TaxTMI 
TaxTMI 
2025 (3) TMI 216
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....peals) 24, Delhi [Ld. 'CIT (A)] has erred in confirming the order dated December 30, 2021 passed u/s.153C r.w.s.143(3) of the Income Tax Act, 1961 ("Act") passed by the DCIT, CC-7, Delhi ['AO'], in complete violation of the principles of natural justice and also without fair and objective application of mind to the facts of the case and law and hence liable to be quashed. 2. On the facts and circumstances of the case and in law, the CIT (A) erred in sustaining the action of AO in completion of proceedings u/s 153C of the IT Act, solely on the basis Unverified/unconfirmed statement recorded under section 132(4) of the Act of the employees Jindal Bullion Limited who have searched under section 132 of the Act on 04.01.2017. 3. On the facts and circumstances of the case and in law, the Ld. CIT (A)/AO erred in not appreciating that no addition could be made in the hands of the appellant merely on the alleged statements of the employees of the Buyer recorded under section 132(4) of the Act without having any corroborating evidences without having any incriminating material belongs to the appellant found during the search on Buyer. 4. On the facts an....
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....g the penalty proceedings under section271(1)(c) of the Act." Additional Grounds of Appeal "1. That on the facts and circumstances of the case and in law, the assessment order dated 30.12.2021 (hereafter 'the assessment order) passed under section 153C rws 143(3) of the Income Tax Act, 1961 (hereafter 'the Act'), is illegal and invalid in the eyes of law, since the same was issued without quoting DIN on the body of the assessment order as well as without providing the reasons or obtaining necessary prior approval for such issuance in violation of the CBDT Circular No. 19/2019 dated 14.08.2019. 2. That on the facts and circumstances of the case and in law the assessment order is illegal and beyond jurisdiction, since the satisfaction dated 04.02.2021 recorded by the Respondent before initiating proceedings u/s. 153C of the Act, after a laps of more than a year from the date of conclusion of assessment proceedings in the case of 'searched person', was barred by limitation. 3. That on the facts and circumstance of the case and in law, the assessment order is illegal and beyond jurisdiction, since the approval obtained from the Addition....
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....urchased in cash from JBL. 6. The Ld. CIT(A) affirmed the additions made in the assessment order by observing that since the bank transactions found recorded in the seized ledger were correct and pertained to the assessee firm, it will not be appropriate to accept that the cash transaction mentioned in the same account did not pertain to the assessee. The Ld. CIT(A) in his order stated that the data of Hazir Johri software was found during search and in view of section 292C of the Act, the same is presumed to be true and correct. Further, the Ld. CIT(A) also rejected the request for providing the complete copies of statement and cross examination of Parul Ahluwalia as the said statement was not the primary evidence on the basis of which additions were made, which also got corroborated with the seized material found during the search. The relevant findings and order of the Ld. CIT(A) are reproduced as under:- "4.1.20 As held by the Assessing Officer, these transactions indicate the purchase of bullion from M/s Jindal Bullion Ltd. No effective and convincing explanation of these cash transactions have been provided during the course of assessment and subsequent appellate ....
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....former employee of M/s. JBL. In her statement, however, Ms.Ahluwalia made no mention of any cash transactions involving the assessee, nor was she specifically questioned about such transactions. Given that the "Hazir Johri" ledger was neither maintained by nor recovered from the assessee, the presumption under Section 292C read with section 132(4A) of the Act does not apply to the assessee. Thus it was argued that no presumption could be drawn against the assessee on the basis of seized material found in the search of third party, when no corroborative evidence in related to such transactions was found implicating the assessee. Reliance was placed on the following case laws in support of this proposition:- a) ITAT Delhi decision in Sh. Rajeshwar Singh Yadav Vs DCIT in ITA Nos. 1909 & 1910/Del/2022, which limits such presumptions to persons from whom documents are actually seized. b) Hon'ble High Court of Allahabad in the case of CIT vs. Babu Mohan Arya Smarak Educational Trust reported in 42 taxmann.com 255 (Allahabad). c) ITAT Mumbai decision in the case of Straptex India P Ltd. v Dy. CIT reported in 84 ITD 320 (Mum). d) ITAT Chandigarh decision....
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....d parties were included, illustratively some of the transactions are reproduced hereunder:- Ankit - Given 29.489 kg silver to JBL on 19.10.2015 (enclosed in Page 33 of Paper Book) Kls (Telwale) - Given 88.7490 kg silver to JBL on 19.10.2015 (enclosed in Page 33 of Paper Book) Kamty - Rs 6,12,027.14/- given by JBL to this party on 16.12.2015 (enclosed in Page 34 of Paper Book) 11. The Ld. AR also drew our attention to the seized ledger in which against the bank payments, name of the respective party i.e., Assessee firm or other parties were mentioned. However, against the alleged cash payment, no names are mentioned. Therefore, even if one believes that the cash payment to be true it cannot be said how much cash is attributable to which party. This pattern of recording the entries raises a serious concern whether while making the entries, the accountant of JBL have posted the cash entries in the wrong ledgers or deliberately, the cash entries were posted in the ledgers of genuine parties, like Assessee firm, for concealing the identity of the actual cash buyers and to reflect the correct profitability. 12. Ld. AR also pointed out that out of the non-....
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....e Ld. AO or the Ld. CIT(A) grossly failed to bring on record any corroborative evidence like sales bills/vouchers, stock register showing the cash sales etc. to prove that the alleged cash sales belong to Assessee firm. Reliance in this regard is placed on recent decision of Co-ordinate Bench of Delhi Tribunal in the case of Surender Kumar Jain in ITA No. 1314/Del/2023 dated 07.03.2024 arising out of search in the JBL, wherein it was held that entries in the Hajir Johri ledger of M/s. JBL, supposedly involving M/s. S.K. Impex, do not prove actual transactions without corroborative evidence such as bills or invoices. The additions are based on conjecture and the statement of Mr. Parul Ahluwalia lacking supporting evidence was deleted. 17. Ld. AR further drew our attention to the additional grounds raised vide application filed in 16.08.2023 contending that only jurisdictional grounds were taken for which facts were on record not warranting any further investigation therein placing reliance upon the decision of Hon"ble Supreme Court in the case of NTPC Ltd vs. CIT reported in 229 ITR 383 (SC). Out of the 3 grounds taken, the Ld. AR argued upon additional ground no. 2, dealing with....
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....se of 13 months, more particularly, when the same was recorded by the same AO who was seized of the entire record of JBL, right from beginning and had completed assessment of JBL, there was no reason to sit on the file for over 13 months to record satisfaction against third parties and therefore, the same was barred by limitation in terms of mandatory CBDT guidelines. 20. Per contra, the Ld. DR vehemently relied on the orders of the lower authorities and argued that the Hazir Johri Software, the accounting data of which was seized during the search on JBL, was full fledged database which was meticulously prepared to record the banking transactions as well the unaccounted cash transactions. Further, it was also argued that the persons belonging to JBL in their statement recorded under section 132(4) of the Act during the search admitted that accounted (genuine transaction disclosed in the regular books of accounts) as well as unaccounted cash entries were recorded in the Hajir Johri software. The said statements were never retracted by the said persons. Ld. DR also highlighted an instance in seized ledger, i.e., transaction dated 16.12.2015, where the cash of Rs. 6,12,028/- was r....
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....aws relied upon by the Ld. AR are factually distinguishable as in those cases, there was no crisis situation like Covid 19 outbreak which were prevailing. 23. Rebutting to the arguments of the Ld. DR, it was argued that the instance in the seized ledger dated 16.02.2015 wherein the alleged cash received by the JBL is attributed to the Assessee solely on the basis that the name of the Assessee "Sanmati gold 25435" was found mentioned in the said ledger. Ld. AR argued that no evidence in the form of bill/voucher was ever produced which proves that the cash payment mentioned belongs to the Assessee. Further, Ld. AR referred to the said entry of the seized material and pointed that the delivery of 240.624 grams of gold against the alleged cash payment was made to a party named "Kamty" which is not related to the Assessee, therefore, the reference to the said entry itself proves that the seized ledger in which the cash payment which is said to have received from the Assessee against which the delivery of gold/silver were made to some other person completely unrelated to the Assessee, is a dumb document on the basis of which no addition can be made in the hands of the Assessee. 24.....
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....sequent assessment proceedings initiated under section 153C barred by limitation. 27. We have heard the rival submissions and perused the materials available on record. At the outset, we find that a search and seizure operation was conducted u/s 132 of the Act on 05.01.2017 in the case of Jindal Bullion Ltd (JBL). During this search, digital data stored in software called "Hazir Johri" was seized from the residence of Mr. Kushagra Jindal, promoter of JBL. The said software purportedly contained parallel books maintained by JBL where both transactions through the banking channel and cash transactions were found recorded. The Ld. AO observed that a statement of Ms. Parul Ahluwalia, Director and former employee of JBL, was recorded under Section 132(4) of the Act, wherein, she stated that both "pakka" (entries recorded in regular books of account) and "kaccha" (unaccounted) transactions undertaken by JBL were documented in the "Hazir Johri" software. On perusal of seized data, among others, a ledger named "Sanmati 1586" allegedly pertaining to Assessee was found. In the said ledger, the transactions made in cash as well as through banking channel were found recorded. But it is pert....
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....rd are as under:- "30. The banking transactions pertaining to other entities such as Aarthav Gems & Jewels Pvt. Ltd., Surasti Overseas Pvt. Ltd., M/s Saumya Bullion &Jewellers were also recorded in the account AP whereas it had nothing to do with the assessee. In the Remand Report dated 02.08.2021 the Assessing Officer verified all these banking transactions and accepted the contentions of the assessee. In other words, it was verified by the Assessing Officer that some of the banking transactions recorded in the account AP pertain to other entities and not the assessee. Only 23% of the total banking transactions pertain to assessee and remaining 77% are between JBL and other parties. In the facts of the assessee's corroboration is missing. It is for the searched party i.e. JBL to explain the contents of material recovered from his premises. In case the searched party states that the material belongs to a third party there has to be some connect or corroboration with the third party. On the facts of the present case there is no direct evidence to establish that the account AP belongs to Anoop Soni. The entire action is based on presumptions made by the A.O. Notably, sim....