Validity of Addition made pursuant to search operation on the same subject matter, which was examined during original assessment

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Validity of Addition made pursuant to search operation on the same subject matter, which was examined during original assessment

Short Overview : Since no incriminating material was unearthed by AO during the course of search operation under section 132, therefore no addition could be made during the relevant assessment year under section 153A by reopening the assessment on the matter, which was examined earlier during original assessment.

Assessment of assessee was originally concluded under section 143(3). Consequent to search operation conducted on assessee, AO made addition by reopening the assessment under section 153A.

it is held that  Since no incriminating material was unearthed by AO during the course of search operation under section 132, therefore, no addition could be made during the relevant assessment year under section 153A by reopening the assessment on the matter, which was examined earlier during original assessment concluded under section 143(3).

Decision: In assessee’s favour

Referred: CIT v. Kabul Chawla (2015) 380 ITR 573 (Del) : 2015 TaxPub(DT) 3486 (Del-HC).

IN THE RAJASTHAN HIGH COURT

S. RAVINDRA BHAT & PUSHPENDRA SINGH BHATI, JJ.

Pr. CIT v. Daksha Jain

D.B. Income Tax Appeal No. 125/2017

4 July, 2019

Appellant(s) by: K.K. Bissa, Sr. Standing Counsel for Income Tax with G.S. Chouhan.

Respondent(s) by: Hemant Bhati for Sanjay Nahar.

ORDER

Various questions of law with respect to dis-allowance and additions made in the course of re-assessment proceedings are urged by the Revenue in its appeal under section 260A of the Income Tax Act, 1961 (for short, ‘the Act’)

2. The search under section 132 of the Act was conducted in the assessee’s premises on 10-2-2010. This resulted in notices under section 153A which culminated in search assessment orders for block period between assessment years 2004-05 to 2010-11. The additions made were on identical grounds i.e. business loss, claim for dis-allowance of interest of substantial amount, additions made on account of unexplained cash entries in the bank accounts, etc.

3. The ITAT noticed inter alia that all the additions were not based upon any fresh materials seized during the course of search. That was the first ground for setting aside the order; the ITAT also considered and decided in favour of the assessee on the merits of the additions.

4. The approach of the ITAT of setting aside the search assessment on the ground that no fresh materials was seized or discerned in the course of search is correct and conform to the view taken by the Delhi High Court in the case of Commissioner of Income Tax (Central)-III v. Kabul Chawla reported in (2015) 380 ITR 573 (Del) : 2015 TaxPub(DT) 3486 (Del-HC). That judgment has been followed by various High Courts including this Court.

5. Consequently, no question of law arises. The present appeal is accordingly dismissed.

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