Assessee filed appeal against the assessment order passed under section 153A on the ground that approval granted under section 153D by the Jt. CIT was based on non-application of mind and without any independent enquiry and overlooking/ignoring important/ significant aspect of earlier assessments being made in the hands of M/s. JIL, etc. Held: It was an admitted fact that assessments under section 153A had been framed by Asstt. CIT, therefore, prior approval of the Jt. CIT in respect of each assessment year referred to under section 153A or 153B shall have to be obtained. Thus, no order of assessment or re-assessment shall be passed by AO in the present case in respect of each of assessment years under sections 153A/153B of IT Act 1961, except with the prior approval of the Jt. CIT. It was found that the approval under section 153D had been granted by Jt. CIT without going through the seized material, appraisal report and other material on record. Granting approval under section 153D is not a mere formality, but it is a supervisory act which requires proper application of administrative and judicial skill by Jt. CIT on the application of mind and this exercise should be discernable from the Orders of the approval under section 153D. While granting approval under section 153D, Jt. CIT shall have to peruse all the incriminating materials and other seized material on record and proper procedure if have been adopted by AO and appraisal report as well. The Jt. CIT shall apply his mind to such material on record before granting his approval, otherwise, it will be invalid and bad in law. Thus, the approval was granted in a most mechanical manner and without application of mind. Therefore, same was invalid, bad in law and void ab initio and as such all assessments under section 153A got vitiated.
IN THE ITAT, DELHI BENCH
BHAVNESH SAINI & PRASHANT MAHARISHI, JJ.
Sanjay Duggal v. ACIT
ITA Nos. 1800 to 1828, 1608-1609, 1611 to 1627, 1797 to 1799, 1991/Del/2019
19 January, 2021
In favour of assessee.
Appellant by: Kapil Goel, Sandeep Goel, R.S. Singhvi, Satyajeet Goel, Advocate
Respondent by: Pramita M Biswas, Commissioner--Departmental Representative
All the appeals by different Assessees are directed against the common Order of the learned Commissioner (Appeals)-23, New Delhi, dated 30-12-2018, for the above assessment years.
2. We have heard the Learned Representatives of all the parties through videoconferencing and perused the material on record. All parties have also filed written submissions which are also taken into consideration.
3. This Order shall dispose of all the Group 52 Appeals pertaining to Talwar and Duggal Group of Cases in which identical issues have arisen.
4. Learned Counsel for the Assessee mainly argued in ITA. No. 1813/Del./2019 in respect of Shri Sanjay Duggal as a lead case and references also made to all the remaining appeals as well.
5. Learned Commissioner (Appeals) recorded the facts of the case in detail under the Head 'Background of the Case' in the impugned order which refers to the factual position in respect of all the above Assessees. The background of the facts are as under:--
5.1. A search and seizure operation was conducted on 29-12-2015 against Shri Rajnish Talwar (who was Ex-General Manager (Sales)) of M/s. Jagatjit Industries Ltd., (M/s. JIL). Shri Sanjay Duggal (who was Ex.DGM (Sales) of JIL), their family Members and MAPSKO Group. The basic issue of search and seizure was deposit of huge money in the bank accounts of M/s. Alfa India which is proprietary concern of Shri Arun Duggal brother of Shri Sanjay Duggal and transfer of huge amounts from bank accounts of M/s. Alfa India to various bank accounts maintained by Shri Rajnish Talwar and his family Members and Shri Sanjay Duggal and his family Members.
5.2. These accounts were maintained in various branches of South India Bank. As per the submissions made by the Assessee before the learned Commissioner (Appeals) in the case of Shri Sanjay Duggal for the assessment year 2010-2011, bank accounts in the name of M/s. Alfa India proprietary concern of Shri Arun Duggal, real brother of Shri Sanjay Duggal were used as conduit just to route the unaccounted money generated through the game of 'rebates and discounts'. The Assessees claimed that M/s. Alfa India was never a beneficiary, and all the funds in the accounts either transferred by Shri Sanjay Duggal's Family or Shri Rajnish Talwar's Family.
5.3. The Search and Seizure operation was conducted because the Income Tax Department came to know that Shri Rajnish Talwar was maintaining the Savings Bank Account No. 358.53.3614 with South India Bank Ltd., Chittaranjan Park, New Delhi Branch on 1-10-2008. Similarly, Shri Sanjay Duggal was maintaining a S.B. Account No. 555.53.204 with South India Bank Ltd., Faridabad Branch. On going through the transactions in the abovementioned Bank Accounts of Shri Rajnish Talwar and Shri Sanjay Duggal, it was noticed that large value fund transfers were coming in these bank accounts from a Current Account No. 358.73.2431 which was in the name of M/s. Alfa India maintained with same bank (Chittaranjan Park, New Delhi Branch). Credits in the bank account of M/s. Alfa India were received by way of proceeds of large value cheques tendered for collection in the account and this money was found transferred (from the bank account of M/s. Alfa India) to the bank accounts of Sh. Rajnish Talwar (and his family members) and Shri Sanjay Duggal (and his family members). Sh. Rajnish Talwar and Sh. Sanjay Duggal used to withdraw the funds from their (and family members) bank accounts, in cash, generally.
5.4. Further, it was found that the above mentioned process was followed in various other connected bank accounts as well. The bank accounts showing similar pattern of transaction as discussed above are detailed as below :--