M/S. SHRI SUNIL T DOSHI, MUMBAI V. THE ADDL CIT RG 24(2), MUMBAI

ITA 2250/MUM/2007

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 79346 (ITAT-MUMBAI)
• Duration Of Justice: 7 year(s) 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-07-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: J
• Next Hearing Date: 26-12-2013
• Assessment Year: 2001-2002
• Appeal Filed On: 20-03-2007
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R K SAHU
• Assessee Lawyers: N JAYENDRAN
• Keywords: Unexplained expenditure; Search and seizure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL J BENCH, MUM BAI , BEFORE SHRI D. MANMOHAN, VP AND SHRI SANJAY ARORA, AM I.T.A. NO. 2250/MUM/2007 ( / ASSESSMENT YEAR: 2001-02) SUNIL T. DOSHI M/S. NATVARLAL VEPARI & CO., ORICON HOUSE, 4 TH FLOOR, 12, K. DUBASH MARG, MUMBAI-400 023 VS. ADDL. CIT, RANGE 24(2), C-13, PRATYAKHA KAR BHAVAN, 6 TH FLOOR, BANDRA KURLA COMPLEX, BANDRA (E), MUMBAI-400 051 ! ' ./PAN/GIR NO. AAEPM 9839 E ( !# /APPELLANT ) : ( $%!# / RESPONDENT ) !#&' / APPELLANT BY : SHRI N. JAYENDRAN $%!#&' / RESPONDENT BY : SHRI R. K. SAHU ( )*&+, / DATE OF HEARING : 07.05.2014 -./&+, / DATE OF PRONOUNCEMENT : 16.07.2014 0 O R D E R PER SANJAY ARORA, A. M.: THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-XXIV, MUMBAI (CIT(A) FOR SHORT) DATED 27.12.2006, PARTLY ALLOWING THE ASSESSEES APPEAL CONTESTING ITS ASSES SMENT U/S.143(3) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) FOR THE ASSESSMEN T YEAR (A.Y.) 2001-02 VIDE ORDER DATED 15.03.2004. 2 ITA NO. 2250/MUM/2007 (A.Y. 2001-02) SUNIL T. DOSHI VS. ADDL. CIT 2. THE APPEAL RAISES A SINGLE GROUND AND AN ADDITIO NAL GROUND, WHICH READ AS UNDER: GROUND OF APPEAL 1. THE COMMISSIONER OF INCOME TAX (APPEALS) XXIV [ (CIT(A)] ERRED IN CONFIRMING THE ADDITION OF RS.22,00,000/- MADE B Y THE A.O. IN RESPECT OF THE LIABILITIES SHOWN (MR. ABHISHEK BACHCHAN RS.17, 50,000/- AND MR. AMITABH BACHCAHN RS.4,50,000/-). THE APPELLANT SUBM ITS THAT, BOTH THE CIT(A) AND AO HAVE NOT CONSIDERED THAT THE APPELLAN T MAINTAINS BOOKS ON MERCANTILE BASIS WHILE THE RECIPIENTS BEING FILM AR TISTS MAINTAIN BOOKS ON CASH BASIS. THE APPELLANT SUBMITS THAT THE ABOVE AM OUNTS ARE LIABILITIES AS PER THE MERCANTILE SYSTEM OF ACCOUNTING FILED BY TH E APPELLANT AND NOT INCOME OF THE APPELLANT. ADDITIONAL GROUND OF APPEAL ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE COM MISSIONER OF INCOME- TAX (APPEALS) ERRED IN CONFIRMING THE ADDITION OF R S.6,00,000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF CASH FOUND AT THE P REMISES OF MS. RANI MUKHERJEE. THE ADDITIONAL GROUND ARISING OUT OF THE IMPUGNED O RDER, WAS, AFTER PRELIMINARY HEARING, ADMITTED. WE SHALL PROCEED TO DISCUSS EACH OF THE T HREE SUMS, CLAIMED AS A LIABILITY, SINCE CONFIRMED FOR DISALLOWANCE/ADDITION BY THE LD. CIT( A). 3. THE ASSESSEE IS IN THE BUSINESS OF EVENT PROMOTI ON, ARRANGING CELEBRITY ENDORSEMENTS, ETC., PER HIS TWO PROPRIETARY FIRMS, M/S. LIMELIGHT AND M/S. ALLIANCE MEDIA AND ENTERTAINMENT (AME). IN THE COURSE OF THE ASSESSMENT PROCEEDINGS FOR THE RELEVANT YEAR, THE ASSESSEES ACCOUNTS, MAINTAINED ON MERCANTILE BASIS, WERE OBSERVED TO REFLECT A LIABILITY OUTSTANDING IN THE NAME OF THE FOLLOWING CELEBRITIES AS AT THE RELEVANT YEAR-END: A) ABHISHEK BACHCHAN (AB) : RS.17,50,000/- B) AMITABH BACHCHAN (AB) : RS.4,50,000/- C) RANI MUKHERJEE (RM) : RS.6,00,000/- THE SAID LIABILITIES WERE FOUND BY THE ASSESSING OF FICER (A.O.) AS IN TRUTH AND ESSENCE AS NON-EXISTENT, I.E., AS HAVING NO EXISTENCE IN REALI TY, AND ONLY CAMOUFLAGED AS SUCH FOR REDUCING/DEFERRING TAX. THE SAME FINDING CONFIRMATI ON BY THE LD. CIT(A), THE ASSESSEE IS 3 ITA NO. 2250/MUM/2007 (A.Y. 2001-02) SUNIL T. DOSHI VS. ADDL. CIT IN SECOND APPEAL. WE SHALL PROCEED TO DISCUSS THE C ASE OF THE RESPECTIVE PARTIES QUA EACH LIABILITY, AND DECIDE ACCORDINGLY. LIABILITY TO AB (RS.17.50 LACS) : 4. THE SAME IS STATED TO ARISE OUT OF THE TWO AGREE MENTS ENTERED INTO BY AME, ONE DATED 03.06.1999 WITH M/S. PEPSI FOODS LTD., NEW DE LHI (PFL) AND ANOTHER WITH AB (DATED 09.06.1999). THE RELEVANT CLAUSES OF THE AGR EEMENTS STAND REPRODUCED BY THE A.O. IN HIS ORDER, AND ARE NOT A SUBJECT MATTER OF DISPU TE. AS PER THE PRINCIPAL AGREEMENT (WITH PFL/PB PGS.45-51), THE ASSESSEE WAS TO ARRANGE PERS ONAL APPEARANCE OF AGREED CELEBRITY/S (AB) FOR SIX (6) MUTUALLY AGREED UPON EVENTS/OCCASI ONS OVER A PERIOD OF 18 MONTHS (FROM THE COMMENCEMENT OF THE AGREEMENT) FOR A CONSIDERAT ION OF RS.50 LACS, TO FALL DUE ON THE FOLLOWING DATES: SR. NO. MONTH/YEAR WHEN ACCRUED AMOUNT ACCRUED 1 JUNE, 1999 ON EXECUTION OF THIS AGREEMENT RS.10 LACS 2 JANUARY, 2000 ON COMPLETION OF 6 TH CELEBRITY APPEARANCE RS.40 LACS AT THE REQUEST OF AME, HOWEVER, PFL AGREED TO RELEA SE THE PAYMENTS AS PER THE FOLLOWING SCHEDULE: SR. NO. AMOUNT ACCRUED WHEN ACCRUED 1 RS.32 LACS UPON EXECUTION OF THE AGREEMENT 2 RS.18 LACS UPON COMPLETION OF THE 6 TH CELEBRITY APPEARANCE THE PAYMENTS FROM PFL WERE FINALLY RECEIVED AS UNDE R: DATE AMOUNT RECEIVED 16.06.1999 RS.32,00,000/- 14.04.2001 RS.18,00,000/- 4 ITA NO. 2250/MUM/2007 (A.Y. 2001-02) SUNIL T. DOSHI VS. ADDL. CIT AS PER THE CORRESPONDING AGREEMENT WITH AB (PB PGS. 52-55), THE PAYMENTS WERE TO BE MADE WITHIN 15 DAYS OF THE COMMENCEMENT OF THE PERF ORMANCE PERIOD, AS FOLLOWS: PERFORMANCE PERIOD AMOUNT 15.06.1999 TO 14.06.2000 RS.20,00,000 15.06.2000 TO 14.12.2000 RS.17,50,000 TOTAL CONSIDERATION RS.37,50,000 THE PAYMENTS TO AB WERE, HOWEVER, MADE AS UNDER: DATE AMOUNT RECEIVED 24.06.1999 RS.22,50,000/- 31.03.2000 RS.4,72,500/- TOTAL RS.27,22,500/- THE ASSESSEE, ON BEING CALLED UPON TO EXPLAIN THE M ANNER OF ACCOUNTING FOR THE INCOME FROM THE SAID RECEIPTS, EXPLAINED THAT HE ST OOD TO GAIN RS.12,50,000/- FROM THE SAID CONTRACT, I.E., RS.50 LACS RS.37.50 LACS. FO R A.Y. 2000-01, AGAINST THE RECEIPT OF RS.32 LACS, RS.10 LACS STOOD ACCOUNTED FOR AS INCOM E, WHILE THE BALANCE RS.22 LACS WAS TAKEN TO THE ADVANCE ACCOUNT. ON THE EXPENSE SIDE , OF RS.27.225 LACS PAID TO AB, RS.20 LACS WAS ACCOUNTED AS EXPENDITURE, TREATING THE BAL ANCE RS.7,22,500/- AS ADVANCE TO THE ARTIST. FOR A.Y. 2001-02, THE CURRENT YEAR, ANOTHER RS.10 LACS WAS RECOGNIZED AS INCOME, LEAVING A BALANCE OF RS.12 LACS IN THE ADVANCE ACC OUNT. THE BALANCE CONSIDERATION OF RS.18 LACS WAS RECEIVED FROM PFL IN THE FOLLOWING Y EAR (A.Y. 2002-03) AND ACCOUNTED FOR AS INCOME FOR THAT YEAR. NO FURTHER PAYMENT WAS MADE TO AB DURING THE YEAR RELEVANT TO A.Y. 2001-02 AS THE PERFORMANCE PERIOD STOOD EXT ENDED BY ANOTHER YEAR, I.E., UPTO 02.12.2001 (PB PG. 44). IN FACT, ANOTHER RS.10,27,5 00/- (RS.37,50,000/- - RS.27,22,500/-) WAS DUE TO AB, WHICH, HOWEVER, WAS NOT PAID. THE SA ID AMOUNT GETTING TIME BARRED IN 2004, WOULD BE OFFERED TO TAX FOR A.Y. 2004-05 (REF ER ASSESSEES LETTER DATED 09.03.2004/PB PGS.64-67/PGS.5-6 OF THE ASSESSMENT O RDER). THE MATTER WAS PUT TO CROSS-VERIFICATION BY THE REV ENUE FROM AB, WHEREAT IT STOOD CLARIFIED THAT HE HAD RECEIVED RS.31.25 LACS AND RS .4.725 LACS DURING THE PREVIOUS YEARS RELEVANT TO A.Y. 2000-01 AND 2001-02 RESPECTIVELY, AND THAT, THAT NO FURTHER AMOUNT WAS 5 ITA NO. 2250/MUM/2007 (A.Y. 2001-02) SUNIL T. DOSHI VS. ADDL. CIT DUE FROM THE ASSESSEE. THIS INFORMATION STOOD CONFI RMED BY THE A.O. THROUGH THE CONCERNED OFFICER ASSESSING AB. IN HIS VIEW, THEREF ORE, THE ASSESSEE HAD OVERBOOKED LIABILITY OF RS.17.50 LACS TO AB. THE SAME BEING NO N-EXISTENT AS ON 31.03.2001, THE ASSESSEES INCOME WAS INCREASED ON ACCOUNT OF UNPRO VED LIABILITY (EXPENDITURE) BY THAT AMOUNT. THE SAME STOOD CONFIRMED IN APPEAL FOR THE SAME REASON/S; THE PAYEE HAVING CONFIRMED TO HAVE RECEIVED THE TOTAL OF RS.35.975 L ACS TILL 31.03.2001 (AS AGAINST THE CONTRACT AMOUNT OF RS.37.50 LACS), DISCLOSING THE S AME AS HIS INCOME FOR THE RELEVANT YEARS, WITH NOTHING BEING DUE FROM THE ASSESSEE. TH ERE WAS ACCORDINGLY NO JUSTIFICATION FOR THE ASSESSEE IN CLAIMING THE EXPENDITURE IN THE FORM OF A LIABILITY TO HIM AT RS.17.50 LACS AS ON 31.03.2001. 5. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. 5.1 OUR FIRST OBSERVATION IN THE MATTER IS THAT THE DISPUTE BEFORE US IS QUA THE EXPENDITURE OF RS.17.50 LACS CLAIMED BY THE ASSESSE E, LIABILITY IN RESPECT OF WHICH OUTSTANDS IN THE ASSESSEES BOOKS AS AT THE YEAR-EN D. WE SAY SO AS, AS IT APPEARS, ON THE INCOME SIDE, RS.12 LACS CONTINUES TO BE REFLECTED A S AN ADVANCE, WHILE INCOME TO THAT EXTENT HAS CERTAINLY ACCRUED TO THE ASSESSEE BY 31. 03.2001, THE YEAR-END, IF NOT EARLIER. ALSO, THE BALANCE CONSIDERATION OF RS.18 LACS WOULD STAND ACCRUED ON THE COMPLETION OF THE SIXTH CELEBRITY APPEARANCE, INFORMATION ON WHIC H IS NOT FORTHCOMING, AND NOT ON ITS PAYMENT. THE ASSESSEES CASE, I.E., IN RESPECT OF T HE IMPUGNED LIABILITY, AS WE UNDERSTAND, IS THAT WHILE LIABILITY FOR RS.17.50 LACS HAD ARISE N BY 31.03.2001, HE, BY ALSO CLAIMING THE PAYMENT OF RS.7,22,500/- (MADE DURING THE PREVIOUS YEAR RELEVANT TO A.Y. 2000-01), MADE AN EXCESS CLAIM TO THAT EXTENT, I.E., RS.7.225 LACS. HOWEVER, AS NO FURTHER PAYMENT WAS MADE TO AB, THE ENTIRE SUM OF RS.17.50 LACS STO OD OFFERED TO TAX FOR A.Y. 2004-05 ON BECOMING BARRED BY TIME. THAT IS, LIABILITY TO THE EXTENT OF THE DIFFERENCE OF RS.10.275 LACS (RS.17.50 LACS RS.7.225 LACS) CEASED ONLY SU BSEQUENTLY, AND, ACCORDINGLY, WAS RIGHTLY ASSESSABLE FOR A.Y. 2004-05, ON ITS WRITE B ACK, WHILE CONSIDERING TO AN OVERCLAIM FOR THE CURRENT YEAR FOR RS.7.225 LACS. 6 ITA NO. 2250/MUM/2007 (A.Y. 2001-02) SUNIL T. DOSHI VS. ADDL. CIT 5.2 WE ARE COMPLETELY UNABLE TO APPRECIATE THE ASSE SSEES CASE. HE CLAIMS NON- PAYMENT DURING THE CURRENT YEAR ON THE BASIS THAT T HE TIME PERIOD OF PERFORMANCE STOOD EXTENDED. THERE IS, FIRSTLY, NO MATERIAL TO SUPPORT THE CONTENTION; THE LETTER DATED 23.01.2001, ADVERTED TO BY THE LD. AUTHORIZED REPRE SENTATIVE (AR) DURING HEARING IN THIS REGARD, BEING UNSIGNED (PB PG.44). TWO, THE SAME IS NOT MATERIAL AS IN TERMS OF THE AGREEMENT, PAYMENT BECOMES DUE WITHIN 15 DAYS OF TH E COMMENCEMENT OF THE PERFORMANCE PERIOD, WHICH, I.E., DUE DATE, REMAINS UNCHANGED. THE ACCRUAL OF INCOME TO THE CELEBRITY, AS PER THE AGREEMENT, IS NOT LINKED MATHEMATICALLY TO HIS PERSONAL APPEARANCE. ALL THAT HE HAS TO DO IS TO MAKE HIMSEL F AVAILABLE FOR 10 DAYS DURING THE PERFORMANCE PERIOD, OF WHICH PERSONAL APPEARANCE IS TO BE MADE ON SIX OCCASIONS AT MUTUALLY AGREED DATES. THUS, THOUGH IN RESPECT OF P ERFORMANCE, FOR WHICH TIME SPAN IS DEFINED, THE REVENUE ARISING (OR EXPENSE ACCRUING) IS NOT A LINEAR FUNCTION OF TIME. IN FACT, THERE IS NOTHING TO SHOW THAT THE ASSESSEE, THOUGH CLAIMS SO (PB PGS.64-67), HAS BOOKED INCOME AND EXPENDITURE ON THE BASIS OF CELEBRITY AP PEARANCES, EITHER GENERALLY OR DURING THE RELEVANT PERIOD, SO MUCH SO THAT, AS IT TRANSPI RES, AND UNDISPUTEDLY, THE ASSESSEE WHILE MAKING THE PAYMENT OF RS.4,72,500/-, AN ODD FIGURE, MADE FULL AND FINAL PAYMENT TO THE CELEBRITY. IT HAS NOWHERE EXPLAINED THE BASIS OF TH E PAYMENT IN SUCH AN ODD SUM, MUCH BELOW THE AMOUNT THAT WAS REQUIRED TO BE PAID AS PE R THE AGREEMENT ITSELF. HOWEVER, THOUGH THE ASSESSEE HAS NOT STATED THE FULL FACTS, THE FACT OF THE MATTER, AS CONFIRMED BY THE PAYEE, IS THAT NO AMOUNT, AFTER THE PAYMENT OF RS.4.725 LACS MADE ON 31.03.2000 , IS DUE TO AB, AND WHICH IS BORNE OUT BY THE SUBSEQUENT COURSE OF EVENTS. AS SUCH, WHILE THE ASSESSEE COULD RIGHTLY CLAIM THE EXPENDITURE QUA PAYMENT OF RS.7,22,500/- FOR THE CURRENT YEAR, THERE IS NO BASIS FOR BOOKING EXPENDITURE FOR RS.17.50 LACS ON THE BASIS OF ACCRUAL, AND WHICH HAS THUS BEEN CLAIMED IN EXCESS. IT IS CL EARLY WRONG TO SAY, AS ALLEGED, THAT THE REVENUE HAS BROUGHT THIS AMOUNT TO TAX BY FOLLOWING THE CASH METHOD OF ACCOUNTING, I.E., AS ADOPTED BY THE PAYEE. THERE IS FURTHER NO QUESTION OF LIABILITY CEASING DURING THE CURRENT YEAR IN-AS-MUCH AS NO LIABILITY IN ITS RESPECT HAD ACCRUED IN THE F IRST PLACE. WE ALSO OBSERVE A DIFFERENCE IN THE PAYMENT TO AB (CLAIMED AS) RECORDED IN THE ASSE SSEES BOOKS DURING THE PREVIOUS YEAR 7 ITA NO. 2250/MUM/2007 (A.Y. 2001-02) SUNIL T. DOSHI VS. ADDL. CIT RELEVANT TO A.Y. 2000-01, I.E., AT RS.22.50 LACS, A ND THAT CLAIMED RECEIVED AND, THEREFORE, DISCLOSED AS HIS INCOME BY THE PAYEE AB, I.E., RS.3 1.25 LACS. THE LD. AR WOULD DURING HEARING, ON BEING ENQUIRED IN THE MATTER, STATE THA T THE AMOUNT STATED AS RECEIVED HAS BEEN WRONGLY RECORDED BY THE REVENUE, AND OUGHT TO BE CO NSIDERED AS RS.22.50 LACS INSTEAD, IN-AS-MUCH AS THAT IS THE AMOUNT PAID BY THE ASSESS EE. WE OBSERVE NO CLAIM TO THIS EFFECT TO HAVE BEEN RAISED BEFORE THE AUTHORITIES BELOW. R ATHER, THIS WOULD GIVE RISE TO ANOTHER QUESTION, I.E., THE SOURCE OF PAYMENT OF THE DIFFER ENCE OF RS.8.75 LACS DURING THE PREVIOUS YEAR RELEVANT TO A.Y. 2000-01. BE THAT AS IT MAY, W E HAVE, AS INDEED HAS THE REVENUE, ONLY PROCEEDED ON THE BASIS THAT THE SAME HAS NO BE ARING ON THE DISPUTE UNDER REFERENCE, I.E., THE AMOUNT PAYABLE TO AB AS ON 31.03.2001, TH E RELEVANT YEAR-END, IN TERMS OF THE RELEVANT CONTRACTS AND THE PAYMENT MADE TO HIM AS P ER THE ASSESSEES ACCOUNTS. 5.3 UNDER THE CIRCUMSTANCES, WE HAVE NO HESITATION IN CONFIRMING THE DISALLOWANCE/ADDITION IN RESPECT OF THE UNPROVED EX PENSE/LIABILITY FOR RS.17.50 LACS OUTSTANDING IN THE NAME OF AB AS ON 31.03.2001. FUR THER, THOUGH THERE IS NO FINDING BY THE AUTHORITIES BELOW IN ITS RESPECT, AS IT APPEARS FROM THE STATEMENT OF THE AMOUNT WRITTEN BACK FOR A.Y. 2004-05 (PB PG.62) , THE ASSESSEE HAS OFFERED THIS AMOUNT AS INCOME FO R THAT YEAR. THOUGH THIS WOULD NOT ALTER OUR DECISION , BASED AS IT IS ON THE FINDING OF FACT OF NO LIABILITY TO THAT EXTENT AS HAVING, IN FACT, ACC RUED, OR, IN ANY CASE EXISTING AS ON 31.03.2001, WITH THE ASSESSMENT HAVING BEEN FINALIZ ED PRIOR TO 31.03.2004, AT THE SAME TIME, THE SAME AMOUNT CANNOT BE SUBJECT TO TAX TWIC E. ACCORDINGLY, WHERE THE ASSESSEE ACCEPTS THE ASSESSMENT OF THIS INCOME FOR THE CURRE NT YEAR, HE SHALL, ON MOVING THE REVENUE, BE ALLOWED, UPON VERIFICATION, CONSEQUENTI AL RELIEF FOR A.Y. 2004-05. IN FACT, EVEN IN THE CASE OF NON-ACCEPTANCE BY THE ASSESSEE, THE REVENUE CANNOT, IMPENDING THE RESOLUTION OF THE DISPUTE, COLLECT TAX TWICE, SO TH AT THE DEMAND FOR ONE YEAR, I.E., THE LATTER YEAR, SHALL HAVE TO BE KEPT IN ABEYANCE. WE DECIDE ACCORDINGLY. LIABILITY TO SHRI AMITABH BACHCHAN (AB) RS.4.50 L ACS : 6. THE ASSESSEE WAS PAID RS.5 LACS (IN HIS PROPRIET ARY FIRM M/S. LIMELIGHT) BY M/S. GLAXO INDIA DURING THE RELEVANT YEAR FOR RELEASING STOCK PICTURES OF AB, WHICH THE SAID 8 ITA NO. 2250/MUM/2007 (A.Y. 2001-02) SUNIL T. DOSHI VS. ADDL. CIT FIRM WANTED TO UTILIZE, AMONG OTHERS, AS A PART OF THEIR ASTHMA MEDIA CAMPAIGN AS WELL AS PATIENT EDUCATION PROGRAMME FOR A DEFINED PERIOD OF TIME (FIVE YEARS), AS A PART OF THEIR MEDIA PLAN, UNDER A MEMORANDUM OF UNDERSTANDING (MO U). THE ASSESSEE, AS CLAIMED, WAS TO PAY RS.4.50 LACS TO AB, RETAINING THE BALANC E RS.50,000/- AS HIS COMMISSION @10%. ACCORDINGLY, WHILE RS.5 LACS WAS TAKEN AS INC OME, CORRESPONDINGLY, LIABILITY TO AB AT RS.4.50 LACS WAS BOOKED. THE SAME WAS, HOWEVE R, NOT PAID FOR THE REASON, AS STATED, GOOD RELATIONSHIP WITH AB, SO THAT THE ASSE SSEE WAS ALLOWED (BY HIM) TO RETAIN THE SAME AND, ACCORDINGLY, OFFERED THE SAME AS HIS INCO ME FOR A.Y. 2004-05 (PB PG. 63 ). THERE BEING NO BASIS TO HOLD THAT A LIABILITY TO AB EXISTED AS ON 31.03.2001, THE IMPUGNED AMOUNT WAS CONFIRMED FOR ADDITION/DISALLOWANCE. AGG RIEVED, THE ASSESSEE IS IN SECOND APPEAL. 7. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. THE INCOME AT RS.5 LACS STANDS ACCRUED AND RECEIVED BY THE ASSESSEE, S O THAT THE QUESTION IS OF THE CORRESPONDING LIABILITY TO AB, I.E., OF IT HAVING A CCRUED OR NOT, IN THE FACTS AND CIRCUMSTANCES OF THE CASE. THERE IS ADMITTEDLY NO W RITTEN AGREEMENT WITH AB TO EVIDENCE THAT RS.4.50 LACS WAS PAYABLE TO HIM. THERE IS ALSO NO EVIDENCE OF ANY ORAL AGREEMENT BETWEEN THE PARTIES, I.E., THE ASSESSEE AND AB. THE RE IS ALSO NO CONFIRMATION FROM AB, SO THAT THE ASSESSEES CASE IS WITHOUT AN IOTA OF EVID ENCE. FURTHER, THE STOCK PICTURES, RELEASED TO M/S. GLAXO INDIA BY THE ASSESSEE, WOULD ONLY BE WITH THE CONSENT OF AB, PERHAPS EVEN OUT OF THE PICTURES OF AB ACCUMULATED WITH THE ASSESSEE OVER THE YEARS OF HIS ASSOCIATION WITH HIM AS AN EVENT MANGER, ALLOWE D TO BE RELEASED/USED BY AB IN VIEW OF HIS GOOD RELATIONSHIP WITH THE ASSESSEE. FOR ALL WE KNOW, AB MAY HAVE NEVER AGREED FOR BEING PAID ANY COMPENSATION FOR THE ASTHMA CAMP AIGN FOR WHICH HIS PICTURES WERE BEING SOUGHT. IN THE UNDISPUTED FACTS OF THE CASE, THERE IS AS SUCH NO BASIS TO HOLD THAT A LIABILITY TO AB HAD EVER ACCRUED DURING THE YEAR, A ND CEASED TO DO SO AT A LATER POINT IN TIME. THE SAME, IN OUR VIEW, THEREFORE, STOOD RIGHT LY ADDED (DISALLOWED) BY THE REVENUE. THERE IS, AGAIN, NO MERIT IN THE CHARGE OF THE INCO ME HAVING BEEN SUBJECT TO TAX ON CASH BASIS, AS BEING FOLLOWED BY THE PAYEE, WHO ADMITTED LY WAS NOT PAID ANY AMOUNT. FURTHER 9 ITA NO. 2250/MUM/2007 (A.Y. 2001-02) SUNIL T. DOSHI VS. ADDL. CIT ON, THE ASSESSEE CLAIMING A WRITE BACK OF THE LIABI LITY IN HIS ACCOUNTS, AND ITS OFFER AS INCOME FOR A.Y. 2004-05 (PB PG.63 ), OUR COMMENTS AT PARA 5.3 OF THIS ORDER IN RESPEC T OF LIABILITY TO AB, QUA WHICH A SIMILAR CLAIM HAD BEEN MADE, WOULD APPLY IN EQUAL MEASURE FOR THIS LIABILITY AS WELL. WE DECIDE ACCORDINGLY. RANI MUKHERJEE (RM) - RS.6 LACS: 8. THE ASSESSEES EXPLANATION FOR THIS LIABILITY WA S THAT THE SAME STANDS SINCE PAID ON 31.03.2002. AS, HOWEVER, THE SAME WAS PAID IN CASH, 20% THEREOF STOOD DISALLOWED SUO MOTU U/S.40A(3) OF THE ACT FOR A.Y. 2002-03. UPON CONFIR MATION FROM RM, IT WAS FOUND THAT SHE HAD BEEN SUBJECT TO SEARCH AND SEIZURE ACT ION ON 08.10.2000, WHEREAT CASH AMOUNTING TO RS.7.50 LACS WAS FOUND FROM HER LOCKER . AS EXPLAINED BY HER FATHER, SHRI RAM MUKHERJEE, RS.1.50 LACS OF THE SAME BELONGED TO THE FAMILY, AND THE BALANCE RS.6 LACS WAS RECEIVED FOR SAFE KEEPING FROM THE ASSESSE E, A FAMILY FRIEND, ON 25.09.2000 AND, THEREFORE, DEPOSITED IN THE LOCKER ON THE SAME DAY. HOWEVER, AS THE ASSESSEE WAS NOT AVAILABLE FOR CONFIRMING THE SAME DUE TO HIS BUSY S CHEDULE, THE SAME STOOD OFFERED TO TAX BY RM AS HER UNDISCLOSED INCOME FOR THE BLOCK PERIO D. THE SAID EXPLANATION, HOWEVER, WAS NOT FOUND VALID BY THE REVENUE, WHICH, ON THE B ASIS OF THE MATERIAL GATHERED IN SEARCH, VIZ. DIARY, STATEMENT, ETC., FOUND RS.6 LAC S TO BE HER INCOME FROM BATA ADVERTISEMENT, WHICH WAS ARRANGED BY THE ASSESSEE. THE ASSESSEES CLAIM FOR LIABILITY AS ON 31.03.2001 WAS, THUS, FOUND UNEXPLAINED AND DISA LLOWED. THE SOURCE OF CASH PAID TO RM DURING THE CURRENT YEAR ALSO REMAINED UNEXPLAINE D AND, ACCORDINGLY, LIABLE FOR ADDITION U/S.69C. BOTH THE DISALLOWANCE AND ADDITIO N WERE, ACCORDINGLY, AFFECTED IN ASSESSMENT. IN APPEAL, ON THE BASIS OF THE SUBMISSI ONS BY RM BEFORE HER A.O., INCLUDING THE MATERIAL ADDUCED IN SUPPORT, IT WAS FOUND THAT THE ASSESSEE HAD VIDE HIS LETTER DATED 04.10.2000 AFFIRMED CASH DEPOSIT WITH RM ON 25.09.2 000 FOR SAFE KEEPING. THE SAME WAS EXPLAINED AS SOURCED FROM CASH WITHDRAWN FROM B ANK IN JULY AND SEPTEMBER, 2000. FURTHER, THE LIABILITY OF RS.6 LACS TO RM WAS IN RE SPECT OF HER PERFORMANCE FOR BATA INDIA LTD., WHICH STOOD PAID TO HER IN CASH DURING THE PR EVIOUS YEAR 2001-02, THOUGH FOR THAT REASON DISALLOWED U/S.40A(3) AT RS.1.20 LACS (FOR A .Y. 2002-03). IN THIS VIEW OF THE 10 ITA NO. 2250/MUM/2007 (A.Y. 2001-02) SUNIL T. DOSHI VS. ADDL. CIT MATTER, THE LD. CIT(A) FOUND NO SUBSTANCE IN THE DI SALLOWANCE QUA LIABILITY, BEING IN RESPECT OF THE PERFORMANCE FOR BATA INDIA LTD. THE PAYMENT IN SEPTEMBER, 2000, THOUGH, REMAINED UNEXPLAINED IN-AS-MUCH AS NEITHER THE PURP OSE, I.E., SAFE KEEPING, NOR SOURCE, I.E., WITHDRAWAL FROM BANK, WAS FOUND SATISFACTORY. THE ADDITION U/S.69C WAS, ACCORDINGLY, RETAINED, SO THAT THE ASSESSEE IS IN S ECOND APPEAL. 9. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. 9.1 OUR FIRST OBSERVATION IS THAT THE SUO MOTU DISALLOWANCE BY THE ASSESSEE U/S.40A(3) FOR A.Y. 2002-03 IS TO NO CONSEQUENCE OR MOMENT. TH E SAME IS ONLY QUA AN EXPENDITURE WHICH IS OTHERWISE ALLOWABLE AND, TWO, IRRESPECTIVE OF THE YEAR OF PAYMENT, IS TO TAKE EFFECT FOR THE YEAR IN WHICH THE EXPENDITURE IS INC URRED OR CLAIMED, I.E., A.Y. 2001-02, THE CURRENT YEAR. 9.2 OUR SECOND OBSERVATION IN THE MATTER IS THAT TH E TWO ASPECTS OR PAYMENTS ARE INTERTWINED; THE ASSESSEE HIMSELF CONCEDING VIDE HI S LETTER DATED 22.12.2004 THAT ONE ADDITION MAY BE RETAINED (REFER PARA 3.6 OF THE IMP UGNED ORDER). AS IT APPEARS, THE ASSESSEE WAS REQUIRED TO PAY RM FOR HER PERFORMANCE FOR THE BATA COMMERCIAL, FOR WHICH HE HAD RECEIVED RS.14.64 LACS (OR IS IT RS.15.645 L ACS - THE AMOUNT AS PER THE ORDERS BY THE AUTHORITIES BELOW BEING DIFFERENT) DURING THE CURRE NT YEAR FROM BATA INDIA LTD. (AT NET OF TDS). HOWEVER, WHAT IS NOT CLEAR IS THE AMOUNT OF THE LIA BILITY, AND WHEN IT WAS FINALLY PAID ? IF PAID IN SEPTEMBER, 2000, THERE IS NO QUESTION OF ANY LIABILITY ON THAT ACCOUNT SUBSISTING AS ON 31.03.2001. BESIDES, IN THAT CASE, WHAT IS THE PAYMENT ON 31.03 .2002 FOR ? AGAIN, WHAT IS THE SOURCE OF PAYMENT IN SEPTEMBER , 2000, NOT RECORDED IN THE ASSESSEES BOOKS OF ACCOUNT? THE AVAILABILITY OF CA SH IN THE ASSESSEES ACCOUNTS AT THE RELEVANT TIME WOULD, THEREFORE, BE TO NO AVAIL. NOB ODY WOULD WITHDRAW CASH WHICH AS PER THE ASSESSEES OWN BOOKS IS FOR COMMERCIAL SHOO TING EXPENSES, FROM BANK FOR SAFE KEEPING AND, FURTHER, DEPOSIT IT WITH ANOTHER FOR T HE PURPOSE, AND THAT TOO WITHOUT ANY EVIDENCE. THE CASH AS PER THE BOOKS WOULD, IN ANY C ASE, ONLY STAND TO BE UTILIZED FOR BUSINESS PURPOSES IN DUE COURSE OF TIME, AND IT IS NOBODYS CASE THAT IT CONTINUES TO BE UNUTILIZED TO DATE. AT THE SAME TIME, RM ADMITTEDLY OFFERED THE CASH FOUND IN SEARCH, 11 ITA NO. 2250/MUM/2007 (A.Y. 2001-02) SUNIL T. DOSHI VS. ADDL. CIT EXPLAINED AS SOURCED FROM THE ASSESSEE, AS HER INCO ME. THE SAME ONLY IMPLIES A REJECTION OF HER EXPLANATION OF BEING THE ASSESSEES MONEY, K EPT WITH HER FOR SAFE KEEPING, AS AFFIRMED BY THE ASSESSEE VIDE HIS LETTER DATED 04.1 0.2000. THE CASH FOUND WITH HER WOULD THUS NOT AUTOMATICALLY STAND TO BE CONSIDERED AS TH E ASSESSEES MONEY AND, THUS, UNEXPLAINED INCOME, WHICH WOULD IMPLY AN ACCEPTANCE OF THE RMS EXPLANATION, MAKING THE REVENUES STAND APPARENTLY CONTRADICTORY. THE A DDITION, HOWEVER, IN THE ASSESSEES CASE IS NOT U/S.69/69A, I.E., IN RESPECT OF UNEXPLA INED MONEY OR DEPOSIT, BUT U/S.69C, I.E., UNEXPLAINED EXPENDITURE, SO THAT AN ADDITION IN THE HANDS OF BOTH THE ASSESSEE AND RM COULD OBTAIN SIMULTANEOUSLY, AND THERE IS IN FACT N O CONTRADICTION OR INCONSISTENCY. THE QUESTION, THEREFORE, BOILS DOWN TO THE SOURCE OF MO NEY FOUND IN SEARCH WITH RM IN OCTOBER, 2000, RECEIVED BY HER IN HER OWN RIGHT A ND NOT BY WAY OF SAFE KEEPING FOR THE ASSESSEE, WHICH (LATTER) EXPLANATION EVEN OTHERWISE STANDS HOLLOW FOR THE REASONS AFORE- STATED, AND REJECTED BY THE REVENUE IN THE ASSESSEE S CASE AS WELL. THE ASSESSEE HAS EFFECTED A PAYMENT IN SEPTEMBER, 2 000 AS WELL AS ANOTHER ON 31.03.2002, THOUGH HAS BOOKED ONLY ONE LIABILITY IN HIS ACCOUNTS. IF THE SECOND PAYMENT TO RM IN CASH IN MARCH, 2002 IS AFFIRMED BY HER, IT WOULD STAND PROVED WITHOUT DOUBT THAT THERE WERE INDEED TWO PAYMENTS OF RS.6 LACS EA CH BY THE ASSESSEE TO HER, IN WHICH CASE THE PAYMENT OF SEPTEMBER, 2000, BEING UNEXPLAI NED, WOULD MERIT BEING ADDED. THE SAME MAY WELL BE AGAINST THE BUSINESS (TRADE) LIABI LITY, ADMISSIBLE U/S.37(1), BUT WOULD STAND TO BE DISALLOWED UNDER PROVISO TO SECTION 69C, RESULTING IN AN ADDITION OF RS.6 L ACS FOR A.Y. 2001-02. IF, ON THE OTHER HAND, RM DENIES RECEIPT OF ANY SUM QUA BATA COMMERCIAL, I.E., OTHER THAN THAT RECEIVED FROM THE ASSESSEE IN SEPTEMBER, 2000, SO THAT NO ADDITIONAL INCOME QUA THE BATA COMMERCIAL HAS BEEN DISCLOSED BY HER, EITH ER ON ACCRUAL BASIS (FOR A.Y. 2001-02) OR ON RECEIPT (FOR A.Y. 2002-03), THEN THERE HAS BEEN INDEED ONLY ONE TIME PAYMENT BY THE ASSESSEE TO HER , I.E., IN SEPTEMBER, 2000. WE SAY SO AS DESPITE THE ASSESSEE ITSELF DECLARING TWO PAYMEN TS, I.E., IN SEPTEMBER, 2000 AND MARCH, 2002, THE CORROBORATING CIRCUMSTANCES AND OVERWHELM ING EVIDENCE IS IN FAVOUR OF ONE LIABILITY ONLY, WITH THE EXPLANATION AS TO DEPOSIT (FOR SAFE KEEPING) HAVING BEEN ROUNDLY REJECTED. 12 ITA NO. 2250/MUM/2007 (A.Y. 2001-02) SUNIL T. DOSHI VS. ADDL. CIT UNDER THE CIRCUMSTANCES, THE INFERENCE OF SECOND LIABILITY TO HER AS HAVING ACCRUED TO THE ASSESSEE AND OUTSTANDING AS ON 31.03 .2001 WOULD BE WITHOUT BASIS AND DE HORS ANY MATERIAL RECORD. THE SAME WOULD, ACCORDINGLY, S TAND TO BE DISALLOWED. IT MAY WELL BE ARGUED FROM THE STAND POINT OF THE REVENUE THAT THE PAYMENT HAVING BEEN MADE (IN SEPTEMBER, 2000), SOURCE OF WHICH IS UNEXPLAINE D; THE ADDITION U/S.69C WOULD ALSO ARISE. THE ARGUMENT, THOUGH VALID, WOULD YET GIVE R ISE TO A SINGLE ADJUSTMENT AND NOT TWO IN-AS-MUCH AS THERE HAS BEEN A SINGLE PAYMENT AGAIN ST A SINGLE LIABILITY. THOUGH THE LIABILITY IS REFLECTED IN THE ACCOUNTS, ITS STANDS DISCHARGED PRIOR TO MARCH, 2001, SO THAT THE SOURCE OF PAYMENT REMAINED UNEXPLAINED. AS SUCH, EI THER WAY, I.E., IRRESPECTIVE OF THE RESPONSE FROM RM, THERE SHALL ARISE ONLY A SINGLE A DJUSTMENT TO THE ASSESSEES RETURNED INCOME ON ACCOUNT OF LIABILITY TOWARD AND PAYMENT T O RM, FOR THE CURRENT YEAR. WE, THEREFORE, FOR OUR SEPARATE REASONS, CONFIRM THE AD DITION OR, AS THE CASE MAY BE, DISALLOWANCE OF RS.6 LACS IN COMPUTING THE ASSESSEE S INCOME FOR THE YEAR, AS AGAINST TWO BY THE A.O., CONFIRMING, IN RESULT, THE ORDER BY TH E LD. CIT(A). WE DISPOSE THE ASSESSEES APPEAL ON THIS GROUND ACCORDINGLY. 10. IN THE RESULT, THE ASSESSEES APPEAL IS DISMISS ED. 1/+23451+& 1&+6 ORDER PRONOUNCED IN THE OPEN COURT ON JULY 16, 2014 SD/- SD/- (D. MANMOHAN) (SANJAY ARORA) / VICE PRESIDENT / ACCOUNTANT MEMBER ( 7* MUMBAI; 8 DATED : 16.07.2014 )3 ROSHANI , SR. PS 13 ITA NO. 2250/MUM/2007 (A.Y. 2001-02) SUNIL T. DOSHI VS. ADDL. CIT !' # $%&' ('% COPY OF THE ORDER FORWARDED TO : 1. !# / THE APPELLANT 2. $%!# / THE RESPONDENT 3. ( 9+ : ; / THE CIT(A) 4. ( 9+ / CIT - CONCERNED 5. <)=>$3+3?4 ,?4/ ( 7* / DR, ITAT, MUMBAI 6. >5@* GUARD FILE !' ) / BY ORDER, */)+ (DY./ASSTT. REGISTRAR) , ( 7* / ITAT, MUMBAI