Case Number: ITA 685/DEL/2021
Appellant: ACIT Central Circle-13, New Delhi
Respondent: Nirmal Minda, New Delhi
Assessment Year: 2013-14
Case Filed on: 2021-06-10
Order Type: Final Tribunal Order
Date of Order: 2022-08-31
Pronounced on: 2022-08-31
This case involves the Assistant Commissioner of Income Tax (ACIT), Central Circle-13, New Delhi, and Nirmal Minda, New Delhi. The primary issue under consideration is the validity of the assessment under Section 153A of the Income Tax Act for the assessment year 2013-14, based on incriminating material found during a search operation.
Nirmal Minda, an individual, filed his return of income for the assessment year 2013-14 on 05.08.2013, declaring an income of Rs. 1,95,58,963/-. The original assessment was completed under Section 143(3) of the Income Tax Act on 03.03.2016, accepting the return of income. Subsequently, a search operation under Section 132 of the Income Tax Act was conducted on 08.06.2017 at various business and residential premises of the Minda Group of cases. Following the search, a notice under Section 153A was issued on 25.04.2019, and the assessee filed a return of income declaring Rs. 1,95,58,963/-. The assessment was then framed under Section 143(3) read with Section 153A, determining the total income at Rs. 2,71,35,420/-.
Aggrieved by the AO’s order, Nirmal Minda appealed to the Commissioner of Income Tax (Appeals) [CIT(A)], challenging both the additions made and the validity of the assessment framed under Section 143(3) read with Section 153A. The CIT(A), considering the submissions and following the decision of the Hon’ble Delhi High Court in the case of CIT vs. Kabul Chawla [2015] 61 taxmann.com 412 (Delhi), held that the additions were not based on any incriminating material found during the search proceedings but were made only based on the scrutiny of the regular return of income, which was already assessed under Section 143(3). Therefore, the CIT(A) deleted the additions.
The Revenue appealed the CIT(A)’s order, raising the following grounds:
The ITAT Delhi Bench, comprising Sh. Anil Chaturvedi (Accountant Member) and Sh. Challa Nagendra Prasad (Judicial Member), heard the appeal on 30.08.2022 and pronounced the order on 31.08.2022. The Tribunal’s key findings were as follows:
The Tribunal observed that the CIT(A) rightly held that the additions made by the AO were not sustainable since they were not based on any incriminating material found during the search. This approach was consistent with the judicial precedents, particularly the decision in Kabul Chawla.
The Tribunal dismissed the Revenue’s appeal, upholding the CIT(A)’s order. The additions made under Section 153A were correctly deleted as they were not based on incriminating material found during the search.
This ruling underscores the importance of adhering to the principles established in judicial precedents when making additions in assessments under Section 153A. The decision reinforces the requirement that such additions should be based on incriminating material found during the search, ensuring fairness and consistency in tax assessments.
The detailed analysis of the procedural background shows the sequence of events leading to the assessment and subsequent appeals. The original assessment was completed under Section 143(3), and the subsequent search operation led to the issuance of a notice under Section 153A.
The AO’s assessment orders were challenged by Nirmal Minda, leading to partial relief granted by the CIT(A). The CIT(A) re-evaluated the additions, applying a more precise calculation method that aligned with judicial precedents.
The Tribunal referred to the Hon’ble Delhi High Court’s decision in Kabul Chawla, which provided clear guidelines on the application of Section 153A for completed assessments. The Tribunal also emphasized that additions should be based on incriminating material found during the search.
The final judgment emphasized that the CIT(A)’s approach to the additions under Section 153A was legally sound and aligned with judicial precedents. The Tribunal upheld the CIT(A)’s order, dismissing the Revenue’s appeal and providing a clear precedent for similar cases.
This case highlights the importance of judicial consistency and adherence to legal precedents in tax assessments. The Tribunal’s ruling reinforces the principles of fair and accurate assessments under Section 153A, ensuring that only relevant incriminating material found during the search is considered. The decision serves as a significant precedent for future cases involving assessments under Section 153A and the importance of incriminating material in such cases.
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