ACIT 11(1), MUMBAI V. AFZAL KHAN, MUMBAI

ITA 2245/MUM/2010

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9328 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 10 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-02-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 27-11-2014
• Assessment Year: 2000-2001
• Appeal Filed On: 22-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S PADMAJA
• Keywords: Search and seizure
• Section: 133A; 153A; 132

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A, MUMBAI , , , , . , . . BEFORE SHRI R C SHARMA, AM & SHRI SANJAY GARG, JM ITA NOS.2245, 2246, 2247 & 2248/MUM/2010 ! ' / ASSESSMENT YEARS - 2000-01, 2001-02, 2002-03 & 2 004-05 ASST CIT 11(1) MUMBAI VS AFZAL KHAN, 701/15 MHADA RESIDENTIAL COMPLEX, LOKHANDWALA COMPLEX, ANDHERI (W), MUMBAI- 400053 PAN AGPPK3148J ( #$ /APPELLANT) ( %&#$ /RESPONDENT) ! ' ()* / DATE OF HEARING :27.11.2014. +,' ' ()* / DATE OF PRONOUNCEMENT :04.02.2015 APPELLANT BY : MS. S PADMAJA RESPONDENT BY : MR. K GOPAL O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE ABOVE TITLED APPEALS HAVE BEEN PREFERRED BY THE REVENUE AGAINST THE COMMON ORDER OF THE CIT(A) DATED 08.01.2001 RELATIN G TO A.YS. 2000-01, 2001-02, 2002-03 & 2004-05. SINCE THE ISSUES INVOLVED IN AL L THESE APPEALS ARE IDENTICAL, THEY ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF BREVITY. 2. WE SHALL FIRST TAKE UP THE APPEAL IN ITA NO. 2245/MUM/2010 RELATING TO A.Y. 2000-01, WHEREIN THE REVENUE HAS TAKEN UP THE FOLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD. CIT(A) ERRED IN HOLDING THAT THE ASSESSMENT MADE U/S.153(C) 2 WAS NULL AND VOID AB-INITIO WITHOUT APPRECIATING TH E FACT THAT THE SALES BILL RAISED BY THE SUPPLIER PERTAINED AND BELONGED TO THE ASSESSEE THEREBY MAKING ACTION OF THE A.O. U/S 153(C) WAS WE LL WITHIN THE PROVISIONS OF THE ACT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS .7,39,583/- MADE BY THE ASSESSING OFFICER WITHOUT APPRECIATING THE FACT THAT THE SAID AMOUNT WAS NOT PAID BY THE ASSESSEE TO THE SUPPLIER TILL THE DATE OF PASSING THE ORDER OR EVEN THEREAFTER AND APPLICATIO N OF RULE 9A DOES NOT COME INTO PICTURE IN THIS SCENARIO. 3. THE APPELLANT PRAYS THAT THE ORDER OF CIT(APPEAL S) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSIN G OFFICER RESTORED. 4. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 3. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF PRODU CING FILMS. THERE WAS A SEARCH AND SEIZURE ACTION U/S. 132 CARRIED OUT IN T HE CASE OF SHRI NANHA LAL D GUPTA, PROPRIETOR OF M/S. GUPTA PAINTS AND HARDWARE STORES ON 24.06.04. THE SAID CONCERN WAS ENGAGED IN THE SUPPLY OF PAINT, HARDWAR E AND OTHER MATERIAL FOR MAKING SETS OF FILM PRODUCERS. THE ASSESSEE HAD DE ALINGS WITH THE SAID CONCERN FOR A NUMBER OF YEARS. FROM THE SEIZED MATERIAL IT WAS FOUND THAT THE SAID SHRI GUPTA HAD TRANSACTIONS WITH THE ASSESSEE. THE AO THEREAF TER OBSERVED THAT THE BILLING AMOUNT IN RESPECT OF FILM MEHBOOBA PRODUCED BY TH E ASSESSEE TALLIED WITH THAT OF SHRI GUPTA AND THERE WAS NO DISCREPANCY IN THE RECO RD. THE AO ALSO OBSERVED THAT IN RESPECT OF THE FILM HUM KISSISE KUM NAHIN THER E WAS NO BILLING BY MR. GUPTA AND HENCE THERE WAS NO DIFFERENCE. HE FURTHER OBSERVED THAT THE EXPENDITURE OF RS.7,39,583/- WAS INCURRED BY THE ASSESSEE TOWARDS FILM MEHBOOBA, WHICH THE ASSESSEE DID NOT PAY DURING THE YEAR UNDER CONSIDER ATION. THE ASSESSEE RELEASED THE FILM IN THE A.Y. 2009-10. THE AO FURTHER OBSER VED THAT AS PER RULE 9A OF THE I T RULES ENTIRE EXPENSES INCURRED BY THE ASSESSEE FOR PRODUCTION OF THE MOVIE ARE ALLOWABLE TO BE SET OFF DURING THE ASSESSMENT YEAR IN WHICH THE FILM IS RELEASED. THE ASSESSEE HAD ACCORDINGLY BOOKED THE SAID EXPEND ITURE IN THE A Y 2009-10. HE FURTHER OBSERVED THAT THE SAID EXPENDITURE WAS IN F ACT INCURRED BY THE ASSESSEE IN AY 2000-01 AND THIS AMOUNT WAS NOT PAID BY THE ASSE SSEE DURING THE SAID YEAR. HENCE, THE SAME HAD RESULTED INTO INCOME OF THE ASS ESSEE. THE AO THEREFORE TOOK 3 ACTION U/S. 153C AGAINST THE ASSESSEE AND MADE THE IMPUGNED ADDITIONS DURING THE YEAR UNDER CONSIDERATION. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A). 4. THE LEARNED CIT(A) AFTER OVERALL APPRECIATION OF THE FACTS AND EVIDENCES ON THE FILE HELD THAT NO INCRIMINATING MATERIAL WAS FO UND AGAINST THE ASSESSEE DURING THE SEARCH ACTION CARRIED ON THE PREMISES OF THE SH RI N D GUPTA. NO BOOKS OF ACCOUNT OR DOCUMENTS BELONGING TO THE ASSESSEE WERE FOUND OR SEIZED IN THE PROCEEDINGS U/S. 153A IN THE SEARCHED CASE AND, THE REFORE, THE PROCEEDINGS U/S. 153C AGAINST THE ASSESSEE WERE WITHOUT JURISDICTION . IT HAS ALSO BEEN OBSERVED BY THE CIT(A) THAT THERE WAS A SURVEY ACTION U/S. 133A IN THE ASSESSEES CASE WHERE NO DISCREPANCIES IN THE ACCOUNTS/BILLS WERE FOUND. IN THE ABSENCE OF ANY INCRIMINATING MATERIAL FOUND AGAINST THE ASSESSEE DURING THE SEAR CH ACTION IN THE CASE OF MR. N D GUPTA, THE AO WAS NOT JUSTIFIED IN INVOKING THE PRO VISIONS OF SECTION 153C AGAINST THE ASSESSEE. ON MERITS, THE LEARNED CIT(A) OBSERV ED THAT THE EXPENDITURE OF RS.7,39,583/- REPRESENTING THE BILLS RAISED BY M/S. GUPTA PAINT STORES IN RESPECT OF FILM MEHBOOBA WHICH WAS UNDER PRODUCTION, WERE NE ITHER CLAIMED NOR ALLOWED IN THE YEAR UNDER CONSIDERATION AND WHICH IN FACT WERE CARRIED FORWARD AS COST OF PRODUCTION OF THE FILM WHICH HAS BEEN RELEASED IN T HE A Y 2009-10. THE BILLS RAISED ON ACCOUNT OF PAYMENTS WERE DULY CORROBORATED BY TH E BILLS AND STATEMENT OF ACCOUNT FOUND IN THE SEARCH OPERATIONS AND WERE DUL Y CONFIRMED BY SHRI N D GUPTA. AS PER RULE 9A, THE ASSESSEE HAD RIGHTLY BOOKED THE EXPENSES IN THE YEAR IN WHICH THE FILM RELEASED I.E. A Y 2009-10. HE THEREFORE H ELD THAT THE ACTION OF THE AO IN MAKING THE ADDITIONS MERELY ON THE GROUND THAT THE EXPENDITURE WAS NOT PAID DURING THE ASSESSMENT YEAR UNDER CONSIDERATION WAS WRONG AND ILLEGAL. HE, THEREFORE, DELETED THE IMPUGNED ADDITIONS. 5. AFTER HEARING THE LEARNED REPRESENTATIVES OF THE PARTIES, WE DO NOT FIND ANY INFIRMITY IN THE WELL REASONED ORDER OF THE CIT(A) IN THIS RESPECT. THE LEARNED DR COULD NOT BRING OUT AS TO ON WHAT GROUND THE ORDER OF THE CIT(A) WAS NOT JUSTIFIED. THIS ISSUE IS ACCORDINGLY DECIDED IN FAVOUR OF THE ASSESSEE. 6. ITA NO. 2246/MUM/2010 FOR A.Y. 2001-02. GROUND NO. 1 OF THIS APPEAL IS IDENTICAL TO THAT O F A.Y. 2001-02 DEALT ABOVE. IN VIEW OF OUR FINDING GIVEN THEREIN, THIS GROUND I S DECIDED IN FAVOUR OF THE ASSESSEE. 4 7. GROUND NO.2 IN THIS APPEAL PERTAINS TO THE ADDIT ION OF RS.20,50,186/- REPRESENTING BILLS FOR THE FILM MEHBOOBA RAISED B Y MR. GUPTA. FOR THE REASONS MENTIONED BY US WHILE DEALING GROUND NO.2 FOR A.Y. 2000-01, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT(A) AN D IT IS ACCORDINGLY UPHELD. 8. ITA NO.2247/MUM/2010 FOR A.Y. 2002-03 GROUND NO.1 AND 2 TAKEN IN THIS APPEAL BY THE REVE NUE ARE IDENTICAL TO THAT OF A.Y. 2000-01. IN VIEW OF THE FINDINGS GIVEN ABO VE FOR A Y 200-01, THESE GROUNDS ARE DECIDED AGAINST THE REVENUE 9. ITA NO. 2248/MUM/2010 FOR A Y 2004-05 GROUND NO.1 OF THIS APPEAL IS IDENTICAL TO THAT OF A.Y. 2000-01. IN VIEW OF OUR FINDING GIVEN WHILE DECIDING THE ISSUE UNDER CONSID ERATION, THIS GROUND IS DECIDED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 10. GROUND NO.2 OF THIS APPEAL RELATES TO THE ACTIO N OF THE CIT(A) IN DELETING THE ADDITION MADE BY THE AO U/S. 41(1) OF THE ACT ON TH E GROUND THAT A SUM OF RS.36,25,473/- HAD REMAINED PAYABLE BY THE ASSESSEE . DURING THE YEAR UNDER CONSIDERATION THE AO NOTICED THAT IN THE CASE OF FI LM HUM KISSI KUM NAHIN AN YEAR HAD ALREADY ELAPSED SINCE THE RELEASE OF THE MOVIE BUT THE ASSESSEE HAD NOT PAID THE AMOUNT OF RS.36,22,594/- TO SHRI GUPTA IN RESPE CT OF BILLS RAISED. HE THEREFORE HELD THAT THE LIABILITY OF THE ASSESSEE HAD CEASED TO EXIST AND MADE THE ADDITION U/S. 41(1) OF THE ACT. THE LEARNED CIT(A) DELETED THE I MPUGNED ADDITION OBSERVING THAT THERE WAS NO CESSATION OF LIABILITY DURING THE YEAR UNDER CONSIDERATION. THE ASSESSEE HAD SHOWN IT AS LIABILITY WHEREAS SHRI N D GUPTA HAD ALSO STATED THAT THE AMOUNT WAS RECOVERABLE FROM THE ASSESSEE. THE LEAR NED CIT(A) FURTHER OBSERVED THAT IN A Y 2009-10 THE ASSESSEE HAD WRITTEN OFF TH E SAID AMOUNT. FURTHER, IT HAS BEEN CLAIMED BY THE ASSESSEE THAT WHEN THE ASSESSEE WOULD BE IN A POSITION TO MAKE THE PAYMENT, IT WOULD BE CLAIMED AS EXPENSES I N THE YEAR OF PAYMENT. THE LEARNED CIT(A) THEREFORE OBSERVED THAT SHRI GUPTA H AD ALSO CONFIRMED THAT THE AMOUNT WAS RECEIVABLE FROM THE ASSESSEE AND THE ASS ESSEE HAD ALSO NOT WRITTEN OFF THE SAID AMOUNT IN THE BOOKS OF ACCOUNT HENCE, THER E WAS NO JUSTIFICATION ON THE PART OF THE AO TO ADD THE AMOUNT IN QUESTION U/S. 4 1(1) ON ACCOUNT OF CESSATION OF LIABILITY. 11. AFTER CONSIDERING THE RIVAL SUBMISSIONS OF THE REPRESENTATIVES OF THE PARTIES, WE FIND THAT THERE IS NO INFIRMITY IN THE ORDER OF THE CIT(A) ON THIS ISSUE ALSO. THERE 5 WAS NO MATERIAL BEFORE THE AO FROM WHICH IT COULD H AVE BEEN GATHERED THAT THERE WAS CESSATION OF LIABILITY. MERELY BECAUSE THE AMO UNT IN QUESTION WAS NOT PAID BY THE ASSESSEE DURING THE YEAR, ITSELF, COULD NOT BE SAID TO BE A GROUND TO HOLD THAT THE LIABILITY HAD CEASED TO EXIST. HENCE, WE DO NO T FIND ANY MERIT IN THE APPEAL OF THE REVENUE ON THIS ISSUE ALSO. 12. GROUND NOS. 3 & 4 IN ALL THE APPEALS ARE GENERA L IN NATURE AND DOES NOT NEED ADJUDICATION. 13. IN THE RESULT, ALL THE APPEALS BY THE REVENUE A RE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH FEBRUARY, 2015. SD/- SD/- (R C SHARMA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; -.! DATED : 4 TH FEBRUARY, 2015. SA . ' %(/ 0/'( /COPY OF THE ORDER FORWARDED TO : 1. #$ /THE APPELLANT. 2. %&#$ / THE RESPONDENT. 3. 1 ( ) / THE CIT(A), MUMBAI. 4. 1 / CIT 5. /2 %(! , , / DR, A BENCH, ITAT, MUMBAI .! / BY ORDER, &/( %( //TRUE COPY// / 3 (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI