Dismissed¶22

The Pr. Commissioner of Income Tax -Central -1 v. Som Hari Infrastructure Pvt. Ltd.

Taxation – Search assessments – Addition for lack of creditworthiness of lending firm

Delhi HC7 Jan 2026ITA/699/2025

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Case brief

AI extract

What is this about?

High Court of Delhi; ITA 699/2025; decided 07 January 2026; Pr. Commissioner of Income Tax Central-1 v. Som Hari Infrastructure Pvt. Ltd.; search-based assessment AY 2012-13; addition of Rs.21,00,00,000/- for lack of creditworthiness of Kolkata firm; deletion upheld for want of incriminating material; Kabul Chawla principle ([2015] 61 taxmann.com 412 (Delhi)); affirmed by SC in Abhisar Buildwell ((2024) 2 SCC 433); issue factual, no question of law; departmental appeal and pending application dismissed.

What did the court decide?

None to the appellant; the appeal alongwith the pending application was dismissed. ¶22

The Pr. Commissioner of Income Tax -Central -1 Vs Som Hari Infrastructure Pvt. Ltd. — Delhi HC (2026) — LawSathi Research

What the court decided

AI extract

Outcome

None to the appellant; the appeal alongwith the pending application was dismissed.

¶22

Issue for consideration

Whether the AO's addition of Rs.21,00,00,000/- to the respondent-assessee's returned income for AY 2012-13, premised on the concerned Kolkata firm's lack of creditworthiness, could be sustained where the proceedings emanated from a search without incriminating material for that year; and whether the appellate issue involved any question of law.

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Court's answer

Upon hearing learned counsel for the appellant and perusal of the orders under consideration, the Court held the issue to be essentially one of facts, not involving any question of law.

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Ratio / Principle

It is a settled position of law that where no incriminating material is found for the relevant assessment year, the AO cannot make the addition, as held in Kabul Chawla (supra).

¶21

Key takeaways

The Court noted that this Court's judgment in Kabul Chawla (supra) has been affirmed by the Supreme Court in Principal Commissioner of Income Tax, Central-3 vs. Abhisar Buildwell Private Limited, (2024) 2 SCC 433.obiter¶18

Detailed headnote1 paragraphs

Taxation - Search assessments - Addition for lack of creditworthiness of lending firm - Absence of incriminating material. The High Court of Delhi (Dinesh Mehta and Vinod Kumar, JJ.) dismissed the Pr. Commissioner of Income Tax (Central)-1's appeal (ITA 699/2025; pending CM APPL. 75698/2025) challenging the ITAT (Delhi Bench 'G') order dated 30.04.2025, which had endorsed the CIT(A)-24 order dated 22.06.2020 deleting the AO's addition of Rs.21,00,00,000/- to the returned income of Som Hari Infrastructure Pvt. Ltd. for AY 2012-13, originally premised on the concerned Kolkata firm's lack of creditworthiness. Holding the issue essentially factual and not involving any question of law, the Court applied the settled principle in Commissioner of Income-tax (Central)-III vs. Kabul Chawla, [2015] 61 taxmann.com 412 (Delhi) - a judgment recorded by the Court as having been affirmed by the Supreme Court in Principal Commissioner of Income Tax, Central-3 vs. Abhisar Buildwell Private Limited, (2024) 2 SCC 433 - that where no incriminating material is found for the relevant assessment year, the AO cannot make the addition.

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$~2

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IN THE HIGH COURT OF DELHI AT NEW DELHI

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Date of decision:- 7^th January, 2026.

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- ITA 699/2025 and CM APPL. 75698/2025 THE PR. COMMISSIONER OF INCOME

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TAX -CENTRAL -1 .....Appellant Through: Mr Ruchir Bhatia, SSC and Mr. Anant Mann, JSC.

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versus

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SOM HARI INFRASTRUCTURE PVT. LTD. .....Respondent Through: None.

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CORAM:

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HON'BLE MR. JUSTICE DINESH MEHTA HON'BLE MR. JUSTICE VINOD KUMAR

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J U D G M E N T

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DINESH MEHTA, J. ( Oral )

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The present appeal relates to the addition of a sum of Rs.21,00,00,000/- to the returned income in the hands of the respondentassessee for the Assessment Year (AY) 2012-13, which was made by the Assessing Officer (AO) holding, inter alia, that the concerned firm located in Kolkata did not have creditworthiness.

¶13

The Commissioner of the Income Tax (Appeals)-24 ( hereinafter referred to as ‘CIT(A) ’) set aside the aforesaid addition vide his order dated 22.06.2020 holding that there was no incriminating material unearthed during the search proceedings. And the conclusion that the firm at Kolkata, which had advanced sum of Rs.21,00,00,000/- did not have creditworthiness was drawn only during the assessment proceedings. The CIT(A) also relied upon judgment of this Court in the case of Commissioner of Income-tax

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Signature Not Verified

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ITA 699/2025 Page 1 of 2

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Digitally Signed By:NAVEEN KUMAR Signing Da te:0 9.01.2026 19:02:48

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(Central)-III vs. Kabul Chawla, reported in [2015] 61 taxmann.com 412 (Delhi) and deleted the addition so made.

¶18

It is to be noted that the judgment of this Court rendered in the case of Kabul Chawla (supra) has been affirmed by Hon'ble the Supreme Court in the case of Principal Commissioner of Income Tax, Central-3 vs. Abhisar Buildwell Private Limited reported in (2024) 2 SCC 433.

¶19

In an appeal filed by the Department, against the above referred order of the CIT(A) dated 22.06.2020, the Income Tax Appellate Tribunal, (Delhi Bench ‘G’ New Delhi) also took the same view vide order dated 30.04.2025 and recorded a finding that since there was no incriminating material with the AO during the search and hence, therefore, addition for the Assessment Year 2012-13 was impermissible in law as the proceedings emanated from search.

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Having heard learned counsel for the appellant and upon perusal of the orders under consideration, we are of the firm view that the issue is essentially that of facts and does not involve question of law.

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That apart, it is a settled position of law that in case no incriminating material is found for the relevant assessment year, the AO cannot make addition as has been held in Kabul Chawla (supra) .

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The appeal alongwith pending application is, therefore, dismissed.

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DINESH MEHTA (JUDGE)

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VINOD KUMAR (JUDGE)

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JANUARY 7, 2026/MR

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ITA 699/2025 Page 2 of 2

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Signature Not Verified

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Digitally Signed By:NAVEEN KUMAR Signing Da te:0 9.01.2026 19:02:48

The Pr. Commissioner of Income Tax -Central -1 v. Som Hari Infrastructure Pvt. Ltd.

Case brief

What is this about?

What did the court decide?

The Pr. Commissioner of Income Tax -Central -1 v. Som Hari Infrastructure Pvt. Ltd.

Case brief

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What the court decided

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