Case Number: ITA 1614/DEL/2019
Appellant: Rajnish Talwar, New Delhi
Respondent: ACIT, Central Circle-4, New Delhi
Assessment Year: 2013-14
Date Filed: February 27, 2019
Order Type: Final Tribunal Order
Date of Order: January 19, 2021
Pronounced On: January 19, 2021
The case ITA 1614/DEL/2019 involves an appeal by Rajnish Talwar against the Assistant Commissioner of Income Tax (ACIT), Central Circle-4, New Delhi, concerning the assessment year 2013-14. This appeal was filed on February 27, 2019, and the final order was pronounced on January 19, 2021, by the Income Tax Appellate Tribunal (ITAT), Delhi Bench “E”, consisting of Shri Bhavnesh Saini, Judicial Member, and Shri Prashant Maharishi, Accountant Member.
The case revolves around a search and seizure operation 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 of the search was the deposit of substantial funds in the bank accounts of M/s Alfa India, a proprietary concern of Arun Duggal, Sanjay Duggal’s brother, and the subsequent transfer of these funds to various bank accounts maintained by Rajnish Talwar and his family members, as well as Sanjay Duggal and his family members.
The funds were found to be transferred from M/s Alfa India’s bank account to the bank accounts of Rajnish Talwar and Sanjay Duggal, among others. The search and seizure operation revealed large value transactions in these accounts, prompting the authorities to request PAN card details from the account holders. It was found that these individuals either refused to provide their PAN details or pretended not to have PAN cards. Eventually, the accounts were closed due to the alarm raised by the bank regarding the significant fund movements.
The enquiries conducted revealed that the funds credited to M/s Alfa India came from various liquor distributors, including M/s Sohan Lal Singla AOP and M/s Om Prakash Singla AOP, part of the MAPSKO Group. It was determined that M/s Alfa India was a dummy concern used to route unaccounted money generated through rebates and discounts in the liquor trade.
During the search, Rajnish Talwar admitted to using these accounts for distributing incentives to key managerial persons of L-1 license holder groups, such as Sohan Lal Singla, Prem Singla & Co., Jai Krishan Liquors, and others. He stated that the funds in the account of M/s Alfa India were borne by JIL in the form of rebate adjustments to these wholesalers. However, during the post-search period, he contradicted his earlier statements, claiming that the cash withdrawn from these accounts was deposited with Vinod Kumar Banga, COO of JIL, and used for procuring gifts for retail salesmen and shops in Haryana.
The Assessing Officer (AO) noted inconsistencies in the statements given by Rajnish Talwar and Sanjay Duggal regarding the utilization of cash withdrawn from the bank accounts of their family members. The AO observed that the assessee’s explanation regarding the utilization of these funds was not credible and lacked evidence.
The AO made several additions to the income of Rajnish Talwar and other assessees, including unexplained bank deposits, interest income, and disallowance of exemptions under Section 10(38) of the Income Tax Act. The Commissioner of Income Tax (Appeals) [CIT(A)] confirmed these additions and further enhanced the income assessed by the AO.
The assessee contended that no incriminating material was found during the search to justify the additions made under Section 153A. It was argued that the assessee was merely a conduit for JIL, and the funds in question ultimately belonged to JIL. Therefore, the assessee claimed that the income should not be taxed in his hands.
The ITAT, after considering the submissions of both parties and the material on record, dismissed the appeals of the assessee. The ITAT held that the approval under Section 153D of the Income Tax Act was granted by the Joint Commissioner in a mechanical manner without application of mind. The Tribunal found that the assessments were framed based on the seized material and other evidence gathered during the search and post-search enquiries.
The case ITA 1614/DEL/2019 highlights the importance of proper application of mind by the approving authority under Section 153D of the Income Tax Act. The ITAT’s decision underscores the need for thorough examination of the seized material and other evidence before granting approval for assessments under Section 153A. The dismissal of the assessee’s appeals serves as a reminder of the stringent scrutiny involved in search and seizure cases, ensuring that unexplained and unaccounted funds are adequately addressed under the law.
Case Summary: ITA 1614/DEL/2019 – Rajnish Talwar vs ACIT, Central Circle-4, New Delhi
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