Case Number: ITA 1611/DEL/2019
Appellant: Rajnish Talwar, New Delhi
Respondent: ACIT, Central Circle-4, New Delhi
Assessment Year: 2010-11
Result: Final Tribunal Order
Case Filed On: 27th February 2019
Date of Order: 19th January 2021
Pronounced On: 19th January 2021
The case ITA 1611/DEL/2019 involves Rajnish Talwar, the appellant, against the ACIT, Central Circle-4, New Delhi, concerning the assessment year 2010-11. The case was filed on 27th February 2019, and the final order was pronounced on 19th January 2021 by the Income Tax Appellate Tribunal, Delhi Benches ‘E’, comprising Shri Bhavnesh Saini, Judicial Member, and Shri Prashant Maharishi, Accountant Member.
A search and seizure operation was conducted on 29th December 2015 against Rajnish Talwar, who was the Ex-General Manager (Sales) of M/s Jagatjit Industries Ltd. (JIL). The search targeted Talwar, Sanjay Duggal (Ex-DGM Sales of JIL), their family members, and the MAPSKO Group. The investigation revealed large sums of money deposited in the bank accounts of M/s Alfa India, a proprietary concern of Arun Duggal, and the subsequent transfer of funds to the bank accounts of Talwar and Duggal families.
The investigation uncovered that these transactions involved bank accounts in various branches of South India Bank. The assessees claimed that the funds in these accounts were unaccounted money generated through the game of ‘rebates and discounts.’ These accounts received large value cheques from various liquor distributors, which were then transferred to the accounts of Talwar and Duggal families.
The Assessing Officer (AO) noted that substantial money was deposited into the bank accounts of Rajnish Talwar and his family members. These transactions were facilitated through M/s Alfa India, which acted as a conduit for routing the unaccounted money. The funds were received from liquor distributors and transferred to the personal accounts of Talwar and Duggal families.
During the search, Rajnish Talwar admitted to opening several bank accounts in his name and in the names of his family members, using these accounts to distribute incentives to key managerial persons in the liquor trade. Talwar and Duggal admitted that M/s Alfa India was a dummy concern used for routing funds received from various liquor dealers as per the directions of JIL.
The appellants challenged the assessments made by the AO, arguing that no incriminating material was found during the search to justify the additions under section 153A of the Income Tax Act. They claimed that they were merely conduits and that the funds belonged to JIL. The AO, however, made several additions, including unexplained bank deposits, disallowance of exemptions, and additions on account of unexplained investments and capital gains.
The appellants also raised additional grounds challenging the validity of the approval under section 153D of the Income Tax Act, arguing that the approval was granted without proper application of mind and was thus invalid.
The Income Tax Appellate Tribunal reviewed the material on record, including the statements recorded during the search and post-search investigations. The Tribunal noted that the approvals under section 153D were granted in a mechanical manner without proper application of mind, rendering the assessments invalid. Consequently, the Tribunal quashed the assessment orders under section 153A.
In conclusion, the Tribunal held that the assessments made by the AO were invalid due to the lack of proper approval under section 153D. The Tribunal emphasized the importance of following the due process of law and ensuring that approvals are granted with proper application of mind and consideration of the material on record.
Based on the findings and the procedural lapses identified, the Tribunal quashed the assessment orders for the assessment year 2010-11. The case highlighted the necessity for proper adherence to legal procedures and the importance of ensuring that approvals are granted with due diligence.
1. The Income Tax Act, 1961
2. Relevant case laws and judicial pronouncements
3. Statements recorded during search and post-search investigations
4. Appraisal reports and other material on record
This judgment serves as a reminder for tax authorities to meticulously follow the procedures and ensure that approvals are not granted in a cursory manner, upholding the principles of natural justice and fairness.
ITA 1611/DEL/2019: Rajnish Talwar vs ACIT, Central Circle-4, New Delhi
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