M/S TOPAZ FILMS, JALANDHAR V. ADDL. C.I.T., CENTRAL RANGE, JALANDHAR

ITA 199/ASR/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3304 (ITAT-AMRITSAR)
• Duration Of Justice: 2 year(s)
• Appeal Type: Income Tax (International Taxation) Appeal
• Pronouncement Date: 20-04-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 14-05-2018
• Assessment Year: 2013-2014
• Appeal Filed On: 20-04-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PAWAN K KUMAR
• Assessee Lawyers: J S BHASIN
• Keywords: Unexplained cash credit; Reasonable cause
• Section: 273B; 143(3); 271D; 271E; 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR. BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER AND SH. N. K. CHOUDHRY, JUDICIAL MEMBER I.T.A. NOS. 199&200/ASR/2017 AS SESSMENT YEAR: 2013-14 TOPAZ FILMS, CHAMAN LAL BUILDING, MANDI ROAD, NEAR LAXMI CINEMA, JALANDHAR [PAN: AAHFT 8538P] VS. ADDL. C.I.T., CENTRAL RANGE, JALANDHAR (APPELLANT) (RESPONDENT) APPELLANT BY : SH. J. S. BHASIN (ADV.) RESPONDENT BY: SH. PAWAN K. KUMAR, CIT-DR DATE OF HEARING: 14.05.2018 DATE OF PRONOUNCEMENT: 11.06.2018 ORDER PER SANJAY ARORA, AM: THIS IS A SET OF TWO APPEALS BY THE ASSESSEE, DIREC TED AGAINST THE CONFIRMATION OF THE LEVY OF PENALTY U/SS. 271D AND 271E OF THE INCOME TAX ACT, 1961 ('THE ACT' HEREINAFTER) FOR THE ASSESSMENT YEA R (AY) 2013-14 VIDE ORDERS DATED 27.01.2016, BY THE COMMISSIONER OF INCOME TAX (APPEALS)-1, JALANDHAR ('CIT(A)' FOR SHORT) VIDE HIS SEPARATE ORDERS OF EV EN DATE (I.E., 20.02.2017). 2. THE BACKGROUND FACTS OF THE CASE ARE THAT THE AS SESSEE, A PARTNERSHIP FIRM, IN THE BUSINESS OF FILM DISTRIBUTION, WAS FOR THE RELE VANT YEAR ASSESSED AT A LOSS OF RS.72.04 LACS, AS AGAINST THE RETURNED LOSS OF RS.8 7.16 LACS, VIDE ORDER U/S. 143(3) DATED 21.09.2015. DURING THE COURSE OF THE ASSESSME NT PROCEEDINGS, THE ASSESSING ITA NOS. 199&200/ASR/2017 (AY 2013-14) TOPAZ FILMS V. ADDL. CIT 2 OFFICER (AO) OBSERVED THE ASSESSEE TO HAVE RECEIVED FROM, AS WELL AS REPAID, A SUM OF RS.2,00,000/- IN CASH TO ONE, SHRI C.L. VOHRA. T HE SAME BEING IN EXCESS OF RS.20,000/-, AS PRESCRIBED BY SECTIONS 269SS AND 2 69T OF THE ACT, PENALTY PROCEEDINGS U/S. 271D AND 271E RESPECTIVELY WERE IN ITIATED VIDE SHOW CAUSE NOTICE DATED 16.12.2015. THE ASSESSEE REITERATED WHAT HE H AD STATED DURING THE ASSESSMENT PROCEEDINGS, I.E., THAT THE AMOUNT RECEIVED FROM AN D RETURNED BACK TO SHRI CL VOHRA WAS A BOOKING ADVANCE, I.E., FOR BOOKING OF A FILM, RECEIVED ON BEHALF OF THE MOVIE THEATRES. SECTIONS 269SS AND 269T DID NOT APP LY TO A TRADE ADVANCE. SHRI CL VOHRA WAS SUMMONED U/S. 131 BY THE AO, BUT HE DID N OT ATTEND. THE ASSESSEE WAS ACCORDINGLY PROVIDED AN OPPORTUNITY TO EVIDENCE ITS CLAIM (FOR 21.01.2016), WHICH REMAINED UNRESPONDED (TILL THE DATE OF THE PASSING OF THE PENALTY ORDERS). THE CLAIM OF RECEIPT AND REPAYMENT OF A TRADE ADVANCE BEING W HOLLY UNPROVED, WITH, ON THE CONTRARY, SHRI VOHRA ADMITTEDLY BEING AN EMPLOYEE O F THE BATRA GROUP WORKING AS A MANAGER FOR KAPIL BATRA FILM PRODUCTION HOUSE PVT. LTD., THE AO LEVIED PENALTY U/SS. 271D AND 271E OF THE ACT. THE ASSESSE E FAILING TO IMPROVE ITS CASE IN ANY MANNER IN THE APPELLATE PROCEEDINGS, THE SOME S TOOD CONFIRMED IN FIRST APPEAL, WITH THE LD. CIT(A) HOLDING AS UNDER: 11. I HAVE SEEN THE LIST OF THEATRES PROVIDED BY S H. VOHRA IN SUPPORT OF THE ASSESSEES CONTENTION THAT THE AMOUNT OF RS. 2,00,000/- WAS RECEIVED ON ACCOUNT OF ADVANCES FROM THESE THEATRES. I FIND THE ASSESSEES PLEA IS HALF BAKED AT BEST. A SIMPLE LIST OF THEATRES WITH SOME AMOUNTS TOTALING RS. 2,00,000/- CANNOT BE CONSIDERE D EVIDENCE IN SUPPORT OF ASSESSEES CONTENTION. HAD SH. VOHRA REMAINED PRESENT BEFORE T HE ASSESSING OFFICER AFTER BEING SUMMONED BY HIM, SEVERAL QUESTIONS AGAINST THE BLAN D LIST PRODUCED COULD HAVE BEEN ASKED. IT IS PERTINENT TO NOTE THAT NO DATES OF RECEIPT OF ADVANCE FROM THE THEATRES OR REPAYMENT BY SH. VOHRA ARE MENTIONED. THE REASON FOR THE FILM NO T RUNNING ARE ALSO NOT MENTIONED BY THE ASSESSEE. IT IS INTERESTING TO NOTE THAT THE ASSESS EES EMPLOYEE HIMSELF IS GIVING THIS CONFIRMATION OF RECEIVING AND REPAYING ADVANCES IN CASH FROM THEATRES/CINEMAS AND THEREFORE IS A POINTER TO COLLUSION BETWEEN SH. VOHRA AND THE ASSESSEE. AGGRIEVED, THE ASSESSEE IS IN SECOND APPEAL. ITA NOS. 199&200/ASR/2017 (AY 2013-14) TOPAZ FILMS V. ADDL. CIT 3 3. BEFORE US, THE ASSESSEES (THROUGH ITS COUNSEL) PRINCIPAL THRUST WAS ON THE IMPERMISSIBILITY OF THE ADVERSE INFERENCE DRAWN FRO M THE NON-APPEARANCE OF SHRI CL VOHRA IN RESPONSE TO THE SUMMONS UNDER SECTION 1 31 OF THE ACT IN THE PENALTY PROCEEDINGS. THE AO HAD NOT CALLED UPON THE ASSESSE E TO PRODUCE SHRI VOHRA, BUT HAD ACTED ON HIS OWN TO ENFORCE HIS ATTENDANCE. THA T BEING THE CASE, NO ADVERSE INFERENCE COULD BE DRAWN FROM THE SAID NON-ATTENDAN CE. FURTHER, ONCE THE ASSESSEE HAD FURNISHED AN AFFIDAVIT FROM SHRI VOHRA, DEPOSIN G OF HAVING MADE A BOOKING ADVANCE, WHICH WAS RECEIVED BACK AS THE FILM FOR WH ICH IT WAS GIVEN DID NOT RUN, THERE WAS NO SCOPE FOR DRAWING ANY ADVERSE INFERENC E, AS DONE BY THE REVENUE. ON BEING QUERIED BY THE BENCH OF THERE BEING ANY MATER IAL ON RECORD TO EXHIBIT MR. VOHRA, THE LENDER/DEPOSITOR, TO BE A BOOKING AGENT, OR WORKING AS ONE, HE COULD NOT POINT OUT TO ANY. 4. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. OUR FIRST OBSERVATION IN THE MATTER IS THAT THE FA CT THAT SHRI VOHRA HAS CONFIRMED THE TRANSACTION OF ADVANCE AND ITS RECEIP T BACK IN CASH; THE ASSESSEE HAVING FURNISHED HIS CONFIRMATION DURING THE ASSESS MENT PROCEEDINGS, IS THE BASIS FOR INITIATION AND, FINALLY, THE LEVY OF PENALTY/S UNDER REFERENCE. THAT IS, THE TRANSACTION/S HAS BEEN REGARDED AS A REAL, GENUINE TRANSACTION BETWEEN THE TWO. WE STATE SO AS, WHERE NOT SO, SO THAT THE GENUINENESS OF THE TRANSACTION IS DOUBTED BY THE REVENUE, THE SAME COULD ONLY BE DEEMED AS THE A SSESSEES INCOME BY WAY OF UNEXPLAINED CREDIT U/S. 68. PUT DIFFERENTLY, THE IN STANT PROCEEDINGS ARE BASED ON THE ACCEPTANCE OF THE IMPUGNED TRANSACTION/S AS GENUINE , AS OTHERWISE THE SECTION BECOMES INAPPLICABLE. OUR SECOND OBSERVATION IN THE MATTER IS THAT THE AD VANCE, CLAIMED AS RECEIVED FOR AND BEHALF OF THE MOVIE THEATRES, IS NOT CREDIT ED IN THE ASSESSEES REGULAR BOOKS OF ACCOUNT TO THEIR ACCOUNTS, WHO THEREFORE ARE THE ACTUAL LENDERS/DEPOSITORS OR, AS A ITA NOS. 199&200/ASR/2017 (AY 2013-14) TOPAZ FILMS V. ADDL. CIT 4 CASE MAY BE, ADVANCERS, BUT IN THE NAME OF THE PERS ON WHICH IS ADMITTEDLY WORKING AS THEIR AGENT. WHY? THERE IS NO ANSWER. NOT ONLY T HAT, THE SAME, AS IS APPARENT, IS NOT REFLECTED AS A BOOKING ADVANCE IN THE ASSESSEE S ACCOUNTS. WHY AGAIN, TO NO ANSWER. FURTHER, NO RECEIPTS STAND ISSUED IN THE NA ME OF INDIVIDUAL THEATRES/THEATRE OWNERS WHICH, EVEN OTHERWISE OBLIGATORY, IS THE FIR ST THING AN AGENT WOULD ASK FOR; RATHER, INSIST UPON, AS THE SAME ONLY WOULD EVIDENC E THE TRANSACTION OF THE MONEY CHANGING HANDS, INDICATING ALSO ITS PURPOSE, AS WEL L AS ENABLE HIM TO SETTLE THE ACCOUNT WITH THE PAYEE AS WELL AS THE PAYER/S, THE MOVIE THEATRE/S (OWNER/S). FURTHER, EVEN IF ASSUMED THAT HE WAS WORKING AS A B OOKING AGENT AND, THEREFORE, CARRIED AN IMPLIED AUTHORITY TO BOOK THE FILM FOR AND ON BEHALF OF THE MOVIE THEATRES, THE PARTIES WOULD SURELY FOLLOW SOME PROT OCOL OR ADOPT SOME BUSINESS PRACTICE, VIZ. SIGN AN AGREEMENT OR EVEN A FORM, LI STING THE PRINCIPAL TERMS AND CONDITIONS; THE FILM FOR WHICH THE ADVANCE IS MADE; THE TOTAL AMOUNT TO BE RECEIVED, AND BY WHEN, ETC. THAT IS, THE TRANSACTION COULD NO T BE, AS IT IS, SANS ANY CORROBORATIVE MATERIAL, EXHIBITING IT BEING A TRADE ADVANCE. WHY, RATHER, WE WONDER, WAS THE SUM NOT GIVEN AND/OR REPAID THROUGH THE BANKING CHANNEL, WHICH WOULD AT ONCE ELIMINATE MANY QUESTIONS, CLARIFYING IN THE LEAST, THE IDENTITY OF THE PAYER/S. THE PURPOSE OF THE LOAN OR ADVANCE, AT LEA ST AS FAR AS SECTIONS 269SS AND 269T ARE CONCERNED, IS LARGELY IRRELEVANT. A TRADE ADVANCE STANDS TO BE ADJUSTED AGAINST THE VALUE OF THE GOODS OR SERVICES, FOR THE SUPPLY OF WHICH IT IS GIVEN, AND WHICH EXPLAINS ITS EXCLUSION FROM THE PURVIEW OF SS . 269SS/269T OF THE ACT, APPLICABLE TO A LOAN OR DEPOSIT OF MONEY. IT HAS AL SO NOT BEEN SHOWN THAT THE RECEIPT IN THIS, ALBEIT INEXPLICABLE, MANNER IS THE NORMAL BUSINESS PRACTICE. FURTHER, THERE IS NO CONFIRMATION, EVEN AS POINTED OUT BY THE REVENUE , FROM THE RESPECTIVE MOVIE THEATRES. IF IT IS THE MOVIE THEATRES, WHICH ARE CL AIMED TO HAVE MADE THE ADVANCE AND, CONSEQUENTLY, RECEIVED BACK THE SAME, IT OUGHT TO FIND REFLECTION IN THEIR BOOKS ITA NOS. 199&200/ASR/2017 (AY 2013-14) TOPAZ FILMS V. ADDL. CIT 5 OF ACCOUNT, WHILE WE FIND THAT EVEN AS MUCH AS A CO NFIRMATION FROM THEM HAS NOT BEEN BROUGHT ON RECORD. CONTINUING FURTHER, THERE ARE SEVERAL SUCH UNANSWER ED QUESTIONS, WHICH ARISE FROM THE ASSESSEES EXPLANATION AND CONDUCT: WHAT H AD TRANSPIRED IN THE FEW DAYS OF THE RECEIPT, WHICH LED TO THE REPAYMENT? AS THE MOVIE (HEROINE), AGAINST WHICH THE ADVANCE/S IS STATED TO HAVE BEEN GIVEN, F INALLY HIT THE SCREEN, DID THE ASSESSEE CONTACT SHRI VOHRA FOR REBOOKING THE FILM? SHRI VOHRA WHO IS THE ASSESSEES WITNESS, HAVING NEITHER ATTENDED NOR BEE N PRODUCED BY THE ASSESSEE BEFORE THE AO, AT LEAST HIS BOOKS OF ACCOUNT (OF TH E AGENCY BUSINESS) COULD BE SHOWN. IT IS IN THE BACKGROUND AND CONTEXT OF THESE AND SUCH-LIKE QUESTIONS, WHICH COULD BE ANSWERED BY SHRI VOHRA, THAT THE AO SUMMON ED HIM IN THE PENALTY PROCEEDINGS, AS ALSO NOTED BY THE LD. CIT(A). HIS A FFIDAVIT, WITHOUT MEETING THE CROSS EXAMINATION TO WHICH IT COULD BE PUT TO, IS T HUS OF LITTLE VALUE. WHY, AS AFORE- NOTED, IT HAS NOT BEEN SHOWN IN ANY MANNER THAT HE WAS WORKING AS A BOOKING AGENT. FURTHER, IF TRUE, THERE WOULD BE PLETHORA OF MATERIAL TO EVIDENCE OR ESTABLISH THIS. HE WOULD, FOR EXAMPLE, IF THE TRADE IS REGULA TED, HAVE A LICENCE FOR THE SAME. IN ANY CASE, THE TRADE ASSOCIATION WOULD RECOGNIZE HIM AS A BOOKING AGENT. HE WOULD BE MAINTAINING BOOKS OF ACCOUNT OF HIS SAID A GENCY BUSINESS. THE TRANSACTIONS ENTERED INTO AS A BOOKING AGENT WOULD, IN ANY CASE, BE RECORDED IN THE BOOKS OF BOTH, THE MOVIE THEATRES AS WELL AS THE DI STRIBUTOR, EXHIBITING THE BOOKING AGENT, IF ANY, THROUGH WHICH THE TRANSACTIONS ARE M ADE. THOUGH EVEN IF SO SHOWN, I.E., OF HIM WORKING AS A BOOKING AGENT, IT WOULD N OT AUTOMATICALLY LEAD TO THE CONCLUSION OF THE IMPUGNED LOAN/ DEPOSIT BEING A TR ADE ADVANCE, WOULD YET HAVE INVESTED HIS STATEMENT WITH SOME CREDIBILITY. THIS IS AS ONLY WHERE HE IS WORKING AS ONE THAT THE MOVIE THEATRE OWNERS WOULD APPROACH HI M FOR BOOKING FILMS AND/OR VICE VERSA , AND TRUST HIM WITH THEIR MONEY FOR THE SAME. IN O THER WORDS, THE QUESTION OF HIS BEING PAID A BOOKING ADVANCE BY THE MOVIE THEATRES ARISES ONLY ITA NOS. 199&200/ASR/2017 (AY 2013-14) TOPAZ FILMS V. ADDL. CIT 6 WHERE HE IS, AS CLAIMED, WORKING AS A BOOKING AGENT , OF WHICH THERE IS NOTHING ON RECORD TO SUGGEST, MUCH LESS ESTABLISH. ON THE CONT RARY, HE IS ADMITTEDLY WORKING AS A MANAGER WITH A BUSINESS HOUSE IN THE FILM TRADE. IT IS PERHAPS FOR THIS REASON THAT HE IS KNOWN TO THE ASSESSEE; A TRANSACTION OF LENDI NG OR ADVANCING COULD MATERIALIZE ONLY BETWEEN PARTIES KNOWN TO EACH OTHE R; RATHER, HAVING MUTUAL TRUST THE ASSESSEE WORKING THROUGH ITS PARTNERS. RATHER, HE STANDS DESCRIBED AS AN EMPLOYEE OF THE ASSESSEE-COMPANY BY THE LD. CIT(A), INDICATING THE ASSESSEE- COMPANY TO BE A PART OF THE BATRA GROUP, AND WHICH HAS NOT BEEN DENIED BY THE ASSESSEE BEFORE US. THE ASSESSEES OBJECTION TO THE OBSERVATIONS BY THE LD. CIT(A) (AT PARA 11 OF HIS ORDER, REPRODUCED ABOVE), IS, IN VIEW OF THE FO RE-GOING, WITHOUT MERIT. IN FACT, PRIOR TO THE PENALTY PROCEEDINGS, OPPORTUNITY FOR P RODUCING SHRI VOHRA WAS PROVIDED TWICE DURING THE ASSESSMENT PROCEEDINGS. M R. VOHRA, WHOSE CONFIRMATION AND AFFIDAVIT THE ASSESSEE RELIES UPON, IT IS TO BE APPRECIATED, IS THE ASSESSEES WITNESS, AND NOT OF THE REVENUE. THEN, AGAIN, EVEN AFTER HIS NON-ATTENDANCE, THE ASSESSEE WAS AGAIN EXTENDED AN OPPORTUNITY TO SUBST ANTIATE ITS CASE, FOR 20.01.2016. FURTHER, HE WAS NOT PRODUCED EVEN IN THE APPELLATE PROCEEDINGS WHEREAT THE SAID AFFIDAVIT WAS FILED, AND WHICH THEREFORE WITNESSED A REMAND REPORT BEING CALLED FOR BY THE LD. CIT(A), WHICH FINDS REPRODUCTION IN HIS ORDER, AS WELL AS, THE ASSESSEES REPLY. SHRI VOHRA BEING NOT SHOWN TO BE WORKING AS A BOOKING AGENT, WITH THE EXPLANATION ADVANCED, AS AFORE-DISCUSSED, COMPLETEL Y UNPROVED AND INCONSISTENT WITH THE FACTS AND CIRCUMSTANCES OF THE CASE, THE SAME ONLY HIGHLIGHT THE NEED FOR HIS EXAMINATION. THE OBSERVATION BY THE LD. CIT(A) IS TO BE READ IN THIS CONTEXT. THE ASSESSEES CASE IS WHOLLY UNSUBSTANTIATED. 5. IN OUR CONSIDERED VIEW, THEREFORE, I.E., IN VIEW OF THE FOREGOING, THE CLAIM OF THE AMOUNT LOAN/DEPOSIT BEING A TRADE ADVANCE, IS, AS FOUND BY THE REVENUE, WHOLLY ITA NOS. 199&200/ASR/2017 (AY 2013-14) TOPAZ FILMS V. ADDL. CIT 7 UNPROVED (IF NOT DISPROVED). ON THE CONTRARY, THE C ONDUCT AND THE SURROUNDING FACTS AND CIRCUMSTANCES POINT TO THE CONTRARY, I.E., TO I T BEING NOT SO. THE SAME IS THE ASSESSEES ONLY EXPLANATION FOR THE CONTRAVENTION O F SECTIONS 269SS AND 269T OF THE ACT. NO REASONABLE CAUSE FOR THE SAME HAS BEEN SHOWN, MUCH LESS PROVED, FOR US TO CONSIDER THE APPLICATION OF SECTION 273B IN T HE FACTS AND CIRCUMSTANCES OF THE CASE. WE, THEREFORE, FIND NO REASON FOR INTERFERENC E AND, ACCORDINGLY, CONFIRM THE LEVY OF IMPUGNED PENALTY U/S. 271D AND 271E OF THE ACT. WE DECIDE ACCORDINGLY. 6. IN THE RESULT, THE ASSESSEES APPEALS ARE DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON JUNE 11, 2018 SD/- SD/- (N. K. CHOUDHRY) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 11.06.2018 /GP/SR. PS. COPY OF THE ORDER FORWARDED TO: (1) THE APPELLANT: TOPAZ FILMS, CHAMAN LAL BUIL DING, MANDI ROAD, NEAR LAXMI CINEMA, JALANDHAR (2) THE RESPONDENT: ADDL. C.I.T., CENTRAL RANGE , JALANDHAR (3) THE CIT(APPEALS)-1, JALANDHAR (4) THE CIT CONCERNED (5) THE SR. DR, I.T.A.T TRUE COPY BY ORDER