Sri Petla Jagganadh Alia Poori Jagannath, Hyderabad V. ACIT, Hyderabad

ITA 247/HYD/2008

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 59189 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 11 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 07-03-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 18-02-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MYTHILI RANI
• Keywords: Depreciation; Search and seizure; Retraction

Judgement Text

ITA NO.247 OF 2008, PETLA JAGANATH ALIAS POORI JAGANNATH, HYD . 1 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE CHANDRA POOJARI, ACCOUNTANT MEMBER & SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO. 247/HYD/2008 ASSESSMENT YEAR 2005-06 SHRI PETTA JAGGANNATH ALIA POORI JAGANNATH, HYDERABAD (PAN AEKPP2273E) VS THE ACIT, CENTRAL 4, HYDERABAD APPELLANT RESPONDENT APPELLANT BY : SHRI A. SRINIVAS RESPONDENT BY : SMT. MYTHILI RANI, DR DATE OF HEARING : 9.1.2012 DATE OF PRONOUNCEMENT : ORDER PER ASHA VIJAYARAGHAVAN, JM . THIS APPEAL OF THE ASSESSEE IS AGAINST THE ORDER OF CIT(A)-I, HYDERABAD DATED 7.12.2007 CONFIRMING THE ADDITIONS MADE BY THE AO IN RESPECT OF EXPENDITURE CLAIMED BY THE ASSESSEE I N RESPECT OF THREE FILMS. 2. BRIEF FACTS OF THE CASE ARE THAT THE APPELLANT I S A FILM DIRECTOR AND ALSO IS ENGAGED IN BUSINESS OF PRODUCTION OF CINEMA S. A SEARCH AND SEIZURE OPERATION WAS CONDUCTED IN THE CASE OF THE APPELLANT AND OTHER GROUP CASES ON DATED 2.1.2004. THE FINDINGS OF THE SEARCH OPERATION WERE THAT THE ASSESSEE USED TO INFLATE EXPENDITURE AND ALSO EXPENSES INCURRED ARE NOT ALWAYS SUPPORTED BY PROPER VOUCHER S. DURING THE RELEVANT PERIOD, THE ASSESSEE HAS PRODUCED TWO MOVI ES NAMELY AMMA NANNA O TAMIL AMMAYE AND SIVAMANI. THE ASSESSEE ALSO DIRECTED A MOVIE CALLED ANDHRAWALA. ITA NO.247 OF 2008, PETLA JAGANATH ALIAS POORI JAGANNATH, HYD . 2 3. DURING COURSE OF POST SEARCH INVESTIGATION THE APPELLANT FILED AN AFFIDAVIT BEFORE THE DCIT (INV) UNIT II(1)HYD., WH EREIN THE ASSESSEE HAS ESTIMATED INCOME FROM PRODUCTION AND DIRECTION OF M OVIES, INCOME ESTIMATED AS PER THE SAID AFFIDAVIT IS SUMMARISED A S UNDER: 1. AMMA NANNA O TML AMMAYE (RS. LAK HS) INCOME AS PER BOOKS RS. 87.56 PROVISION FOR POST PRODUCTION EXPENSES (-) RS 27 .56 BALANCE RS. 60.00 DISCREPANCIES IN POST PRODUCTION EXPENDITURE (+) RS 39.00 TOTAL INCOME ESTIMATED RS. 99.00 2. SIVAMANI: INCOME AS PER BOOKS RS. 84.35 PROVISION FOR POST PRODUCTION EXPENSES (-) RS. 42.35 BALANCE RS. 42.00 DISCREPANCIES IN POST PRODUCTION EXPENDITURE (+) RS. 43.00 TOTAL INCOME ESTIMATED RS. 85.00 3. ANDHRAWALA (RS. IN LAKHS) INCOME ESTIMATED AFTER EXPENDITURE RS 100 GRAND TOTAL RS.284 4. HOWEVER, AS PER PROFIT AND LOSS ACCOUNT AND BA LANCE SHEET FILED DURING ASSESSMENT PROCEEDINGS THE ASSESSEE AR RIVED AT INCOME AS UNDER: 1.AMMA NANNA O TMIL AMMAYE NET PROFIT AS PER P& L A/C. RS 68,20,443 2. SIVAMANI: NET PROFIT AS P& L A/C. RS.50,62,488 3.ANSHRAWALA NET PROFIT AS P&L A/C. RS.1,02,44,900 TOTAL RS.2,21,27,831 ITA NO.247 OF 2008, PETLA JAGANATH ALIAS POORI JAGANNATH, HYD . 3 5. AFTER TAKING INTO ACCOUNT INCOME FROM HIRING, H OUSE PROPERTY AND DEPRECIATION CLAIMS AND OTHER ADJUSTMENTS, THE ASSE SSEE OFFERED INCOME, AS PER RETURN, AT RS 201,74,489/-. 6. THE ASSESSING OFFICER WHILE COMPUTING INCOME HA S MADE VARIOUS DISALLOWANCES OF EXPENDITURE ACCORDINGLY THE ASSESS ING OFFICER HAS TAKEN THE PROFIT AND LOSS ACCOUNT FILED BY THE ASSE SSEE AS BASE FOR COMPUTING INCOME. HOWEVER, THE ASSESSING OFFICER HA S RECAST THE PROFIT AND LOSS ACCOUNT IN RESPECT OF MOVIES IN VIEW OF TH E AFFIDAVIT FILED BY THE ASSESSEE FOR PURPOSE OF DISCUSSION IN THE ASSES SMENT ORDER. 7. IN RESPECT OF MOVIE AMMA NANNA O TAMIL AMMAYE, THE ASSESSING OFFICER HAS MADE TOTAL DISALLOWANCE OF RS 58,35,756 /- OUT OF VARIOUS EXPENDITURE CLAIMED BY THE ASSESSEE. THE SAID DISA LLOWANCE CONSISTS OF RS 39,00,000/- OF POST PRODUCTION EXPENSES, WHICH W AS ALSO ADMITTED BY THE ASSESSEE AS BOGUS EXPENDITURE IN THE AFFIDAV IT ITSELF. THE BALANCE DISALLOWANCE OF RS. 19,35,756/- IS POST PRODUCTION EXPENDITURE CLAIMED BY THE APPELLANT FOR WHICH NO VOUCHERS COULD BE PRO DUCED. FOR CLARITY IT MAY BE MENTIONED HERE THAT IN THE AFFIDAVIT, ASS ESSEE PROVIDED FOR POST PRODUCTION EXPENDITURE OF RS 27.56 LAKHS WHILE ESTIMATING INCOME BUT WHILE FILING PROFIT AND LOSS ACCOUNT AND RETURN THE SAID CLAIM WAS RESTRICTED TO RS 19,35,756/-. 8. THE ASSESSING OFFICER HAS OBSERVED THAT NO VOUC HERS OR EVIDENCES WERE PRODUCED FOR THE CLAIM OF THE ABOVE EXPENDITUR E AND EVEN THE AUTHORISED REPRESENTATIVE EXPRESSED HIS INABILITY T O PRODUCE ANY EVIDENCE IN SUPPORT OF THE CLAIMS OF EXPENDITURE MA DE IN THE RETURN. THE ASSESSING OFFICER HAS OBSERVED THAT PAYMENTS TO THE DANCER, JUNIOR ARTISTS, MUSIC AND ORCHESTRA, WOULD NOT BE DELAYED BUT PAID ON THE DAY OF SHOOTING OR WITHIN 2-3 DAYS. THE ASSESSING OFFIC ER HAS NOTED THE STATEMENT OF THE ASSESSEE THAT INFLATED EXPENDITURE WAS UTILISED FOR PAYMENT OF ON MONEY FOR ACQUISITION OF PROPERTIES. THE ASSESSING OFFICER HAS ALSO GIVEN A FINDING THAT THE ASSESSEE HAS WITHDRAWN AN ITA NO.247 OF 2008, PETLA JAGANATH ALIAS POORI JAGANNATH, HYD . 4 AMOUNT OF RS 38,70,000/- FROM THE BANK ACCOUNT, WHI CH COULD HAVE BEEN UTILISED FOR PAYMENT OF ON MONEY FOR PURCHASE OF PROPERTIES. SINCE THE ASSESSEE HAS ALREADY OFFERED RS 39,00,000 /- IN THE AFFIDAVIT AND ALSO THE FACT THAT NO VOUCHERS OR EVIDENCES WER E PRODUCED BEFORE HIM AND IN RESPECT OF RS 19,35,756/- ALSO NO EVIDEN CES OR VOUCHERS WERE PRODUCED BEFORE HIM, THE ASSESSING OFFICER DIS ALLOWED BOTH THE EXPENDITURES. 9. IN RESPECT OF MOVIE SIVAMANI THE ASSESSING OF FICER HAS MADE DISALLOWANCE OF EXPENDITURE AMOUNTING TO RS.98,12,9 66/- OUT OF EXPENDITURE CLAIMED IN THE PROFIT AND LOSS ACCOUNT. THE EXPENDITURE DISALLOWED INCLUDES AMOUNTS OF RS 33,73,346/- FOR T HE PERIOD 3.1.2004 TO 31.3.2004 AND RS 64,39,620 OUT OF PREPRODUCTION EXPENSES. THE ASSESSING OFFICER HAS NOTED THAT THE STATEMENT GIVE N BY THE ASSESSEE WHEREIN HE HAS ADMITTED THAT THE EXPENDITURE OF RS 64.39 LAKHS WAS NOT SUPPORTED BY VOUCHERS OUT OF WHICH THE EXPENDIT URE INFLATED WAS TO THE EXTENT OF RS 43 LAKHS WHICH WAS OFFERED AS INCO ME IN THE AFFIDAVIT. HOWEVER CONTRARY TO WHAT WAS STATED IN THE AFFIDAVI T THE ASSESSEE HAS NOT EVEN OFFERED THE SAID RS 43 LAKHS AS INCOME. DU RING THE COURSE OF ASSESSMENT, VOUCHERS AND EVIDENCES WERE ASKED FOR I N RESPECT OF CLAIM OF RS 64.39 LAKHS AS WELL AS RS 33,73,346/- HOWEVER NO EVIDENCES OR VOUCHERS COULD BE PRODUCED BEFORE THE ASSESSING OFF ICER AND THE AUTHORISED REPRESENTATIVE EXPRESSED INABILITY TO PR ODUCE ANY EVIDENCE THE ASSESSING OFFICER HAS ALSO NOTED THAT PAYMENTS TO THE DANCERS, JUNIOR ARTISTS ETC. WOULD NOT WAIT FOR LONG BUT TO BE MADE ON THE DAY OF SHOOTING OR WITHIN 2-3 DAYS. ACCORDINGLY, SINCE NO EVIDENCES WERE EXISTING NOR ANY VOUCHERS PRODUCED THE ASSESSING OF FICER DISALLOWED THE CLAIM OF EXPENDITURE TO THE EXTENT ALREADY DISC USSED. 10. IN THE CASE OF ANDHRAWALS, ASSESSEE HAS SHOWN A NET PROFIT OF RS 1,02,44,900/- IN THE PROFIT AND LOSS ACCOUNT WHEREI N AN EXPENDITURE OF RS 57,55,100 WAS CLAIMED, IN RESPECT OF SOME OF THE EXPENSES NOT ITA NO.247 OF 2008, PETLA JAGANATH ALIAS POORI JAGANNATH, HYD . 5 COVERED BY TDS, NO EVIDENCES COULD BE PRODUCED BEFO RE THE ASSESSING OFFICER, SUCH EXPENSES AMOUNTED TO RS 11,30,100/- T HE AUTHORISED REPRESENTATIVE ALSO SUBMITTED THAT HE IS NOT IN A P OSITION TO PRODUCE EVIDENCES. ACCORDINGLY, THE ASSESSING OFFICER DISAL LOWED EXPENSES AMOUNTING TO RS 11,30,100/-. 11. THE APPELLANT IS AGGRIEVED AGAINST DISALLOWANC E OF EXPENDITURE PREFERRED AN APPEAL BEFORE THE CIT(A). IN THE APPEL LATE PROCEEDINGS SUBMITTED THAT ADDITIONS MADE BY THE ASSESSING OFFI CER ARE BASED TO A LARGE EXTENT ON THE DECLARATION MADE DURING SEARCH PROCEEDINGS, THERE IS NO DISPUTE REGARDING GROSS RECEIPTS BUT THE DISP UTE IS IN RESPECT OF CLAIM OF EXPENDITURE AND DISALLOWANCE OUT OF THE SA ME. 12. IN RESPECT OF MOVIE AMMA NANNA O TAMIL AMMAYE , IT IS SUBMITTED THAT THE BOGUS EXPENDITURE OF RS 39 LAKHS AS MENTIONED IN THE AFFIDAVIT ALSO INCLUDES AMOUNTS PAID TO ARTISTS , DANCERS, JUNIOR ARTISTS, MUSIC AND ORCHESTRA, PUBLICITY EXPENDITURE , SET EXPENDITURE ETC., THE PAYMENT OF RS 4 LAKHS TO THE MUSIC DIRECT OR HAS BEEN ACCEPTED BY THE MUSIC DIRECTOR. THE ASSESSEE ALSO STATES THA T THE MOVIE HAD POST PRODUCTION EXPENSES IN THE NATURE OF POST PUBLICITY , INTEREST ON VEHICLE LOANS, ADMINISTRATIVE EXPENSES, FUNCTION EXPENSES E TC. THE SAME WAS ESTIMATED AT RS 27.56 LAKHS IN THE AFFIDAVIT. BUT W HEN THE RETURN WAS FILED THE ACTUAL EXPENDITURE WAS TAKEN INTO CONSIDE RATION AND SUCH AMOUNT HAS COME TO RS 19.35 LAKHS AS AGAINST THE ES TIMATE OF RS 27.56 LAKHS. IF IT WAS THE INTENTION OF THE ASSESSEE TO BOOST EXPENDITURE HE WOULD HAVE CLAIMED THE TOTAL OF RS 27.56 LAKHS AGAI NST THE ACTUAL CLAIM OF RS.19.35 LAKHS. THE ASSESSEE STATES THAT THE EXP ENDITURE IS GENUINE AND CORRECT. IT MAY BE HIGHLY IMPOSSIBLE FOR ANY BU SINESS MAN TO HAVE 100% VOUCHERS AND SOME WOULD BE IN THE NATURE OF SE LF MADE VOUCHERS. THIS DOES NOT MEAN THAT THE EXPENDITURE IS TOTALLY BOGUS AND CALLS FOR TOTAL DISALLOWANCE. ITA NO.247 OF 2008, PETLA JAGANATH ALIAS POORI JAGANNATH, HYD . 6 13. IN RESPECT OF MOVIE SIVAMANI THE ASSESSEE SU BMITTED THAT THE DISALLOWANCE OF EXPENDITURE IS BASED TO A LARGE EXT ENT IN THE STATEMENT OF MR. CHAKRI, THE MUSIC DIRECTOR. THE ASSESSEE ALS O STATED THAT THE OBSERVATIONS OF THE ASSESSING OFFICER FOR DISALLOWA NCE OF RS 42.35 LAKHS OF POST PRODUCTION EXPENSES IS TO A LARGE EXTENT OU T OF TUNE WITH THE ACTUAL PICTURE. THE ASSESSING OFFICER HAS OBSERVED A) THAT THE VOUCHERS ARE NOT SUPPORTED BY BILLS B) THAT THE VOUCHERS ARE ROUND FIGURES C) THAT THE ARTISTES WILL NOT WAIT FOR PAYMENTS AFTER THE M OVIE IS RELEASED D) THAT THE PAYMENTS ARE MADE ON A SINGLE DAY AFTER THE REL EASE. 14. THE ASSESSEE SUBMITTED THAT IT IS NOT POSSIBLE TO HAVE BILLS FOR EACH AND EVERY VOUCHER. THE REPUTATION OF THE PROD UCER IS ONE THE CRITICAL FACTOR FOR DELAY IN PAYMENTS. SOME OF THE ARTISTS OR TECHNICIANS HOPING FOR FIGURE EMPLOYMENT ALSO DELAY TAKING PAYM ENTS FOR BUILDING GOODWILL WITH THE PRODUCERS. THE FACT THAT ALL TH E PAYMENTS WERE MADE ON A SINGLE DAY COULD MEAN THAT THE PRODUCER HAS RE CEIVED AMOUNTS FROM DISTRIBUTORS OR THE EXHIBITORS AFTER THE RELEA SE AND THE SAME WAS DISBURSED WITHOUT ANY DELAY ON A SINGLE DAY. 15. IN RESPECT OF MOVIE ANDHRAWALS, IT IS SUBMITT ED THAT BECAUSE THE PARTICULAR EXPENDITURE IS NOT COVERED UNDER TDS IS NO REASON FOR DISALLOWANCE. IT IS NOT POSSIBLE TO SUPPORT ALL EXP ENDITURE WITH BILLS AND EVIDENCES FOR WHICH SELF MADE VOUCHERS WERE PRODUCE D. 16. THE CIT(A) HELD AS UNDER: I HAVE CONSIDERED THE RELEVANT MATERIALS. THE OFFE R OF INCOME AND DISALLOWANCE OF EXPENDITURE VIS--VIS PROFIT AND LO SS ACCOUNT AS WELL AS THE CONTENTS OF THE AFFIDAVIT HAVE ALREADY BEEN DISCUSSED. NOW THE ADDITIONS ARE CONSIDERED MOVIE WISE AS UNDE R: IN THE CASE OF AMMA NANNA O TAMIL AMMAYE THE INCOM E ADMITTED BY THE ASSESSEE IN THE AFFIDAVIT IS RS 99 LAKHS, AFTER MAKING PROVISION FOR POST PRODUCTION EXPENSES OF RS 27.56 LAKHS. ITA NO.247 OF 2008, PETLA JAGANATH ALIAS POORI JAGANNATH, HYD . 7 HOWEVER IN THE PROFIT AND LOSS ACCOUNT SUCH POST P RODUCTION EXPENSES HAS BEEN CLAIMED ONLY FOR AN AMOUNT OF RS 19.35 LAKHS WHICH MEANS THE INCOME ESTIMATED IN THE AFFIDAVIT W OULD GO UP BY AN AMOUNT OF RS 8.21 LAKHS (RS 27.56 19.35), I.E. THE INCOME AS PER AFFIDAVIT COULD BE 107.21 LAKHS. HOWEVER, AS PE R THE P &L A/C AND RETURN FILED THE INCOME RETURNED FOR THE ABOVE MOVIE WAS ONLY RS. 68,20,443. AGAINST ADJUSTED AFFIDAVIT INCOME O F RS 107.21 LAKHS THE TOTAL INCOME ASSESSED FROM THIS MOVIE IS RS 126.56 LAKHS IE. THE DIFFERENCE OF RS 19,35,756/- WHICH RE PRESENTS THE POST PRODUCTION EXPENSES FOR WHICH PROVISION WAS MA DE IN THE AFFIDAVIT FOR A HIGHER AMOUNT OF RS 27.56 LAKHS. FROM THE ABOVE FACTS IT IS CLEAR THAT THE COMPUTATI ON OF INCOME AS MADE BY THE ASSESSING OFFICER IS BASED ON THE DECLARATION/AFFIDAVIT FILED BY THE ASSESSEE. WHILE ACCEPTING THE INCOME OFFERED BY THE ASSESSEE IN AFFIDAVIT, THE AS SESSING OFFICER HAS NOT ACCEPTED THE CLAIM OF EXPENDITURE IN ABSENC E OF PROPER EVIDENCES. THE ASSESSEE HAS EXPRESSED INABILITY TO PRODUCE ALL THE REQUIRED EVIDENCES. THE AFFIDAVIT WHICH IS SELF SE RVING DOCUMENT SHOULD HAVE BEEN BACKED BY EVIDENCES AS REQUIRED BY THE ASSESSING OFFICER. THOUGH THE ASSESSEE HAS SHOWN HI S SINCERITY AND BONAFIDES IN COMING OUT WITH ESTIMATES OF INCOM E AND FILED AN AFFIDAVIT, HE HAS SUBSEQUENTLY SHOWN HIS NON COOPER ATION BY NOT ADHERING TO THE DETAILS SET OUT IN THE AFFIDAVIT. AT THE SAME TIME IT IS ALSO NOT POSSIBLE TO HAVE BILLS AND VOUCHERS AND EVIDENCES FOR ALL KINDS OF EXPENSES IN THE BUSINESS OF CINEMA PRODUCT ION. AS AGAINST PROVISION OF RS 27.56 LAKHS MADE IN THE AFF IDAVIT THE ASSESSEE HAS CLAIMED ONLY AN AMOUNT OF RS 19,35,756 /- IN THE P&L A/C WHICH REFLECTS POSITIVELY ON THE ASSESSEE. SINCE EVERY CLAIM MADE BY THE ASSESSEE SHOULD BE CAPABLE OF JUS TIFICATION AND EVIDENCES PRODUCED WHEREVER NECESSARY, THE NATURE O F BUSINESS HAS TO BE KEPT IN MIND WHILE DISALLOWING EXPENSES I N ABSENCE OF BILLS AND VOUCHERS. THE INCOME BROUGHT TO TAX BY TH E ASSESSING ITA NO.247 OF 2008, PETLA JAGANATH ALIAS POORI JAGANNATH, HYD . 8 OFFICER OVER AND ABOVE THAT MENTIONED IN THE AFFIDA VIT CAN BE CONSIDERED TO BE THE AMOUNT OF RS 19,35,756/-. PAY MENTS TO MUSIC DIRECTOR AND MUSICIAN CANNOT BE DENIED EVEN I F NO VOUCHERS ARE PRODUCED OR QUANTUM OF PAYMENT NOT KNOWN. CONS IDERING THE FACTS OF THE CASE AND NATURE OF BUSINESS IT WILL ME ET ENDS OF JUSTICE IF AN AMOUNT OF RS 10 LAKHS IS DISALLOWED OUT OF RS 19,35,756/- ACCORDINGLY THE ASSESSEE IS ALLOWED RELIEF OF RS 9, 35,756/- IN RESPECT OF MOVIE AMMA NANNA O TAMIL AMMAYE. IN RESPECT OF MOVIE SIVAMANI AGAINST RS 85 LAKHS DE CLARED IN THE AFFIDAVIT THE ASSESSEE ADMITTED AN AMOUNT OF RS 50, 62,488/- IN THE RETURN FILED AS PER P&L ACCOUNT. THE ASSESSING OFFICER HAS ASSESSED THE INCOME FROM THIS MOVIE AT RS 1,48,75,4 52/- BY MAKING AN ADDITION OF RS.98,12,966/- IN THE AFFIDAV IT THE ASSESSEES OFFER INCLUDED AN AMOUNT OF RS 43 LAKHS OF POST PRODUCTION EXPENSES, WHICH IS PART OF POST PRODUCTI ON EXPENDITURE OF RS 64.39 LAKHS FOR WHICH NO PROPER BILLS WERE AV AILABLE AS ADMITTED BY THE ASSESSEE IN HIS STATEMENT DATED 1.3 .2004. AS PER THE SAID STATEMENT, OUT OF RS 64.39 LAKHS, THE EXPE NDITURE INFLATED IS ONLY RS 43 LAKHS AND BALANCE OF RS 21.39 LAKHS W AS CLAIMED AS GENUINE EXPENDITURE. THE ASSESSING OFFICER HAS DISA LLOWED THE ENTIRE AMOUNT OF RS 64,39,620/- POST PRODUCTION EXP ENDITURE SINCE NO PROPER VOUCHERS ARE AVAILABLE AND NO EVIDENCES W ERE PRODUCED INCLUDING RS 43 LAKHS ADMITTED AS BOGUS IN THE AFFI DAVIT. THE AMOUNT OF RS 33,73,346/- WHICH RELATES TO PERIO D 3.1.2004 TO 31.3.2004 HAS BEEN DISALLOWED DUE TO LACK OF EVIDEN CE AND VOUCHERS PRODUCED BY THE ASSESSEE. IN FACT THIS AMO UNT IS PART OF THE INCOME OFFERED IN THE AFFIDAVIT BUT SUBSEQUENTL Y NOT MATERIALISED IN THE RETURN FILED. THE ASSESSEE HAS ALREADY OFFERED THIS AMOUNT AND THE SUBSEQUENT RETRACTION IS NOT BA CKED BY EVIDENCES OR VOUCHERS. ITA NO.247 OF 2008, PETLA JAGANATH ALIAS POORI JAGANNATH, HYD . 9 FROM THE FACTS NARRATED ABOVE THE ONLY ADDITION MAD E BY THE ASSESSING OFFICER OVER AND ABOVE THE AMOUNT ACCEPTE D IN THE AFFIDAVIT IS TO THE EXTENT OF RS 21.39 LAKHS WHICH IS PART OF RS 64.39 LAKHS AS ALREADY DISCUSSED. THIS AMOUNT OF R S 21.39 LAKHS WAS CLAIMED AS GENUINE EXPENDITURE BUT NO EVIDENCES OR BILLS WERE PRODUCED IN SUPPORT. NO CLAIM COULD BE ACCEPTED UN LESS IT IS BACKED BY THE EVIDENCES AND OR JUSTIFIED IN THE CON TEXT OF NATURE OF BUSINESS. HOWEVER, IT MAY NOT BE POSSIBLE TO SECUR E BILLS VOUCHERS OR PRODUCE EVIDENCE FOR EACH TYPE OF EXPENDITURE PA RTICULARLY IN THE FILM PRODUCTION WHERE LOT OF CASH EXPENDITURE IS IN VOLVED. IN THE INSTANT CASE AS ALREADY DISCUSSED, THE ASSESSEE HAS TO CERTAIN EXTENT SHOWN HIS BONAFIDES BY FILING AFFIDAVIT THOU GH LATER FALTERED BY FILING RETURN SHOWING LOWER INCOME. IN THE AFFID AVIT ITSELF THE EXPENDITURE WAS CLAIMED AFTER WHICH INCOME WAS ESTI MATED. THE AFFIDAVIT IS THE BASIS FOR ARRIVING AT TOTAL INCOME BY THE ASSESSING OFFICER. FURTHER EXPENSES LIKE PAYMENTS TO MUSIC D IRECTOR OR MUSICIANS CANNOT BE DENIED EVEN IF THE ASSESSEE CAN NOT PRODUCE VOUCHERS BILLS OR AMOUNTS OF PAYMENTS ARE NOT KNOWN FOR SURE. IN VIEW OF THE SAME IN THE CONTEXT OF FACTS OF THE CAS E, NATURE OF BUSINESS, IT WILL MEET ENDS OF JUSTICE, IF OUT OF T HE SAID RS 21.39 LAKHS AN AMOUNT OF RS 10 LAKHS IS DISALLOWED ON EST IMATE. ACCORDINGLY THE APPELLANT IS ALLOWED RELIEF OF RS 1 1.39 LAKHS IN RESPECT OF FILM SIVAMANI. IN RESPECT OF MOVIE ANDHRAWALA THE AMOUNT OF RS 11 ,30,100/- HAS BEEN DISALLOWED IN ABSENCE OF EVIDENCES. THE A UTHORISED REPRESENTATIVE ALSO EXPRESSED INABILITY TO PRODUCE ANY EVIDENCES. IN THIS CASE, THE ASSESSEE HAS EARNED INCOME AS A D IRECTOR AND THERE COULD NOT BE MUCH EXPENDITURE MADE BY HIM DIR ECTLY. SINCE ASSESSEE HAS FAILED TO ESTABLISH THE EXPENDITURE CL AIMED, THE DISALLOWANCE OF EXPENDITURE BY THE ASSESSING OFFICE R IS CONFIRMED. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. ITA NO.247 OF 2008, PETLA JAGANATH ALIAS POORI JAGANNATH, HYD . 10 17. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US. 18. WE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIALS AVAILABLE ON RECORD. THE GRIEVANCE OF THE ASSESSEE IS DISALLOWA NCE OF RS 10 LAKHS IN RESPECT OF FILMS AMMA NANNA O TAMIL AMMAYE OUT OF EXPENDITURE CLAIMED OF RS. 19, 35, 756/-: DISALLOWANCE OF RS 10 LAKHS IN RESPECT OF FILM SIVAMANI OUT OF EXPENDITURE CLAIMED OF RS 21.39 LAKHS : IN RESPECT OF THE MOVIE ANDHRA WALA DISALLOWANCE OF THE ENTIRE EXPENDITURE CLAIMED OF RS 11,30,100/-. THE NATURE O F EXPENDITURE AND THE DIFFICULTY IN OBTAINING DOCUMENTARY EVIDENCE TO THE SATISFACTION HAS BEEN ARGUED AND HAS BEEN DISCUSSED IN THE ORDER OF THE CIT(A). 19. THE DIFFERENCE IN THE INCOME HAS ARISEN ON ACCO UNT OF THE DISALLOWANCE PRE AND POST PRODUCTION EXPENSES. TO T HE TUNE OF RS. 1,67,78,822/- OUT OF PRE AND POST PRODUCTION EXPENS ES FOR WANT OF PROPER DOCUMENTARY PROOF. THE ASSESSEE SUBMITTED T HAT IN THIS LINE OF BUSINESS IT IS DIFFICULT TO OBTAIN THIRD PARTY VOU CHERS FOR THESE TYPES OF EXPENDITURES. FINALLY IT WAS SUBMITTED THAT THE INC OME AS PER DECLARATION MAY BE ACCEPTED. WE HAVE HEARD BOTH SID ES. AS EXPLAINED BY THE ASSESSEE IN THEIR PARTICULAR LINE OF BUSINES S, IT IS DIFFICULT TO OBTAIN PROOF OF EXPENDITURE TO THE SATISFACTION. AT THE SAME TIME AN ELEMENT OF BOOSTING OF EXPENDITURE CANNOT ALSO BE R ULED OUT. IN THE CIRCUMSTANCES OF THE CASE WE CAN ONLY ESTIMATE THE EXPENDITURE IN MAKING THE FILMS. CONSIDERING THE ARGUMENTS OF THE PARTIES, WE FEEL THAT THE INCOME FROM THE THREE FILMS CAN BE TAKEN A T THE AMOUNTS DECLARED BY THE ASSESSEE. THUS THE PROFITS FROM `SI VAMANI SHALL BE TAKEN AT 85.00 LAKHS, THE INCOME IN RESPECT OF THE FILM ` AMMA NANNA O TAMIL AMMAYE SHALL BE TAKEN AS RS. 99.00 LAKHS A ND PROFIT FROM THE FILM `ANDHRAWALLA SHALL BE TAKEN AS PER RETURN AT RS. 102.44 LAKHS (AS AGAINST RS. 100.00 LAKHS AS PER DECLARATION), THUS THE PROFITS FROM THE THREE FILMS SHALL BE TAKEN AT RS. 286.44 LAKHS (BEF ORE MISCELLANEOUS INCOME AND DEPRECIATION ALLOWANCE) AS AGAINST RS. 221.27 LAKHS ITA NO.247 OF 2008, PETLA JAGANATH ALIAS POORI JAGANNATH, HYD . 11 RETURNED BY THE ASSESSEE AND RS. 388.61 ASSESSED BY THE AO AND THE AO SHALL RE-COMPUT THE TOTAL INCOME ON THE BASIS OF THE ABOVE DIRECTION. 20. IN THE RESULT THE ASSESSEES APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 3.2.20 12 SD/- SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER DATED THE 3RD FEBRUARY, 2012 COPY FORWARDED TO: 1. SRI PETLA JAGGANADH ALIA POORI JAGANNATH, FLAT NO.1 01, VISHNU MEADOWS, ROAD NO.3, BANJARA HILLS, HYDERABAD-500016 . 2. THE ACIT, CENTRAL CIRCLE -4, HYDERABAD 3. THE CIT(A)-I, HYDERABAD 4. THE CIT, HYDERABAD 5. THE DR, ITAT, HYDERABAD NP/