DINESH KUMAR JAIN,NEW DELHI V. DCIT CENTRAL CIRCLE 7, NEW DELHI

ITA 3405/DEL/2023

AI Insights

The case involves appeals by Dinesh Kumar Jain against the orders of the Learned Commissioner of Income-Tax (Appeals)-24, New Delhi, which upheld the additions made by the Assessing Officer under Section 153C of the Income Tax Act, 1961, for the assessment years 2015-16 and 2016-17. The additions were based on digital data seized during a search operation at Jindal Bullion Ltd (JBL), which included cash transactions not reflected in the regular books of accounts. The Tribunal examined whether the entries in the 'Hazir Johri' software, which contained these transactions, were sufficient to link them to the assessee. The Tribunal noted that similar cases had been decided in favor of the assessee under comparable circumstances, leading to the conclusion that the additions made were based on assumptions rather than concrete evidence.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 775018 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 9 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-09-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2015-2016
• Appeal Filed On: 28-11-2023
• Other Referred Cases: Sachin Vs. DCIT, M/s. Sanmati Jewellers Vs. DCIT, Anoop Kumar Soni vs. DCIT, Surender Kumar Jain vs. DCIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KAILASH DAN RATNOO
• Assessee Lawyers: RANO JAIN; PLACING
• Keywords: Corroborative evidences; Peak credit; Search and seizure
• Section: 132; 139

Judgement Text

" INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “B”: NEW DELHI BEFORE SHRI S RIFAUR RAHMAN, ACCOUNTANT MEMBER AND SHRI VIMAL KUMAR, JUDICIAL MEMBER ITA No. 3405/DEL/2023 Assessment Year: 2015-16 ITA No. 3406/DEL/2023 Assessment Year: 2016-17 Dinesh Kumar Jain, 1165, Kucha Mahajani, Chandni Chowk, Delhi – 1100 06 PAN No. AAJPJ0869K Vs. Deputy Commissioner of Income Tax, Central Circle 7, ARA Centre, Jhandewalan Extension, Delhi -1100 55 (Appellant) (Respondent) O R D E R PER VIMAL KUMAR, JUDICIAL MEMBER: The appeals of the assessee are against separate orders dated 29.09.2023 of Learned Commissioner of Income-Tax (Appeals)-24, New Delhi (hereinafter referred as “the Ld. CIT(A)”) under Section 250 of the Income Tax Act, 1961 ( hereinafter referred as “the Act”) arising out of separate Assessment Orders dated 30.12.2021 of the Ld. DCIT, Central Circle-7, New Delhi (hereinafter referred as “Ld. AO\") under Section 153C of the Act for assessment years 2015-16 and 2017-18 respectively. Assessee by: Ms. Rano Jain, Shri Anhu Jain, Advs. & Ms. Mansi Jain, CA Department by: Shri Kailash Dan Ratnoo, CIT ( DR ) Date of Hearing: 26.08.2025 Date of pronouncement: 03.09.2025 Printed from counselvise.com ITA Nos.3405 & 3406/Del/2023 2 2. Both the appeals having similar facts, grounds and issues were heard together for sake of convenience. 3. Brief facts of case are that a search and seizure operation under Section 132 of the Act was conducted in Jindal Bullion Ltd (JBL) Group on 05.01.2017. During course of search, digital data maintained in a software called ‘Hazir Johri’, was seized at the residential cum business premises of Shri Kusharg Jindal (promoter and director of JBL) at Plot No.25, Vaishali Enclave, Pitampura, Delhi, in a dongle (Seized as Annexure A-25, Party No JKR vide Panchnama dated 08.01.2017). The digital data pertains mainly to financial years 2014-15, 2015-16 and 2016-17. The analysis of the said soft data clearly showed that JBL had been systematically engaged in cash transactions with a number of entities, mostly bullion traders and jewellers. The JBL books of accounts as maintained in the ‘Hazir Johri’ software, contained both cash transactions of JBL as well as its transactions through banking channels. The transactions through banking channels are reflected in the Tally books of accounts of JBL whereas the cash transactions are not reflected in the same. The returns of income have been filed by JBL on the basis of books of accounts maintained on Tally software. Printed from counselvise.com ITA Nos.3405 & 3406/Del/2023 3 3.1. On perusal of the said data, it reveals that the ledger account(s) found with code name(s) ‘Thekedar' wherein some cash/bank transactions is pertained to Sh. Dinesh Kumar Jain. Hence, the Assessing Officer of the searched persons i.e. Sh. Kusharg Jindal (promoter and director of JBL) recorded his satisfaction u/s153C of the Act on 04.02.2021 that the assessee has made some cash/bank transaction mentioned in ledger namely 'Thekedar' is belonged to the assessee Sh. Dinesh Kumar Jain. According, the assessing officer of Sh. Dinesh Kumar Jain recorded his satisfaction and issued notice under Section 153C of the Act for assessment years 2011-12 to 2017-18. 3.2 Assessee furnished his original return of income under Section 139 of the Act on 21.09.2015 at an income of Rs.11,54,140/-. 3.3 Notice under Section 153C of the Act was issued to assessee on 05.02.2021. In response to notice under Section 153C of the Act, assessee filed reply dated 12.02.2021. 3.4 Notice under Section 142(2) dated 29.10.2021 was issued along with questionnaire asking assessee to furnish documents mentioned therein. On completion of proceedings, Ld. AO vide order dated 30.12.2021 made addition of Rs.66,43,907/- for assessment year 2015-16. 4. Similarly, Ld. AO vide order dated 30.12.2021 made addition of Rs.3,70,579/- for assessment year 2016-17. Printed from counselvise.com ITA Nos.3405 & 3406/Del/2023 4 5. Against orders dated 30.12.2021 of Ld. AO, the appellant/assessee filed separate appeal before Ld. CIT(A) which were dismissed through separate orders dated 29.09.2023. 6. Being aggrieved, appellant/assessee preferred present appeals. 7. Learned Authorized Representative for the appellant/assessee submitted that name of the assessee is appearing nowhere in the seized document. There is no link between alleged cash receipt mentioned in the seized document and the Assessee. Even the document relied on by the department contains less than 50% of bank transactions related to assessee. Only on the basis of some pseudonym it is concluded that the transactions belong to the assessee. Other material relied on by the Assessing Officer is the statements of Sh. Parul Ahluwalia and Ms. Ekta Soni, the copies of which were never provided to the assessee. Even the demand of the assessee for cross examination has also been arbitrarily rejected. 7.1 In the similar circumstances, the Delhi Bench of the Tribunal in the cases of ITA Nos. 2613 & 2614/Del/2022 titled as “Sachin Vs. DCIT” decided on 05.03.2015 and in “M/s. Sanmati Jewellers Vs. DCIT” ITA 3031/Del/2022, dated 28.02.2025, allowed the Appeals of the Assessee. 7.2 The Delhi Bench of the Tribunal in the case of Anoop Kumar Soni vs. DCIT in ITA No. 1641/Del/2021 vide order dated 2.8.2023, adjudicated almost Printed from counselvise.com ITA Nos.3405 & 3406/Del/2023 5 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. 7.3 Similar view was taken by this 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. 8. Learned Authorised Representative for the Department of Revenue submitted that name of assessee appears in ledger maintained in the seized digital data as ‘Thekedar’. Ld. CIT(A) has upheld the order of Ld. AO. 9. From examination of record in light of aforesaid rival contentions, undisputedly, it is crystal clear that search and seizure operation under Section 132 of the Act was conducted in Jindal Bullion Ltd (JBL) Group on 05.01.2017. On perusal of seized digital data in Software called ‘Hazir Johri’, it was revealed that the ledger accounts found with Code Name of ‘Thekedar’ in some cash/bank transactions pertained to the assessee. On basis of material, satisfaction was recorded and notices under Section 153C of the Act for assessment years 2011-12 to 2017-18 were issued to the assessee. Printed from counselvise.com ITA Nos.3405 & 3406/Del/2023 6 10. A Co-ordinate Bench in ITA Nos.2613 & 2614/Del/2022 titled as “Sachin Versus DCIT, Central Circle-7, Delhi” decided on 05.03.2025 in paras nos.13 to 17 held as under: “13. 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 „Pankaj kb‟ allegedly pertaining to Assessee was found. In the said ledger, the transactions made in cash as well as through banking channel Page | 7 ITA Nos. 2613 & 2614/Del/2022 Sachin 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 only be on JBL. The assessee on its part had categorically denied the transactions reflected in the said Hazir Johri Software by clearly stating that the entries found thereon contains transactions of various other unrelated parties with the assessee and that the employee of JBL had recorded all the transactions against assessee‟s name. 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. However, 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 Printed from counselvise.com ITA Nos.3405 & 3406/Del/2023 7 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. Furthermore, 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. Hence those entries cannot be relied upon for making an addition in the hands of the assessee. 14. We also find that the Co-ordinate Bench of this Tribunal in the case of Anoop Kumar Soni vs. DCIT in ITA No. 1641/Del/2021 dated 2.8.2023, Sachin wherein 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. The relevant observations made by the Tribunal in this regard 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, 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 Printed from counselvise.com ITA Nos.3405 & 3406/Del/2023 8 the statement of Shri Parul Ahluwalia. However, statement of the assessee has not been recorded on this issue either at the time of search, post search inquiries or even during the assessment proceedings. A careful examination of the account AP as reproduced in the assessment order would reveal that in the remarks column various acronyms have been used against different transactions such as JD, KCX, RBG Overseas, KMTY, Oven AJ, JBL Coins, Oppo Mobile, Satia, Ishaan, Anshul, Vinod 8676, Guddu etc. These abbreviations Page | 9 ITA Nos. 2613 & 2614/Del/2022 Sachin show that the transaction recorded is neither through bank nor cash because since specific acronyms have been used, these transactions cannot be inferred to be pertaining to the assessee even if it is presumed with account AP belongs to the assessee. 32. Hence, keeping in view, the entire factual matrix of the case, we hold that no addition is warranted in the case of the assessee. In the result, the peak credit theory set out by the ld. CIT(A) would also become infructuous. The appeals of the assessee on this ground are allowed and accordingly the appeals of the revenue are liable to be dismissed.” 15. Similar view was taken by this 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. The relevant findings of the said decision are as under:- “9. We have given our careful thought to the submission of the parties and perused the records. The facts are not in dispute. During assessment proceedings the common plea of the assessee in both the AY(s) was that merely entries found in the Hajir Johri ledger of M/s. JBL supposedly in the name of M/s. S.K. Impex, the proprietary concern of the assessee does not tantamount to actual transactions having taken place in the absence of any corroborative evidence such as bills, invoices, challans etc. There is no linking in the order of the Ld. AO/CIT(A) that the alleged cash transactions are substantiated by any supporting evidence as claimed by the assessee. On the contrary, the impugned additions are based purely Printed from counselvise.com ITA Nos.3405 & 3406/Del/2023 9 on conjectures and surmises 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 Page | 10 ITA Nos. 2613 & 2614/Del/2022 Sachin the side of the Revenue to controvert the above pleadings of the assessee.” 16. 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 for both the years under consideration. 17. In the result, both the appeals of the assessee are allowed.” 11. In view of above material facts and judicial precedents, referred above, we hold that the addition could not be made in the hands of assessee by placing any reliance on ‘Hazir Johri’ Solfware.Accordingly, grounds of appeals are allowed for both the years. 12. In the result, both the appeals of the assessee are allowed. Order pronounced in the open court on 3rd September, 2025. Sd/- Sd/- (S RIFAUR RAHMAN) (VIMAL KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 03/09/2025 Mohan Lal Printed from counselvise.com ITA Nos.3405 & 3406/Del/2023 10 Copy forwarded to - 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi Printed from counselvise.com "