The case between DCIT, CC-31, New Delhi, and Trishul Homes and Infrastructure Pvt. Ltd. revolved around a significant financial discrepancy noted during assessments for the fiscal year 2014-15. Filed under ITA No. 1614/DEL/2021, this legal battle centered on an addition of Rs. 29,23,50,000 labelled as an unsecured loan by the assessing officer (AO).
A search operation on 14.09.2017 at the business premises of Trishul Homes led to a reassessment under section 153A. The AO noted discrepancies in the company’s financial records concerning substantial unsecured loans. Despite providing requisite details, the AO contested the authenticity and creditworthiness based on missing crucial documentation such as ITRs and bank statements, leading to the addition.
The case hinged on the interpretation of ‘incriminating material’ found during the search. Trishul Homes argued that the reassessment was baseless as no incriminating material specific to the loans was discovered. They relied on the judicial precedents set by the Delhi High Court in the case of CIT vs. Kabul Chawla, which restricts making additions during 153A assessments without incriminating evidence.
The CIT (Appeals) sided with Trishul Homes, deleting the addition as it was not supported by any incriminating material found during the search. This decision was upheld by the ITAT, led by members Shri Shamim Yahya and Shri Anubhav Sharma, who agreed that the addition was unjustified and emphasized the precedence of the Kabul Chawla case despite opposing views from the Revenue regarding its applicability following the admission of an SLP by the Supreme Court.
The tribunal’s decision reaffirms the protective measures afforded to taxpayers against arbitrary additions in completed assessments under section 153A, stressing the necessity for concrete incriminating evidence to warrant such additions. This case serves as a pivotal reference for similar cases involving assessments post-search operations.
Order pronounced in the open court on 15th December 2022.
DCIT vs Trishul Homes and Infrastructure: Unsecured Loan Dispute
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