DCIT, DELHI vs. VIJAY ANAND CHAURASIA , DELHI

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ITA 8449/DEL/2025Status: DisposedITAT Mumbai29 October 2026AY 2018-1930 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the assumption of jurisdiction under Section 153C of the Act by the AO was flawed. It noted that individual satisfaction notes were not recorded for each assessment year by the AO, which is contrary to the provisions of the Act. The Tribunal relied on decisions of the Hon'ble High Courts and the dismissal of the Special Leave Petition (SLP) by the Hon'ble Supreme Court in the case of ITO vs Saksham Commodities Ltd, which held that Section 153C would apply only to Assessment Years where the jurisdictional AO is satisfied and has incriminating material for those Assessment Years. Since the AO recorded a consolidated satisfaction note for various assessment years, the assumption of jurisdiction was invalid. Consequently, the assessment was quashed on this limited legal ground. The adjudication of other legal and factual grounds raised by the assessee on merits became academic and were left open. The levy of interest under Section 234B and initiation of penalty proceedings under Section 271AAC were noted as consequential and premature, respectively. The appeal of the assessee in ITA No. 6743/Del/2025 was allowed, and the appeal of the revenue in ITA No. 8178/Del/2025 was dismissed.

What were the facts?

The appeals by the assessee, Sh. Shashi Kant Chaurasia, and the revenue for Assessment Year 2020-21 arose from an order of the CIT(A) which partly allowed the assessee's appeal against an assessment order passed under Section 143(3) of the Income-tax Act, 1961. The original assessment order, dated 30.09.2021, was passed after a search and seizure operation on 15.01.2020. The Assessing Officer (AO) made several additions, including Rs. 62,13,03,750 on account of sale of diamonds and long-term capital gains (LTCG) declared on sale of diamonds, which were derecognized. The CIT(A) deleted additions related to the sale of diamonds and commission expenditure but upheld an addition on account of alleged unexplained investment in bullion. The assessee had declared rough diamonds under the Income Disclosure Scheme, 2016, paid taxes thereon, and later sold processed diamonds, declaring LTCG. The AO treated the sale proceeds as unexplained cash credit under Section 68.

What were the issues?

1. Whether the sale proceeds received on sale of diamonds could be construed as an accommodation entry by treating it as unexplained cash credit, warranting addition under Section 68 of the Act? (Question of law) 2. Whether the CIT(A) was justified in confirming the addition on account of alleged commission as unexplained expenditure under Section 69C of the Act for the purpose of obtaining accommodation entry? (Question of mixed law and fact) Assessee's Contentions: - The assessee argued that rough diamonds were declared under the Income Disclosure Scheme, 2016, based on a valuation report from a registered valuer, and taxes were paid. These diamonds were received as a gift and held since 1994. - The processed diamonds were sold, and LTCG were duly offered to tax. - The AO doubted the existence of rough diamonds and treated sale consideration as unexplained cash credit under Section 68. Revenue's Contentions: - The revenue contended that the assessee and family members failed to establish the source of acquisition and existence of diamonds. - The assessee was unable to establish/corroborate that diamonds were actually processed (cut, polished etc.). - The revenue also argued that the CIT(A) erred in deleting the addition on account of commission expenditure.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 153A,Section 153C,Section 68,Section 69C,Section 234B,Section 271AAC

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI

Before: SHRI M BALAGANESH & SHRI SUDHIR KUMAR

For Respondent: Shri Om Prakash, CIT(DR)

Heard together (4 matters)

ITA 6743/DEL/2025
ITA 8178/DEL/2025
ITA 8449/DEL/2025
ITA 5817/DEL/2025

Read from the judgment's own cause title. This page is filed under one of them.

1.

Heard the learned counsel for the petitioners. 2. There is a delay of 124 and 127 days in filing the Special Leave Petitions respectively, which has not been satisfactorily explained. Even otherwise, we have gone through the Special Leave Petition and do not find any merit in the same.

ITA 6743/DEL/2025 ITA 8178/Del/2025 SH. SHASHI KANT CHAURASIA

3.

The Special Leave Petitions are, therefore, dismissed on the ground of delay as well as on merits. 4. Pending application(s), if any, stand disposed of.”

31.

Since individual satisfaction note was not recorded for each assessment year by the learned AO of the Assessee herein, the assumption of jurisdiction under section 153C of the Act becomes fatal. Respectfully following the aforesaid decisions of the Hon’ble High Courts, we hold that the assumption of jurisdiction under section 153C of the Act qua the Assessee herein is totally flawed.

32.

In view of the above, respectively following the aforesaid judicial precedents, the Ground No. 2 is hereby allowed by holding that there was an invalid assumption of jurisdiction u/s 153C of the Act by the ld AO by recording consolidated satisfaction note for various assessment years, which is not in consonance with the provisions of the Act.

33.

Since, the assessment is quashed on the aforesaid limited legal facet of argument, the adjudication of other legal and factual grounds raised by the assessee vide Ground No. 2.1 and grounds raised by the assessee on merits from Grounds 3 to 3.1, becomes academic in nature and they are left open.

34.

The Ground No. 4 is challenging the levy of interest u/s 234B of the Act, which is consequential in nature.

35.

The Ground No. 5 is challenging the initiation of penalty proceedings u/s 271 AAC of the Act, which would be premature for adjudication at this stage.

36.

In the result, the appeal of the assessee in ITA No. 5817/Del/2025 is partly allowed.

ITA 6743/DEL/2025 ITA 8178/Del/2025 SH. SHASHI KANT CHAURASIA

37.

To sum up,

ITA No. AY Party name Result 8178/Del/2025 2020-21 Shashi Kant Chaurasia Revenue Appeal is Dismissed 6743/Del/2025 2020-21 Shashi Kant Chaurasia Assesse Appeal is Allowed 8449/Del/2025 2018-19 Vijay Anand Chaurasia Revenue Appeal is Dismissed 5817/Del/2025 2018-19 Vijay Anand Chaurasia Assessee Appeal is Partly allowed Order pronounced in the open court on 29-Oct-2026.

-Sd/- -Sd/- SUDHIR KUMAR M BALAGANESH JUDICIAL MEMBER ACCOUNTANT MEMBER Delhi Dated: 29/10/2026 AK Keot Copy to: VIJAY ANAND CHAURASIA SH. SHASHI KANT CHAURASIA, 575, 1ST FLOOR, DOUBLE STOREY, NEW 575, 1ST FLOOR, DOUBLE STORY, 1 RAJINDER NAGAR, NEW RAJINDER NAGAR NEW DELHI-110060, DELHI-110060, DELHI DELHI DCIT DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 27, NEW DELHI, ROOM NO. 348, E-2, ARA CENTRE, 2 ROOM NO. 348, 3RD FLOOR, JHANDEWALAN EXTN., NEW JHANDEWALAN EXTENSION, DELHI 110055, NEW DELHI-110055, NEW DELHI-110055, DELHI DELHI 3 THE PCIT / CIT, THE PCIT / CIT, 4 THE D.R., ITAT, DELHI BENCH THE D.R., ITAT, DELHI BENCH 5 GUARD FILE GUARD FILE TRUE COPY SHASHI Digitally signed by SHASHI KANT KANT PANDEY Date: 2026.11.05 PANDEY ASSISTANT REGISTRAR / 09:45:31 +05'30' SR. PRIVATE SECRETARY I.T.A.T., DELHI

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