No Income Tax Addition U/S 153A and 153C If No Incriminating Material is found during course of Search: Delhi HC [Read Order]

The division bench of the Delhi High Court has held that no addition under sections 153A and 153C if no incriminating material is found during the course of the search.

Based on the search operation against M/s K.R. Pulp and Papers Limited, notice under Section 153A of the Act was issued by the Assessing Officer upon the assessee, Mamta Agarwal. After filing of return the AO made additions to the income of the assessee under Section 69B and Section 68 of the Act by making reference to the documents.

Being aggrieved an appeal was filed by the assessee before the Commissioner of Income Tax (Appeals). The CIT(A) allowed the appeal of the assessee, deleted additions and held that in the absence of any incriminating material, the Assessing Officer cannot re-apprise and review already completed assessment and settled issues before the date of search under Section 153A of the Act. the ITAT upholds the decision of CIT(A). The aggrieved revenue filed an appeal before the High Court.

The Coram of Justice Manmohan and Justice Manmeet Pritam Singh Arora by relying on the decision of the division bench of Delhi High Court in Kabul Chawla observed that if no incriminating material is found during the course of the search in respect of an issue, then no addition in respect of such an issue can be made in the assessment under Sections 153A and 153C of the Act.

The division bench while dismissing the appeal has held that the question of law raised had been settled by an earlier Division Bench in Kabul Chawla and no incriminating documents or materials had been found and seized at the time of the search.

Mr. Ajit Sharma and Advocate Mr. Gautam Jain appeared on behalf of the revenue and the assessee respectively.

To Read the full text of the Order CLICK HERE

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