Case Number: ITA 1617/DEL/2019
Appellant: Rajnish Talwar, New Delhi
Respondent: ACIT, Central Circle-4, New Delhi
Assessment Year: 2016-17
Case Filed On: February 27, 2019
Order Type: Final Tribunal Order
Date of Order: January 19, 2021
Pronounced On: January 19, 2021
The case ITA 1617/DEL/2019 involves the appellant, Rajnish Talwar from New Delhi, challenging the assessment order passed by the ACIT, Central Circle-4, New Delhi, for the assessment year 2016-17. The final judgment was pronounced by the Income Tax Appellate Tribunal, Delhi Benches “E” on January 19, 2021.
A search and seizure operation was conducted on December 29, 2015, against Rajnish Talwar, Ex-General Manager (Sales) of M/s Jagatjit Industries Ltd. (JIL), Sanjay Duggal, Ex-DGM (Sales) of JIL, their family members, and MAPSKO Group. The primary issue revolved around the deposit of large sums of money in the bank accounts of M/s Alfa India, a proprietary concern of Arun Duggal, brother of Sanjay Duggal. These funds were transferred to various bank accounts maintained by Rajnish Talwar and his family members, and Sanjay Duggal and his family members.
During the search operation, it was revealed that the savings bank accounts of Rajnish Talwar and Sanjay Duggal had large fund transfers from a current account in the name of M/s Alfa India. The funds in M/s Alfa India’s account were proceeds from cheques collected and subsequently transferred to the personal accounts of Talwar and Duggal families, who then withdrew the funds mostly in cash.
The enquiry conducted revealed that these transactions were carried out to route unaccounted money generated through the game of “rebates and discounts”. The accounts were maintained in various branches of South Indian Bank. Further scrutiny showed that upon being asked for PAN details by the bank, the account holders either pretended not to have PAN cards or refused to provide them, despite having PAN cards.
The Income Tax Department found that the accounts were closed due to pressure from the bank authorities after large fund movements and non-submission of PAN details by the account holders.
The search operation uncovered a pattern of transactions involving multiple bank accounts, mainly in the names of family members of Talwar and Duggal families. The funds transferred into these accounts were largely withdrawn in cash. It was found that the deposits in M/s Alfa India’s account were from liquor distributors, including M/s Sohan Lal Singla AOP and M/s Om Prakash Singla AOP, which were part of the MAPSKO Group.
During the investigation, both Rajnish Talwar and Sanjay Duggal admitted that M/s Alfa India was used as a conduit to route unaccounted funds. Rajnish Talwar stated that these funds were meant for incentivizing key personnel in the liquor trade. However, post-search statements contradicted their initial statements, with Rajnish Talwar claiming that a significant portion of the withdrawn cash was handed over to Mr. Vinod Kumar Banga, COO of JIL, for gift procurement and other purposes.
The Assessing Officer (AO) made several additions to the income of the assessees, including unexplained bank deposits, interest thereon, disallowance under section 10(38) of the Income Tax Act, and additions on account of long-term capital gains, unsecured loans, and advances against the sale of house property. The AO also noted inconsistencies and contradictions in the statements given by Rajnish Talwar and Sanjay Duggal regarding the utilization of the withdrawn cash.
The Income Tax Appellate Tribunal (ITAT) concluded that the approval for assessment under section 153D was granted in a mechanical manner without proper application of mind and due consideration of the material facts. As a result, the assessments framed under section 153A were found to be invalid, and the Tribunal directed the authorities to reconsider the case with proper application of mind and adherence to the procedural requirements under the Income Tax Act.
The case of ITA 1617/DEL/2019 highlights the complexities involved in tax assessments following a search and seizure operation. It underscores the importance of proper procedural adherence and thorough investigation by the tax authorities to ensure fair and just assessments. The final judgment by the ITAT serves as a reminder of the need for meticulous scrutiny and application of mind in the approval process under section 153D of the Income Tax Act.
ITA 1617/DEL/2019: Rajnish Talwar vs. ACIT – Detailed Case Analysis
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