PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL) V. M/S.MIDAS CAPITAL PVT.LTD.

ITA/92/2018

AI Insights

The case involves an appeal by the Principal Commissioner of Income Tax (Central), Vishakhapatnam against M/s. Midas Capital Pvt. Ltd., concerning an order by the Income Tax Appellate Tribunal, Cuttack Bench. The appeal questioned the ITAT's decision to set aside an assessment order which had made additions without any incriminating material found during a search and seizure operation. The court referenced several precedents, particularly from its own previous decisions and a significant Delhi High Court decision, which clarified that for assessments under Section 153A of the Income Tax Act, 1961, any additions must be substantiated by incriminating material directly related to the evidence found during the search.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 682830 (HC-ORISSA)
• Appeal Type: Others
• Pronouncement Date: 05-07-2022
• Assessment Year: misc
• Other Referred Cases: Smt. Jami Nirmala v. Pr. CIT, Bhubaneswar [2021] 437 ITR 573 (Orissa), Smt. Smrutisudha Nayak v. Union of India [2021] 439 ITR 193 (Orissa), CIT v. Kabul Chawla [2016] 380 ITR 573 (Delhi)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: R V EASWAR; MUKESH PANDA; S K TULSIYAN; RUBAL BANSAL; ANANYA RATH
• Assessee Lawyers: R CHIMANKA; A KEDIA
• Keywords: Assessment; Income Tax; Incriminating material; ITAT; Search and seizure
• Section: 153(A)

Judgement Text

" Page 1 of 3 IN THE HIGH COURT OF ORISSA AT CUTTACK ITA No.92 of 2018 Principal Commissioner of Income Tax (Central), Vishakhapatnam …. Appellant Mr. R. Chimanka, Sr. Standing Counsel along with Mr. A. Kedia, Jr. Standing Counsel -versus- M/s. Midas Capital Pvt. Ltd. …. Respondent Mr. R.V. Easwar, Senior Advocate along with Mr. Mukesh, Panda, Advocate Mr. S.K. Tulsiyan, Advocate Ms.Rubal Bansal, Advocate Ms. Ananya Rath, Advocate CORAM: THE CHIEF JUSTICE JUSTICE R.K. PATTANAIK ORDER 05.07.2022 Order No. 03. 1. The present appeal by the Revenue is directed against an order dated 23rd March 2018 of the Income Tax Appellate Tribunal, Cuttack Bench, Cuttack (ITAT) in IT(SS)A No.04/CTK/2018 for the assessment year 2011-12. 2. The questions sought to be urged by the Revenue in the present appeal, inter alia, are; (i) Whether the ITAT was correct in setting aside the assessment order holding that no addition can be made in an assessment under Section 153 A of the Income Tax Act, 1961 (Act) consequent to a search and seizure action when no incriminating material was found relatable to the issue on which addition was made? Page 2 of 3 (ii) Whether in the event of a concluded assessment, the necessity for finding incriminating material is relevant? 3. Having heard Mr. Chimanka, learned Senior Standing Counsel for the Revenue and Mr. Easwar, learned Senior Advocate appearing for the Assessee, the Court finds that both the questions stand answered in favour of the Assessee and against the Revenue by two decisions of this Court in Smt. Jami Nirmala v. Pr. CIT, Bhubaneswar [2021] 437 ITR 573 (Orissa) and Smt. Smrutisudha Nayak v. Union of India [2021] 439 ITR 193 (Orissa). Reference has been made by this Court in the said decisions to the decision of the High Court of Delhi in CIT v. Kabul Chawla [2016] 380 ITR 573 (Delhi) where, inter alia, while summarizing the legal position, it was observed as under: “xxx xxx xxx iv. Although Section 153A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the assessing officer which can be related to the evidence found, it does not mean that the assessment “can be arbitrary or made without any relevance or nexus with the seized material. Obviously, an assessment has to be made under this Section only on the basis of seized material. xxx xxx xxx vii. Completed assessments can be interfered with by the assessing officer while making the assessment under section 153A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed Page 3 of 3 income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment.” 4. Consequently, this Court declines to frame the questions as urged by the Revenue in the present appeal. Accordingly, the present appeal is dismissed. (Dr. S. Muralidhar) Chief Justice (R.K. Pattanaik) Judge S.K. Guin "