Sanmati Jewellers Vs DCIT (ITAT Delhi)
ITAT Delhi order on presumptions u/s 292, absence of corroborative evidence of cash transactions, delay in recording of proceeding note u/s 153C in case of search u/s 132
Summary: In the case of Sanmati Jewellers Vs DCIT (ITAT Delhi), the assessee challenged additions made under Section 69A of the Income Tax Act. M/s Sanmati Jewellers, engaged in trading bullion and jewelry, was implicated based on digital data seized during a search of Jindal Bullion Ltd. (JBL). The Assessing Officer (AO) added ₹67.16 lakh as peak balance for alleged unaccounted cash payments and ₹19.37 lakh as assumed gross profit from cash purchases. The Commissioner of Income Tax (Appeals) upheld the additions citing the presumption of accuracy under Section 292C. The ITAT ruled that Section 292C’s presumption applies only to the person from whom the documents were seized (JBL) and not to third parties like Sanmati Jewellers. The tribunal emphasized the lack of corroborative evidence to substantiate the alleged cash transactions, noting that no invoices, stock registers, or corroborating records linked the assessee to the entries. ITAT also addressed the significant delay of four years in recording the satisfaction note under Section 153C, deeming it beyond reasonable limits. However, it acknowledged that the COVID-19 lockdown partially justified the delay. Citing precedents like CIT vs. Girish Chaudhary and CIT v. D.K. Gupta, ITAT deleted the additions of ₹86.54 lakh due to insufficient evidence and procedural lapses.
