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*      IN THE HIGH COURT OF DELHI AT NEW DELHI
                                    Date of Decision: 14.11.2019
+      ITA 186/2019
       THE PR. COMMISSIONER OF INCOME TAX-CENTRAL-3
                                                   ..... Appellant
                          Through:    Mr. Ajit Sharma, Senior Standing
                                      Counsel with Ms. Adeeba Mujahid,
                                      Junior Standing Counsel.
                          versus

       ANKUSH SALUJA                                        ..... Respondent

                          Through:
       CORAM:
       HON'BLE MR. JUSTICE VIPIN SANGHI
       HON'BLE MR. JUSTICE SANJEEV NARULA

SANJEEV NARULA, J. (Oral):
1. The present appeal under Section 260A of the Income Tax Act
(hereinafter referred to as ,,Act) is directed against the order dated
07.12.2017 passed by the Income Tax Appellate Tribunal (hereinafter
referred to as ,,ITAT) Bench B New Delhi in ITA 2047/De1/2016 for the
Assessment Year (AY) 2007-08, whereby the appeal filed by the Appellant
against the order of CIT (A) dated 25.01.2016, challenging the deletion of
additions made under Section 68 of the Act on account of unexplained cash
credit has been upheld.


2. The factual matrix of the case giving rise to the present appeal is that a
search and seizure operation under Section 132 of the Act was initiated by
the investigation wing of the Department on 12.01.2011 in respect of the




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Saluja group. Cash and jewellery belonging to the Respondent (hereinafter
referred to as ,,Assessee) was also found and seized from the residence of
the assessees father ­ Mr. Vinod Saluja, in whose name the search warrant
of authorization was issued. The satisfaction note was recorded by the
Assessing Officer in this regard and a notice under Section 153C read with
Section 153A was issued and served on the assessee. In response thereto,
the assessee filed his return of income, declaring an income of Rs.
4,97,608,70/-. The Assessing Officer (AO) after considering the explanation
of the assessee treated the unsecured loans, in the sum of Rs. 11,90,57,300/-
as unexplained credit under Section 68 of the Act and made an addition to
that effect. The assessment was completed under Section 153C read with
Section 153A of the Act      on 14.03.2013, determining the total taxable
income of Rs. 16,88,18,170/-.


3. The assessee filed an appeal before CIT (A), which was allowed in favour
of the assessee. Following the decision of this Court in the case of CIT v.
Kabul Chawla 380 ITR 573 (Del) dated 25.01.2016, the addition made by
the AO was deleted. The operative portion of the said order of the CIT (A)
reads as under:
     "5.3 "Findings: The findings are as under:-

     5.4 I have carefully considered assessment order, written
     submissions, case laws relied upon and oral arguments of Ld.
     AR. The objections/arguments of the appellant, are discussed as
     under:-

     (i) It has been submitted by the Appellant that the original
     assessment u/s 143(3) was completed on 18.12.2009, consequent
     of search and seizure action u/s 132 on 12.01.2012. In the








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     assessment order, no addition was made and the assessment was
     completed at returned income of Rs.4,97,60,866/-.

            However, in the subsequent search and seizure action u/s
     132 of the Act on 12.01.2012, no incriminating document was
     found. It has been further submitted that the earlier assessment
     u/s 143(3), was completed on 18.12.2009, before initiation of
     action u/s 132 on 12.01.2012 and therefore, the assessment was
     not abated at the time of initiation of second search on
     12.01.2012, consequence of which, the assessment order passed
     by the A.O. on 14.3.2014, is challenged in this appeal.

     (ii) It has been further submitted by the Appellant that
     subsequent to the search and seizure action u/s 132 of the act,
     assessment u/s 153A/153C was completed on 14.3.2014, at total
     income of Rs.16,88,18,170/-, after making addition u/s 68 as
     unexplained cash credit on account of unsecured loan, but
     without referring any incriminating document found/seized
     during the search and seizure action u/s 132. Therefore, it is
     submitted that addition made by the A.O., is without any
     jurisdiction for making such illegal and untenable addition u/s 68
     of the Act.

            In view of the above facts, it is submitted by the appellant
     that decision of the Hon'ble jurisdictional High Court of Delhi, in
     the case of CIT vs. Kabul Chawla 61 Taxmann.com 412 (Del.), is
     squarely applicable to the facts of the appellant.

     In view of the above, it is clear that:

     (a) The original assessment order dated 18.12.2009, passed u/s
     143(3), was completed before the initiation of search and seizure
     action u/s 132, on 12.01.2012. Therefore, I hold that no
     assessment/ reassessment proceedings, were abated as on
     12.01.2012 i.e. the date of initiation of action u/s 132 of the Act.
     (b) It is also clear from the assessment order that the addition
     made by the A.O. u/s 68, is not based on any incriminating
     document found/seized during the search action u/s 132 and




ITA 186/2019                                                   Page 3 of 6
     therefore, I hold that the A.O. has no jurisdiction to make an
     addition u/s 68, while passing order u/s 153A/153C. This view is
     also supported by the ratio laid down by the Hon'ble
     Jurisdictional High Court of Delhi, in the case of C1T Vs. Kabul
     Chawla 61 Taxmann.com 412 (Del), which is squarely
     applicable to the facts of the appellant.

     In view of the above, I agree with the arguments of the appellant
     and therefore, addition made by the A.O. u/s 68, in absence of
     any incriminating document/evidence, cannot be sustained.

     Accordingly, ground no. 3 and 8, are hereby, allowed."

4. With respect to the addition of Rs. 11,90,57,300/-, the CIT (A) made the
following observations:
     "6.5      Findings: The findings are as under:

     6.6     I have carefully considered assessment order, written
     submission, case laws relied upon, remand report of the A.O.,
     rejoinder filed by the appellant and oral arguments of Ld. AR.
     The objections/arguments of the appellant, are discussed as
     under:

     (i)     The addition of Rs. 11,90,57,300/-, on account of
     unsecured loans u/s 68 of the Act, has been made u/s 153C/153A,
     without referring any incriminating document found during
     search and seizure action u/s 132. Therefore, it is submitted by
     the appellant that in absence of any incriminating document, no
     addition can be made u/s 153C/153A, when the assessment of
     this year, is not abated.

     (ii)    As, I have already held (supra), while deciding in ground
     no. 3 & 8, that no addition can be made in the assessment order
     u/s 153A, in view of the ratio laid down by Honble
     Jurisdictional High Court of Delhi, in the case of CIT Vs. Kabul
     Chawla (supra), if:









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             Assessment is not abated, at the time of initiation of
     action u/s 132 of the Act and

               No incriminating document is found during action u/s
     132.


     In view of the above, it is not necessary to adjudicate ground no.
     1, 4 to 7.

     7.       Ground no. 9 is against charging of interest u/s 234A and
     234B of the Act. This ground is consequential in nature. The
     A.O. is directed to charge interest as per provision of the Act, on
     total income, after giving effect to this order. Therefore, for
     statistical purposes, ground no. 9, is treated as allowed.

     8.        In the result, the appeal is partly allowed."

5. Aggrieved with the aforesaid order of the CIT (A), Revenue filed an
appeal before the ITAT. The Tribunal concurred with the findings of the
CIT (A), and also relying upon the decision of this Court in Kabul Chawla
(supra), dismissed the appeal, inter alia holding as under:

     "8.     In the present case, even no incriminating document was
     found during the course of search so as to make the addition
     under section 68 of the I.T. Act on account of unexplained cash
     credit. The Ld. CIT (A) in view of these findings did not decided
     the issue on merit. The above discussion clearly show that
     department has no case for interference. The Ld. D.r. has not
     pointed out any infirmity in the order of the Ld. CIT (A).

     9.        In the result, appeal of the department stands dismissed.
               Order pronounced in the open Court."

6. The Revenue has filed the present appeal challenging the impugned order




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passed by the ITAT contending that the AO had correctly assumed
jurisdiction under Section 153C of the Act.       The ITAT has failed to
appreciate that the documents belonging to the assessee were found and
seized during the course of search under Section 132 of the Act.


7. We have perused the orders passed by the Tax Authorities. There are
concurrent findings of fact to the effect that the additions made by the
Assessing Officer under Section 168 are not based on any incriminating
document found/seized during the search action under Section 132 of the
Act. In this view of the matter, the assumption or jurisdiction under Section
153C by the AO was not justified and accordingly the additions made under
Section 68 cannot be sustained. The concurrent factual position is squarely
covered by the decision of this Court in CIT v. Kabul Chawla (supra).
Thus, the present appeal does not raise any substantial question of law and
we therefore are not inclined to entertain the present appeal and accordingly
the same is dismissed.




                                                   SANJEEV NARULA, J



                                                       VIPIN SANGHI, J
NOVEMBER 14, 2019
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