The assessee, a commission agent operating through his proprietary concern had entered into an agreement with a non-resident company, for facilitating RBI contracts for supply of banknote paper. The agreement terminated on 31.12.2012. A search was conducted under Section 132 on 26.12.2016, and assessments for AYs 2012-13 to 2017-18 were reopened under Section 153A. The Assessing Officer made additions across all years, alleging that remittances continued from foreign group entities related to the aforementioned non-resident company, which he treated as undisclosed income arising from the same line of activity.

The Delhi High Court upheld the ITAT’s decision deleting all additions, holding that there was no incriminating material found during the search to support additions for the unabated assessments (AYs 2012-13 to 2015-16). It relied on the settled law laid down in Kabul Chawla and Abhisar Buildwell that completed assessments under Section 153A cannot be reopened without incriminating evidence. The Court observed that the payments in question were already disclosed, and there was no fresh material linking them to any business activity post-termination of the agreement. For AYs 2016-17 and 2017-18, the Revenue also failed to establish any active Indian business connection or evidence of services rendered. Since the entire assessment was based on assumptions rather than evidence, the Court held there was no substantial question of law and dismissed the Revenue’s appeals.(AY. 2012-13 to 2017-18)