Case Number: ITA 1620/DEL/2019
Appellant: Ratnashri Buildtech Pvt Ltd., Delhi
Respondent: ACIT Central Circle 4, New Delhi
Assessment Year: 2012-13
Case Filed On: 2019-02-27
Order Type: Final Tribunal Order
Date of Order: 2021-01-19
Pronounced On: 2021-01-19
This article provides a comprehensive analysis of the Income Tax Appeal (ITA) case number 1620/DEL/2019, involving Ratnashri Buildtech Pvt Ltd. and the Additional Commissioner of Income Tax (ACIT) Central Circle 4, New Delhi. The case pertains to the assessment year 2012-13 and was filed on February 27, 2019. The final order was pronounced on January 19, 2021, by the Income Tax Appellate Tribunal (ITAT), Delhi Benches “E”, comprising Shri Bhavnesh Saini, Judicial Member, and Shri Prashant Maharishi, Accountant Member.
The background of the case involves a search and seizure operation conducted on December 29, 2015, against various individuals and entities linked to Jagatjit Industries Ltd. (JIL), including Shri Rajnish Talwar, Shri Sanjay Duggal, and their family members. The investigation revealed substantial unaccounted money transactions involving multiple bank accounts and entities, including M/s Alfa India, which was found to be a conduit for routing unaccounted funds.
The search operation was initiated to investigate the deposit of significant amounts of money into the bank accounts of M/s Alfa India, a proprietary concern of Shri Arun Duggal, the brother of Shri Sanjay Duggal. The investigation revealed that the funds were transferred from the accounts of M/s Alfa India to various bank accounts maintained by the family members of Shri Rajnish Talwar and Shri Sanjay Duggal. These accounts were used primarily to withdraw cash.
The investigation found that M/s Alfa India was used to route unaccounted money generated through rebates and discounts provided by JIL. The funds were deposited into the bank accounts of M/s Alfa India from various liquor distributors and subsequently transferred to the accounts of the family members of Talwar and Duggal. These funds were then withdrawn in cash, allegedly for distribution as incentives to key personnel in the liquor trade.
The Assessing Officer (AO) made several additions to the income of Ratnashri Buildtech Pvt Ltd. and other involved parties under section 68 of the Income Tax Act, citing unexplained cash deposits and interest thereon. The AO noted inconsistencies in the statements given by Shri Sanjay Duggal and Shri Rajnish Talwar during the search and post-search periods regarding the utilization of the cash withdrawn from these accounts.
According to section 153D of the Income Tax Act, no order of assessment or reassessment shall be passed by an Assessing Officer below the rank of Joint Commissioner in respect of each assessment year referred to in section 153A except with the prior approval of the Joint Commissioner. In this case, the Joint Commissioner (JCIT) granted approval for the assessments in a consolidated manner without specifying the details for each assessment year, which raised questions about the validity and application of mind in granting such approval.
The ITAT observed that the approval granted under section 153D was mechanical and lacked detailed examination of the seized material and other relevant records. The Tribunal noted that the JCIT did not provide specific details about the incriminating material, whether the assessments were abated or non-abated, or whether the statements recorded during the search were examined. The Tribunal emphasized that the JCIT must apply his mind independently and provide reasons for granting approval for each assessment year separately.
The ITAT concluded that the approval granted under section 153D was invalid due to the lack of detailed examination and application of mind by the JCIT. Consequently, the Tribunal quashed the assessments framed under section 153A of the Income Tax Act for the involved parties, including Ratnashri Buildtech Pvt Ltd., for the assessment year 2012-13. The Tribunal’s decision highlights the importance of adhering to procedural requirements and ensuring a thorough examination of records before granting approvals for assessments in search cases.
This case underscores the need for tax authorities to meticulously follow procedural requirements and apply their minds independently while granting approvals for assessments under section 153D. The decision reinforces the principle that mechanical approvals without detailed examination can render the assessments invalid. Taxpayers and practitioners should take note of the Tribunal’s observations and ensure that proper procedures are followed in similar cases to avoid legal challenges and ensure fair assessments.
Overall, the ITA 1620/DEL/2019 case serves as a significant precedent in the context of search assessments and the importance of adhering to the procedural safeguards laid down in the Income Tax Act.
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