TaxTMI 
TaxTMI 
TaxTMI 
2026 (4) TMI 237
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....el/2025, C.O. NO. 258/Del/2025, ITA No. 4427/Del/2025, ITA No. 4428/Del/2025, ITA No. 4429/Del/2025, C.O. No. 149/Del/2025, C.O. No. 150/Del/2025, C.O. No. 151/Del/2025 SHRI SUDHIR KUMAR, JUDICIAL MEMBER AND SHRI MANISH AGARWAL, ACCOUNTANT MEMBER For the Revenue : Ms. Pooja Swaroop, CIT(DR) For the Assessees : Sh. Rohit Jain, Adv., Ms. Tejasvi Jain, CA and Sh. Shivam Gupta, CA ORDER PER BENCH : These bunch of 20 appeals by the Revenue and 20 cross objections by the Assessee are preferred against the respective orders of the Ld. CIT(A), Delhi for the respective captioned assessment years. Since common grounds have been taken in all the appeals of the revenue as well as cross objections of the assessee, hence, these were heard together and are being consolidated by this common order for the sake of convenience, by dealing with the facts of ITA Nos. 3766, 3767 & 3764/Del/2025 (AYrs. 2018-19 to 2020-21) in the case of Sh. Navneet Chaurasia, being the lead case. 2. The brief facts of the case are that the assessee is an individual and a resident of tax purposes in India. For the previous years relevant to the assessment years 2018-19 to 2020-21, the assessee filed r....
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....ed diamonds belonging to the family members were later sold by Sh. Shashi Kant Chaurasia to various diamond merchants in the previous year, relevant to assessment years 2017-18 to 2021-22. Accordingly, the family members, in their respective income tax returns, declared long term capital gains arising on sale of processed diamonds and paid tax thereon. Pursuant to search carried out on Kamla Prasad group of cases on 15.1.2020, all the cases of Chaurasia Family, including the assessee's, were centralized and assessment were completed under section 153A/153C/143(3) of the Act. It was further submitted that identical assessment orders were passed in the case of all the family members of Chaurasia family, including the assessee and Shri Shashi Kant Chaurasia. It was submitted that in the impugned assessment years viz. 2018-19 to 2020-2021, consideration received on account of sale of diamonds were treated as unexplained cash credits under section 68 and additions were also made on account of alleged commission under section 69C of the Act. He further submitted that on further appeal, the CIT(A) following the decision of the Tribunal in the case of Shashi Kant Chaurasia vs. DCIT ITA Nos....
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....arly provides that IDS declaration is to be treated as conclusive proof of matters contained therein and binding on all the parties including the regulatory authorities. Hence the existence of rough diamonds to the extent of 12857.07 carats cannot be doubted by the revenue. If it is doubted, then the purpose of making payment of taxes of Rs 22.24 crores gets defeated. We hold that that IDS 2016 declaration cannot be doubted by the revenue in the light of sovereign commitment given by the Government of India. Further the observation of ld CITA that diamonds were not declared in earlier income tax or wealth tax returns by the assessee is absurd in view of the fact that the assessee had made the declaration of undisclosed asset under IDS 2016 and the same has been accepted by the ld PCIT by issuing Form No. 4 thereon. If the diamonds had earlier been declared in any tax returns, then why the assessee would even come forward to declare the same in IDS 2016. This argument of the revenue is simply absurd and only indicates the pre-determined mind in order to reach the pre-determined destination of taxing the receipt of sale consideration by any means whatsoever. 14. It is a fact....
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....e consideration, ITRs etc . 18. It is pertinent to note that assessee had acquired the rough diamonds by way of gift from grandfather and that the diamonds (both rough as well as processed diamonds), were always kept in lockers maintained by the assessee and other family members for safe keeping and this fact has categorically been affirmed/ confirmed by all the family members and the assessee in their respective statements:- - Relevant extracts of statement of the assessee dt. 15.01.2020 is enclosed in Pages 739 to 765 of Paper Book; - Relevant extracts of statement of Sh. Mayank Chaurasia dt. 15.01.2020 is enclosed in Pages 857 to 867 of Paper Book; - Relevant extracts of statement of Sh. Navneet Chaurasia dt .15.01.2020 is enclosed in Pages 815 to 833 of Paper Book; - Relevant extracts of statement of Sh. Rajiv Chaurasia dt. 16.01.2020 is enclosed in Pages 896 to 904 of Paper Book; - Relevant extracts of statement of Sh. Vijay Anand Chaurasia dt. 15.01.2020 is enclosed in Pages 868 to 879 of Paper Book. 19. We find that all the family members, in their separate statements, categorically and consistently confirmed the....
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.... relied upon in the facts of the instant case as it is contrary to the cogent evidences placed on record by the assessee. 22. We find that the expenditure in respect of cutting and polishing of diamonds was undertaken by the assessee in the immediately preceding assessment year 2017-18, wherein no adverse inference has been drawn by the ld AO. What was declared by the assessee in IDS 2016 was only rough diamonds. Hence the said diamonds are to be processed in order to fetch better pricing in the market, thereby making the processing of diamonds imperative . Moreover, the price of diamonds is dependent upon its various features, size, colour, clarity grading, fineness/ cutting shape etc. It is a fact that processing of rough diamonds into cut and polished diamonds was undertaken by the assessee through various parties, which details in comprehensive manner were duly furnished by the assessee as under:- - Complete details of parties including contact particulars of the job workers; - Ledger accounts of the job-workers enlisting the expenses and payments; - Copies of invoices issued by the job-workers; - Copies of bank statements of the ass....
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....iness, address, transaction details with assessee and copy of ITRs enclosed in Pages 287 to 292 of Paper Book * Copy of letter dated 26.09.2021 filed by the assessee who apprised the ld AO that due to dilapidated conditions of the building the office of Niti Impex had shifted - enclosed in Pages 983 to 993 of Paper Book. (iv) Misty Enterprise: * Copy of ledger account enclosed in Page 293 of Paper Book * Copy of bills/invoices& inspection memo enclosed in Pages 294 to 297 of Paper Book * Copy of bank statements from where the payments were made - enclosed in Pages 298 to 299 of the Paper Book * Copy of response filed by the party to notice issued u/s 133(6) (received under RTI) of the Act - providing details of nature of business, transaction details with assessee and copy of ITRs enclosed in Pages 300 to 301 of Paper Book. 24. In so far as the specific allegations of the ld AO in respect of processing of diamonds are concerned, the same was rebutted by the ld AR as under:- (a) Allegation that the assessee failed to provide any details in respect of communication made with the parties who undertook cutting and ....
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....s violation of principles of natural justice, and the assessee is, therefore, unable to provide an effective rebuttal to the same. Even otherwise, factual rebuttal to the aforesaid allegation is specifically provided at Pages 1076 to 1156 of Paper Book, being the detailed submission filed before the ld CITA. 25. It is pertinent to note here that notices issued by the ld AO u/s 133(6) of the Act were not only served but also responded to by the job workers directly before the ld AO leaving no scope for any doubt at all that the parties actually exist and had undertaken the job of cutting and polishing of diamonds. Hence the existence of rough diamonds with the assessee together with the activity of processing of rough diamonds into cut and polished diamonds is proved beyond reasonable doubt by the assessee herein. 26. We find that the ld AO had also alleged that the transaction of sale of diamonds is also not genuine. We are unable to comprehend ourselves to accept to this allegation of the revenue in as much as the the customers to whom cut and polished diamonds were sold by the assessee had directly responded before the ld AO by furnishing direct replies / eviden....
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.... * Copies of KYC and business profile of the parties enclosed in Pages 463 to 467 of Paper Book * Details of PAN enclosed in Page 468 of Paper Book * Copy of Aadhar card enclosed in Page 469 of Paper Book * Copy of response filed by the party to notice issued u/s 133(6) (received under RTI) of the Act - providing copy of ledger accounts, transaction details, stock register, bank statement, financial statements, GST return, ITR etc enclosed in Pages 470 to 589 of Paper Book. (iii) Yogi Diam: * Copy of ledger account enclosed in Pages 590 to 591 of Paper Book * Copy of purchase confirmation enclosed in Pages 592 to 597 of Paper Book * Copy of bank statement in which the sale proceeds were received enclosed in Pages 598 to 603 of Paper Book * Copies of KYC and business profile of the parties enclosed in Pages 604 to 607 of Paper Book * Details of PAN enclosed in Page 608 of Paper Book * Copy of Aadhar card enclosed in Page 609 of Paper Book * Copy of response filed by the party to notice issued u/s 133(6) (received under RTI) of the Act - providing copy of ledger accounts, transaction....
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.... Singhvi, a third party, had merely stated that he knew the assessee as an acquaintance in certain social gatherings and had no financial transactions with assessee. Further the ld AR pointed out that statement of Sh. Singhvi was recorded on 27.1.2020 during the course of search under duress / pressure and his only daughter's wedding was scheduled on 30.1.2020 and hence in order to complete the search proceedings, he at the end of his statement had stated that all transactions are bogus. But we find that soon after the marriage ceremonies were completed, Sh. Singhvi on 4.2.2020 itself i.e. within one week from the date of search, had retracted his statement clearly explaining the reasons and circumstances under which the said statement was recorded. This retraction statement is enclosed in Pages 155 to 161 of the Paper Book. 31. Similarly even the statement of Sh. Kawadia who also gave statement u/s 132(4) of the Act during his search stating that the transactions are bogus, had retracted vide letter dated 9.2.2021 which is enclosed in Pages 231 to 234 of the Paper Book. 32. Hence it could be safely concluded that no reliance in any manner whatsoever, could be pla....
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....tatements. Accordingly, the various other arguments advanced by the ld AR and ld DR before us about the veracity of the contents in the statements of these two parties, need not be gone into. 33. As stated hereinabove, the existence of rough diamonds, processing of rough diamonds into cut and polished diamonds and sale of cut and polished diamonds had been proved by the assessee beyond reasonable doubt with contemporaneous documents in the instant case. The assessee had declared the gains arising on sale of diamonds as LTCG in the return of income. The ld CITA vide para 7.12 at page 31 of impugned order dated 31.10.2023, contrary to the primary allegation of doubting the very existence of diamonds, concluded that since the said diamonds were declared by the assessee under IDS 2016, the period of holding of such diamonds needs to be construed from 01.06.2016 and not from the actual date of their acquisition. While holding so, the ld CITA relied upon CBDT Circular No. 29 of 2016 dated 18.08.2016 read with subsequent clarification dated 19.08.2016. Accordingly, the ld CITA observed that capital gains arising on sale of the diamonds should be classified as 'short term capital ....
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....lished diamonds is to be construed as LTCG which had already been offered to tax by the assessee in the return of income and the same cannot be treated as unexplained cash credit u/s 68 of the Act in the facts and circumstances of the instant case. Accordingly, the Ground Nos. 2 to 2.2. raised by the assessee are allowed. 36. In view of our decision for Ground Nos. 2 to 2.2. above, the Ground No.3 raised by the assessee requires to be allowed as there is no question of treating the sale proceeds of diamonds as accommodation entries warranting incurrence of commission expenditure. Accordingly, the Ground No. 3 raised by the assessee is allowed." 4.1 Upon careful consideration of the aforesaid findings of the Tribunal, it is abundantly clear that all the aspects relevant to question of genuineness of the sale of diamonds made by the assessee in different assessment years have attained finality and leaves no scope for any further ambiguity. The entire transaction starting from existence, to processing and subsequent sale of the diamonds have been examined by the Tribunal and on the basis of detailed submissions and contemporaneous evidences filed, have come to the conclusi....