Completed assessments can be interfered with by the AO while making assessment u/s 153A (of Income Tax Act, 1961) only on the basis of some incriminating material unearthed during the course of search which were not produced or not already disclosed or made known in the course of original assessment.

1. This appeal by Revenue has been directed against the order of Ld. CIT(Appeals)-24, New Delhi dated 29.07.2016 for Assessment Year 2010-11.

2. Briefly the facts of the case are that a search and seizure operation u/s 132 (of Income Tax Act, 1961) was conducted on K-World Group of Cases on 05.04.2012. The case of the assessee was also covered u/s 132 (of Income Tax Act, 1961). The assessee in response to notice u/s 153A (of Income Tax Act, 1961) issued on 09.07.2014 submitted its return of income on 24.11.2014 declaring total income of Rs. 90,200/-. The assessee filed the requisite details before the Assessing Officer. The AO noted from the details that assessee has received share capital from 7 parties in a sum of Rs. 2.07 crores. The AO noted that assessee has failed to prove the genuineness of the transaction u/s 68 (of Income Tax Act, 1961) and, accordingly, made addition of Rs. 2.07 crores in the order u/s 153A (of Income Tax Act, 1961) read with section 143(3) (of Income Tax Act, 1961).

3. The assessee submitted before Ld. CIT(A) that during the course of search, no incriminating material was found for making the above addition. The assessee relied upon judgment of the Hon’ble Delhi High Court in the case of CIT vs. Kabul Chawla 380 ITR 573 and others. The Ld. CIT(A) found issue is covered in judgment of Hon’ble Delhi High Court in the case of Kabul Chawla (supra). Following the same, Ld. CIT(A) held that since no incriminating material was unearthed during the course of search. Therefore, no addition could be made u/s 153A (of Income Tax Act, 1961) of this nature. The addition was, accordingly, deleted.

4. The Revenue in the present appeal challenged the order of Ld. CIT(A) in quashing the order u/s 153A (of Income Tax Act, 1961) following the decision of Hon’ble Delhi High Court in the case of Kabul Chawla (supra).

5. We have heard Ld. Representatives of both the parties.

6. Ld. DR relied upon the order of the AO and submitted that section 153A (of Income Tax Act, 1961) does not restrict the assessment to incriminating documents. On the other hand, Ld. Counsel for assessee reiterated the submissions made before the authorities below.

7. After considering the rival submission, we do not find any merit in the Departmental appeal. The assessee in the statement of facts before Ld. CIT(A) has mentioned that original return was filed on 25.09.2010 showing total income of Rs. 83,685/- and the same was processed u/s 143(1) (of Income Tax Act, 1961). It would show that the return was completed and no assessment was pending from the date of the search. The Hon’ble Delhi High Court in the case of CIT vs. Kabul Chawla (supra) held that “Completed assessments can be interfered with by the AO while making assessment u/s 153A (of Income Tax Act, 1961) only on the basis of some incriminating material unearthed during the course of search which were not produced or not already disclosed or made known in the course of original assessment”. The Hon’ble Delhi High Court following the aforesaid decision took the same view in the case of Meeta Gutgutia 395 ITR 526 in which SLP of the Department has been dismissed by the Supreme Court reported in 96 taxmann.com 468. In view of the above, we do not find any infirmity in the order of the Ld. CIT(A) in allowing the appeal of the assessee.

8. In the result, the departmental appeal is dismissed.

Order pronounced in the open court.

Sd/- Sd/-

(PRASHANT MAHARISHI) (BHAVNESH SAINI)

ACCOUNTANT MEMBER JUDICIAL MEMBER

Dated: 11th February, 2020

*Kavita Arora, Sr. P.S.