Appellant: Rajnish Talwar, New Delhi
Respondent: ACIT, Central Circle-4, New Delhi
Assessment Year: 2014-15
Case Filed On: 27th February 2019
Order Type: Final Tribunal Order
Date of Order: 19th January 2021
Pronounced On: 19th January 2021
The final judgment was pronounced in the Income Tax Appellate Tribunal, Delhi Benches ‘E’, before Shri Bhavnesh Saini, Judicial Member, and Shri Prashant Maharishi, Accountant Member.
The case involved Rajnish Talwar, Ex-General Manager (Sales) of Jagatjit Industries Ltd. (JIL), and several other individuals and entities linked to him. A search and seizure operation was conducted on 29th December 2015 against Rajnish Talwar, Sanjay Duggal (Ex-DGM Sales of JIL), their family members, and the MAPSKO Group. The main issue of the search was the deposit of large sums of money into the bank accounts of Alfa India, a proprietary concern of Arun Duggal, Sanjay Duggal’s brother, and subsequent transfers to various bank accounts maintained by Rajnish Talwar, his family members, Sanjay Duggal, and his family members.
The funds were primarily routed through multiple bank accounts with the South Indian Bank, revealing a complex web of transactions designed to hide the unaccounted money generated through rebates and discounts in liquor trade.
During the search and post-search investigations, it was found that Alfa India received significant credits from various liquor distributors, including Sohan Lal Singla AOP and Om Prakash Singla AOP, part of the MAPSKO Group. The funds were subsequently transferred to the bank accounts of the Duggal and Talwar families, where they were mostly withdrawn in cash.
The investigation revealed that Alfa India did not provide any goods or services in exchange for these funds. Instead, the funds were used to incentivize key personnel in the liquor trade, a practice confirmed by the statements of Rajnish Talwar and Sanjay Duggal.
The investigation also uncovered several inconsistencies and contradictions in the statements provided by Rajnish Talwar and Sanjay Duggal during the search and post-search periods. These included discrepancies regarding the purpose of the funds, the role of Vinod Kumar Banga (COO of JIL), and the actual use of the cash withdrawals.
The assessments under Section 153A of the Income Tax Act were challenged by the assessees on several grounds, including the validity of the search, the nature of the seized materials, and the procedural aspects of the assessments.
The Tribunal carefully examined the evidence, including the statements recorded during the search, the bank account transactions, and the explanations provided by the assessees. The Tribunal concluded that the funds in question were indeed unaccounted income and upheld the additions made by the Assessing Officer under Section 68 of the Income Tax Act.
Additionally, the Tribunal found that the approval under Section 153D of the Income Tax Act, which requires the prior approval of the Joint Commissioner, was granted without proper application of mind. The approval was deemed mechanical, lacking independent examination of the seized materials and relevant records.
Consequently, the Tribunal quashed the assessments made under Section 153A of the Income Tax Act due to the invalid approval under Section 153D, rendering the assessment orders null and void.
The case of Rajnish Talwar vs ACIT, Central Circle-4, New Delhi, highlights the importance of thorough and mindful scrutiny by the approving authorities in search and seizure cases. The Tribunal’s decision underscores the need for proper application of mind and adherence to procedural requirements to ensure the validity of assessments.
This case sets a significant precedent for similar cases involving search and seizure operations and the assessment of unaccounted income.
The detailed findings and the Tribunal’s decision serve as a crucial reference for tax professionals and legal practitioners dealing with cases of unaccounted income and procedural lapses in tax assessments.
ITA 1615/DEL/2019: Rajnish Talwar vs ACIT, Central Circle-4, New Delhi
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