Tax -Central -3 v. Abhisar Buildwell P. Ltd

$~60 * IN THE HIGH COURT OF DELHI AT NEW DELHI+ ITA 240/2018 THE PR. COMMISSIONER OF INCOME TAX -CENTRAL -3 ..... Appellant Through: Ms.Vibhooti Malhotra, Senior Standing Counsel and Mr.Siddharth Manocha, Advocate. versus ABHISAR BUILDWELL P. LTD. ..... Respondent Through: Ms.Monika Ghai, Advocate. CORAM:JUSTICE S.MURALIDHAR JUSTICE TALWANT SINGH O R D E R% 05.08.2019 The office note has been perused. The order dated 24[th] July 2019 will read as under : “$~18 and 19 * IN THE HIGH COURT OF DELHI AT NEW DELHI + ITA 239/2018 THE PR. COMMISSIONER OF INCOME TAX -CENTRAL -3 .... Appellant Through: Ms. Vibhooti Malhotra, Advocate. versus ABHISAR BUILDWELL P. LTD ..... Respondent Through: Dr. Rakesh Gupta, Mr. Anil Aggarwal, Mr. Somil Agarwal and Ms. Monika Ghai, Advocates. ITA 240/2018 Page 1 of 4 AND +ITA 240/2018 THE PR. COMMISSIONER OF INCOME TAX CENTRAL-3 ..... Appellant Through: Ms. Vibhooti Malhotra, Advocate. versus ABHISAR BUILDWELL PVT. LTD. ..... Respondent Through : Dr. Rakesh Gupta, Mr. Anil Aggarwal, Mr. Somil Agarwal and Ms. Monika Ghai, Advocates. CORAM: JUSTICE S.MURALIDHAR JUSTICE TALWANT SINGH O R D E R % 24.07.2019 CM Appl. 7359/2018 (exemption) in ITA No.240/2018 1. Allowed, subject to all just exceptions. ITA 239/2018 and ITA 240/2018 2. These are two appeals filed against the impugned common order dated 4[th] July 2017 passed by the ITAT in ITA No.4877/Del/14 & 2878/Del/2014 for the Assessment Years (AYs) 2007-08 and 2008-09, respectively. 3. The issue urged in the present appeals is whether the ITAT erred in deleting the additions made by the Assessing Officer in the assessments framed under Section 153A of the Income Tax Act, 1961 (the Act) on the basis that there was no incriminating material qua the Assessee. 4. The facts in brief are that a search was conducted on 21[st]January, 2011 in Dharampal Satyapal group of cases. ITA 240/2018 Page 2 of 4 Consequent thereto, a notice under Section 153A of the Act was issued to the Respondent Assessee, an entity created on demerger of rubber thread unit of Dharampal Satyapal Ltd. (DSL). The Assessee, in the return filed in response to the notice, declared a loss in each of the AYs. The Assessee claimed depreciation in the sum of Rs.1,05,84,885/- for AY 2007-2008 and Rs.9,50,75,091/- for AY 2008-2009. The Assessing Officer (AO) acted on the report of Special Audit ordered in the case of DSL under Section 142 (2A) of the Act, after the search, and concluded that the depreciation could not have been claimed in respect of assets acquired by DSL out of the deferred government grant in terms of Explanation 10 to Section 43 (1) of the Act. 5. The Commissioner of Income Tax (Appeals) [CIT(A)] by the common order dated 25[th] April 2014 allowed the Assessee’s appeals for the AYs in question on the ground that no incriminating material qua the Assessee was recovered during the search. On this ground account the CIT (A) deleted the additions made by the AO. 6. The ITAT has dismissed the Revenue’s appeal relying essentially on the decisions of this Court in CIT v. Kabul Chawla (2015) 380 ITR 573 (Del) and Pr. CIT v. Meeta Gutgutia Proprietor Ferns ‘N’ Petals (2017) 395 ITR 526 5. The Commissioner of Income Tax (Appeals) [CIT(A)] by the common order dated 25[th] April 2014 allowed the Assessee’s appeals for the AYs in question on the ground that no incriminating material qua the Assessee was recovered during the search. On this ground account the CIT (A) deleted the additions made by the AO. 6. The ITAT has dismissed the Revenue’s appeal relying essentially on the decisions of this Court in CIT v. Kabul Chawla (2015) 380 ITR 573 (Del) and Pr. CIT v. Meeta Gutgutia Proprietor Ferns ‘N’ Petals (2017) 395 ITR 526 7. Learned counsel for the Revenue repeated the submission made before the ITAT viz., that the report of Special Audit should be treated as incriminating evidence. Clearly the report of the Special Auditor, having been commissioned subsequent to the search, and during the assessment proceedings against DSL, cannot obviously be treated as incriminating material qua the Assessee, recovered during the course of search, in order to justify the addition made in theassessment under Section 153A of the Act. This is consistent with the legal position explained in both CIT v. Kabul Chawla (supra) (which still holds the field) and Pr. CIT v. Meeta Gutgutia Proprietor Ferns ‘N’ Petals (supra). Dr. Rakesh Gupta, learned counsel for the Assessee appearing on advance notice produced before this Court copy of an order dated 2[nd] July 2018 passed by the Supreme Court dismissing the Revenue’s Special Leave Petition against the aforementioned judgment in Pr. CIT v. Meeta ITA 240/2018 Page 3 of 4 Gutgutia Proprietor Ferns ‘N’ Petals (supra) on merits. The said order is reported as Pr CIT v. Meeta Gutgutia (2018) 257 Taxman 441 (SC). 8. This Court, therefore, finds there is no legal infirmity in the impugned order of the ITAT. No substantial question of law arises therefrom. 9. The appeals are accordingly dismissed.” S. MURALIDHAR, J. AUGUST 05, 2019 mr TALWANT SINGH, J. ITA 240/2018 Page 4 of 4