Pr. Commissioner Of Income Tax-1 v. M/S Charvak Trading Pvt. Ltd

Signature Not Verified $~68*IN THE HIGH COURT OF DELHI AT NEW DELHI %Date of Decision : 28.05.2025 +ITA 179/2025 PR. COMMISSIONER OF INCOME TAX-1.....AppellantThrough:Mr Vipul Aggarwal, SSC, Mr AkshatSingh, Ms Sakshi Shairwal, JSCs andMr Gaoraang Ranjan, Advocates.Through:Mr Vipul Aggarwal, SSC, Mr AkshatSingh, Ms Sakshi Shairwal, JSCs andMr Gaoraang Ranjan, Advocates. versus M/S CHARVAK TRADING PVT. LTD......RespondentThrough:Dr Rakesh Gupta, Mr Somil AgarwalandMrDushyantAgarwal,Advocates. CORAM:HON'BLE MR. JUSTICE VIBHU BAKHRUHON'BLE MR. JUSTICE TEJAS KARIA VIBHU BAKHRU, J. (ORAL) CM APPL. 33763/2025(condonation of delay in refiling) 1.For the reasons stated in the application, the delay in refiling theabove captioned appeal is condoned. 2.The application stands disposed of. CM APPL. 33762/2025(condonation of delay in filing) 3.For the reasons stated in the application, the delay in filing the abovecaptioned appeal is condoned. 4.The application stands disposed of. ITA 179/2025 5.The Revenue has filed the present appeal under Section 260A of theIncome Tax Act, 1961 [the Act], inter alia, impugning the order dated16.06.2023 [impugned order] passed by the learned Income Tax AppellateTribunal [Tribunal] in ITA No.3270/Del/2018 in respect of AssessmentYear 2010-11. 6.The impugned order is a common order passed by the learnedTribunal in two appeals pertaining to the AY 2010-11 and AY 2011-12being ITA No.3270/Del/2018 and ITA No.3271/Del/2018 preferred by theRevenue. However, the present appeal is confined to the impugned orderinsofar as it relates to the ITA No.3270/Del/2018. 7.The Tribunal had rejected the appeal preferred by the Revenue on theground that the assessments framed under Section 153A of the Act were notbased on any incriminating material found during the search. The learnedTribunal following the decision of this Court in Commissioner of IncomeTax (Central) -III v. Kabul Chawla : Neutral Citation No.: 2015: DHC:7044-DB which was affirmed by the Supreme Court in PrincipalCommissioner of Income-tax, Central-3 v. Abhisar Buildwell (P.) Ltd.:Neutral Citation No.:(2024) 2 SCC 433 concluded that the assumption ofjurisdiction under Section 153A of the Act would not be permissible absentany incriminating material. 8.The present appeal emanates from the assessment order dated30.12.2016 passed under Section 153A read with Section 143(3) of the Act.The Assessing Officer had made additions on account of unexplainedinvestment in unquoted shares of unlisted companies. However, there is nodispute that the assessment order was premised on search and seizure operations that were conducted on 25.04.2014 under Section 132 of the Actin the case of Dua group of cases.An authorisation of search was alsoissued in the case of the Assessee. It is not in dispute that during the courseof search no material was found which could be construed as incriminatingmaterial and the assessment was passed on the basis of entries in the booksof accounts that were also the subject matter of the examination during theoriginal proceedings. 9.The Assessee had appealed the said decision before the Commissionerof Income Tax Appeals – XXVI, New Delhi [CIT(A)] on various grounds,including that the assessment order was invalid on the ground that noincriminating material was found during the search operations. Whilst, theCIT(A) rejected the assessee’s contention that the AO did not have thejurisdiction to pass the assessment order for want of incriminating materialfound during the search proceedings, he allowed the appeal on merits anddeleted the additions. 10.The Revenue, being aggrieved by the said order, preferred the appealbefore the Tribunal. The Assessee also assailed the learned CIT(A)’s findingthat the assumption of jurisdiction by the AO was valid. Accordingly, theAssessee filed an application under Rule 27 of the Income Tax AppellateTribunal Rules, 1963, which came to be allowed by the impugned order. 10.The Revenue, being aggrieved by the said order, preferred the appealbefore the Tribunal. The Assessee also assailed the learned CIT(A)’s findingthat the assumption of jurisdiction by the AO was valid. Accordingly, theAssessee filed an application under Rule 27 of the Income Tax AppellateTribunal Rules, 1963, which came to be allowed by the impugned order. 11.Concededly, there was no material found during the search andseizure operations conducted under Section 132 of the Act, which could betermed as incriminating. The question whether in such circumstances,addition could be made is no longer res intergra. The said issue is coveredby the decision of this Court in Commissioner of Income Tax-7 v. RRJ SecuritiesLimited:NeutralCitationNo.:2015:DHC:8989-DBandCommissioner of Income Tax (Central) -III v. Kabul Chawla (supra). Theposition of law as summarised in Commissioner of Income Tax (Central) -III v. Kabul Chawla (supra) was upheld by the Supreme Court in PrincipalCommissioner of Income-tax, Central-3 v. Abhisar Buildwell (P.) Ltd(supra).In subsequent decision by this Court in Saksham CommoditiesLimited v. Income Tax Officer Ward 22(1), Delhi & Anr: Neutral CitationNo.: 2024:DHC:2836-DB, the earlier decisions were considered and theprinciple was reiterated. 2015:DHC:8989-DBand 12.In Saksham Commodities Limited v.Income Tax Officer Ward22(1), Delhi & Anr. (supra), this Court also considered the difference inassumption of jurisdiction under Section 153A of the Act and Section 153Cof the Act. In cases covered under Section 153A of the Act, the AO isrequired to reiterate the earlier assessment in the absence of anyincriminating material. 13.In view of the above, we find no infirmity with the impugned order.No substantial question of law arises for consideration of this Court. 14.The appeal is unmerited and, accordingly, dismissed. VIBHU BAKHRU, J MAY 28, 2025M TEJAS KARIA, J Click here to check corrigendum, if any