The Pr. Commissioner of Income Tax-Central-3 v. Abhisar Buildwell P. Ltd.

1. Allowed,subjectto alljustexceptions. ITA 239/2018 and ITA 240/2018

2. These are two appealsfiled against the impugned common order dated 4^ July 2017 passed by the ITAT in ITA No.4877/Del/I[4] & 2878/Del/20I[4] for the Assessment Years (AYs)2007-08and2008-09,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 assessmentsframed under Section 153A ofthe Income Tax Act, I96I (the Act)on the basis that there was no incriminating materialqua the Assessee.

4. The facts in brief are that a search was conducted on 2P'January, 2011 in Dharampal Satyapal group of cases. ITA 240/2018 Page2of[4] Consequent thereto, a notice under Section 153A ofthe Act was issuedto the RespondentAssessee, an entity createdon demerger of rubber thread unit of Dharampal Satyapal Ltd. (DSL). The Assessee, in the returnfiled in response to the notice, declared a loss in each ofthe AVs. The Assessee claimed depreciation in the sum ofRs.1.05,84,885/-for AY2007-2008andRs.9,50,75,0917-for AY2008-2009. The Assessing Officer(AO)acted on the report of SpecialAudit ordered in the case ofDSL under Section 142(2A)of the Act, after the search, and concluded thatthe depreciation could not have been claimed in respect ofassets acquired by DSL out of the deferred government grant in terms of Explanation 10 to Section 43(1)ofthe Act.

5. The Commissioner ofIncome Tax (Appeals)[CIT(A)] by the common order dated 25'^ April 2014 allowed the Assessee's appealsfor the AYs in question on the groundthatno incriminating materialqua the Assessee wasrecoveredduring the search. On this groundaccountthe CIT(A)deletedthe additions made by the AO.

6. TheITAThas dismissed the Revenue's appealrelying essentially on the decisions ofthis Court in CIT v. Kabul Chawla(2015)380 TTR 573(Del)and Pr. CIT v. Meeta Gutgutia Proprietor Ferns 'N'Petals(2017)395ITR 526

7. Learned counselfor the Revenue repeated the submission made before the ITAT viz., that the report ofSpecial Audit should be treated as incriminating evidence. Clearly the report ofthe Special Auditor, having been commissioned subsequent to the search, and during the assessmentproceedings against DSL, cannot obviously be treated as incriminating material qua the Assessee, recovered during the course ofsearch, in order tojustify the addition made in theassessment underSection 153A ofthe Act. Thisis consistent with the legal position explained in both CIT v. Kabul Chawla (supra)(which still holds thefield)andPr. CITv. Meeta Gutgutia Proprietor Ferns W Petals (supra). Dr. Rakesh Gupta, learned counselfor the Assessee appearing on advance notice produced before this Court copy ofan order dated 2"''July 2018passed by the Supreme Courtdismissing the Revenue's SpecialLeave Petition against the aforementioned judgment in Pr. CIT v. Meeta ITA 240/2018 Page3of[4] GutgutiaProprietor 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 ofthe ITAT. No substantial question oflaw arises therefrom.

9. The appeals are accordingly dismissed." AUGUST 05,2019 mr S.MTOAEID^R,j. TALWANT SINGH,J. ITA 240/2018 Page4of[4]