Sabari Diamonds & Jewels Vs DCIT (ITAT Chennai)
The appeals concerned the levy of penalty under section 270A of the Income Tax Act for assessment years 2018-19 to 2021-22. The assessee, engaged in jewellery manufacturing and diamond retail, challenged the penalties imposed on additions relating to gross profit on alleged unaccounted purchases. The additions were based on a ledger titled “SABARI” extracted from JPACK software found during a search conducted in the Mohanlal Jewellers group. The Assessing Officer treated entries in the “SABARI” ledger as pertaining to the assessee and made additions accordingly, later levying penalty under section 270A(9)(e) for alleged under-reporting due to misreporting.
The assessee did not file appeals against the assessment orders but accepted the additions solely to purchase peace, asserting that penalty proceedings are independent of assessment proceedings. The assessee argued that the JPACK ledger did not belong to it, as it contained only the common name “SABARI” and not “Sabari Diamonds & Jewels.” It contended that no statement recorded from group personnel mentioned the assessee or identified the “SABARI” ledger as relating to it. Only one genuine purchase was made from the group in FY 2018-19, duly accounted for, and no other transactions in the ledger matched the assessee’s books.
