DCIT CEN CIR 1(3), MUMBAI V. PRIYANKA CHOPRA, MUMBAI

ITA 2523/MUM/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0725 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2018
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: H
• Next Hearing Date: 12-09-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 01-05-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Income from undisclosed sources; Search and seizure; Document seized; Documents seized
• Section: 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA, A M AND SHRI SANDEEP GOSAIN, JM ./ I.T.A. NO. 2523/MUM/2015 ( / ASSESSMENT YEAR: 2007 - 08 ) DY. CIT, CEN TRAL CIRCLE - 1(3), ROOM NO. 905, OLD CGO BUILDING ANNEX, M. K. ROAD, MUMBAI - 20 / VS. MS. PRIYANKA CHO P RA 705, 706 & 806, RAJ CLASSIC, B - WING, VERSOVA, MUMBAI - 400 061 ./ ./ PAN/GIR NO. ACXPC 1741 R ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI RAHUL RAMAN / RESPONDENT BY : SHRI NARESH KUMAR & SHRI YOGESH JOIJODE / DATE OF HEARING : 02.11.2017 / DATE OF PRONOUNCEMENT : 16.01 .2018 / O R D E R PER SHAMIM YAHYA , A. M.: THIS A PPEAL BY THE REVENUE IS DIRECTED AGAINST THE O RDER BY THE COMMISSIONER OF INCOME TAX (APPEALS) DATED 12.02.2015 AND PERTAINS TO THE A SSESSMENT YEAR 2007 - 08. 2. THE GROUNDS OF APPEAL READ AS UNDER: 2 ITA NO. 2523/MUM/2015 (A.Y. 2007 - 08) D Y. CIT VS. MS. PRIYANKA CHO P RA (IV) 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) IS JUSTIFIED IN DELETING THE ADDITION OF RS. 24.87 LACS BEING UNACCOUNTED INCOME RECEIVED FROM RED CHILLIES WITHOUT APPRECIATING THE FACT THAT THE ADDIT ION HAS BEEN MADE ON THE BASIS OF DOCUMENTS SEIZED DURING THE SEARCH FROM THE PREMISES OF PERSONAL SECRETARY OF THE ASSESSEE IN WHICH RECEIPT OF $ 240000 WAS RECORDED OUT OF WHICH THE ASSESSEE FURNISHED EXPLANATION AS TO HOW TRANSACTION OF $ 185930 ARE REC ORDED IN HER BOOKS OF ACCOUNTS BUT WAS UNABLE TO DISCHARGE HER ONUS OF EXPLAINING THE REMAINING TRANSACTION OF $ 54070? (V) 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) IS JUSTIFIED IN DELETING THE ADDITION OF R S. 1.45 LACS BEING UNACCOUNTED INCOME RECEIVED FROM LONDON SPEAKER BUREAU FOR ATTENDING EVENT NAMED GLOBAL LEADERSHIP FORUM WITHOUT APPRECIATING THE FACT THAT THE ADDITION HAS BEEN MADE ON THE BASIS OF DOCUMENTS SEIZED DURING THE SEARCH FROM THE PREMISES O F PERSONAL SECRETARY OF THE ASSESSEE IN WHICH RECEIPT OF $ 50000 WAS RECORDED OUT OF WHICH THE ASSESSEE FURNISHED EXPLANATION AS TO HOW TRANSACTION OF $ 25000 ARE RECORDED IN HER BOOKS OF ACCOUNTS BUT WAS UNABLE TO DISCHARGE HER ONUS OF EXPLAINING THE REMA INING TRANSACTION OF $ 25000? APROPOS GROUND NO. 1 : ADDITION OF RS.24.87 LACS ON ACCOUNT OF INCOME RECEIVED FROM RED CHILLIES . 3. IN THIS CASE, SEARCH AND SEIZURE ACTION U/S. 132 OF THE ACT WAS CONDUCTED ON 24. 0 1.2011. THE ASSESSEE IS A WELL KNOWN ACTR ESS OF INDIAN FILM INDUSTRIES. ON THIS ISSUE, THE ASSESSING OFFICER OBSERVED THAT AS PER ANNEXURE A - 3, PAGES 15 - 16 SEIZED DURING THE COURSE OF SURVEY, IT WAS FOUND THAT THE ASSESSEE HAS ENTERED INTO A CONTRACT AGREEMENT WITH RED CHILLIES FOR A PROFESSIONAL CONSIDERATION OF US $ 2,40,000/ - . IN THIS REGARD, THE ASSESSEE WAS ASKED TO SUBMIT THE DETAILS OF ACCOUNTABILITY AND RECEIPTS IN HER BOOKS OF ACCOUNT. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS SUBMITTED THE COPY OF LEDGER AND BANK STATEMENT OF H AVING RECEIVED ONLY US $ 1,85,930 AND WAS NOT ABLE TO EXPLAIN THE DIFFERENCE OF US $ 54,070 AND THAT THE 3 ITA NO. 2523/MUM/2015 (A.Y. 2007 - 08) D Y. CIT VS. MS. PRIYANKA CHO P RA ASSESSEE FURTHER SUBMITTED THAT THE DIFFERENCE IS INCLUDED IN THE UNIDENTIFIED PARTIES. HOWEVER, THE ASSESSING OFFICER NOTED THAT NO EVIDENCE WAS PROVID ED TH AT THE CONSIDERATION RECEIVED IS THE SAME AS THAT OF THE AGREEMENT ENTERED WITH RED CHILLIES. THEREFORE, THE ASSESSING OFFICER ADDED THE DIFFERENCE RECEIPTS OF RS.24,87,220/ - AND TREATED AS UNACCOUNTED INCOME OF THE ASSESSEE. 4. AGAINST THE ABOVE ORD ER, THE REVENUE APPEALED BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS). 5. CONSIDERING THE ASSESSEES SUBMISSION, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) NOTED THAT THIS ADDITION HAS BEEN MADE ONLY ON THE BASIS OF JOTTING ON LOOSE SHEETS SEIZED DURING THE SEARCH ACTION. THAT THE ASSESSING OFFICER HAS ALSO NOT BROUGHT ANYTHING ON RECORD TO SUBSTANTIATE SUCH ADDITION. THAT NO AGREEMENT WITH RED CHILLIES INTERNATIONAL LTD. WAS FOUND DURING SEARCH. THAT ONLY AN UNSIGNED PAYMENT SCHEDULE OF USD 2,30, 000 WAS FOUND FROM THE PREMISES OF THE MR. CHAND MISRA, THE ASSESSEES PERSONAL SECRETARY. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) OPINED THAT THE ASSESSING OFFICER HAS TO BRING DOCUMENTARY EVIDENCE TO SUBSTANTIATE THE EVIDENCE WHICH HAS BEEN MADE ON THE BASIS OF LOOSE PAPER SHEET WHICH IS FOUND ON THE PREMISES OF ANOTHER PERSON AND NOT FOUND ON THE PREMISES OF THE ASSESSEE. THAT NO ADDITION SHOULD BE MADE ON THE BASIS OF LOOSE SHEETS. HENCE, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HELD THAT THE A SSESSEES EXPLANATION IS ACCEPTABLE IN LIGHT OF THE ONBLE SUPREME COURT DECISION IN THE CASE OF CIT VS. KALYANASUNDARAM [2007] 294 ITR 49 4 ITA NO. 2523/MUM/2015 (A.Y. 2007 - 08) D Y. CIT VS. MS. PRIYANKA CHO P RA (SC) AND ITAT, MUMBAI BENCH DECISION IN THE CASE OF S P GOYAL VS. DCIT [2002] 82 ITD 85 (MUM). 6. AGAINST THE ABO VE ORDER, THE REVENUE IS IN APPEAL BEFORE US. 7. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. WE FIND THAT T HE ASSESSING OFFICER HAS NOTED THAT FROM THE LED GER ACCOUNTS AND BANK STATEMENT THAT THE ASSESSEE HAS SHOWN ONLY USD 1,85,930 AND HAS NO T BEEN ABLE TO SHOW THE DIFFERENCE OF USD 54 , 070. HOWEVER, THE ASSESSING OFFICER HAS NOTED THAT THE ASSESSEE HAS SUBMITTED THAT THE DIFFERENCE IS INCLUDED IN THE HEAD OF UNIDENTIFIED PARTIES. IN THIS REGARD, IT HAS BEEN SUBMITTED BY THE ASSESSEE THAT IT WA S DULY EXPLAINED BEFORE THE ASSESSING OFFICER THAT THE BALANCE OF US $54,070 CONSIST OF $4070 AS TAX AND $50,000 WAS UNADVERTENTLY INCLUDED IN THE HEAD OF UNIDENTIFIED PARTIES AND THE SAID FACT WAS SUBSTANTIATED BY GIVING THE LEDGER ACCOUNTS SUPPORTED BY R ECEIPTS IN BANK STATEMENTS. WE FURTHER NOTE THAT IN THE COPY OF THE LOOSE SHEET, WHERE NOTINGS FROM RED CHILLIES WAS THERE, WE FIND THAT THERE WERE ENTRIES OF USD 50,000 AND ALSO ENTRY FOR US $ 4070 WITH NARRATION PA TAX. 8. HOWEVER, THE ASSESSING OFFICER HAS REJECTED THIS CONTENTION ON THE GROUND THAT NO EVIDENCE HAS BEEN PROVIDED THAT THE CONSIDERATION RECEIVED IS THE SAME AS THAT OF THE AGREEMENT ENTERED WITH RED CHILLIES. HERE WE FIND THAT IT IS NOT THE CASE OF THE REVENUE, THE DIFFERENCE AMOUNT WHICH H AS BEEN EXPLAINED TO BE INCLUDED IN THE HEAD 5 ITA NO. 2523/MUM/2015 (A.Y. 2007 - 08) D Y. CIT VS. MS. PRIYANKA CHO P RA OF UNIDENTIFIED PARTIES IS OF ANY DIFFERENT AMOUNT. HE NCE, IF THE RECEIPT SHOWS U NIDENTIFIED PARTIES AND THE SAME IS EXACTLY AGREEING WITH THE DIFFERENCE BETWEEN THE RECEIPT SHOWN FROM RED CHILLIES AND IT S DIFFE RENCE FROM THE AGREEMENT, THE ASSESSEES EXPLANATION THAT THE SAME IS ACTUALLY AN AMOUNT RECEIVED FROM RED CHILLIES DESERVES TO BE ACCEPTED. HENCE, THE SUBMISSION OF THE ASSESSEE IS COGENT AND THE ADDITION IN THIS REGARD IS NOT JUSTIFIED. IN THIS REGARD, W E MAY MENTION THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) WHILE DELETING THE ADDITION HAS GIVEN IRRELEVANT REASONING. BE AS IT MAY, SINCE WE HAVE ALREADY FOUND THAT THE ADDITION IS NOT SUSTAINABLE IN THE HANDS OF THE ASSESSEE, WE UPHOLD THE REVERSAL OF THE ORDER OF THE ASSESSING OFFICER AND DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE. APROPOS GROUND NO. 2 : REGARDING DELETING THE ADDITION OF RS.11.45 LACS BEING UNACCOUNTED INCOME RECEIVED FROM LONDON SPEAKER BUREAU - GLOBAL LEADERSHIP FORUM 2006 9. ON THIS ISSUE, THE ASSESSING OFFICER NOTED THAT ON VERIFICATION OF ANNEXURE A - 7 OF PAGE NOS. 28 - 29 OF THE SEIZED DOCUMENTS , IT WAS NOTED THAT THE ASSESSEE HAS ENTERED INTO AN AGREEMENT WITH THE ONDON SPEAKER BUREAU TO ATTEND THE GLOBAL LEADERSHIP FORUM , 2006 FOR A PROFESSIONAL RECEIPTS OF US $ 50,000. HOWEVER, ON VERIFICATION OF THE DETAILS FILED IN THIS REGARD, THE ASSESSEE HAS OFFERED ONLY US $ 25,000 EQUAVALENT TO INDIAN RS.11,45,000/ - ONLY. THEREFORE, THE ASSESSING OFFICER HELD THAT THE DIFFERENCE 6 ITA NO. 2523/MUM/2015 (A.Y. 2007 - 08) D Y. CIT VS. MS. PRIYANKA CHO P RA A MOUNT OF US $ 25,000 EQUALENT TO INDIAN RS.11,45,000/ - IS TREATE D AS UNDISCLOSED INCOME FOR A.Y. 2007 - 08 AND IS TAXED ACCORDINGLY. 10. AGAINST THE ABOVE ORDER, THE ASSESSEE APPEALED BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS). 11. THE LD. COMMIS SIONER OF INCOME TAX (APPEALS) NOTED THAT THE ASSESSEE HAS SUBMITTED THAT SHE HAS RECE IVED ONLY US $25,000 FOR THE EVENT AND HAS ALSO OFFERED THE SAME FOR TAX. HE ALSO NOTED THE ASSESSEES SUBMISSION THAT NO AGREEMENT WAS FOUND DURING SEARCH. THE LD. COMMI SSIONER OF INCOME TAX (APPEALS) HELD THAT THE ADDITION BY THE ASSESSING OFFICER WAS BASED ON THE LOOSE S HEET FOUND DURING SEARCH AND ON THE SAME REASONING AND AS IN EA RLIER GROUND D EALT ABOVE S HE DELETED THE ADDITION. 12. AGAINST THE ABOVE ORDER, THE ASS ESSEE IS IN APPEAL BEFORE US. 13. WE HAVE HEARD BOTH THE LD. COUNSEL AND PERUSED THE RECORDS. WE FIND THAT IT IS THE CONTENTION OF THE ASSESSEE THAT THE LOOSE PAPER FOUND WAS A DRAFT UNSIGNED CONTRACT FOR ATTENDING THE EVENT NAMELY THE GLOBAL LEADERSHIP F ORUM 2006 FOR A CONSIDERATION OF US $ 50,000. HOWEVER, THE ASSESSEE HAS CONTENDED THAT SHE HAS RECEIVED ONLY US $ 25,000. IT IS THE FURTHER CONTENTION OF THE ASSESSEE THAT THE ASSESSEE IS FOLLOWING CASH SYSTEM OF ACCOUNTING AND UNRECEIVED AMOUNT CANNOT BE AD DED IN THE HANDS OF THE ASSESSEE. IN THIS REGARD WE NOTE THAT THE LOOSE PAPER FOUND IS AS UNDER: 7 ITA NO. 2523/MUM/2015 (A.Y. 2007 - 08) D Y. CIT VS. MS. PRIYANKA CHO P RA 14. FROM THE ABOVE, IT IS EVIDENT THAT IT IS THE DRAFT COPY OF THE LETTER SEEKING CONFIRMATION OF ENGAGEMENT. THE SIGNED COPY OF THE ASSESSEE WAS SUPPOSED TO BE SENT TO LONDON SPEAKER BUREAU. HENCE, PRESUMABLY IT IS THE DRAFT RECEIPT FROM LONDON 8 ITA NO. 2523/MUM/2015 (A.Y. 2007 - 08) D Y. CIT VS. MS. PRIYANKA CHO P RA SPEAKER BUREAU WHICH HAS BEEN FOUND. THERE WAS NO QUESTION OF REVENUE LAYING ITS HAND ON THE DOCUMENT SIGNED AND SENT BY THE ASSESSEE TO LONDON SPEAKER BUREAU. HENC E, THE CONTENTION THAT ONLY AN UNSIGNED AGREEMENT HAS BEEN FOUND IS TOTALLY UNSUSTAINABLE. HENCE, WHEN THE LETTER SEEKING CONFIRMA TION OF ENGAGEMENT SPECIFIES FEE S OF US $ 5 0 ,000/ - , THE ASSESSEES PLEA THAT AFTER THE ASSESSEE HAVING PERFORMED HER PART, SHE DID NOT RECEIVE US $ 25,000 IS NOT ACCEPTABLE, AS NO EVIDENCE IN THIS REGARD HAS BEEN PRODUCED BY THE ASSESSEE. IF AFTER THE PERFORMANCE AS PER THE ENGAGEMENT LETTER, THE ASSESSEE CLAIMS THAT SHE WAS NOT PAID THE FULL AMOUNT AND WAS PAID ONLY HALF THE AMO UNT, THE ONUS IS ON THE ASSESSEE TO PROVE THE SAME, WHEN COGENT DOCUMENT WAS FOUND. THE ASSESSEE HAS NOT PRODUCED ANY EVIDENCE OR ANY LETTER WHEREBY SHE HAS DEMANDED THE BALANCE AMOUNT TO BE PAID. IT IS QUITE UNBELIEVABLE THAT IN AN INTERNATIONAL PERFORMAN CE ENGAGEMENT, THE ASSESSEE WILL BE PAID ONLY HAL F THE AMOUNT AFTER THE PERFORMANCE AND SHE WILL NOT MAKE ANY PRESENTATION OR SUBMISSION FOR REALIZATION OF THE SAME. HENCE, IN OUR CONSIDERED OPINION THAT ADDITION IS BASED UPON COGENT MATERIAL AND THE ASSES SEE HAS NOT BEEN ABLE TO DISLODGE THE SAME. 15. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS DELETED THE ADDITION ON IRRELEVANT REASONING. THE ADDITION HAS NOT BEEN MADE ON JOTTING IN A LOOSE SHEET. RATHER, IT IS BASED UPON A FULL FLEDGED ENGAGEMENT LETTER, THE VERACITY OF WHICH HAS NOT BEEN DOUBTED. FURTHERMORE, THE CASE LAWS REFERRED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ARE IN CONTEXT OF DIFFERENT FACTS AND CIRCUMSTANCES NOT APPLICABLE HERE. 9 ITA NO. 2523/MUM/2015 (A.Y. 2007 - 08) D Y. CIT VS. MS. PRIYANKA CHO P RA ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) AND RESTORE THAT OF THE ASSESSING OFFICER. 16. IN THE RESULT, TH IS APPEAL BY THE REVENUE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16.01.2018 SD/ - SD/ - ( SANDEEP GOSAIN ) (S HAMIM YAHYA ) / J UDICIAL MEMBER / A CCOUNTANT MEMBER MUMBAI ; DATED : 16.01.2018 . . ./ ROSHANI , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI