Case Number: ITA 1613/DEL/2019
Appellant: Rajnish Talwar, New Delhi
Respondent: ACIT, Central Circle-4, New Delhi
Assessment Year: 2012-13
Result: 2012-13
Case Filed on: 2019-02-27
Order Type: Final Tribunal Order
Date of Order: 2021-01-19
Pronounced on: 2021-01-19
A search and seizure operation was conducted on 29.12.2015 against Shri Rajnish Talwar, who was the Ex-General Manager (Sales) of M/s. Jagatjit Industries Ltd. (JIL). The search also involved Shri Sanjay Duggal, who was the Ex-Deputy General Manager (Sales) of JIL, their family members, and the MAPSKO Group. The primary issue of the search was the deposit of significant amounts of money in the bank accounts of M/s. Alfa India, a proprietary concern of Shri Arun Duggal, the brother of Shri Sanjay Duggal. This money was then transferred to various bank accounts maintained by Shri Rajnish Talwar and his family members, as well as Shri Sanjay Duggal and his family members.
The search revealed that the bank accounts in question were maintained in various branches of the South Indian Bank. The Assessees claimed that M/s. Alfa India was used as a conduit to route unaccounted money generated through the game of ‘rebates and discounts.’ The Assessees asserted that M/s. Alfa India was never a beneficiary and that all the funds in the accounts were either transferred by Shri Sanjay Duggal’s family or Shri Rajnish Talwar’s family.
During the investigation, it was found that large value fund transfers were coming into the bank accounts of Shri Rajnish Talwar and Shri Sanjay Duggal from a current account in the name of M/s. Alfa India. The South Indian Bank branch authorities requested the account holders to submit copies of their PAN cards, but the customers either pretended they had no PAN card or refused to provide the PAN details. Subsequent to the bank’s request for information regarding the source of funds, the account in the name of M/s. Alfa India was closed.
The enquiry revealed that the credits in the form of cheque deposits were coming from various liquor distributors, including M/s. Sohan Lal Singla AOP and M/s. Om Prakash Singla AOP, which are part of the MAPSKO Group. The enquiry also revealed that M/s. Alfa India was not authorized to sell liquor. The payments made to M/s. Alfa India by these liquor distributors were found to be bogus purchases of liquor.
During the search, Shri Sanjay Duggal stated that M/s. Alfa India was in the business of promotional activities like brand promotion through gift distribution in the liquor trade on behalf of M/s. Discovery Asia AOP and its member Shri O.P. Singla. However, it was found that Shri Sanjay Duggal was not related to Shri O.P. Singla and that he was employed by JIL during the period in question.
Shri Rajnish Talwar, in his statement, explained that the utilization of funds was meant for incentivizing key managerial persons belonging to L-1 license holder groups and other wholesale and retail salesmen in Haryana. However, during the post-search period, his statement changed, and he claimed that the cash withdrawn was deposited with Mr. Vinod Kumar Banga, COO of JIL, and only part of it was used to procure gifts.
The Assessing Officer (AO) observed inconsistencies in the statements of both Shri Sanjay Duggal and Shri Rajnish Talwar. There was a lack of evidence to support their claims about the utilization of the cash withdrawn through M/s. Alfa India. The AO concluded that the amounts deposited in the bank accounts of the family members of Shri Sanjay Duggal and Shri Rajnish Talwar were unaccounted income.
The AO made several additions to the income of Shri Sanjay Duggal and his family members, including unexplained bank deposits, unexplained HRA, disallowance under section 10(38), addition on account of advance against the sale of house, and addition on account of unsecured loans and interest. Similar additions were made in the case of Shri Rajnish Talwar and his family members.
The approval under section 153D was granted by the JCIT for all the years together involved in the search. It was argued that the approval was given without considering the seized material and other records, making it invalid and void. The Assessees contended that the assessments were framed in a mechanical manner without proper application of mind.
The Income Tax Appellate Tribunal (ITAT) found that the approval under section 153D was granted in a mechanical manner without due consideration of the material on record. The ITAT concluded that the assessments made under section 153A were invalid due to the improper approval under section 153D. Therefore, the ITAT quashed the assessments made by the AO.
The final judgment in the case concluded that the assessments were not sustainable in law due to the lack of proper approval under section 153D, highlighting the importance of thorough and diligent application of mind by the approving authority.
ITA 1613/DEL/2019: Rajnish Talwar vs. ACIT, Central Circle-4, New Delhi
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