DCIT CENTRAL CIRCLE-8, NEW DELHI V. SOM HARI INFRASTRUCTURE PVT LTD, NEW DELHI

ITA 1516/DEL/2020

AI Insights

The case revolves around an appeal by the Department of Revenue against Som Hari Infrastructure Pvt. Ltd. concerning an addition of Rs. 21 crore made as unsecured loan during the Financial Year 2011-12. The addition was initially made by the Assessing Officer following a search and seizure operation under Section 132 of the Income Tax Act, 1961, conducted on the premises of the assessee. The Commissioner of Income Tax (Appeals) later deleted this addition, citing the absence of incriminating material found during the search. The Department of Revenue challenged this decision, arguing that the CIT(A) erred in law and on facts by deleting the addition without considering the merits of the case.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 312906 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2012-2013
• Other Referred Cases: CIT Vs. Kabul Chawla (61 Taxmann.com 412) (Delhi), PCIT Vs. Abhisar Buildwell Pvt. Ltd. [2023] 149 taxmann.com 399 (SC), Mukundray K. Shah [2007] 160 Taxman 276 (SC)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAYA CHOUDHARY
• Assessee Lawyers: AMIT GOYAL; PRANAV
• Keywords: Documents seized; Search and seizure
• Section: 143(3); 132; 153A; 68

Judgement Text

" 1 ITA No. 1516/Del/2020 DCIT Vs. SomHari Infrastructure Pvt. Ltd. IN THE INCOME TAX APPELLATE TRIBUNAL DELHI (DELHI BENCH ‘G’ NEW DELHI BEFORE SHRI YOGESH KUMAR U.S., JUDICIAL MEMBER AND SHRI MANISH AGARWAL, ACCOUNTANT MEMBER ITA No. 1516/Del/2020 (A.Y. 2012-13) DCIT Central Circle-8 Room No. 333, 3rd Floor, E-2 ARA Centre, Jhandewalan Extension, New Delhi Vs. Som Hari Infrastructure Pvt. Ltd. Flat No. 202, 2nd Floor, 25/33. East Patel Nagar, New Delhi PAN: AAKCS8786Q Appellant Respondent Assessee by Sh. Amit Goyal, CA and Sh. Pranav Yadav, Advocate Revenue by Ms. Jaya Choudhary, CIT DR Date of Hearing 17/04/2025 Date of Pronouncement 30/04/2025 ORDER PER YOGESH KUMAR, U.S. JM: The present appeal is filed by the Department of Revenue against the order of the Commissioner of Income Tax (Appeal)(‘Ld. CIT(A)’ for short) dated 22/06/2020 pertaining to Assessment Year 2013-14. 2. The grounds of Appeal are as under:- “1. The Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs.21 crore despite the adverse evidence that the nature and source of the cash credit was unexplained and the sum had been routed through shell companies. 2 ITA No. 1516/Del/2020 DCIT Vs. SomHari Infrastructure Pvt. Ltd. 2. The Ld. CIT(A) has erred in law and on facts in holding that addition which was not based on incriminating material found during the search could not be made in assessment u/s 153A of the I.T.Act and, consequently, deleting addition of Rs.21 crore without going into merits of the same. 3. Brief facts of the case are that, a search and seizure action u/s 132 of the Income Tax Act, 1961 (‘Act’ for short) was carried out in the Sanjay Singhal Group of cases on 15/11/2017. A search warrant of authorization u/s 132 of the Act was issued in the name of the Assessee to search its premises. The Assessee had filed its original return u/s 139(1) of the Act on 29/09/2012 declaring total income of Rs. 1,70,760/- and the same was processed u/s 143(1) of the act on 18/05/2013. Since search was initiated in the case, a notice u/s 153A of the Act was issued on 04/04/2019 which was duly served on the Assessee. In response to the notice issued u/s 153A of the Act, return of income was filed by the Assessee on 24/04/2019 declaring the total income at Rs. 1,70,760/- without changing the returned income which was filed u/s 139(1) of the Act. An assessment order came to be passed u/s 153A r.w. Section 143(3) of the Act on 30/12/2019 by making addition of Rs. 21 crore which was received as unsecured loan by the Assessee Company during Financial Year 2011-12 relevant to Assessment Year 2012-13 through M/s Ujjawal Merchandise Pvt. Ltd. Aggrieved by the assessment order dated 30/12/2019, the Assessee preferred an Appeal before the 3 ITA No. 1516/Del/2020 DCIT Vs. SomHari Infrastructure Pvt. Ltd. CIT(A). The Ld. CIT(A) vide order dated 22/06/2020, allowed the Appeal of the Assessee by relying on the Judgment of Jurisdictional High Court in the case of CIT Vs. Kabul Chawla (61 Taxmann.com 412) (Delhi) and other Judgments on the ground that no addition can be made in the hands of the Assessee since no incriminating material was unearthed during the course of the search and the assessment order of the Assessee stood completed on the date of the search.Aggrieved by the order of the Ld. CIT(A) dated 22/06/2020, the Department of Revenue preferred the present Appeal on the grounds mentioned above. 4. The Ld. Departmental Representative vehemently submitted that the Ld. CIT(A) has committed error in deleting the addition despite the adverse evidence that the nature and source of the cash credit was unexplained and the same had been routed through shell Companies. Further submitted that, the Ld. CIT(A) has also erred in holding that‘addition which was not based on incriminatingmaterial found during the search could not be made in the assessment u/s 153A of the Act’ and consequently committed error in deleting the addition without going into the merit of the case. The Ld. Department's Representative submitted that the search conducted and the documents seized during the search sparked the assessment proceedings against the Assessee and the A.O. 4 ITA No. 1516/Del/2020 DCIT Vs. SomHari Infrastructure Pvt. Ltd. has also relied on enquires conducted by Investigation Wing. Therefore, sought for allowing the Appeal. 5. The Ld. Departmental Representative has also filed written submission which is reproduced as under:- “Sub: Submission on behalf of the Department in the above captioned appeal - Reg. It is humbly submitted that the below mentioned decisions support the case of the Department on the issue of incriminating material found during the course of search, and the same may kindly be considered S. No. Citation Relevant para 1 K. Krishnamurthy [2025] 171 taxmann.com 413 (SC) dated 13.02.2025 Para (40 & 41 therein defines the scope of material found during the course of search & inquiries conducted/emanating based upon documents/facts unearthed during search of assessee or simultaneously even of third parties were held to be 'found during the course of search'. 2 AbhisarBuildwell (P.) Ltd. [2023] 149 taxmann.com 399 (SC) dated 24.04.2023 Para 14(iii) & (iv) therein mention that incriminating material found during the course of search can be used to frame assessments in unabated & abated assessment years. 3 Mukundray K. Shah [2007] 160 Taxman 276 (SC) dated 10.04.2007 Para 12 therein brings out that if post-search inquiries are made based upon a document found during the course of search, then the same shall lead to invocation of provisions of search assessments. The copies of these decisions are enclosed herewith for kind reference.” 5 ITA No. 1516/Del/2020 DCIT Vs. SomHari Infrastructure Pvt. Ltd. 6. Per contra, the Ld. Assessee's Representative submitted that the addition made by the A.O. is beyond the scope of provision of Section 153A of the Act as no incriminating material or evidence had been found during the course of search so as to make the addition of loan as has been made by the A.O. The Ld. Counsel for the Assessee relying on the findings and conclusions of the Ld. CIT(A), submitted that the case of the Assessee is squarely covered by Judgment of Hon'ble Supreme Court in the case of PCIT Vs. Abhisar Buildwell reported in 2023(4) TMI (056)(S.C) and other plethora of Judgments. Thus, sought for dismissal of the Appeal filed by the Department. 7. We have heard both the parties and perused the material available on record. For the sake of adjudicating the present Appeal, certain dates are relevant, the Assessee filed return of income u/s 139(1) of the Act on 29/09/2022. The search and seizure action u/s 132 of the Act was carried out on 15/11/2017. As on the date of the search, no assessment proceedings were pending for the year under consideration. It is a settled law that in the absence of any incriminating seized material found during the course of search, no addition can be made in the assessment u/s 153A of the Act. 6 ITA No. 1516/Del/2020 DCIT Vs. SomHari Infrastructure Pvt. Ltd. 8. On the plain reading of the Assessment Order, at no point of time, the Ld. A.O. referred any seized material which has been made basis for the impugned addition. The A.O. has only mentionedthe date of search,however, not referred any incriminating material found during the course of search which could be basis for the addition made ultimately. The only addition made by the A.O. is on account of unsecured loan u/s 68 of the Act. The Ld. A.O. in Para 5 mentioned regarding ‘the balance sheet’ of the Assessee which has been made basis for making the impugned addition. Though the Ld. Departmental Representative filed copy of Annexure-21,26, 28 & 34, which are seized materials, however, those annexures are neither referred in the Assessment Order and not made reliance to make the impugned addition. When the Ld. A.O. himself has not referred the incriminating seized material in the assessment order in order to make the addition, the Department cannot improve the case of the A.O. before the Tribunal by readingsomething which is not written in the assessment order. 9. In so far as, the Judgment of Hon'ble Supreme Court relied by the Ld. Departmental Representative in the case of K. Krishna Murthy (supra), the subject matter of the said case was penalty u/s 271AAA of the Act, wherein the addition has been made on account of undisclosedincome arising out of search and the said addition has been 7 ITA No. 1516/Del/2020 DCIT Vs. SomHari Infrastructure Pvt. Ltd. made based upon own admission of the Assessee during the course of the search and since a quantum was confirmed, the penalty u/s 271AAA was upheld. Therefore, the said Judgment is not applicable to the case in hand. 10. In so far as Judgment of Hon'ble Supreme Court in the case of Abhisar Buildwell Pvt. Ltd. relied by the Ld. Department's Representative, it is seen that in para (iii) and (iv) of the said Judgment, it is held that, in the absence of incriminating material found during the search, no addition can be made in the unabated assessment. In the present case which can be seen from the assessment order, that there is no reference to any incriminating material found during the search which resulted in the addition. 11. Further, the Judgment rendered in the case of Mukundray K. Shah [2007] 160 Taxman 276 (S.C) dated 10.04.2007 relied by the Ld. Department's Representative is concerned, the addition therein was made based upon seized diary which was sparking point for the assessment proceedings. In the present case, there is no such seized material available with the A.O. which was made basis for making the addition in the Assessment Order. 8 ITA No. 1516/Del/2020 DCIT Vs. SomHari Infrastructure Pvt. Ltd. 12. The Hon’ble Apex Court in the case of Abhisar Build well (supra) upheld the viewof the Jurisdictional High Court in the case of Kabul Chawla (supra), that in the absence of any incriminatory seized material found during the course of search, no addition can be made in an assessment made u/s 153A of the Act where, on the date of search, no assessment is pending for the relevant Assessment Year. 13. In the present case, the A.O. has not referred any incriminating material found during the course of search, which could be thebasis for the impugned addition and the addition has been made only on the account of unsecured loan u/s 68 of the Act de-hors any incriminating material found during the search. Taking into consideration that as on the date of search,no assessment proceedings were pending for the year under consideration, in our opinion, the Ld. CIT (A) has committed no error in quashing the assessment proceedings by relying on the ratio laid down in the case of Kabul Chawla (supra), which has been upheld by the Hon'ble Supreme Court in the case of Abhisar Buildwell (supra). Thus we find no merits in the Grounds of Appeal of the Revenue, accordingly, Appeal of the Revenue is dismissed. Order pronounced in the open court on 30th April , 2025 Sd/- Sd/- (MANISH AGARWAL) (YOGESH KUMAR U.S.) ACCOUNTANT MEMBER JUDICIAL MEMBER Date:- 30.04.2025 9 ITA No. 1516/Del/2020 DCIT Vs. SomHari Infrastructure Pvt. Ltd. R.N, Sr.P.S* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI "