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TMI Blog2025 (3) TMI 216X X X X Extracts X X X X X X X X Extracts X X X X ..... nfirming 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 and in the circumstances of the case Ld. CIT (A) erred both on facts and i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ircumstances 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 Additional Commissioner of Income Tax, Central Range - 2, New Delhi u/s. 153D of the Act was mechanical in nature and without any independent applicatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 proceedings. The correctness of the Hazir Johri data have already been discussed above and the cash transactions have been correctly considered as have been made by the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 in the case of ACIT v Kishore Lal Balwant Rai reported in 17 SOT 380 (Chd.). e) ITAT Ahmedabad decision in the case of Sheth Akshay Pushpavadan Vs. DCIT reported in 130 TTJ 42 (Ahdbd Trib) 8. The Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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-cash transaction mentioned in the seized ledger, only 56% of the transactions were pertaining to the Assessee, while the balance 44% of the transactions were belonging to third parties unrelated to the Assessee. 13. In view of the above pointed deficiencies, it was argued that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 limitation of satisfaction recorded to initiation the proceedings under section 153C of Act. Other grounds were not argued holding them to be academic in nature. In support of the aforesaid additional ground no. 2, the Ld. AR argued that the perusal of the satisfaction note recorded by the AO of the searched person, da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 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 received by JBL against which the name of Assessee "sanmati gold 25435" was mentioned to support that the cash transaction in the seized material pertains to the Assessee to justify the impugned additions. Further, the transaction dated 20.02.2015 was also referred to, where against the cash of Rs. 59,000/- was recorded to be received from the Assessee i.e., "Sanmati Jewelle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Similarly, the other entry dated 20.02.2016 also was a wrong entry in as much as, while cash was stated to be received from the assessee but on the same date corresponding contra entry of same amount of Rs. 59,000/- was entered as paid by cheque to the Assessee, which in the submission of the Counsel was incomprehensible or did not match with the entire case built up by the Ld. AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... " 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 pertinent to note that the Hazir Johri Software was found and seized from the premises of JBL at the time of its search under section 132 of the Act. Hence the presumption under section 292C of the Act would apply to JBL and not to the assessee. Even though the proceedings stood initiated under section 153C of the Act on the assessee, the basic presumption under section 292C of the Act would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, simultaneous search action on 05.01.2017 on Anoop Soni did not detect any material or evidence to establish or even suggest that he was engaged in unaccounted and undisclosed transactions involving sale/purchase of gold in cash outside books of accounts. 31. The entire addition by treating the account AP as belonging to Anoop Soni has been made on the basis of presumption drawn and the statement o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es solely relying on the statement of Ms. Parul Ahluwalia, Director and former employee of M/s. JBL, the entity subjected to search operation during which her statement was recorded. The Ld. AR submitted before us that Ms. Parul Ahluwalia nowhere in her statement identified that alleged cash transactions related to the assessee. No specific questions in this regard were asked from her. Nothing is forthcoming from the side of the Revenue to controvert the above pleadings of the assessee." 30. In view of the above observations and respectfully following the judicial precedents relied upon hereinabove, we hold that 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. 31. We find that the additional grounds raised by the assessee go to the root of the matter and facts relevant for its adjudication are already on record. Hence the same are hereby admitted. We find that the challenge of initiation of proceedings under section 153C of the Act belatedly was well met by the Ld. DR before us, as in our considered opinion, majority of the time was covered by the period of Covid 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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