Case Number: ITA 1609/DEL/2019
Appellant: Kritika Talwar, New Delhi
Respondent: ACIT Central Circle 4, New Delhi
Assessment Year: 2013-14
Case Filed On: February 27, 2019
Order Type: Final Tribunal Order
Date of Order: January 19, 2021
Pronounced On: January 19, 2021
The case pertains to Kritika Talwar, who is assessed under PAN APKPT9912M. The assessment year in question is 2013-14. The appeal was filed against the order of the Additional Commissioner of Income Tax (ACIT), Central Circle 4, New Delhi.
A search and seizure operation under Section 132 of the Income Tax Act, 1961, was conducted on December 29, 2015, against the Talwar and Duggal families, including Kritika Talwar. The search operation revealed substantial unaccounted money routed through a network of bank accounts.
The Income Tax Department discovered significant fund transfers among various bank accounts maintained by members of the Talwar and Duggal families. The investigation focused on accounts held at the South Indian Bank, which showed large value fund transfers from the account of M/s. Alfa India, a proprietary concern of Arun Duggal.
The credits in the bank account of M/s. Alfa India were primarily received from liquor distributors and subsequently transferred to the bank accounts of family members, including Kritika Talwar. These funds were withdrawn mostly in cash.
During the search and post-search inquiries, statements were recorded from key individuals, including Kritika Talwar and her relatives. The statements revealed that M/s. Alfa India was used as a conduit to route unaccounted money generated through rebates and discounts in the liquor trade.
Kritika Talwar argued that she was merely a conduit and not the real owner of the funds transferred to her bank account. She contended that the money belonged to M/s. Jagatjit Industries Limited (JIL) and was routed through her account as part of the company’s sales promotion activities.
It was further argued that the assessment made by the ACIT was based on incorrect assumptions and without proper appreciation of the facts. The appellant’s counsel pointed out inconsistencies in the statements recorded during the search and post-search periods.
The ACIT contended that the funds transferred to Kritika Talwar’s account were unaccounted money and represented her undisclosed income. The department relied on the statements recorded during the search, which indicated that the funds were used for incentivizing key managerial persons in the liquor trade.
The ACIT further argued that the approval for the assessment under Section 153D of the Income Tax Act was duly obtained from the Joint Commissioner of Income Tax (JCIT), Central Range-1, New Delhi, and that the assessment was made in accordance with the law.
The Tribunal examined the statements and evidence presented by both parties. It noted that there were inconsistencies in the statements of Kritika Talwar and other key individuals regarding the utilization of cash withdrawn from the bank accounts.
The Tribunal observed that the approval under Section 153D was granted in a mechanical manner without proper application of mind by the JCIT. The approval lacked specific details regarding the seized material and the basis for the additions made by the ACIT.
In view of the inconsistencies and lack of proper approval, the Tribunal held that the assessment made by the ACIT was invalid. The Tribunal quashed the assessment order for the assessment year 2013-14 and directed the department to reconsider the case in light of the proper application of law and facts.
The case of Kritika Talwar vs. ACIT Central Circle 4 highlights the importance of proper application of mind and adherence to legal procedures in assessments under Section 153A and 153D of the Income Tax Act. The Tribunal’s decision to quash the assessment order emphasizes the need for thorough scrutiny and proper approval processes in search and seizure cases.
The final judgment pronounced by the Income Tax Appellate Tribunal, Delhi Benches, Delhi, on January 19, 2021, sets a precedent for future cases involving similar issues.
Income Tax Appellate Tribunal Case: Kritika Talwar vs. ACIT Central Circle 4
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