Sachin Vs DCIT (ITAT Delhi)
In a significant relief for taxpayer Sachin, a gold bullion wholesaler, the Income Tax Appellate Tribunal (ITAT) Delhi has quashed additions made by tax authorities regarding alleged unexplained cash transactions for assessment years (AY) 2016-17 and 2017-18. The Tribunal’s decision, issued on March 5, 2025, underscores the critical importance of corroborative evidence and the adherence to principles of natural justice in income tax proceedings, particularly when relying on third-party seized documents.
The Genesis of the Dispute
The case originated from a search and seizure operation conducted by the Income Tax Department on January 5, 2017, against Jindal Bullion Ltd (JBL) Group. During this search, digital data from a software named ‘Hajir Johri’ was seized from the residence of Mr. Kushagra Jindal, a promoter of JBL. This software was believed by the tax authorities to contain parallel accounts maintained by JBL, recording both legitimate banking transactions and unaccounted cash dealings.
The Assessing Officer (AO) noted that a statement recorded under Section 132(4) of the Income-tax Act, 1961, from Ms. Parul Ahluwalia, a Director and former employee of JBL, allegedly confirmed that both ‘pakka’ (official) and ‘kaccha’ (unofficial) transactions were documented in the ‘Hajir Johri’ software.
Upon scrutinizing the seized data, a ledger account with the code ‘Pankaj kb’ was identified, which the tax authorities claimed pertained to Sachin, proprietor of M/s Meru Jewels. This ledger purportedly showed both cash and banking transactions. Based on this, the AO of the searched person recorded a satisfaction note on September 24, 2020, asserting that the ‘Pankaj kb’ ledger pertained to Sachin and had a bearing on his total income. Consequently, a notice under Section 153C of the Act was issued to Sachin on October 23, 2020.
