The case under discussion involves the appeal by Ratnashri Buildtech Pvt Ltd., Delhi, against the ACIT Central Circle 4, New Delhi, for the assessment year 2014-15. The case, numbered ITA 1621/DEL/2019, was filed on February 27, 2019, and the final tribunal order was pronounced on January 19, 2021, by the Income Tax Appellate Tribunal, Delhi Benches “E”, Delhi.
A search and seizure operation were conducted on December 29, 2015, against several entities and individuals connected to Jagatjit Industries Limited (JIL), including Rajnish Talwar and Sanjay Duggal. The search revealed substantial unaccounted transactions involving the bank accounts of the Talwar and Duggal families, routed through the accounts of a proprietary concern named M/s Alfa India.
The primary issue was the deposit of substantial funds in these accounts, which were transferred from the accounts of liquor distributors. These funds were alleged to be unaccounted money generated through the manipulation of rebates and discounts in the liquor trade.
During the search, it was found that the bank accounts of M/s Alfa India, maintained with the South Indian Bank, were used to route funds to the personal accounts of Rajnish Talwar, Sanjay Duggal, and their family members. Significant amounts of money were deposited into these accounts and subsequently withdrawn in cash.
The statements of Rajnish Talwar and Sanjay Duggal were inconsistent regarding the purpose and end-use of the funds. Initially, they claimed the funds were for promotional activities and incentives for key personnel in the liquor trade. However, they later stated that the cash was handed over to Vinod Kumar Banga, COO of JIL, without providing any evidence of the purchase or distribution of promotional gifts.
In the legal proceedings, the key points discussed included:
The Tribunal noted that the JCIT had granted approval under Section 153D in a mechanical manner, without proper application of mind or independent examination of the seized material. The Tribunal emphasized the necessity for the JCIT to provide specific approval for each assessment year, taking into account the unique circumstances and evidence for each year.
The Tribunal concluded that the approval granted by the JCIT under Section 153D was invalid due to lack of proper scrutiny and application of mind. Consequently, the assessment orders under Section 153A, based on such approval, were deemed invalid. The Tribunal emphasized that proper and independent examination of the evidence is crucial for granting approval under Section 153D.
This case highlights the importance of adherence to procedural requirements in tax assessments and the need for detailed scrutiny by higher authorities to ensure the validity and fairness of the assessment process.
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