Smt. Purnima Dutta, Prop. of M/s. Piyali Films, Kolkata V. Addl. CIT, Range - 55, Kolkata, Kolkata

ITA 1544/KOL/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83020 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 8 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-08-2014
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 11-11-2011
• Court: TRIBUNAL
• Department Lawyers: SABOORUL HASAN USMANI JCITSR
• Assessee Lawyers: SOUMITRA CHOW DHURY
• Keywords: Corroborative evidences
• Section: 133(6); 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH A , KOLKATA [BEFORE HONBLE SRI P.K.BANSAL, AM & HONBLE SRI MAHAVIR SINGH, JM] ITA NO.1544/KOL/2011 ASSESSMENT YEAR : 2006-07 ( APPELLANT ) - (RESPONDENT) SMT.PURNIMA DUTTA ADDL.CIT,RANGE-55, KOLKATA -VERSUS- KOLKATA (PAN: ADRPD 5608 D) FOR THE APPELLANT: SHRI SOUMITRA CHOWDHURY, ADVOCATE FOR THE RESPONDENT: SHRI SABOORUL HASAN USMANI, JCIT,SR.DR DATE OF HEARING : 22.07.2014 DATE OF PRONOUNCEMENT : 1.8.2014. ORDER PER SHRI P.K.BANSAL, AM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A)- XXXVI, KOLKATA DATED 26.09.2011 BY TAKING THE FOLLO WING EFFECTIVE GROUNDS OF APPEAL : 1 . FOR THAT THE LD.COMMISSIONER OF INCOME TAX (APPEAL) -XXXVI/KOLKATA HAS ERRED IN LAW AS WELL AS ON FACTS OF THE CASE IN CONFIRMING T HE DISALLOWANCE AND ADDITION OF RS.5,4,270.00 U/S 41(1) OF THE I.T.ACT ON THE GROUN DS WHICH ARE NOT CORRECT. 2.FOR THAT THE LD.COMMISSIONER OF INCOME TAX (APPEA L)-XXXVI/KOLKATA HAS ERRED IN LAW AS WELL AS ON FACTS OF THE CASE IN CONFIRMING T HE DISALLOWANCE AND ADDITION OF THE SUM RS.5,52,409.00 ON ACCOUNT OF DISALLOWANCE ON T HE BASIS OF AGREEMENT ON THE GROUNDS WHICH ARE NOT CORRECT. 3. FOR THAT THE LD.COMMISSIONER OF INCOME TAX (APPE AL)-XXXVI/KOLKATA HAS ERRED IN LAW AS WELL AS ON FACTS OF THE CASE IN CONFIRMING T HE DISALLOWANCE ADDITION OF RS.2,55,411.00 ON ACCOUNT OF DISALLOWANCE FOR NON- PRODUCTION OF BILLS & VOUCHERS ON THE GROUNDS WHICH ARE NOT CORRECT. 4. FOR THAT THE LD.COMMISSIONER OF INCOME TAX (APPE AL)-XXXVI/KOLKATA HAS ERRED IN LAW AS WELL AS ON FACTS OF THE CASE IN CONFIRMING T HE DISALLOWANCE & ADDITION OF THE SUM OF RS.17,64,705.00 ON ACCOUNT OF DISALLOWANCE (PR ODUCERS SHARE) IN ABSENCE OF WRITTEN AGREEMENT ON THE GROUNDS WHICH ARE NOT CORRECT. 2. THE FACTS RELATING TO GROUND NO.1 ARE THAT THE A O NOTED THAT THE ASSESSEE HAS SHOWN SUNDRY CREDITORS FOR A SUM OF RS.10,59,716/- AND THERE WAS DIFFERENCE IN THE ITA NO.1544/KOL/2011 SMT.PURNIMA DUTTA A.YR.2006-07 2 RECONCILIATION AND IN RESPECT OF SUNDRY CREDITORS. THERE WAS NO TRANSACTION DURING THE YEAR. THEREFORE THE AO INVOKED THE PROVISION OF SEC TION 41(1) OF THE ACT AND MADE ADDITION OF RS.5,41,270/-. THE ASSESSEE WENT IN APP EAL BEFORE THE LD. CIT(A). THE CIT(A) CALLED FOR THE REMAND REPORT. IN THE REMAND REPORT THE AO POINTED OUT THAT NOTICE WAS ISSUED U/S 133(6) OF THE ACT TO THE SUND RY CREDITORS AND AT THE GIVEN ADDRESSES OUT OF THE EIGHT SUNDRY CREDITORS NOTICE S WERE SERVED ONLY TO FOUR SUNDRY CREDITORS AND THERE WERE DISCREPANCIES IN THESE CAS ES ALSO. THE LD. CIT(A) AFTER HEARING THE ASSESSEE CONFIRMED THE ADDITION MADE B Y AO BY OBSERVING AS UNDER :- 3.4. I HAVE DULY CONSIDERED THE SUBMISSION OF THE AR OF THE APPELLANT AND SEEN THE DETAILS FILED. THE AO MADE SPOT INQUIRIES FOR EXAMI NATIONS OF CERTAIN LIABILITIES FOR EXPENSES AND FOUND DISCREPANCIES WITH REGARD TO SEV EN ALLEGED CREDITORS, TOTALING TO RS.5,41,270/-. THE AO CONSIDERED THE SAID AMOUNT AS CESSATION OF LIABILITY IN TERMS OF SECTION 41(1) OF THE ACT AS THE APPELLANT FAILED TO EXPLAIN OR RECONCILE THE DIFFERENCES WITH SUPPORTING EVIDENCES IN SPITE OF SUFFICIENT OP PORTUNITIES PROVIDED. DURING THE APPEAL PROCEEDING ALSO, APART FROM GIVING A WRITTEN SUBMISSION NARRATING DETAILS OF PAYMENTS MADE TO SUCH CREDITORS, THE AR FAILED TO F ILE ANY SUPPORTING EVIDENCE WHAT-SO- EVER. IN THE REMAND PROCEEDINGS ALSO, ADMITTEDLY NO SUPPORTING EVIDENCE IN THE MATTER HAS BEEN FILED. IN VIEW OF SUCH, I AM INCLINED TO A CCEPT AOS FINDINGS THAT THE LIABILITIES FOR EXPENSES TO THE EXTENT OF RS.5,41,270/- CEASED TO EXIST. ACCORDINGLY, ADDITION OF RS.5,41,270/- IS CONFIRMED. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y CONSIDERED THE SAME. IN OUR OPINION, THE ONUS IS ON THE AO TO PROVE THAT THE AM OUNT HAS BEEN REMITTED OR CEASED DURING THE IMPUGNED ASSESSMENT YEAR. IN THIS CASE W E DO NOT FIND ANY EVIDENCE OR MATERIAL BROUGHT ON RECORD BY THE AO. THE AO WHILE MAKING THE ADDITION SIMPLY OBSERVED THAT THERE ARE DISCREPANCIES IN ALL THE CA SES BUT DID NOT HOLD THAT THE LIABILITY HAS BEEN REMITTED OR CEASED DURING THE YEAR. UNDER THESE CIRCUMSTANCES WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND DELETE THE ADDITION MADE BY THE AO. GROUND NO.1 TAKEN BY THE ASSESSEE STANDS ALLOWED. 4. GROUND NO.2 RELATES TO SUSTENANCE OF ADDITION AM OUNTING TO RS.5,52,409/- BY DISALLOWING CERTAIN EXPENSES. THE AO DISALLOWED THE FOLLOWING EXPENSES : I ) FILM MAINTENANCE : RS.1,21,208/- II) SOFTWARE MAINTENANCE : RS. 1,310/- III) MOVIE MARKETING EXPENSES : RS.3,69,882/- IV) COST OF PRINT : RS. 50,000/- V) FREIGHT & CARRIAGE : RS. 10,009/- TOTAL RS.5,52,409/- ITA NO.1544/KOL/2011 SMT.PURNIMA DUTTA A.YR.2006-07 3 5. THE AO NOTED THAT AS PER THE TERMS AND CONDITION S OF THE AGREEMENT BETWEEN THE ASSESEE AND THE DISTRIBUTOR OF THE FILM THE ASS ESSEE WAS GETTING PRINTS, PHOTOSETS, TRAILERS AND POSTER FREE OF COST FROM THE PRODUCER. THE ADVERTISING AND MARKETING COSTS ARE TO BE BORNE BY THE PRODUCER IN THE CASE OF DIST RIBUTION 40% OF THE REALIZATION. IN NONE OF THE CASES THIS EXPENDITURE EXCEEDS 40%. EVE N OTHERWISE ALSO THE ASSESSEE COULD NOT PRODUCE ANY BILLS OR VOUCHERS. THE ASSESS EE WENT IN APPEAL BEFORE THE LD. CIT(A). BEFORE THE LD. CIT(A) THE ASSESSEE CONTENDE D THAT THE DISALLOWANCE OF RS.5,52,409/- WAS TOTALLY BASED ON MISUNDERSTANDIN G OF THE TRANSACTION.. THIS EXPENDITURE IS NOT RELATED TO DISTRIBUTION BUSINESS . PIYALI FILMS OWN FOUR FILMS LIKE ARANYER DIN RATRI, PRATIDWANDI, GUPI GAYEN BAGHA B AYEN AND BASIC INSTINCT WHICH IS TIME TO TIME EXHIBITED BY EXHIBITOR. THE E XPENDITURE HAS BEEN INCURRED AGAINST THESE EXHIBITION AND NOT FOR OTHER FILMS DI STRIBUTED BY PIYALI FILMS UNDER DISTRIBUTION AGREEMENT. THE CIT(A) CALLED FOR THE R EMAND REPORT FROM THE AO. THE AO IN HIS REPORT SUBMITTED THAT THE VERIFICATION CO ULD NOT BE POSSIBLE SINCE THE ASSESSEE FAILED TO PRODUCE BOOKS OF ACCOUNT. 6. AFTER HEARING THE RIVAL SUBMISSIONS WE NOTED THA T THE ASSESSEE SUBMITTED THE DETAILS OF THE EXPENSES, CASH FLOW DURING THE ASSES SMENT PROCEEDINGS. THE ONUS, IN OUR OPINION IS ON THE ASSESSEE TO PROVE THE GENUINITY OF THE EXPENDITURE INCURRED BY HIM AND ALSO THAT THE EXPENDITURE HAS BEEN INCURRED FOR THE PURPOSE OF THE BUSINESS. THE EXPENDITURE ARE NOT CAPITAL OR PERSONAL EXPENSES. B USINESS EXIGENCIES DEMANDS SUCH EXPENDITURE TO BE INCURRED. THE LD. COUNSEL OF THE ASSESSEE VEHEMENTLY CONTENDED THAT HE COULD NOT PRODUCE NECESSARY EVIDENCES. WE, THERE FORE, IN THE INTEREST OF JUSTICE AND FAIR PLAY OF BOTH THE PARTIES WE SET ASIDE THE ORDE RS OF THE LD. CIT(A) AND RESTORE THE ISSUE TO THE FILE OF THE AO WITH THE DIRECTION THAT THE AO SHALL VERIFY THE GENUINITY OF THESE EXPENSES ON THE BASIS OF BOOKS OF ACCOUNT AND BILLS AND VOUCHERS FILED BY THE ASSESSEE. THE ASSESEE IS ALSO DIRECTED TO PRODUCE N ECESSARY EVIDENCES IN THIS REGARD. IN CASE THE ASSESSEE FAILS TO PRODUCE BOOKS OF ACCOUNT AS WELL AS BILLS AND VOUCHERS THE AO IS DIRECTED TO DISALLOW PART OF THE EXPENDITURE AS HE DEEMS FIT. GROUND NO.2 OF THE ASSESSEE;S APPEAL IS ALLOWED FOR STATISTICAL PURPO SES. ITA NO.1544/KOL/2011 SMT.PURNIMA DUTTA A.YR.2006-07 4 7. GROUND NO.3 RELATES TO DISALLOWANCE AMOUNTING TO RS.2,55,411/-. THE SAID SUM HAS BEEN DISALLOWED BY THE AO AS THE ASSESSEE DID N OT PRODUCE THE BILLS/VOUCHERS RELATING TO THESE EXPENSES. THE ASSESSEE WENT IN AP PEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) SUSTAINED THE ADDITION. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y CONSIDERED THE SAME ALONG WITH THE ORDERS OF THE TAX AUTHORITIES BELOW. IN OU R OPINION, THE ONUS IS ON THE ASSESSEE ONCE HE CLAIMS DEDUCTION IN RESPECT OF CERTAIN EXPE NSES INCURRED BY HIM U/S 37 OF THE ACT TO PROVE THE GENUINITY OF THE EXPENDITURE. THE AO HAD DISALLOWED THESE EXPENSES AS THE ASSESSEE COULD NOT PRODUCE BILLS OR VOUCHERS . THE LD.CIT(A) CALLED FOR THE REMAND REPORT AND DURING THE REMAND PROCEEDINGS ALS O THE ASSESSEE FAILED TO PRODUCE THE BOOKS OF ACCOUNT AS WELL AS BILLS AND VOUCHERS FOR DISCHARGING HIS ONUS. UNDER THESE CIRCUMSTANCES WE CONFIRM THE DISALLOWANCE MAD E BY THE AO. THUS GROUND NO.3 OF THE ASSESSEES APPEAL STANDS DISMISSED. 9. THE LAST GROUND RELATES TO THE SUSTENANCE OF ADD ITION OF RS.17,64,705/-. THE FACTS RELATING TO THE ADDITION ARE THAT THE AO NOTE D THAT THE ASSESSEE HAS PAID THE PRODUCERS SHARE AMOUNTING TO RS.70,58,818/-. THE A SSESSEE COULD NOT PRODUCE THE COMPLETE AGREEMENTS AND IN MANY CASES ONLY SIGNED D OCUMENTS WITHOUT ANY CONDITIONS WERE SUBMITTED. THE AO WAS OF THE VIEW T HAT THE PAYMENTS MADE COULD NOT BE VERIFIED AND THEREFORE HE DISALLOWED 25% OF THE PAYMENTS. 10. THE ASSESSEE WENT IN APPEAL BEFORE THE LD. CIT( A). BEFORE THE LD. CIT(A) THE ASSESSEE CONTENDED THAT PRODUCERS SHARE AND INCOME FROM DISTRIBUTION WERE SHOWN AS EXPENDITURE AND INCOME. AS PER THE AGREEMENT BILLS FOR COLLECTION ON EXHIBITOR IS TO BE RAISED BY THE DISTRIBUTOR ON BEHALF OF PRODUCER. T HEREFORE THE TOTAL BILLING AMOUNT ON EXHIBITOR WAS SHOWN IN THE ACCOUNTS AS INCOME FROM DISTRIBUTION AND SIMILARLY THE SAME AMOUNT WAS SHOWN AS MARKETING EXPENSES. THE CI T(A) REMANDED THE ISSUE BACK TO THE AO AND AFTER GOING THROUGH THE REMAND REPORT THE LD.CIT(A) SUSTAINED THE ADDITION BY OBSERVING AS UNDER :- ITA NO.1544/KOL/2011 SMT.PURNIMA DUTTA A.YR.2006-07 5 6.3. I HAVE GONE THROUGH THE SUBMISSION OF THE APP ELLANT AND THE REMAND REPORT. THE RE-OPENING OF THE ASSESSMENT WHICH MIGHT HAVE A CONSEQUENTIAL EFFECT TO ARRIVE AT THE TAXABLE INCOME, IS NOT A SUBJECT MATT ER OF THIS APPEAL. THE ISSUE IN HANDS IS WHETHER THE ESTIMATED DISALLOWANCE OUT OF THE PAYMENTS MADE TO VARIOUS PRODUCTION HOUSES WAS JUSTIFIED ON THE PART OF THE AO FOR NON SUBMISSION OF AGREEMENTS, AND RELEVANT BOOKS OF ACCOUNTS WITH SUP PORTING EVIDENCES. AS PER THE AO, NO SUCH DETAIL/EVIDENCE WAS FILED DURING TH E ASSESSMENT PROCEEDINGS. NO SUCH DETAIL WAS ALSO FILED BEFORE ME. THE APPELLANT HAS BEEN GIVEN FRESH OPPORTUNITY TO SUBSTANTIATE HIS CLAIM OF PAYMENTS M ADE TO THE PRODUCERS WITH SUPPORTING EVIDENCES DURING THE REMAND PROCEEDINGS, WHICH SHE FAILED TO AVAIL AS THE BOOKS OF ACCOUNTS WITH SUPPORTING EVIDENCES HAV E NOT BEEN PRODUCED TO AO FOR VERIFICATION. UNDER THE FACTS AND CIRCUMSTANCES , THE ADDITION OF RS.17,64,705/- IS SUSTAINED. 11. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFUL LY CONSIDERED THE SAME ALONG WITH THE ORDERS OF THE TAX AUTHORITIES BELOW. THE L D. AR BEFORE US VEHEMENTLY CONTENDED THAT NO SUCH DISALLOWANCE WAS MADE IN THE EARLIER BUT COPY OF THE EARLIER YEARS ORDER WAS NOT FILED BEFORE US. NO SUCH DISAL LOWANCES WAS MADE. WE NOTED THAT NO SUCH PLEA WAS TAKEN BY THE ASSESSEE BEFORE THE T AX AUTHORITIES BELOW. WE NOTED THAT THE DISALLOWANCE HAS BEEN MADE BY THE AO MEREL Y ON ESTIMATE BASIS. IN THE INTEREST OF JUSTICE AND FAIR PLAY WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THE ISSUE TO THE FILE OF THE AO WITH THE DIRECTION THAT THE ASSESSEE SHALL FILE NECESSARY EVIDENCES ON WHICH HE MAY RELY BEFORE THE AO AND T HE AO SHALL VERIFY THE DOCUMENTS WHETHER NO SUCH DISALLOWANCE HAS BEEN MAD E EARLIER. ACCORDINGLY THE ADDITION MAY BE DELETED. THUS GROUND NO.4 IS ALLOWE D FOR STATISTICAL PURPOSES. 12. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 1.8.2014. SD/- SD/- [MAHAVIR SINGH ] [P.K.BANSAL] JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 1.8.2014. R.G.(.P.S.) ITA NO.1544/KOL/2011 SMT.PURNIMA DUTTA A.YR.2006-07 6 COPY OF THE ORDER FORWARDED TO: 1. SMT.PURNIMA DUTTA, 95, RASH BEHARI AVENUE, KOLKATA- 700029. 2 ADDL.C.I.T., RANGE-55, KOLKATA. 3 . CIT KOLKATA 4 . CIT(A)-XXXVI, KOLKATA 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY, BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES