AASHANA INVESTMENTS PVT. LTD.,CHENNAI V. DCIT, CHENNAI

ITSSA 4/CHNY/2019

AI Insights

The case involves Aashna Investments Pvt. Ltd., which appealed against the order of the Commissioner of Income Tax (Appeals)-19, Chennai, concerning a block assessment for the years 1997-98 to 2003-04. The primary issues in the appeal were the additions made by the Assessing Officer under sections 158BD and 254 of the Income Tax Act, which were related to undated pronotes and sundry creditors. The Tribunal examined the arguments and evidence presented, including the nature of the pronotes and the lack of confirmation from the creditors, leading to the decision to partly allow the appeal.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 29427 (ITAT-CHENNAI)
• Duration Of Justice: 5 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 20-11-2024
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 14-11-2024
• Assessment Year: misc
• Appeal Filed On: 12-09-2019
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A. SASIKUMAR LD
• Assessee Lawyers: K. RAVI; LD
• Keywords: Additional evidence; Block assessment; Application of stay
• Section: 132; 158BD

Judgement Text

" आयकर अपीलीय अिधकरण “डी” \u000eा यपीठ चे\u0013ई म\u0016। IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, CHENNAI मा ननीय \u0019ी मनोज क ुमा र अ\u001dवा ल ,लेखा सद# एवं मा ननीय \u0019ी मनु क ुमा र िग'र, \u000eा ियक सद# क े सम(। BEFORE HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM AND HON’BLE SHRI MANU KUMAR GIRI, JM (आयकरअपील सं ./IT(SS)A No.4/Chny/2019 (िनधा )रण वष) / Block Assessment Year: 1997-98 to 2002-03 & part of 2003-04) & Stay Application No.39/Chny/2024 (In IT(SS)A No.4/Chny/2019) (िनधा )रण वष) / Block Assessment Year: 1997-98 to 2002-03 & part of 2003-04) Aashna Investments Pvt. Ltd. 5E, Moogambikai Complex, 4, Lady Desika Road, Chennai-600 004. बना म / Vs. DCIT Central Circle-II(1), Chennai. \u0001थायीलेखासं./जीआइआरसं./PAN/GIR No. AAACA-6251-G (अपीलाथ\u001c/Appellant) : (\u001f थ\u001c / Respondent) अपीलाथ\u001cकीओरसे/ Assessee by : Shri K. Ravi, (Advocate)- Ld.AR \u001f थ\u001cकीओरसे/Revenue by : Shri A. Sasikumar (CIT)-Ld. DR सुनवाईकीतारीख/Date of Hearing : 14-11-2024 घोषणाकीतारीख /Date of Pronouncement : 20-11-2024 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by assessee for captioned block Assessment Year (AY) arises out of an order passed by learned Commissioner of Income Tax (Appeals)-19, Chennai [CIT(A)] on 18-06-2019 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s.158BD r.w.s 254 of the Act on 28-03-2014. The appeal is accompanied by stay application wherein the assessee is seeking stay of recovery of 2 outstanding demand by the revenue. The grounds taken by the assessee are as under: 1. The order dated 18-06-2019 passed by CIT(A) is quite arbitrary, illegal and contrary to the facts of the case of your appellant. 2. The Ld. CIT(A) has erred in confirming the addition on the strength of undated pronotes from Venus, he ought to have appreciated the submission of appellant company that no such advances was ever made to them. 3. The Ld. CIT(A) has further erred in confirming the addition on account of DMS Films which is also based on undated pronote not enforceable in the law. 4. The Ld. CIT(A) further erred in confirming the addition on account of Sundry Creditors amounting to Rs.1,20,000/-. 2. The Ld. AR advanced arguments supporting the case of the assessee whereas Ld. CIT-DR has supported the findings given by lower authorities. Having heard rival submissions and upon perusal of case records, the appeal is disposed-off as under. 3. Pursuant to search action u/s 132 in the case of Shri Rakesh Sarin (a film financier) on 27-03-2003, the assessee was also covered therein. The assessee is an entity in which Shri Rakesh Sarin acted as Managing Director. During the course of search on Shri Rakesh Sarin, books of accounts relating to the assessee were also found in tally accounting package of computer. Notice u/s 158BD was issued to assessee on 27- 11-2003 for the captioned block and an assessment was framed on 23- 12-2005 wherein the undisclosed income was quantified at Rs.260.29 Lacs. The appeal was allowed by first appellate authority. However in department’s further appeal, Tribunal remitted assessment back to the file of Ld. AO for re-adjudication considering the additional evidences filed by the assessee. Consequently, another assessment has been framed on 28-03-2014 making certain additions which are in further appeal before us. The subject matter of present appeal is addition of pronotes and addition of sundry creditors. The same is adjudicated as under. 3 4. Advances on Pronotes 4.1 During the course of search, number of pronotes containing the name of the assessee as lender was found. The assessee filed detailed tables listing out the pronotes and furnished necessary clarification in respect of each entry with supporting documents. However, Ld. AO rejected explanation for certain items and made addition of Rs.32.70 Lacs. The details thereof have been extracted in the assessment order. Upon further appeal, Ld. CIT(A) examined each of the item and deleted all the additions except for addition of Rs.5 Lacs with respect to advances given to Venus and another advance of Rs.2.50 Lacs as given to DMS. 4.2 During appellate proceedings, the assessee contended that no such advances were given to these parties. M/s Venus executed 3 pronotes for Rs.5 Lacs each but loan was given on one pronote only which was reflected in the financial statements. The others were mere draft pronotes which were never executed. There were many pronotes which had not been executed and they do not represent any actual investment. The same are taken as security at the time of renewal of advance made earlier. In film financing, paper work is done after negotiating with the producers and drafts agreements, pronotes lab slips etc. are prepared in financier’s officer. More often than not, the negotiation does not result in striking a deal. Sometime producers give signed pronotes and lab slips in advance during negotiations and wait for the release of funds from film financier depending upon the progress of production of movie. If the deal is not struck, these signed pronotes are not executed. Similar explanation was furnished for DMS. However, Ld. 4 CIT(A) upheld the addition of Rs.7.50 Lacs against which the assessee is in further appeal before us. 4.3 We find that during search on assessee, large number of pronotes was found. The assessee filed detailed tables listing out the pronotes and furnished necessary clarification in respect of each entry with supporting documents. The assessee was substantially successful in explaining the investment made through these pronotes which is evident from the orders of lower authorities. All the investments were found recorded in the regular books of accounts. Therefore, the assessee’s explanation with respect to these two items is to be accepted. Admittedly, the pronotes are undated and there is no confirmation from the other parties with respect to contents of these pronotes. Therefore, we delete the impugned addition of Rs.7.50 Lacs and allow the corresponding grounds raised by the assessee. 5. Sundry Creditors The assessee failed to file confirmation of Sundry Creditors for Rs.1.20 Lacs which were added to assessee’s income. The Ld. CIT(A) confirmed the same. Before us also, no supporting documents has been placed n support of the same. Therefore, no interference is required on this issue. No other ground has been urged in the appeal. 6. The appeal stands partly allowed. The connected stay application is dismissed as infructuous. Order pronounced on 20th November, 2024 Sd/- (MANU KUMAR GIRI) \u000eा ियक सद# / JUDICIAL MEMBER Sd/- (MANOJ KUMAR AGGARWAL) लेखा सद# / ACCOUNTANT MEMBER 5 चे2ई Chennai; िदनांक Dated : 20-11-2024 DS आदेशकीJितिलिपअ\u001dेिषत/Copy of the Order forwarded to : 1. अपीलाथ\u001c/Appellant 2. \u001f थ\u001c/Respondent 3. आयकरआयु;/CIT Chennai 4. िवभागीय\u001fितिनिध/DR 5. गाड@फाईल/GF "