DCIT, DELHI V. ANAND KUMAR CHAURASIA, DELHI

ITA 6312/DEL/2025

AI Insights

The case involves a series of appeals and cross-objections related to the income tax assessments of Navneet Chaurasia and other family members over several assessment years. The primary issues revolved around the treatment of income from the sale of diamonds, which were declared under the Income Disclosure Scheme (IDS) 2016, and the subsequent additions made by the Assessing Officer under sections 68 and 69C of the Income Tax Act. The Tribunal's decision was influenced by previous rulings in similar cases involving other family members, where it was established that the diamonds were legitimately declared and the income therefrom was correctly reported as long-term capital gains.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 841733 (ITAT-DELHI)
• Duration Of Justice: 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-02-2026
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2018-2019
• Appeal Filed On: 06-10-2025
• Other Referred Cases: Shashi Kant Chaurasia vs. DCIT, Anand Kumar Chaurasia vs. DCIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: POOJA SWAROOP
• Keywords: Capital asset; Unexplained cash credit; Document seized; Gift; Retraction; Capital Gains; Principle of natural justice; Accommodation entries; Bogus
• Section: 68; 133(6); 69C; 139

Judgement Text

" 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘B’, NEW DELHI BEFORE SHRI SUDHIR KUMAR, JUDICIAL MEMBER AND SHRI MANISH AGARWAL, ACCOUNTANT MEMBER ITA No. 3766/Del/2025 (AY 2018-19) ITA No. 3767/Del/2025 (AY 2019-20) ITA No. 3764/Del/2025 (AY 2020-21) DCIT ROOM NO. 348, 3RD FLOOR, E-2 ARA CENTRE, JHANDEWALAN EXTENSION, NEW DELHI – 110 002 Vs NAVNEET CHAURASIA, 575, DOUBLE STOREY, NEW RAJINDER NAGAR, NEW DELHI – 60 (PAN: AAEPC7666E) (APPELLANT) (RESPONDENT) AND C.O. NO. 140/Del/2025 (AY 2018-19) C.O. NO. 141/Del/2025 (AY 2019-20) C.O. NO. 142/Del/2025 (AY 2020-21) NAVNEET CHAURASIA, 575, DOUBLE STOREY, NEW RAJINDER NAGAR, NEW DELHI – 60 (PAN: AAEPC7666E) Vs DCIT ROOM NO. 348, 3RD FLOOR, E-2 ARA CENTRE, JHANDEWALAN EXTENSION, NEW DELHI – 110 002 (APPELLANT) (RESPONDENT) AND ITA No. 4396/Del/2025 (AY 2017-18) ITA No. 4397/Del/2025 (AY 2018-19) ITA No. 4398/Del/2025 (AY 2019-20) ITA No. 4399/Del/2025 (AY 2020-21) DCIT ROOM NO. 348, 3RD FLOOR, E-2 ARA CENTRE, JHANDEWALAN EXTENSION, NEW DELHI – 110 002 Vs RAJIV CHAURASIA, 575, FIRST FLOOR, DOUBLE STOREY, NEW RAJINDER NAGAR, NEW DELHI – 60 (PAN: AFVPC0105J) (APPELLANT) (RESPONDENT) Printed from counselvise.com 2 AND C.O. NO. 171/Del/2025 (AY 2017-18) C.O. NO. 172/Del/2025 (AY 2018-19) C.O. NO. 173/Del/2025 (AY 2019-20) C.O. NO. 174/Del/2025 (AY 2020-21) RAJIV CHAURASIA, 575, FIRST FLOOR, DOUBLE STOREY, NEW RAJINDER NAGAR, NEW DELHI – 60 (PAN: AFVPC0105J) Vs DCIT ROOM NO. 348, 3RD FLOOR, E-2 ARA CENTRE, JHANDEWALAN EXTENSION, NEW DELHI – 110 002 (APPELLANT) (RESPONDENT) AND ITA No. 4430/Del/2025 (AY 2017-18) ITA No. 4431/Del/2025 (AY 2018-19) ITA No. 4432/Del/2025 (AY 2019-20) ITA No. 4433/Del/2025 (AY 2020-21) DCIT ROOM NO. 348, 3RD FLOOR, E-2 ARA CENTRE, JHANDEWALAN XTENSION, NEW DELHI – 110 002 Vs MAYANK CHAURASIA, 575, FIRST FLOOR, DOUBLE STOREY, NEW RAJINDER NAGAR, NEW DELHI – 60 (PAN: AEUPC9102R) (APPELLANT) (RESPONDENT) AND C.O. NO. 175/Del/2025 (AY 2017-18) C.O. NO. 176/Del/2025 (AY 2018-19) C.O. NO. 177/Del/2025 (AY 2019-20) C.O. NO. 178/Del/2025 (AY 2020-21) MAYANK CHAURASIA, 575, FIRST FLOOR, DOUBLE STOREY, NEW RAJINDER NAGAR, NEW DELHI – 60 (PAN: AEUPC9102R) Vs DCIT ROOM NO. 348, 3RD FLOOR, E-2 ARA CENTRE, JHANDEWALAN XTENSION, NEW DELHI – 110 002 (APPELLANT) (RESPONDENT) Printed from counselvise.com 3 AND ITA No. 3768/Del/2025 (AY 2018-19) ITA No. 3769/Del/2025 (AY 2019-20) ITA No. 4437/Del/2025 (AY 2020-21) DCIT ROOM NO. 348, 3RD FLOOR, E-2 ARA CENTRE, JHANDEWALAN EXTENSION, NEW DELHI – 110 002 Vs VIBHA ARYA CHAURASIA, 575, DOUBLE STOREY, NEW RAJINDER NAGAR, NEW DELHI – 60 (PAN: ANRPA8347C) (APPELLANT) (RESPONDENT) AND C.O. No. 143/Del/2025 (AY 2018-19) C.O. No. 144/Del/2025 (AY 2019-20) C.O. No. 145/Del/2025 (AY 2020-21) VIBHA ARYA CHAURASIA, 575, DOUBLE STOREY, NEW RAJINDER NAGAR, NEW DELHI – 60 (PAN: ANRPA8347C) Vs DCIT ROOM NO. 348, 3RD FLOOR, E-2 ARA CENTRE, JHANDEWALAN EXTENSION, NEW DELHI – 110 002 (APPELLANT) (RESPONDENT) AND ITA No. 6311/Del/2025 (AY 2017-18) ITA No. 6312/Del/2025 (AY 2018-19) ITA No. 6313/Del/2025 (AY 2019-20) DCIT ROOM NO. 348, 3RD FLOOR, E-2 ARA CENTRE, JHANDEWALAN EXTENSION, NEW DELHI – 110 002 Vs ANAND KUMAR CHAURASIA, 575, FIRST FLOOR, DOUBLE STOREY, NEW RAJINDER NAGAR, NEW DELHI – 60 (PAN: AAIPC1441K) (APPELLANT) (RESPONDENT) Printed from counselvise.com 4 AND C.O. NO. 256/Del/2025 (AY 2017-18) C.O. NO. 257/Del/2025 (AY 2018-19) C.O. NO. 258/Del/2025 (AY 2019-20) ANAND KUMAR CHAURASIA, 575, FIRST FLOOR, DOUBLE STOREY, NEW RAJINDER NAGAR, NEW DELHI – 60 (PAN: AAIPC1441K) Vs DCIT ROOM NO. 348, 3RD FLOOR, E-2 ARA CENTRE, JHANDEWALAN EXTENSION, NEW DELHI – 110 002 (APPELLANT) (RESPONDENT) AND ITA No. 4427/Del/2025 (AY 2017-18) ITA No. 4428/Del/2025 (AY 2019-20) ITA No. 4429/Del/2025 (AY 2020-21) DCIT ROOM NO. 348, 3RD FLOOR, E-2 ARA CENTRE, JHANDEWALAN EXTENSION, NEW DELHI – 110 002 Vs VIJAY ANAND CHAURASIA, 575, FIRST FLOOR, DOUBLE STOREY, NEW RAJINDER NAGAR, NEW DELHI – 60 (PAN: AJYPC4260D) (APPELLANT) (RESPONDENT) AND C.O. No. 149/Del/2025 (AY 2017-18) C.O. No. 150/Del/2025 (AY 2019-20) C.O. No. 151/Del/2025 (AY 2020-21) VIJAY ANAND CHAURASIA, 575, FIRST FLOOR, DOUBLE STOREY, NEW RAJINDER NAGAR, NEW DELHI – 60 (PAN: AJYPC4260D) Vs DCIT ROOM NO. 348, 3RD FLOOR, E-2 ARA CENTRE, JHANDEWALAN EXTENSION, NEW DELHI – 110 002 (APPELLANT) (RESPONDENT) Revenue by Ms. Pooja Swaroop, CIT(DR) Assessees by Sh. Rohit Jain, Adv., Ms. Tejasvi Jain, CA and Sh. Shivam Gupta, CA Printed from counselvise.com 5 Date of hearing: 9.2.2026 Date of Pronouncement: 25.2.2026 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 returns of income u/s. 139 of the Act in the following manner:- Assessment year Date of filing ROI Returned Income (Amount in Rs.) 2018-19 30.10.2018 158,53,20,130 2019-20 31.10.2019 102,52,31,150 2020-21 14.2.2021 66,92,64,520 2.1 Subsequently, based on search carried out in Kamla Pasand group of cases, assessment proceedings u/s. 153C/143(3) of the Act were carried out in assessee’s Printed from counselvise.com 6 cases for AYrs 2018-19 to 2020-21, which culminated vide separate assessment orders dated 30.3.32023 wherein, the following additions/alterations were made to assessee’s returned income: S.No. Particulars Amount (In Rs.) AY 2018-19 AY 2019-20 AY 2020-21 1. Returned Income 158,53,20,130 102,52,31,150 66,92,64,520 2. LTCG declared on sale of diamonds derecognized (143,26,76,257) (96,31,61,468) (58,19,36,032) 3. Sale consideration declared on sale of diamonds u/s 68 154,98,66,570 104,65,94,000 62,18,68,000 4. Commission expenditure on sale of diamonds @ 0.18% of sale consideration u/s. 69C. 27,89,760 18,83,869 11,19,362 5. Assessed income 170,53,00,200 111,05,47,550 71,03,15,850 2.2 Against the aforesaid assessment orders dated 30.3.2023, the assessee preferred appeals before the CIT(A) for the relevant assessment yearse 2018-19 to 2020-21, which were allowed vide separate impugned orders dated 7.2.2025 wherein the said additions were deleted. Against the aforesaid orders passed by the CIT(A), the revenue has preferred the captioned appeals, and the assessee has filed its cross objections. Printed from counselvise.com 7 3. At the time of hearing, Ld. AR for the assessee submitted that the assessee, Shri Navneet Chaurasia, is an individual and part of the Chaurasia Family. The assessee along with various members of the Chaurasia Family declared rough diamonds in their respective declarations filed under the Income Disclosure Scheme, 2016 (IDS. 2016) and taxes due were paid thereon. The declarations were duly accepted by the PCIT and the same attained finality. Pertinently, the important financial affairs of the family, including the assessee, were handled by Sh. Shashi Kant Chaurasia. It is submitted that Sh. Shashi Kant Chaurasia, in the previous year relevant to assessment year 2017-18, got the entire rough diamonds of the family processed (cut, polished, etc.). The processed 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 assesee’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 Printed from counselvise.com 8 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. 3844 & 3845/Del/2023 vide order dated 21.01.2025 allowed the appeals of the assessee by deleting the additions made by the AO under sections 68 and 69C of the Act. He further submitted that the aforesaid appeals preferred by the Revenue are fully covered in favour of the assessee by following the decisions in the case of other family members of the Chaurasia Group viz: - Shashi Kant Chaurasia vs. DCIT : ITA Nos. 3844 & 3845/Del/2023 order dated 201.2025 (Delhi Tribunal). - Anand Kumar Chaurasia vs. DCIT : ITA Nos. 1324/Del/2024 order dated 26.11.2025 (Delhi Tribunla). 3.1 In view of above, Ld. AR submitted that the captioned appeals filed by the Revenue may be dismissed and as a result thereof, the assessee’s cross objections will become infructuous and may also be dismissed accordingly. 3.2 Ld. DR did not controvert the aforesaid proposition made by the Ld. AR. 4. We have heard the rival contentions and perused the records. At the threshold, we noted that the issues raised in revenue’s appeals, on merits, are squarely covered by the order dated 20.1.2025 passed by the Delhi Tribunal in the lead case of assessee’s relative, titled as Shashi Kant Chaurasia vs. DCIT in ITA Printed from counselvise.com 9 No. 3844 & 3845/Del/2023 wherein identical additions i.e., (i) addition u/s. 68 qua sale consideration of diamonds and ; (ii) addition u/s. 69C of the act qua alleged commission expenditure, were deleted by the Tribunal by observing as under:- “12. At the outset, we hold that the existence of rough diamonds with the assessee cannot be doubted at all as admittedly the assessee had made declaration of 12857.07 carats of diamonds in IDS 2016 and a certificate in Form NO. 4 dated 7.10.2017 was issued by the ld PCIT admitting the same after ensuring that the assessee had paid due tax thereon in the sum of Rs 22,24,25,856/-. This Certificate in Form No. 4 is enclosed in Page 18 of the Paper Book. Either way, dehors the IDS 2016, it is a fact that the rough diamonds of 12857.07 carats of rough diamonds had been brought into the books by the assessee after making payment of taxes of Rs 22,24,25,856/-. 13. We hold that the statutory scheme of IDS declaration enacted by the Finance Act 2016 considered along with all subsequent clarifications (such as CBDT Circular No. 26 dt 30.6.2016, CBDT Circular No. 29 dt 18.8.2016 and Press Release dated 2.9.2016) clearly 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 that assessee had got the rough diamonds processed by cutting , polishing etc from following 4 job workers in Surat which resulted in 2231.12 carats of processed diamonds:- (i) Rujal Anil Shah (HUF) – Prop. Aarushi Gems (ii) Nareshbhai Babulal Dhami (HUF) – Prop. Beena Impex (iii) Adesh Nareshbhai Dhami (HUF) – Prop. Niti Impex (iv) Nikunj N Kahar – Prop. Misty Enterprises 15. The fact that processing of rough diamonds were undertaken by the assessee in assessment year 2017-18 is duly borne out of the invoices in support of the payments made to the job- workers, confirmations filed by the job workers along with their respective ITRs, proof of actual payments made to the job-workers as Printed from counselvise.com 10 reflected in the bank statement of the assessee. These documents were duly furnished by the assessee before the lower authorities which fact is not in dispute. 16. It is submitted that substantial portion of the processed diamonds were sold by the assessee for a total consideration of Rs.154,95,82,050/- in the relevant assessment year 2018-19 to the following four (4) parties:- (i) Bhairav Gems Pvt. Ltd. (ii) Garima Exports (iii) Gurudev Corporation (iv) Yogi Diam The long-term capital gains of Rs.144,61,64,063/- arising on account thereof was duly offered to tax in the return of income. The ld AR even placed on record the sale of processed diamonds made by the assessee in subsequent assessment years 2019-20 to 2020-21 and the assessee received total consideration of Rs.323,30,50,550/- on sale of diamonds in assessment years 2018-19 to 2020-21. The details of LTCG tax paid on sale of those diamonds are tabulated hereunder:- Assessmentye ar Sale Amount(Rs. ) Taxable LTCG(Rs.) Tax paid on LTCG(Rs.) 2018-19 154,95,82,050 144,46,86,075 34,22,46,131 2019-20 106,21,64,750 97,80,50,623 23,39,49,709 2020-21 62,13,03,750 55,60,81,456 15,84,60,972 Total(Rs.) 323,30,50,550 297,88,18,154 73,46,56,812 17. Further we find that the assessee had substantiated the genuineness of sales made to 4 parties by furnishing the sale invoices, confirmations directly filed by the parties before the ld AO along with their respective ledger accounts, stock register, bank statements evidencing the credit on account of receipt of sale 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. Printed from counselvise.com 11 19. We find that all the family members, in their separate statements, categorically and consistently confirmed the following fundamental facts, without any contradiction:- (a) That they were in possession of diamonds, which was inherited by them; (b) That the diamonds were declared under IDS 2016 and tax paid thereon; (c) That the diamonds were cut/ polished; (d) That the polished diamonds were sold resulting in taxable long-term capital gains, which were declared in the tax returns. 20. Now coming to the statement of Sh Kamla Kant Chaurasia , we find that the ld AO, in the impugned assessment order, has sought to draw adverse inference in respect of the very existence of the diamonds by placing reliance on statement dated 16.01.2020, of Sh. Kamla Kant Chaurasia (father of assessee) wherein he purportedly stated that he was not aware of the diamonds. The ld AR before us submitted that the aforesaid statement of Sh. Kamla Kant Chaurasia cannot be the basis for disputing the transactions due to the following reasons:-  He was non-resident for many years;  At the time of recording of statement, due to his old age coupled with ill-health and fading memory, was not in a position to recollect the facts correctly in respect of inheritance of diamonds;  He did not receive the diamonds from his father and therefore, was not necessarily required to be aware of distribution by his father to other family members;  His statement was subsequently clarified by him vide certificate dated 25.09.2021 which is enclosed in Pages 946 to 947 of the Paper Book;  The assessee was primarily in charge of managing the day-to-day financial affairs of the family and was solely involved in processing the rough diamonds and sale of cut and polished diamonds;  Other members of Chaurasia family in their respective statements recorded during search have confirmed the aforesaid facts. 21. In fact, findings of ld CIT(A) are self-contradictory as initially the existence of diamonds has been accepted and sale transaction also accepted to be genuine by holding that the gains accruing on sale of diamonds should be treated as short term gains, but thereafter proceeds on a completely different premise to hold, without any cogent/ reliable basis, the same to be a bogus transaction. We are in complete agreement with this argument of the ld AR that the statement of Shri Kamla Kant Chaurasia is not to be 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 Printed from counselvise.com 12 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 assessee highlighting the payments made to the job-workers – entire payment was made through banking channels. 23. The details of contemporaneous documents filed by the assessee party wise in respect of 4 job workers for Assessment Year 2018-19 are as under:- (i) AarushiGems: • Copy of ledger account enclosed in Page 237 of Paper Book • Copy of bill/invoice & inspection memo enclosed in Pages 238 to 239 of Paper Book • Copy of bank statements from which payment was made enclosed in Page 240 of 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, address, transaction details with assessee and copy of ITRs enclosed in Pages 241 to 246 of Paper Book (ii) Beena Impex: • Copy of ledger account enclosed in Page 247 of Paper Book • Copy of bills/invoices & inspection memo enclosed in Pages 248 to 251 of Paper Book • Copy of bank statements from where the payments were made enclosed in Page 252 of Paper Book • Copy of clarification dated 26.09.2021 along with acknowledgment filed in support of change of address of Niti Impex and Beena Impex enclosed in Pages 253 to 264 of 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, address, transaction details with assessee and copy of ITRs enclosed in Pages 265 to 270 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 Beena Impex had shifted , details of which are enclosed in Pages 983 to 993 of Paper Book (iii) NitiImpex: • Copy of ledger account enclosed in Page 271 of Paper Book • Copy of bill/invoice & inspection memo enclosed in Pages 272 to 273 of Paper Book Printed from counselvise.com 13 • Copy of bank statements from which payment was made enclosed in Page 274 of Paper Book • Copy of clarification dated 26.09.2021 along with acknowledgement filed in support of change of address of Niti Impex and Beena Impex enclosed in Pages 275 to 276 of 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, 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 polishing work done. It was submitted that the transaction took place in the Assessment Year 2017-18 i.e more than 3 to 4 years before the search was undertaken and the assessee could not have been expected to retain the communication trail with the said parties. Further, communication by way of telephone calls, text messages and personal meetings cannot practically be documented as expected by the ld AO. Further, the assessee has provided all documents in support of the transaction in the form of copies of invoice, ledgers and payment trail to corroborate the genuineness of the transaction. (b) Allegation that the assessee failed to provide copy of bank statement in support of the payment trail. The aforesaid allegation is factually incorrect. It was emphatically submitted that the assessee had, vide submissions filed on various dates before the ld AO, duly furnished copy of bank statements wherein the payments made to the job workers was specifically covered as stated hereinabove. (c) Allegation that the assessee did not even recollect the names of the job workers in so far as the name of the parties stated during the course of statement was different Printed from counselvise.com 14 from the details file during the course of assessment. It was submitted that as already explained above, the transaction was undertaken more than 3-4 years ago and the assessee could not have been expected to accurately remember names of all the parties, more so when he transacts with various persons day in and day out. It is of utmost importance to note that to verify the identity and genuineness of the job- workers, the ld AO independently issued notices u/s 133(6) of the Act to the said parties, which, as a matter of fact, was duly responded to by the said parties confirming that they undertook job work in the nature of cutting, polishing of diamonds in the financial year 2016-17. (d) At pages 29-31 of the assessment order, the ld AO has made reference to Inspectors’ report to allege that the three job workers namely: (i) Aarushi Gems, (ii) Niti Impex, and (iii) Beena Impex never existed at the stated premises. In this regard it was submitted that only limited extracts of the ex-parte Inspector’s report have been reproduced in the assessment order and copy of the same has never been provided to the assessee till date, which was in gross 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 / evidences in response to notice issued u/s 133(6) of the Act confirming and submitting the following:- (i) having purchased diamonds from the assessee; (ii) ledger accounts and information with respect to quantity and weight of diamond purchased ; (iii) stock register along with relevant extract of stock register; (iv) party-wise purchase and sale register (including PAN and address of the party); (v) detailed list of sundry debtors through whom funds were received for the purchase of diamonds along with bank statement and GST return (GSTR – 1); (vi) copy of ITR, computation of income, Tax Audit Report, audited financial statements along with copy of income tax returns; Printed from counselvise.com 15 (vii) bank statements of accounts from where payments were made to the assessee; (viii) ledger account of parties to whom the diamonds were sold after purchasing them from the assessee along with their PAN and address. 27. The details of contemporaneous documents filed party wise in respect of sales made by the assessee during the year under consideration are as under:- (i) Garima Exports: • Copy of ledger account enclosed in Page 302 of Paper Book • Copy of purchase confirmation enclosed in Page 303 of Paper Book • Copy of bank statement in which the sale proceeds were received enclosed in Page 304 of Paper Book • Copies of KYC and business profile of the parties enclosed in Pages 305 to 309 of Paper Book • Details of Permanent Account Number (PAN) enclosed in Page 310 of Paper Book • Details of Aadhaar card enclosed in Page 311 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, Ledger account of parties to whom the diamonds were sold after purchasing them from the assessee along with their PAN and address etc enclosed in Pages 319 to 417 of Paper Book. (ii) Gurudev Corp.: • Copy of ledger account enclosed in Pages 418 to 422 of Paper Book • Copy of purchase confirmation enclosed in Pages 423 to 449 of Paper Book • Copy of bank statement in which the sale proceeds were received enclosed in Pages 450 to 462 of Paper Book • 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 details, stock register, bank statement, financial statements, GST return, ITR etc enclosed in Pages 610 to Printed from counselvise.com 16 686 of Paper Book. (iv) Bhairav Gems: • Copy of ledger account enclosed in Pages 687 to 691 of Paper Book • Copy of purchase confirmation enclosed in Pages 692 to 718 of Paper Book • Copy of bank statement in which the sale proceeds were received enclosed in Pages 719 to 729 of Paper Book • Copies of KYC and business profile of the parties enclosed in Pages 730 to 734 of Paper Book • Details of PAN enclosed in Pages 735 to 736 of Paper Book • Copy of passport enclosed in Page 737 of Paper Book • Copy of Aadhar card enclosed in Page 738 of Paper Book 28. We find that the sale of diamonds made by the assessee to the aforesaid customers cannot be even remotely doubted in as much as those parties had directly responded to the notice issued u/s 133(6) of the Act by furnishing the contemporaneous documentary evidences as listed above. It is not the case of the revenue that the parties to whom the assessee had made sales are related to him in any manner whatsoever. Hence they are independent third parties and transactions were carried out with them at arm’s length in the ordinary course of business. The assessee need not ascertain the financial capacities of these customers as he had not borrowed any loan or not received any share capital / premium from them. On the contrary, the assessee’s interest would be only to receive the sale proceeds of diamonds from the said parties for the sales effected to them. 29. From the above, it could be seen that the existence of rough diamonds with the assessee together with the activity of processing of rough diamonds into cut and polished diamonds and sale of those cut and polished diamonds to third party customers is proved beyond reasonable doubt by the assessee herein. 30. With regard to the search action conducted in the premises of Sh. Singhvi on 27.1.2020 and one Sh. Kawadia on 3.3.2020 wherein statements were recorded from them u/s 132(4) of the Act, the ld AO had sought to draw adverse inference on the assessee herein merely by placing reliance on the said statements, despite the fact that there is no data / document seized from them which in an way directly or indirectly incriminates the assessee herein. Infact Sh. 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. Printed from counselvise.com 17 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 placed on the statements of Sh. Singhvi and Sh. Kawadia to draw adverse inference against the assessee herein. In any event, the revenue had not even bothered to verify as to whether there was any financial transactions between the assessee and Sh. Singhvi and Sh. Kawadia. Factually there is none. This was not controverted by the revenue. On the contrary, the assessee was confronted with the selective portion of the statements recorded u/s 132(4) of the Act of Sh. Singhvi and Sh. Kawadia . Assessee sought for furnishing of complete copy of the statements recorded from these two parties, which was denied. Even the cross – examination of these two parties which were sought for by the assessee. The ld AO fixed the date of cross examination of these two parties on 20.9.2021 without furnishing the full text of the statements recorded from them, on which date, the assesee’s authorized representative was present and both the parties failed to appear before the ld AO. Hence these two parties, having become department’s witnesses, failed to appear for cross-examination before the ld AO. Again on 21.9.2021, the assessee requested the ld AO to provide cross examination of these two parties after providing legible copy of statements recorded from them. Again another request was made by the assessee on 26.9.2021. Copies of the statements were provided to the assessee only on 10.11.2021 at the fag end of completion of assessment proceedings. The ld AO however mentioned that no further opportunity to cross-examine the above- named witnesses will be provided stating that the assessee had failed to avail the opportunity of cross-examination and due to time- barring nature of the matter. We have already dealt this aspect hereinabove that those two parties, being department’s witnesses, had failed to appear for cross examination on the appointed dates before the ld AO and no fault could be attributed on the part of the assessee thereon. Despite that fact, the ld AO had stated that cross-examination will not be provided to the assessee. For this reason also, no reliance in any manner whatsoever could be placed on the statements of these two parties. In view of this fact, we hold that there is absolutely no need to give any credence to the statements recorded from these two parties and no adverse inference in any manner whatsoever could be drawn on the assessee herein , using those statements. 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 Printed from counselvise.com 18 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 gains’ instead of ‘long term capital gains’ as declared by the assessee in his return of income. 34. The aforesaid conclusion of ld CITA is self-contradictory, completely misplaced, illegal and arbitrary as the same operates in contravention to Explanation 1(i)(b) of section 2(42A) of the Act which specifically provides that in case of assets acquired by way of gift, the period of holding shall include the period for which such assets were held by the previous owner. Since in the present case, the diamonds were gifted to the assessee by his grandfather in the previous year relevant to assessment year 1994-95, while computing capital gains, the period of holding should be construed accordingly. Thus, such diamonds shall fall within the definition of ‘long term capital assets’ and consequently, ‘long term capital gains’ shall arise on their transfer. We find that the ld CITA had relied on CBDT Circulars referred supra to treat the gains arising on sale of diamonds as short term capital gains. In this regard, we find that the Circulars had taken oscillating positions with regard to the period of holding of assets which works contradictory to the existing provisions of the Act itself. Hence the provisions of the Act would prevail. The Explanation 1(i)(b) of Section 2(42A) of the Act clearly lays down the law regarding the period of holding of assets. Hence there is no need to place reliance on Circulars for this purpose. Either way, the Circulars are binding only on the revenue authorities and the same is not binding on the Tribunal. Reliance in this regard is placed on the decision of Hon’ble Supreme Court in the case of Commissioner of Customs vs Indian Oil Corporation Ltd reported in 267 ITR 272 (SC). The date of 1.6.2016 would be relevant only for the limited purpose of valuation of undisclosed assets irrespective of the period of holding of the same. That date cannot be considered as a relevant date for the purpose of reckoning the period of holding of assets. Hence we hold that the period of holding of diamonds need to be reckoned from Assessment Year 1994-95 in terms of provisions of the Act and accordingly the resultant gain on sale of diamonds would have to construed only as Long Term Capital Gains in the facts and circumstances of the instant case. 35. In view of the aforesaid observations, we hold that the gains on sale of cut and polished 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 Printed from counselvise.com 19 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 conclusion that all such relevant aspects have been proven beyond any doubt by the assessee in that case, i.e. Sh. Shashi Kant Chaurasia. Further, ITAT, Delhi has in depth examined the Revenue’s to support its claim and on such detailed enquiry have come to the conclusion that the claim of the Revenue holds no merit and also that the relied upon statements etc. hold no evidential value in light of the cogent material evidences and submissions made by the Assessee and other parties relevant to the transaction under examination. We find that following the aforesaid order passed in the case of Shashi Kant Chaurasia, the ITAT, Delhi vide order dated 26.11.2025 passed in the case of another relative viz. Sh. Anand Kumar Chaurasia for AY 2020-21 in ITA No. 1324/Del/2024, has deleted the identical additions on account of sale of diamonds. 5. In the background of the aforesaid discussions and respectfully following the aforesaid precedents in assessee’s own family member’s case, as discussed above, we affirm the action of the Ld. CIT(A) in deleting the additions in dispute and reject the grounds raised by the Revenue by dismissing the appeals of the Revenue in the Printed from counselvise.com 20 captioned assessment years. Since Revenue’s appeals have been dismissed, as aforesaid, the assessee’s cross objections have become infructuous and dismissed as such. 6. Resultantly, the Revenue’s appeals being ITA Nos. 3766, 3767 & 3764/Del/2025 (Ayrs. 2018-19 to 2020-21) and Assessee’s Cross Objection Nos. 140 to 142/Del/2025 (Ayrs. 2018-19 to 2020-21) are dismissed in the aforesaid manner. 7. Our aforesaid decision will apply mutatis mutandis to the remaining other captioned Appeals of the Revenue as well as other remaining Cross Objections of the respective Assessees. 8. In the result, all the 20 appeals of the revenue as well as all the 20 assessee’s cross objections stand dismissed in the aforesaid manner. Order pronounced in the open court on 25-2-2026. Sd/- Sd/- ( MANISH AGARWAL) (SUDHIR KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER *SR BHATNAGGAR* Date:- 25.2.2026 Copy forwarded to: 1.Appellant 2.Respondent 3.CIT 4.CIT(Appeals) 5.DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI Printed from counselvise.com "