S.J.Suryah, CHENNAI V. ITO, CHENNAI

ITA 1863/CHNY/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8763 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2016
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 11-05-2016
• Assessment Year: 2002-2003
• Appeal Filed On: 27-06-2014
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Assessee Lawyers: T BANUSEKAR
• Keywords: Unexplained investment
• Section: 142(1); 234B; 69; 148

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL C BENCH, CHENNAI , . , BEFORE SHRI CHANDRA POOJARI , ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ./ I.T.A.NO. 1863/MDS/2014 / ASSESSMENT YEAR :200 2 - 0 3 SHRI S.J. SURYA H , FLAT NO. D - 1, JAMAL APARTMENTS, NO. 18, NEELAKANTA MEHTA STREET, T. NAGAR, CHENNAI 600 017 . [PAN: A LYPS3012R ] VS. THE INCOME TAX OFFICER , ME DIA WARD III , CHENNAI 600 034 . ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI T. BANUSEKAR, C.A. / RESPONDENT BY : S HRI A.V. SREEKANTH , J CIT / DATE OF HEARING : 1 1 . 0 5 .201 6 / DATE OF P RONOUNCEMENT : 27 . 0 7 .201 6 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : TH I S APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) II , CHENNAI , D ATED 3 1 . 0 3 .20 1 4 RELEVANT TO THE ASSESSMENT YEAR 200 2 - 0 3. 2. THE FIRST GROUND RAISED IN THE APPEAL OF THE ASSESSEE IS WITH REGARD TO CONFIRMATION OF ADDITION OF .30 LAKHS DEPOSITED IN THE BANK AS UNEXPLAINED INVESTMENT UNDER SECTION 69 OF THE INCOME TAX ACT, 1961 [ ACT IN SHORT] . I.T.A. NO . 1863 /M/ 14 2 2.1 THE BRIEF FACTS OF THE CASE ARE THAT AT THE TIME OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS DEPOSITED AN AMOUNT OF .30 LAKHS IN HIS BANK ACCOUNT MAINTAINED IN DENA BANK, T. NAGAR BRANCH, CHENNAI IN ACCOUNT NO. 10728, WHICH HAD BEEN INVESTED ON THE SAME DAY IN THE FIXED DEPOSIT IN FD/4461/3 ON 21.12.2001. THE ASSESSING OFFICER HAS CALLED FOR EXPLANATION FOR THIS AMOUNT REGARDING SOURCE AND NATURE OF THE TRANSACTIONS. THE ASSESSEE HAS NOT F ILED ANY DETAILS BEFORE THE ASSESSING OFFICER. THEREFORE, THE ASSESSING OFFICER TREATED THE AMOUNT OF .30 LAKHS AS UNEXPLAINED INVESTMENTS UNDER SECTION 69 OF THE ACT. SAME POSITION CONTINUES EVEN BEFORE THE LD. CIT(A) ON APPEAL. 2.2 AGGRIEVED, THE ASSE SSEE IS IN APPEAL BEFORE THE TRIBUNAL. AT THE TIME OF HEARING, THE LD. AR HAS FILED A COPY OF LETTER DATED NIL FROM INDIRA PRODUCTION PVT. LTD. ADDRESSED TO THE ADIT, INVESTIGATION UNIT IV(1), CHENNAI ENCLOSING A STATEMENT OF ACCOUNT, WHEREIN, STATING THAT AN AMOUNT OF .30.00 LAKHS WAS PASSED ON TO THE ASSESSEE ON 14.12.2001 BY WAY OF JOURNAL ENTRY PAID TO THE ASSESSEE THROUGH SHRI PRASAD POTLURI ON BEHALF OF THE COMPANY. ACCORDING TO THE LD. AR, THE SAID AMOUNT WAS RECEIVED BY THE ASSESSEE FROM INDIRA PR ODUCTION PVT. LTD. THROUGH SHRI PRASAD POTLURI AND IT HAS TO BE CONSIDERED AS EXPLAINED. THE LD. DR HAS SUBMITTED THAT THE EVIDENCE I.T.A. NO . 1863 /M/ 14 3 BROUGHT ON RECORD WAS NOT SUFFICIENT TO HOLD THAT THE SOURCE OF .30 LAKHS IS PROPERLY EXPLAINED. 2.3 WE HAVE HEARD BOTH SI DES, PERUSED THE MATERIALS ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. ADMITTEDLY, AT THE TIME OF ASSESSMENT, INDIRA PRODUCTION PVT. LTD. HAS DIRECTLY WRITTEN A LETTER DATED NIL TO THE ADIT ENCLOSING STATEMENT OF ACCOUNT THAT AN AMOUNT OF .30 LAKHS PASSED ON TO THE ASSESSEE PAID DIRECTLY THROUGH SHRI PRASAD POTLURI TO THE ASSESSEE. HOWEVER, THERE IS NO EVIDENCE TO SUGGEST UNDER WHAT CIRCUMSTANCES SHRI PRASAD POTLURI HAS PAID THIS AMOUNT TO THE ASSESSEE. THERE IS NO COUNTER CONFIRMATION FROM SHRI PRASAD POTLURI. HAD IT BEEN GENUINE TRANSACTION, THE ASSESSEE SHOULD HAVE BEEN EXPLAINED THE ENTIRE TRANSACTION BETWEEN THE ASSESSEE AND SHRI PRASAD POTLURI AND THE CIRCUMSTANCES UNDER WHICH IT WAS PAID BY SHRI PRASAD POTLURI TO THE ASSESSEE ON BEHAL F OF INDIRA PRODUCTION PVT. LTD. FURTHER, THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT REQUESTED INDIRA PRODUCTION PVT. LTD. FOR THE PERSONAL APPEARANCE AND EXPLAINS IT. BUT, INSTEAD OF PERSONAL APPEARANCE BEFORE THE ASSESSING AUTHORITY, THEY OPTE D TO SEND THE STATEMENT OF ACCOUNT, WHICH DOES NOT EXPLAIN ITSELF THE NATURE OF TRANSACTION BETWEEN THE PARTIES. IN OUR OPINION, AS RIGHTLY POINTED OUT BY THE LD. DR, THE EVIDENCE BROUGHT ON RECORD BY THE ASSESSEE, THE ASSESSEE HAS NOT DISCHARGED HIS BURDE N CAST UPON HIM TO SUBSTANTIATE THE SOURCE AND I.T.A. NO . 1863 /M/ 14 4 GENUINENESS OF THE TRANSACTION. IN THESE CIRCUMSTANCES, IT IS APPROPRIATE TO HOLD THAT THE DEPOSIT OF .30 LAKHS IN THE DENA BANK ACCOUNT HAS NOT PROPERLY EXPLAINED. THEREFORE, THE PROVISIONS OF SECTION 69 OF THE ACT WAS RIGHTLY INVOKED BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(A). THUS, WE FIND NO INFIRMITY IN THE ORDERS OF AUTHORITIES BELOW O N THIS ISSUE AND ACCORDINGLY, THE SAME IS CONFIRMED. 3. THE NEXT GROUND RAISED IN THE APPEAL OF THE ASSESSEE IS THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF .1 CRORE AS INCOME OF THE ASSESSEE BASED ON THE STATEMENT OF SHRI BONNY KAPOOR W ITHOUT CONSIDERING THE FACT THAT THE ASSESSEE MADE A CONDITIONAL OFFER TO SHRI BONNY KAPOOR, HENCE THE INCOME ACCRUED TO THE EXTENT ACCEPTED BY SHRI BONNY KAPOOR AMOUNTING TO .50 LAKHS ONLY WAS TO BE ASSESSED TO TAX. 3.1 FACTS OF THE ISSUE ARE THAT THE ASSESSEE FILED THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2002 - 03 ON 15.09.2004 ADMITTING A TOTAL INCOME OF .40.00 LAKHS AFTER ISSUE OF NOTICE TO THE ASSESSEE UNDER SECTION 142(1) OF THE ACT ON 22.07.2004. THIS NOTICE UNDER SECTION 142(1) OF THE ACT WAS ISSUED TO THE ASSESSEE AFTER SURVEY CONDUCTED AT THE PREMISES OF THE ASSESSEE ON 04.09.2003 AND ISSUED A NOTICE UNDER SECTION 148 OF THE ACT ON 30.03.2004. THE ASSESSEE RECEIVED REMUNERATION FOR THE HINDI VERSION OF FILM KUSHI OF .50 LAKHS FROM SHRI BO NNY KAPOOR AND CLAIMED AN EXPENDITURE OF .10 LAKHS. THE NET INCOME SHOWN WAS .40 LAKHS. AGAINST I.T.A. NO . 1863 /M/ 14 5 ENQUIRY WITH SHRI BONNY KAPOOR, WHO HAS STATED THAT THE ORIGINAL AGREEMENT FOR DIRECTING HINDI VERSION OF KUSHI , IT WAS AGREED FOR .1.50 CRORES AND HE WAS ACTUALLY PAID .1,15,96,614/ - DURING THE YEAR ENDED 31.03.2002 AND 31.03.2003 AND BALANCE AMOUNT OF . 34,13,386/ - WAS OUTSTANDING, WHICH WAS NOT PAID TO THE ASSESSEE SINCE SHRI BONNY KAPOOR HAS WRITTEN BACK THE SUM IN HIS BOOKS OF ACCOUNT IN THE ASSESSMENT YEAR 2005 - 06. THIS AMOUNT OF .1,15,96,614/ - ALSO INCLUDES AN AMOUNT OF .11 LAKHS AS CONSIDERATION FOR DISTRIBUTION RIGHTS FOR TAMIL NADU CIRCUIT FOR THE HINDI FILM KUSHI . FURTHER , AT THE TIME OF ASSESSMENT, THE ASSESSEE FILED REVISED COMPUTATION OF IN COME WHICH READS AS UNDER: RS. INCOME ADMITTED AS RETURN DATED 15.09.2004 40,00,000 ADD: AMOUNT PAID TREATED AS ADVANCE ORIGINALLY 05.10.2001 10,00,000 02.11.2001 10,00,000 12.02.2002 5,00,000 01.04.2002 10,00,000 DIFFERENCE IN STA TEMENT TREATED AS PERSONAL AND NOT RELATED PROFESSION AS PER STATEMENT 16,25,028 OUTSTANDING PAYMENT DUE 34,13,386 85,38,414 SRI SURYA MOVIES: TELUGU KUSHI REMUNERATIONS 13,00,000 1,38,38,414 LESS: LOSS FROM EXPLOITATION KUSHI HINDI VERSION IN TAMILNADU CIRCUIT 11,00,000 TOTAL AND NET TAXABLE INCOME 1,27,28,414 I.T.A. NO . 1863 /M/ 14 6 THE ASSESSING OFFICER, WITHOUT CONSIDERING THE ABOVE REVISED COMPUTATION OF INCOME FILED BY THE ASSESSEE, COMPUTED THE INCOME OF THE ASSESSEE AS FOLLOWS: RS. TOTAL INCOME R ETURNED 40,00,000 ADD: DISALLOWANCE AS DISCUSSED ABOVE 1. DIFFERENCE OF GROSS REMUNERATION AS PER THE MOVIE KUSHI HINDI VERSION 1,00,00,000 2. TELUGU KUSHI REMUNERATION 13,00,000 3. UNEXPLAINED INVESTMENT 30,00,000 1,83,00,000 LESS: OFFICE EXPE NSES AND AIR TICKET 14,61,586 ASSESSED INCOME 1,68,34,414 3.2 BEFORE THE LD. CIT(A), THE ASSESSEE CHALLENGED THE AD - HOC ADDITION OF .1.00 CRORE TOWARDS GROSS REMUNERATION FOR KUSHI HINDI VERSION OF MOVIE. THE LD. CIT(A) CONFIRMED THE ADDITION OF .1.00 CRORE. 3.3 AGAINST THIS, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 3.4 WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE CONTENTION OF THE LD. AR IS THAT THE CORRESPONDENCE BETWEEN SHRI BONNY KAPOOR ANDF THE DEPARTMENT WAS NOT PUT TO THE ASSESSEE FOR HIS COMMENTS AND IT CANNOT BE RELIED UPON. ON THE OTHER HAND, THE LD. DR SUBMITTED THAT THERE IS AN AGREEMENT FOR REMUNERATION TO BE PAYABLE BY SHRI BONNY KAPOOR TO THE ASSESSEE FOR DIRECTING THE FILM KUSHI AND THE SAME WAS CONSIDERED AS INCOME OF THE I.T.A. NO . 1863 /M/ 14 7 ASSESSEE FOR THE ASSESSMENT YEAR 2002 - 03 AS THE ASSESSEE WAS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING. ADMITTEDLY, IN THIS CASE, THE ASSESSEE HAS FILED A STATEMENT BEFORE US CONFI RMING THE RECEIPT OF INCOME FROM NARASIMHA ENTERPRISES OWNED BY SHRI BONNY KAPOOR FOR .1,15,96,414/ - . IN ADDITION TO THIS, IT IS TO BE NOTED THAT THE ASSESSEE FILED REVISED STATEMENT OF INCOME BEFORE THE ASSESSING OFFICER ON 28.03.2005 AT .1,27,28,414/ - . THE ASSESSING OFFICER HAS NOT CONSIDERED THIS AMOUNT. IN OUR OPINION, THE AMOUNT RETURNED BY THE ASSESSEE IN THE REVISED COMPUTATION OF STATEMENT IS TO BE ACCEPTED AT .1,27,28,414/ - SUBJECT TO OUR FINDING IN PARA 3.5 HEREIN BELOW AND INSTEAD OF MAKING AD DITION OF .1.00 CRORE BY OVERLOOKING THIS REVISED STATEMENT. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO CONSIDER THE REVISED COMPUTATION OF INCOME FOR THE ASSESSMENT YEAR 2002 - 03 WITH REFERENCE TO THE INCOME AT .1,27,28,414/ - SUBJECT TO OUR FINDING IN PARA 3.5 HEREIN BELOW . IN OTHER WORDS, THE ASSESSEE IS NOT ENTITLED FOR LOSS OF .11 LAKHS IN RESPECT OF KUSHI TELUGU MOVIE. 3.5 COMING TO OTHER GROUND RAISED BY THE ASSESSEE WITH REGARD TO THE DISALLOWANCE OF EXPENDITURE OF .11 LAKHS TOWARDS EXPEN DITURE INCURRED TOWARDS THE LOSS FROM EXPENDITURE OF KUSHI HINDI VERSION IN TAMILNADU CIRCUIT. THE LD. AR HAS NOT PRESSED THE GROUND AT THE TIME OF HEARING AND ACCORDINGLY, WE DISMISS AS NOT PRESSED. I.T.A. NO . 1863 /M/ 14 8 3.6 WITH REGARD TO NEXT GROUND RAISED BY THE ASSESSE E, CHARGING OF INTEREST UNDER SECTION 234A AND 234B OF THE ACT IS MANDATORY AND CONSEQUENTIAL IN NATURE, WHICH HAS TO BE COMPUTED ACCORDINGLY. 4 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED . ORDER PRONOUNCED ON THE 27 TH JU LY , 201 6 AT CHENNAI. SD/ - SD/ - ( CHANDRA POOJARI ) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 27 . 0 7 .201 6 VM/ - / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.