Case Number: ITA 1622/DEL/2019
Appellant: Ratna Talwar, Delhi
Respondent: ACIT, Central Circle-4, New Delhi
Assessment Year: 2010-11
Result: 2010-11
Case Filed On: 2019-02-27
Order Type: Final Tribunal Order
Date of Order: 2021-01-19
Pronounced On: 2021-01-19
This case involves Ratna Talwar (the appellant) and the Assistant Commissioner of Income Tax (ACIT), Central Circle-4, New Delhi (the respondent). The appeal concerns the assessment year 2010-11, and the final judgment was pronounced by the Income Tax Appellate Tribunal, Delhi Benches ‘E’.
The case revolves around the search and seizure operation conducted on December 29, 2015, against Rajnish Talwar, Sanjay Duggal, their family members, and the MAPSKO Group. The primary issue was the deposit of significant funds in the bank accounts of M/s. Alfa India, a proprietary concern of Arun Duggal, and the subsequent transfer of these funds to various bank accounts maintained by Rajnish Talwar and Sanjay Duggal and their family members. These accounts were managed in various branches of South India Bank.
The Income Tax Department discovered large-value transactions involving multiple bank accounts. The funds transferred from M/s. Alfa India to the accounts of Rajnish Talwar and his family members, as well as Sanjay Duggal and his family members, raised significant concerns. The funds were generally withdrawn in cash from these accounts. The inquiry revealed that the funds were routed through M/s. Alfa India and were linked to transactions with liquor distributors like M/s. Sohan Lal Singla AOP and M/s. Om Prakash Singla AOP.
The investigation highlighted the role of M/s. Alfa India in channeling unaccounted money generated through rebates and discounts. The funds in the accounts of M/s. Alfa India were found to be transferred from various bank accounts associated with the Talwar and Duggal families. The inquiry also found that the proprietors of M/s. Alfa India did not reflect any business income, raising further suspicion.
The search and seizure operations led to the discovery of significant financial discrepancies. The funds were traced back to payments made by liquor distributors to M/s. Alfa India. The credits in the bank accounts were linked to proceeds from large-value cheques. The investigation also revealed that M/s. Alfa India did not have the authorization to sell liquor, and the payments received were not reflected in the 26AS statements of the involved parties.
During the search, statements were recorded from key individuals, including Rajnish Talwar and Sanjay Duggal. These statements provided insights into the operations of M/s. Alfa India and its role in channeling unaccounted funds. Rajnish Talwar admitted that the funds were used to incentivize key managerial personnel of liquor wholesalers, and the funds were routed through M/s. Alfa India.
The assessment orders were passed under section 153A of the Income Tax Act, with significant additions made on account of unexplained bank deposits, interest, disallowances under section 10(38), and other unexplained income. The AO and CIT(A) confirmed these additions and also enhanced them in several cases.
The appellant argued that the approval under section 153D was granted in a mechanical manner, without proper application of mind and independent inquiry. It was contended that the assessments were framed based on hypothetical income and lacked proper consideration of the seized material and statements recorded during the search.
The Tribunal considered the rival submissions and the material on record. It was found that the approval under section 153D was granted without proper scrutiny of the seized material and other records. The Tribunal noted that the assessments were framed in a hurried manner, with mechanical approval from the JCIT. The Tribunal emphasized the importance of proper application of mind and independent inquiry by the approving authority.
The Tribunal concluded that the approval under section 153D was invalid and void ab initio. As a result, the assessments framed under section 153A were quashed. The Tribunal allowed the appeals filed by the appellant, Ratna Talwar.
This case highlights the critical role of proper application of mind and independent inquiry by the approving authority in search and seizure cases. The judgment underscores the need for thorough scrutiny of the seized material and records to ensure fair and just assessments.
ITA 1622/DEL/2019: Ratna Talwar vs ACIT, Central Circle-4, New Delhi
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