Case Number: ITA 1627/DEL/2019
Appellant: Ratna Talwar, Delhi
Respondent: ACIT, Central Circle-4, New Delhi
Assessment Year: 2013-14
Result: 2013-14
Case Filed on: 2019-02-27
Order Type: Final Tribunal Order
Date of Order: 2021-01-19
Pronounced on: 2021-01-19
This case involves Ratna Talwar, the appellant, challenging the order of the Assessing Officer (ACIT, Central Circle-4, New Delhi) for the assessment year 2013-14. The case revolves around the assessment of income following a search and seizure operation conducted on December 29, 2015, against Rajnish Talwar, Sanjay Duggal, their families, and associated entities.
A search and seizure operation was conducted on December 29, 2015, against Rajnish Talwar, Ex-General Manager (Sales) of Jagatjit Industries Ltd. (JIL), Sanjay Duggal, Ex-DGM (Sales) of JIL, their family members, and associated entities. The operation revealed substantial money transfers from Alfa India, a proprietary concern of Arun Duggal (Sanjay Duggal’s brother), to various accounts held by Rajnish Talwar and his family members, as well as Sanjay Duggal and his family members.
The investigation indicated that these accounts were used to route unaccounted money generated through rebates and discounts. It was claimed that Alfa India was used as a conduit to transfer funds from liquor distributors to the accounts of the Talwar and Duggal families, from which the funds were generally withdrawn in cash.
During the search, it was discovered that large value transactions were conducted through several bank accounts maintained by the Talwar and Duggal families in various branches of South Indian Bank. The bank authorities, upon noticing these transactions, requested PAN card details from the account holders, which were either not provided or deliberately avoided.
The enquiry revealed that the funds in Alfa India’s account were primarily received from liquor distributors associated with MAPSKO Group of Gurgaon, Faridabad, and Delhi. The transactions were not reflected in the official records of JIL, and Alfa India was not authorized to sell liquor as per the Haryana Excise Authority.
During the search and subsequent investigations, both Rajnish Talwar and Sanjay Duggal admitted that Alfa India was a dummy concern used to route funds. They also admitted that no goods or services were provided by Alfa India to the liquor distributors, and the funds were used to incentivize key managerial personnel and salesmen in the liquor trade for promoting JIL’s products.
The Assessing Officer made several additions to the income of Ratna Talwar and other assessees based on unexplained bank deposits, disallowance of exemptions, and other discrepancies identified during the investigation. The total income assessed was significantly higher than the income returned by the assessees.
For Ratna Talwar, the assessment for the year 2013-14 included unexplained bank deposits, interest, and other income components, resulting in a substantial addition to the assessed income.
The assessment orders were passed with the prior approval of the Joint Commissioner of Income Tax (JCIT) as mandated under Section 153D of the Income Tax Act. However, the appellant argued that the approval was granted mechanically without proper application of mind and consideration of the seized materials, rendering the assessments invalid.
The Income Tax Appellate Tribunal (ITAT) examined the arguments and the evidence presented. The Tribunal reviewed the procedure followed during the assessment and the approval process by the JCIT. The ITAT noted discrepancies in the statements recorded during the search and post-search periods, highlighting inconsistencies in the explanations provided by the key persons involved.
In its final judgment, the ITAT considered the detailed arguments and evidence presented by both the appellant and the respondent. The Tribunal emphasized the importance of proper application of mind and due process in granting approval under Section 153D. It also highlighted the need for a thorough examination of the seized materials and the statements recorded during the investigation.
The ITAT concluded that the assessment orders were not fully justified based on the evidence presented. The Tribunal directed the Assessing Officer to reconsider the assessments, taking into account the detailed findings and observations made during the ITAT proceedings.
As a result, the case was partially allowed in favor of Ratna Talwar, and the Assessing Officer was instructed to re-evaluate the assessments for the year 2013-14, ensuring compliance with the legal provisions and proper application of mind in the approval process.
The case of Ratna Talwar vs. ACIT, Central Circle-4, New Delhi, underscores the importance of thorough investigation and proper application of legal procedures in income tax assessments. The ITAT’s judgment highlights the need for assessing authorities to diligently examine the evidence and follow due process to ensure fair and just assessments.
Ratna Talwar vs ACIT, Central Circle-4, New Delhi – ITA 1627/DEL/2019
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