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2025 (3) TMI 216 - AT - Income TaxAssessment u/s 153C - Addition u/s 69A - addition based on the seized digital ledger Hazir Johri - On perusal of seized data among others a ledger named Sanmati 1586 allegedly pertaining to assessee was found - 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 - As argued that the seized ledger is a dumb document in as much as it makes no accounting sense to merge the entries of unrelated parties into one ledger HELD THAT - Admittedly the entries reflected in the said software pertains to other unrelated parties with the assessee. Admittedly the said ledger is a combined ledger account of various transactions pertaining to other unrelated parties with the assessee and contains few transactions pertaining to the assessee. There is no concrete material brought on record by the lower authorities to implead assessee with all those transactions. Even for the transactions where assessee s name was mentioned the revenue was not able to bring any corroborative evidence to prove the nature of such transaction. Hence it could be safely concluded that the assessee had given a plausible explanation about the contents of the said software. Further more as rightly pointed out by the Ld.AR there is no corroboration of those entries with the bills / vouchers sales stock registers etc showing the cash sales to prove that the alleged cash sales belong to the assessee firm. Hence those entries cannot be relied upon for making an addition in the hands of the assessee. As decided in the case of Anoop Kumar Soni 2023 (12) TMI 391 - ITAT DELHI while adjudicating almost similar facts related to search on JBL the Tribunal held that since the ledger found during the search AP contains the entries of parties other than assessee then said ledger cannot be said to be belonging to assessee and addition made on the basis of assumption was deleted. Thus no addition could be made in the hands of the assessee by placing any reliance on Hazir Johri Software. Accordingly the grounds raised by the assessee are allowed.
ISSUES PRESENTED and CONSIDERED
The primary issues considered in this judgment include:
ISSUE-WISE DETAILED ANALYSIS 1. Additions under Section 69A based on "Hazir Johri" ledger The legal framework involves Section 69A of the Income Tax Act, which addresses unexplained money and the presumption under Section 292C regarding seized documents. The Tribunal examined whether the entries in the "Hazir Johri" ledger, seized during a search on Jindal Bullion Ltd (JBL), could be attributed to the assessee. The Tribunal noted that the ledger contained entries for multiple parties, not just the assessee, and lacked corroborative evidence like sales invoices or stock registers to substantiate the alleged cash transactions. The Court found that the ledger was a "dumb document" as it did not provide clear evidence of transactions attributable to the assessee. The Tribunal referenced several precedents where similar documents were deemed insufficient for making additions without corroborative evidence. The Tribunal concluded that the additions under Section 69A were not justified as the evidence did not conclusively link the cash transactions to the assessee. 2. Violation of Natural Justice The assessee argued that the principles of natural justice were violated as they were not allowed to cross-examine witnesses whose statements were used against them. The Tribunal recognized the importance of cross-examination in ensuring a fair trial but noted that the AO did not rely solely on these statements for the additions. The Tribunal found that the primary evidence was the seized ledger, not the statements, and thus the lack of cross-examination did not materially affect the outcome. 3. Validity of Assessment Proceedings under Section 153C The Tribunal considered whether the delay in recording the satisfaction note invalidated the proceedings under Section 153C. The legal framework involves the requirement for the AO to record satisfaction that seized documents pertain to a person other than the searched person. The Tribunal acknowledged the delay but accepted the Revenue's explanation that the delay was due to the COVID-19 pandemic and related administrative issues. The Tribunal found the delay reasonable under the circumstances and upheld the validity of the proceedings. 4. Procedural Lapses in Assessment Order The assessee argued that the assessment order was invalid due to the absence of a DIN and lack of prior approval. The Tribunal did not find these procedural lapses sufficient to invalidate the order, as they did not impact the substantive rights of the assessee or the fairness of the proceedings. 5. Imposition of Interest and Penalty Proceedings The Tribunal briefly addressed the imposition of interest under sections 234A, 234B, and 234C, and the initiation of penalty proceedings under section 271(1)(c). The Tribunal found no grounds to interfere with these actions, as they were consequential to the assessment and within the AO's discretion. SIGNIFICANT HOLDINGS The Tribunal held that the additions under Section 69A based on the "Hazir Johri" ledger were not justified due to lack of corroborative evidence. The Tribunal emphasized the need for concrete evidence linking the transactions to the assessee, stating: "The entries in the seized ledger cannot be relied upon for making an addition in the hands of the assessee without corroborative evidence." The Tribunal upheld the validity of the proceedings under Section 153C, accepting the explanation for the delay in recording the satisfaction note due to the pandemic. The Tribunal dismissed the procedural challenges to the assessment order, finding them insufficient to invalidate the order. In conclusion, the Tribunal allowed the appeal in part, setting aside the additions under Section 69A but upholding the validity of the assessment proceedings and related procedural actions.
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