Pr. Commissioner Of Income Tax-7 v. Surya Fresh Foods Pvt. Ltd

$~S-42 & 43 IN THE HIGH COURT OF DELHI AT NEW DELHI +ITA 458/2022 PR. COMMISSIONER OF INCOME TAX-7..... AppellantThrough:Mr.Puneet Rai, Sr.Standing Counselwith Ms.Adeeba Mujahid, Jr.StandingCounselandMr.NikhilJain,Advocate. versus SURYA FRESH FOODS PVT. LTD. ..... Respondent Through:Mr.Satyen Sethi, Advocate. +ITA 459/2022 PR. COMMISSIONER OF INCOME TAX-7..... AppellantThrough:Mr.Puneet Rai, Sr.Standing Counselwith Ms.Adeeba Mujahid, Jr.StandingCounselandMr.NikhilJain,Advocate. versus SURYA FRESH FOODS PVT. LTD...... Respondent Through:Mr.Satyen Sethi, Advocate. % Date of Decision: 17[th]November, 2022 CORAM:HON'BLE MR. JUSTICE MANMOHANHON'BLE MS. JUSTICE MANMEET PRITAM SINGH ARORA J U D G M E N T MANMOHAN, J (Oral): CM APPL.49062/2022 (exemption) in ITA 458/2022CM APPL.49240/2022 (exemption) in ITA 459/2022 Allowed, subject to all just exceptions. Accordingly, the applications stand disposed of. CM APPL.49063/2022 in ITA 458/2022CM APPL.49241/2022 in ITA 459/2022 Keeping in view the averments in the applications, the delay in filingthe appeals is condoned. Accordingly, the applications stand disposed of. ITA 458/2022ITA 458/2022 Present Income Tax Appeals have been filed challenging the Orderdated 11[th]January, 2022 passed by the Income Tax Appellate Tribunal(‘ITAT’) in ITA No.4971/Del/2017 for the Assessment Year 2009-10 andITA No.4972/Del/2017 for the Assessment Year 2010-11. Learned counsel for appellant states that the ITAT has erred in law inholding that additions under Section 153A of the Income Tax Act, 1961(‘the Act’) cannot be made without incriminating material gathered duringthe course of search even though there is no legal requirement in law thatincriminating material must be found during search. He submits that theITAT has erred in relying upon the judgement of this Court in the caseof CIT vs Kabul Chawla 380 ITR 573 (Del) ignoring the fact that Revenue'sSLPs on similar issue are pending before the Supreme Court. He further states that the ITAT has erred in deleting the additionsmade by the Assessing Officer on account of deductions under Section 80IB Signature Not Verified of the Act. Upon perusal of the paper book, this Court finds that the ITAT upheldthe findings of the CIT-(A) that the additions made in the present appealswere not based on any material incriminating or otherwise recovered in thecourse of search action. The relevant extract of the impugned order isreproduced hereinbelow: “ 8. We have carefully considered the rival submissionsand the legal ground raised. It is a matter of record thatthe assessment concerning Assessment Years 2009-10 and2010-11 stood concluded and were not pending at the timeof search. Hence, the CIT(A) has rightly applied theposition of law governing the field that while making theassessment under Section 153A of the Act, the Revenue isnot entitled to interfere with already concluded (and notabated) assessment passed either under Section 143(1)or under Section 143(3) of the Act and not pending at thetime of search, in the absence of any incriminatingdocuments unearth, as a result of search. This legalposition is affirmed and answered in favour of the assesseeby large number of judicial precedents of differentjurisdiction..” ThisCourtfindsthattheconclusionreachedin Kabul Chawla (supra) has been summarized in PCIT vs. Meeta Gutgutia,(2017) 82 taxmann.com 287 Del. The relevant portion of the judgmentpassed in PCIT vs. Meeta Gutgutia (supra) is reproduced hereinbelow:- "37. On a conspectus of Section 153A(1) of the Act, read with the provisosthereto, and in the light of the law explained in the aforementioned decisions,the legal position that emerges is as under: ThisCourtfindsthattheconclusionreachedin Kabul Chawla (supra) has been summarized in PCIT vs. Meeta Gutgutia,(2017) 82 taxmann.com 287 Del. The relevant portion of the judgmentpassed in PCIT vs. Meeta Gutgutia (supra) is reproduced hereinbelow:- "37. On a conspectus of Section 153A(1) of the Act, read with the provisosthereto, and in the light of the law explained in the aforementioned decisions,the legal position that emerges is as under: i. Once a search takes place under Section 132 of the Act, notice underSection 153 A (1) will have to be mandatorily issued to the person searchedrequiring him to file returns for six AYs immediately preceding the previousyear relevant to the AY in which the search takes place. Signature Not Verified ii. Assessments and reassessments pending on the date of the search shallabate. The total income for such AYs will have to be computed by the AOs asa fresh exercise. iii. The AO will exercise normal assessment powers in respect of the six yearsprevious to the relevant AY in which the search takes place. The AO has thepower to assess and reassess the 'total income' of the aforementioned sixyears in separate assessment orders for each of the six years. In other wordsthere will be only one assessment order in respect of each of the six AYs "inwhich both the disclosed and the undisclosed income would be brought totax". iv. Although Section 153 A does not say that additions should be strictly madeon the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related tothe evidence found, it does not mean that the assessment "can be arbitrary ormade without any relevance or nexus with the seized material. Obviously anassessment has to be made under this Section only on the basis of seizedmaterial." v. In absence of any incriminating material, the completed assessment can bereiterated and the abated assessment or reassessment can be made. The word'assess' in Section 153 A is relatable to abated proceedings (i.e. those pendingon the date of search) and the word 'reassess' to completed assessmentproceedings. vi. Insofar as pending assessments are concerned, the jurisdiction to make theoriginal assessment and the assessment under Section 153A merges into one.Only one assessment shall be made separately for each AY on the basis of thefindings of the search and any other material existing or brought on therecord of the AO. vii. Completed assessments can be interfered with by the AO while making theassessment under Section 153 A only on the basis of some incriminatingmaterial unearthed during the course of search or requisition of documents orundisclosed income or property discovered in the course of search which werenot produced or not already disclosed or made known in the course oforiginal assessment." Even, this Court in Principal Commissioner of Income Tax vs.Bhadani Financiers Pvt. Ltd., 2021 SCC OnLine Del 4430 has held thatwhere the assessment of the respondents have attained finality prior to thedate of search and no incriminating documents or materials had been foundand seized at the time of search, no addition could be made under Section Signature Not Verified 153A of the Act as the cases of the respondents were of non-abatedassessment. Thoughtheissueinvolvedin Kabul Chawla (supra) hasbeenchallenged and is pending adjudication before the Supreme Court, yet thereis no stay of the said judgment till date. Consequently, in view of the judgments passed by the Supreme Courtin Kunhayammed and Others vs. State of Kerala and Another, (2000) 6SCC 359 and Shree Chamundi Mopeds Ltd. Vs. Church of South IndiaTrust Association CSI Cinod Secretariat, Madras (1992) 3 SCC 1, thepresent appeals are covered by the judgments passed by this Courtin Bhadani Financiers Pvt. Ltd. (supra) and Kabul Chawla (supra). Accordingly, no substantial question of law arises in the presentappeals and the same along with applications are dismissed. MANMOHAN, J MANMEET PRITAM SINGH ARORA, J NOVEMBER 17, 2022/TS