH COURT] as he states that the Revenue has not accepted the judgment of Kabul Chawla (supra) and has preferred an appeal against the same in the Supreme Court - HELD THAT:- This Court is of the opinion that the questions of law raised in present appeals have been settled by earlier Division Bench in CIT Vs. Kabul Chawla (supra) and assessment of the respondents had attained finality prior to the date of search and no incriminating documents or materials had been found and seized at the time of search. Accordingly, no addition can be made under Section 153A of the Act as the cases of respondents are of non-abated assessments. Though some of the judgments of this Court have been challenged and are pending adjudication before the Supreme Court, yet there is no stay of the said judgments till date. Consequently, in view of the judgments of the Supreme Court in Kunhayammed and Others Vs. State of Kerala And Another, [2000 (7) TMI 67 - SUPREME COURT] and Shree Chamundi Mopeds Ltd. Vs. Church of South India Trust Association CSI Cinod Secretariat, Madras [1992 (4) TMI 183 - SUPREME COURT] the present appeals are dismissed being covered by the judgment passed by the learned predecessor Division Bench. Issues:Challenging ITAT order deleting additions made by assessing officer based on CIT Vs. Kabul Chawla judgment.Interpretation of Section 153A in light of previous judgments.Finality of assessment and non-abated assessments in absence of incriminating material.Applicability of Supreme Court judgments in absence of stay on challenged judgments.Analysis:The High Court judgment dealt with multiple appeals challenging the Income Tax Appellate Tribunal's order dated 27th April, 2020. The primary contention raised by the Appellant was that the ITAT erred in deleting the additions made by the assessing officer, citing the judgment in the case of CIT Vs. Kabul Chawla. The Appellant argued that the Revenue had not accepted the said judgment and had appealed to the Supreme Court against it.In analyzing the interpretation of Section 153A, the Court referred to a previous Division Bench judgment in PCIT vs. Neeta Gutgutia, summarizing the legal position that emerged from the judgment in CIT Vs. Kabul Chawla. The Court highlighted key points, including the mandatory issuance of notice under Section 153A(1) post a search, abatement of pending assessments, and the requirement for assessments to be based on seized material.The Court concluded that the questions of law raised in the appeals had been settled by the earlier Division Bench judgment in CIT Vs. Kabul Chawla. It was noted that the assessments of the respondents had attained finality before the search, and no incriminating documents were found during the search. Therefore, the Court held that no additions could be made under Section 153A as the cases pertained to non-abated assessments.Despite some judgments being challenged and pending before the Supreme Court, the Court highlighted that there was no stay on those judgments. Citing precedents like Kunhayammed and Others Vs. State of Kerala and Shree Chamundi Mopeds Ltd. Vs. Church of South India Trust Association, the Court dismissed the appeals, stating they were covered by the judgment of the predecessor Division Bench. This decision emphasized the importance of legal finality and the application of settled legal principles in tax matters.