Case Number: ITA 1619/DEL/2019
Appellant: Ratnashri Buildtech Pvt Ltd., Delhi
Respondent: ACIT Central Circle 4, New Delhi
Assessment Year: 2011-12
Result: Assessment Year 2011-12
Case Filed On: 2019-02-27
Order Type: Final Tribunal Order
Date of Order: 2021-01-19
Pronounced On: 2021-01-19
The Income Tax Appellate Tribunal (ITAT) Delhi Bench ‘E’ adjudicated on ITA 1619/DEL/2019 concerning the appellant Ratnashri Buildtech Pvt Ltd., Delhi, and the respondent ACIT Central Circle 4, New Delhi. The case revolves around the assessment year 2011-12 and was filed on 2019-02-27. The final order was pronounced on 2021-01-19.
A search and seizure operation was conducted on 29.12.2015 against multiple individuals and entities connected to the Jagatjit Industries Ltd. (JIL), including Ratnashri Buildtech Pvt Ltd. The operation revealed large transactions in various bank accounts related to the individuals and entities involved.
Shri Rajnish Talwar, an Ex-General Manager (Sales) of JIL, and Shri Sanjay Duggal, an Ex-DGM (Sales) of JIL, along with their family members and MAPSKO Group, were found to have substantial funds in their bank accounts originating from M/s Alfa India, a proprietary concern of Shri Arun Duggal, brother of Shri Sanjay Duggal.
During the investigation, it was discovered that the bank accounts in the name of M/s Alfa India were used as conduits to route unaccounted money generated through rebates and discounts. The funds were transferred to various bank accounts of the Talwar and Duggal families, who then withdrew the money in cash.
The investigation further revealed that these funds were credited through cheque deposits from liquor distributors like M/s Sohan Lal Singla AOP and M/s Om Prakash Singla AOP, part of the MAPSKO Group. M/s Alfa India did not provide any goods or services in lieu of these payments, making the transactions appear dubious.
During the search operation, Shri Sanjay Duggal admitted that M/s Alfa India was a dummy concern used for routing funds as per the directions of JIL management. Shri Rajnish Talwar corroborated this, stating that the funds were used to incentivize key managerial persons of liquor distributors in Haryana.
In subsequent statements, there were inconsistencies regarding the utilization of cash withdrawn from these accounts. Initially, it was claimed that the cash was used for promotional activities and incentives, but later statements suggested the cash was deposited with Mr. Vinod Kumar Banga, COO of JIL.
The ITAT considered all the evidence, statements, and the material on record. It was observed that the approval under section 153D of the Income Tax Act, 1961, by the JCIT was granted in a mechanical manner without thorough application of mind.
The Tribunal noted that the JCIT’s approval did not adequately address the specific details of each assessment year, leading to procedural lapses. The assessments were framed without proper consideration of the material seized and the role of JIL in directing these transactions.
The Tribunal concluded that the assessments under section 153A of the Income Tax Act, 1961, were invalid due to the improper approval process under section 153D. The lack of detailed examination and application of mind by the JCIT rendered the assessments void ab initio.
In light of these findings, the Tribunal quashed the assessments made under section 153A for the appellant Ratnashri Buildtech Pvt Ltd., for the assessment year 2011-12.
In the Income Tax Appellate Tribunal, Delhi Benches ‘E’, Delhi, before Shri Bhavnesh Saini, Judicial Member, and Shri Prashant Maharishi, Accountant Member, the appeals by various assessees against the common order of the CIT(A)-23, New Delhi, dated 30.12.2018, for the above assessment years were disposed of. The detailed order addressed the procedural lapses in granting approvals and the inconsistencies in the statements provided during the investigation.
The Tribunal emphasized the importance of proper application of mind and thorough examination of material before granting approvals under section 153D of the Income Tax Act, 1961. The case highlighted significant lapses in the assessment process, leading to the quashing of the assessments for the involved assessees.
ITA 1619/DEL/2019: Ratnashri Buildtech Pvt Ltd. vs. ACIT Central Circle 4, New Delhi
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