PRIYANKA CHOPRA, MUMBAI V. DCIT CEN CIR 3, MUMBAI

ITA 2770/MUM/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0723 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: H
• Next Hearing Date: 12-09-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 11-05-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Gift; Depreciation; Search and seizure; Loose papers; Document seized; Principle of natural justice; Additional evidence; Retraction; Documents seized
• Section: 143(3); 153A; 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. 2770/MUM/2015 ( / ASSESSMENT YEAR: 2009 - 10 ) MS. PRIYANKA CHOPRA 705, 706 & 806, RAJ CLASSIC, B - WING, VERSOVA, MUMBAI - 400 061 / VS. DY. CIT, CENTRAL CIRCLE - (3), ROOM NO. 905, OLD CGO BUILDING ANNEX, M. K. ROAD, MUMBAI - 20 ./ ./ PAN/GIR NO. ACXPC 1741 R ( APPELLANT ) : ( RESPONDEN T ) / 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 ASSESSEE IS DIRECTED AGAINST THE O RDER BY THE COMMISSIONER OF INCOME TAX (APPEALS) DATED 12.02.2015 AND PERTAINS TO THE A SSESSMENT YEAR 2009 - 10. 2. IN THIS CASE, SEARCH AND SEIZURE ACTION U/S. 132 OF THE ACT WAS CONDUCTED ON 24.01.2011. THE ASSESSEE IS A WELL KNOWN ACTRESS OF INDIAN FILM INDUSTRIES. 2 ITA NO. 2770/MUM/2015 MS. PRIYANKA CHOPRA 3. THE FIRST ISSUE RAISED IS THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE ADDITION OF RS.10 LACS MADE BY THE ASSESSING OFFICER BE ING AMOUNT PAID FOR PURCHASE OF PROPERTY IN RESPECT OF CASH PAYMENT MADE FOR PROPERTY AT BANDRA , B ASED ON THE STATEMENT RECORDED ON THE DATE OF SEARCH OF SMT. MADHU CHOPRA, THE ASSESSEES MOTHER AS WELL AS THE STATEMENT OF THE ASSESSEE. 4. ON THIS ISSUE, THE ASSESSING OFFICER NOTED THAT AT THE TIME OF SEARCH , THE STATEMENT RECORDED IN RESPONSE TO Q. NO. 18 ON 25.01.2011, SMT. MADHU CHOPRA HAD ADMITTED THAT SHE HAD SPENT RS.10 LACS IN THE PURCHASE OF PROPERTY TO CLEAR ENCUMBRANCES ON THE PROPERTY AS THE SE LLER BANK IS ONLY A POWER OF ATTORNEY HOLDER AND THE ACTUAL OWNER WAS MR. SHAIK ISMAIL, PROPRIETOR OF M /S. FERDINAND BUILDERS & DEVELOPERS. HOWEVER, IN THE RETRACTION STATEMENT, SMT. MADHU CHOPRA STATED THAT THE SAID PROPERTY WAS PURCHASED FROM MEMON CO - OP . BANK LTD., AND FOR PURCHASE OF SUCH PROPERTY THEY HAVE WITHH E LD RS.10 LAKHS FOR NON - CLEARANCE OF CERTAIN TERMS OF AGREEMENT. IT WA S SUBMITTED THAT SUCH OUTSTANDING PAYMENT IS STILL SHOWN AS LIABILITY AS ON 31.03.2010. HOWEVER, THE ASSESSING OFFICER WAS N OT SATISFIED. HE CONCLUDED THAT THE ASSESSEE HAS MADE THE CASH PAYMENT TO THE TUNE OF RS.10 LACS FOR THE PURCHASE OF BANDRA PROPERTY OUT OF THE BOOKS. HENCE, HE ADDED THE SAME. 5 . BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS), THE ASSESSEE MADE THE FOLLOWING SUBMISSIONS: 3 ITA NO. 2770/MUM/2015 MS. PRIYANKA CHOPRA STATEMENT RECORDED ON THE DATE OF SEARCH OF MRS. MADHU CHOPRA AS WELL AS STATEMENT OF APPELLANT IT IS HOWEVER SUBMITTED T H AT NONE OF THE SEIZED PAPERS SHOWS SUCH ALLEGED PAYMENTS TO THE EXTENT OF RS.L0,00,000 / - WHICH HAS BEEN ESTIMAT ED ON THE DATE OF SEARCH BY MAKING ASSUMPTIONS AND PRESUMPTIONS. IT IS SUBMITTED THAT THE LD AO WAS EXPLAINED THAT SAID PROPERTY WAS PURCHASED BY APPELLANT FROM MEMON CO - OP. BANK LTD. AND FOR PURCHASE OF PROPERTY, APPELLANT HAS WITHHOLD RS.10 LAKHS FOR NO N - CLEARANCE OF CERTAIN TERMS OF AGREEMENT. IT IS FURTHER SUBMITTED THAT NEITHER EVIDENCES WHATSOEVER HAVE BEEN FOUND BY THE INCOME TAX SEARCH TEAM NOR ANY LOOSE PAPERS HAVE BEEN FOUND DURING SEARCH PROCEEDINGS WHICH INDICATES THAT YOUR APPELLANT HAS MADE P AYMENT O F RS.10,00,000/ - OUT OF BOOKS AND THE SAID BANK . HAS ACCEPTED ANY CASH PAYMENT AND THEREFORE ASSUMPTION AND PRESUMPTIONS OF SUCH ALLEGED PAYMENT AS UNDISCLOSED INCOME OF RS.10,00,000/ - IS UNREASONABLE AND UNLAWFUL. IT IS SUBMITTED THAT LD AO HAS ERRED IN STATING THAT APPELLANT HAS NOT AB LE TO SUBSTANTIVELY PROVE THE NO CASH PAYMENTS HAVE BEEN MADE HOWEVER ALL OF THE ABOVE FACTS WERE CLEARLY MENTIONED IN SUBMISSIONS FILED BEFORE THE LEARNED ASSESSING OFFICER. IT IS THEREFORE SUBMITTED THAT SUCH ADD ITION HAS BEEN MADE BY THE LEARNED ASSESSING OFFICER WITHOUT CONSIDERING THE SUBMISSIONS MADE DURING THE ASSESSMENT PROCEEDINGS AND HENCE THE SAME SHOULD BE DELETED. WITHOUT PREJUDICE, WE WOULD LIKE TO STATE THAT APPELLANT FOLLOWS CASH SYSTEM OF ACCOUNTIN G AND THEREFORE SUCH PAYMENTS CAN BE TAXED ONLY ON THE BASIS OF EVIDENCE OF PAYMENT OF SUCH CASH. IT IS FURTHER SUBMITTED THAT NO EVIDENCE REGARDING PAYMENT OF CASH HAS BEEN FOUND BY SEARCH PARTY AS WELL AS BY THE LD. AO HENCE, ADDING OF SAME ON ASSUMPTION S AND PRESUMPTIONS IS AGAINST BASIC OF PRINCIPLES OF LAW AND AGAINST NATURAL JUSTICE. IN VIEW OF THE ABOVE FACTS, SUCH ADDITION SHOULD BE DELETED . 6 . WHEN THE LD. COMMISSIONER OF INCOME TAX (APPEALS) REMANDED THE MATTER TO THE ASSESSING OFFICER, THE ASSES SING OFFICER STATED THA T THE ABOVE TO BE AN AFTERTHOUGHT . THE LD. COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMED THE ADDITION BY OBSERVING AS UNDER: I HAVE CAREFULLY PERUSED THE REPORT OF THE AO. FOR THE SAKE OF NATURAL JUSTICE THE ADDITIONAL EVIDENCE IS A CCEPTED. HOWEVER IT IS SEEN THAT AN ADDITION OF 4 ITA NO. 2770/MUM/2015 MS. PRIYANKA CHOPRA RS.10,00,000/ - HAS BEEN MADE AS IT WAS OUTSTANDING IN THE BOOKS OF THE APPELLANT AS ON 31.03.2010. NOW, DURING THE APPELLATE STAGE, EVEN THOUGH THE APPELLANT HAS SUBMITTED THE NOC DATED 01.06.2006 NO EVIDENCE WHATSOEVER HAS BEEN PRODUCED BY HER AS EVIDENCE OF PAYMENT OF THE OUTSTANDING BALANCE. WITHOUT DOCUMENTARY EVIDENCE THE CLAIM OF THE APPELLANT CANNOT BE ACCEPTED. THEREFORE/1 CONFIRM THE STAND OF THE AO AND DISMISSED THIS GROUND OF APPEAL. 7 . AGAINST THE ABOVE ORDER, THE ASSESSEE IS IN APPEAL BEFORE US. 8 . WE HAVE HEARD THE COUNSELS AND PERUSED THE RECORDS. IN THIS REGARD, WE MAY GAINFULLY REFER TO THE STATEMENTS RECORDED ON OATH U/S. 132(4) BY SMT. MADHU CHOPRA ON THE DATE OF SEARCH. Q. 10 PLEASE REFER TO YOUR STATEMENTS U/S. 232(4) OF THE IT. ACT, DATED 25.1.2011 RECORDED AT YOUR RESIDENCE. YOU ARE REQUESTED TO GO THROUGH YOUR REPLY TO Q. NO. 4 & 5 OF THE STATEMENT. PLEASE CONFIRM AND ELABORATE THE SAME? ANS: - I HAVE PERUSED THE SAID STATEMENT AND GON E THROUGH MY ANSWERS TO ABOVE SAID QUESTIONS. I HAVE ALREADY ADMITTED THAT PAYMENTS RECEIVED BY MY DAUGHTER MS, PRIYANKA CHOPRA FOR THE PERFORMANCES IN MARRIAGES AND SOME MINOR APPEARANCES SUCH AS CUTTING OF RIBBONS ETC. IS RECEIVED PARTLY IN CASH. I AGAIN CONFIRM THE SAME AND ALSO CONFIRM ITS APPLICATIONS IN MAKING ON MONEY PAYMENTS OF PURCHASE OF VARIOUS PROPERTIES AT SAVANTWADI, COMMERCIAL UNIT AT LOKHANDWALA PURCHASE OF FLAT NO. 70S, 706 & 806 AND AT PARKING IN RAJ CLASSIC, CLINIC BY THE NAME STUDIO AES THETIQUE, BANDRA PROPERTY AND MHADA FLAT AT FOUR BUNGLOWS AND RENOVATION OF FLATS AT RAJ CLASSIC AND NAV KARAN . Q. 18. PLEASE REFER TO YOUR ANSWER TO QUESTION NO 10 WHERE IN YOU HAVE MENTIONED THAT THE CASH GENERATED WAS ALSO USED FOR MAKING ON MONEY PAYM ENTS FOR THE PURCHASE OF BANDRA PROPERT Y, MHADA AND STUDIO AESTHETIQUE . PLEASE SUBSTANTIATE AND CLARIFY THE SAME? ANS . I ADMIT THAT 1 HAD TO MAKE CASH PAYMENTS FOR THE PURCHASE OF ABOVE SAID PROPERTIES, I ADMIT THAT I HAVE PAID AN AMOUNT OF RS 10 LACS ON MONEY IN CASH IN THE PROPERTY PURCHASED AT BANDRAFMON DESIRE) AND RS 5 LACS AS ON MONEY PAYMENT FOR PURCHASE OF MHADA PROPERTY AT FOUR BUNGLOWS DURING THE F.Y.2008 - 09 .FURTHER I ALSO ADMIT THAT I HAD TO PAY RS 70 LACS AS CASH COMPONENT FOR THE PURCHASE OF OUR CLINIC STUDIO AESTHETIQUE AT JVPD DURING FY 2007 - 08. THIS AMOUNT OF RS 70 LACS WAS PARTLY FINANCED BY WITHDRAWING 5 ITA NO. 2770/MUM/2015 MS. PRIYANKA CHOPRA CASH OF RS 20 LACS FROM MY DAUGHTERS ACCOUNT AND THE BALANCE OF RS 50 LACS WAS PAID OUT OF CASH GENERATED AS E XP LAINED EARLIER. Q. 19 DO YOU WANT TO STATE ANYTHING ELSE? YES, I ADMIT THAT BASED ON THE ABOVE SEIZED PAPERS AND THE ANSWERS TO THE Q NOS 11 TO 17, I OFFER FOLLOWING UNDISCLOSED INCOMES, WHICH HAD ACCRUED TO ME AND PRIYANKA CHOPRA THROUGH VARIOUS EVENTS, SHOWS AND SALE OFJLAT S IN THE RELEVANT FINANCIAL YEARS AS MENTIONED ABOVE. THE APPLICATION OF THIS CASH GENERATED BY THE ABOVE ME NTIONED ACTIVITIES ARE AS UNDER: F.7 DESCRIPTION AMOUNT (RS) 2005 - 06 CASH PAYMENT IN BVERSHINE COSMIC 15 LACS 2006 - 07 CASH PAYMENT IN R AJ CLASSIC 35 LACS 2007 - 08 CASH EXPENDITURE FOR RENOVATION OF NAVKARAN APT. 901 25 LACS 2007 - 08 CASH PAYMENT FOR PURCHASE OF STUDIO AESTHETIQUE 50 LACS 2008 - 09 CASH PAYMENTS FOR PROPERTY AT BANDRA & MHADA 15 LACS 2010 - 11 CASH PAYMENTS MADE FOR TH E COMMERCIAL UNIT 3.35 CRORES 2010 - 11 CASH PAYMENTS MADE FOR THE LAND IN SAVANTWADI 1.00 CRORE FURTHER, IN ORDER TO MAKE PEACE WITH THE DEPARTMENT AND CONSIDERING THE OTHER ENTRIES IN THE VARIOUS SEIZED DOCUMENTS AND ANY OTHER ISSUES THAT MAY SPRUNG UP D URING THE COURSE OF INVESTIGATION, I FURTHER OFFERED RS. 30 LACS FOR THE F.Y. 2010 - 11 TO COVER UP ANY SUCH DISCREPANCIES. I ALSO PROMISE TO PAY THE TAXES ON THE SAME IN DUE COURSE . 9 . T HE ASSESSEE ON OATH U/S. 132(4) ON THE SAME DAY CONFIRMED AS UNDER: Q. 27 IN CONTINUATION OF YOUR STATEMENT U/S. 132(4) OF INCOME TAX ACT, 1961, YOU ARE HANDED OVER THE STATEMENT U/S. 132(4) OF THE I. T. ACT, 1961 GIVEN BY OUR MOTHER, MRS. MADHU CHOPRA AT YOUR OFFICE PREMISE AT 403, NAVKARAN BUILDING, LKHANDWALA, MUMBAI. Y OU ARE REQUESTED TO GO THROUGH THE SAME. ANS: I HAVE GONE THROUGH THE STATEMENT. AS PER THE STATEMENT MY MOTHER HAS ADMITTED THAT SHE HAS BEEN RECEIVING CASH PAYMENTS ON MY BEHALF FOR ME MAKING THE APPEARANCE AT MARRIAGE FUNCTIONS AND ALSO AT MINOR APPEAR ANCES SUCH AS CUTTING OF RIBBON ETC. MY MOTHER HAS ALSO ADMITTED THAT THIS CASH ALONG WITH SOME OTHER CASH HAS BEEN USED FOR MAKING CASH PAYMENTS FOR PURCHASE AT VARIOUS PROPERTIES AND ALSO FOR MAKING VARIOUS EXPENDITURES. THE DETAILS OF SUCH PAYMENTS AND EXPENSES ARE AS FOLLOWS: - 6 ITA NO. 2770/MUM/2015 MS. PRIYANKA CHOPRA F.Y. 2005 - 06 AMOUNT EVERSHINE COSMIC 15 LAKHS F. Y. 2006 - 07 RAJ CLASSIC PLUS PARKING 35 LAKHS F.Y. 2007 - 08 RENNOVATION OFNAVKARAN BUILDING 75 LAKHS AND CLINIC AESTHETIQUE PURCHASE (25 LAKHS + 50 LAKHS) F. Y. 2008 - 09 BANDRA & MHADA PROPERTY 25 LAKHS F.Y. 2010 - 11 COMMERCIAL UNIT 3 . 35 CRORES SAWANTWADI LAND 1.00 CRORE GENERAL ISSUES 30 LAKHS THUS, MY MOTHER HAS ADMITTED THAT TOTAL CASH PAYMENT AT RS.6.05 CRORES HAS BEEN MAD E FOR PURCHASE AT VARIOUS PROPERTIES AND VARIOUS RENOVATION WORKS. I HAVE ALREADY STATED THAT ALL MY FINANCIAL TRANSACTIONS ARE LOOKED AFTER BY MY MOTHER, MRS. MADHU CHOPRA AND SINCE SHE HAS ADMITTED THAT THE ABOVE MENTIONED PAYMENTS ARE UNACCOUNTED, I STA TE THAT THE SAME IS CORRECT AND I AGREE AND ABIDE BY THE SAME AS MY MOTHER IS FULLY AWARE AND COMPETENT TO KNOW EVERYTHING RELATED TO MY FINANCE,' 1 0 . HOWEVER, SUBSEQUENTLY, SMT. MADHU CHOPRA STATED THAT THE PROPERTY WAS PURCHASED FROM MEMON CO - OP. BANK L TD. AND RS.10 LACS WAS WITHHELD FOR NON CLEARANCE OF CERTAIN AGREEMENT AND IT WAS SUBMITTED THAT SUCH PAYMENTS WERE OUTSTANDING ON 31.3.2010. O N C AREFUL CONSIDERATION , WE FIND THAT WHEN THE ASSESSEE AND HER MOTHER WERE CONFRONTED WITH THE INCRIMINATING DOC UMENT FOUND DURING SEARCH, THEY HAVE ACCEPTED CASH PAYMENT FOR THE BANDRA PROPERTY. IN THE STATEMENT, IT WAS SUBMITTED BY SMT. MADHU CHOPRA THAT SHE HAS SPENT RS.10 LACS IN PURCHASE OF THE PROPERTY TO CLEAR ENCUMBRANCES ON THE PROPERTY, AS THE BANK IS ONLY A PAO HOLDER AND THE ACTUAL OWNER WAS MR. SHAIK ISMAIL, PROPRIETOR OF M /S. FERDINAND BUILDERS & 7 ITA NO. 2770/MUM/2015 MS. PRIYANKA CHOPRA DEVELOPERS. HENCE, IT IS CLEAR THAT THE AMOUNT WAS PAID IN CASH TO CLEAR ENCUMBRANCES. IN SUCH CIRCUMSTANCES, IF THE ASSESSEE STATES THAT IT HAS WITHH E LD RS.10 LACS OUT OF PAYMENT DUE TO THE BANK, IT ONLY GOES TO FURTHER CONFIRM THE PROPOSITION THAT THE CASH WAS PAID TO CLEAR THE ENCUMBRANCES AND RS.1 0 LAC OUT OF THAT WAS WITHHE LD FROM THE PAYMENT DUE TO THE BANK. HENCE, THIS EVIDENCE ONLY SUPPORTS THE CASE OF T HE REVENUE AND THAT THE INCRIMINATING MATERIAL AND STATEMENT OF OATH BY THE ASSESSEE AND HER MOTHER THAT RS.10 LACS IN CASH HAS BEEN PAID TO CLEAR ENCUMBRANCES IN ACQUISITION OF THE PROPERTY AT BANDRA. FURTHERMORE, WE NOTE THAT THERE IS NO RETRACTION WHATS OEVER FROM THE ASSESSEE. ACCORDINGLY , WE DO NOT FIND ANY INFIRMITY IN T H E ORDER OF THE AUTHORITIES BLOW AND, HENCE, WE UPHOLD THE SAME. 11. T HE ASSESSEE HAS RAISED THE FOLLOWING ADDITIONAL GROUND IN THIS REGARD WHICH READS AS UNDER: 1 1 . ADDITIONA L GROUND NO 1: - THE ADDITION OF RS 10,00,000 MADE IN THE ASSESSMENT ORDER PASSED U/S 143(3) R.W. SEC 153A FOR THE ASSESSMENT YEAR 2009 - 10 IN THE CASE OF THE APPELLANT ON ACCOUNT ALLEGED INVESTMENT IN THE PROPERTY AT BANDRA IS BAD - IN - LAW BECAUSE THE ADDITI ON IS NOT BASED ON ANY DOCUMENT OR VALUABLE ASSET BELONGING TO THE APPELLANT SEIZED U/S 132 . 12. WE FIND THAT IN THIS ADDITIONAL GROUND, THE ASSESSEE IS ALLEGING THAT THE ADDITION HAS BEEN MADE WITHOUT ANY DOCUMENT OR VALUABLE ASSET FOUND DURING SEARCH. AS WE HAVE ALREADY DISCUSSED IN DETAIL HEREINABOVE THAT THIS ADDITION IS BASED UPON THE INCRIMINATING MATERIAL FOUND DURING SEARCH PURSUANT TO WHICH THE ASSESSEES MOTHER SMT. MADHU CHOPRA AND THE ASSESSEE HERSELF GAVE A STATEMENTS ACCEPTING THE INVESTMENT OF RS.10 LACS OUT OF BOOKS IN CLEARING THE SAID PROPERTY TO CLEAR 8 ITA NO. 2770/MUM/2015 MS. PRIYANKA CHOPRA ENCUMBRANCES. HENCE, WE DO NOT FIND ANY MERIT WHATSOEVER IN THE ADDITIONAL GROUND. HENCE, THE SAME IS DISMISSED. 13. ANOTHER GROUND RAISED BY THE ASSESSEE READS AS UNDER: ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE HONBLE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE ADDITION OF RS.17,06,534/ - MADE BY THE LD. AO, BEING ALLEGED GIFT IN THE FORM OF JEWELLERY FROM M/S. RED CHILLIES ENTERTAINMENT PVT. LTD. AS PER B ILL OF M/S. KUSHAL EXPORTS DATED 17.12.2008 FOR CONTRIBUTION IN THE FILM BILLUU BARBAR. IT IS SUBMITTED THAT SUCH ADDITION IS MADE MERELY AS THE SAID GIFT WAS SHOWN AS EXPENDITURE IN THE BOOKS OF M/S. RED CHILLIES ENTERTAINMENT PVT. LTD. 14 . ON THIS IS SUE, THE ASSESSING OFFICER MADE ADDITION BY OBSERVING AS UNDER: INFORMATION WAS RECEIVED FROM ACIT CENTRAL CIRCLE 29, MUMBAI THAT THE ASSESSEE HAD RECEIVED GIFT IN THE FORM OF JEWELLERY WORTH RS.17,06,534/ - FROM M/S. RED CHILLIES ENTERTAINMENT PVT. LTD., AS PER THE BILL FROM M/S. KUSHAL EXPORTS DATED 17.12.2008 FOR CONTRIB UTION IN THE FILM 'BILLU BARBAR . THE SAID GIFT WAS SHOWN AS M/S.RED CHILLIES ENTERTAINMENT PVT LTD., IN THEIR BOOKS FOR A.Y.2009 - 10. HOWEVER, ON VERIFICATION OF BOOKS OF THE ASSESSEE, T HE ASSESSEE HAS NOT DISCL OSED ANY SUCH INCOME IN HER BOOKS OF ACCOUNT. FURTHER, THE DOPOR COMPANY IS AN ARTIFICIAL PERSON AND THEREFORE DOES NOT HAVE ANY EMOTIONAL FEELING OF LOVE AND AFFECTION WHICH A THE CARDINAL FACTORS FOR TREATING ANY TRANSACTION AS G IFT. SO, THERE IS NOT EVEN A REMOTE POSSIBILITY TO CONSIDER THIS TRANSACTION AS GIFT. THEREFORE, DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE WAS ASKED TO SHOW CAUSE WHY THE SAME SHOULD NOT BE CONSIDERED AS PROFESSIONAL FEES PAID IN LIEU OF THE PROFESSIONAL WORK RENDERED. THE ASSESSEE HAS NOT GIVEN ANY EXPLANATION IN THIS REGARD. THEREFORE, THE AMOUNT OF RS.17,06,534/ - RECEIVED FROM M /S. RED CHILLIES ENTERTAINMENT PVT. LTD., IS TREATED AS PROFESSIONAL RECEIPTS FOR THE YEAR UNDER CONSIDERATION A ND IS TAXED ACCORDINGLY . 1 5 . THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS CONFIRMED THE ADDITION BY HOLDING AS UNDER: 9 ITA NO. 2770/MUM/2015 MS. PRIYANKA CHOPRA 7.1 I HAVE CAREFULLY PERUSED BOTH THE ASSESSMENT ORDER AND APPELLANTS SUBMISSION. THE ADDITION OF RS.17,06,534/ - HAS BEEN MADE CORR ECTLY BY THE A.O. ON THE BASIS OF A GENUINE SEIZED DOCUMENT WHICH CONTAINS ALL DETAILS OF THE GIFT IN THE FORM OF JEWELLERY. THE SAID GIFT HAS ALSO BEEN SHOWN AS EXPENDITURE INCURRED IN THE BOOKS OF THE DONOR I.E. M/S. RED CHILLIES ENTERTAINMENT PVT. LTD. IT HAS BEEN CORRECTLY ADDED BY THE A.O. AS GIFT RECEIVED BY THE APPELLANT FOR HER CONTRIBUTION IN THE FILM BILLU BARBER. 16. AGAINST THE ABOVE ORDER, THE ASSESSEE IS IN APPEAL BEFORE US. 17 . FURTHERMORE, THE ASSESSEE HAS ALSO RAISED AN ADDITIONAL GROUN D IN THIS REGARD WHICH READS AS UNDER: ADDITIONAL GROUND NO 2 : THE ADDITION OF RS 17,06,534 MADE IN THE ASSESSMENT ORDER PASSED U/S 143(3) R.W.SEC 153A FOR THE ASSESSMENT YEAR 2009 - 10 IN THE CASE OF THE APPELLANT ON ACCOUNT ALLEGED GIFT OF JEWELLERY FROM R ED CHILLIES IS BAD - IN - LAW BECAUSE THE ADDITION IS NOT BASED ON ANY DOCUMENT OR VALUABLE ASSET BELONGING TO THE APPELLANT SEIZED U/S 132 . THE DOCUMENTS RELIED UPON IN THE ASSESSMENT ORDER WERE IMPOUNDED DURING THE SURVEY ACTION U/S 133A. 18 . UPON CAREFUL CONSIDERATION, WE FIND THAT THE ADDITIONAL GROUND IS A LEGAL ISSUE AND GOES TO THE ROOT OF THE MATTER. HENCE, ON THE ANNUAL OF HONBLE APEX COURT DECISION IN THE CASE OF NTPC , W E ACCEPT THE SAME. WE FIND THAT IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS NOT MENTIONED THAT THIS ADDITION IS BASED UPON ANY INCRIMINATING MATERIAL FOUND ON SEARCH. NOW IT IS THE SETTLED LAW THAT THE HON'BLE JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF CIT VS. CONTINENTAL WAREHOUSING CORPORATION (NHAVA SHEVA) LTD. [2015 ] 58 TAXMANN.COM 78 (BOM), ORDER DATED 21.04.2015 THAT DEHORSE ANY SEIZED MATERIAL/INCRIMINATING MATERIAL FOUND DURING SEARCH, ADDITION IN THE CASE OF ABATED ASSESSMENTS U/S. 153A IS NOT SUSTAINABLE. SINCE ALL THE FACTS RELATING TO ADJUDICATION OF THIS ISS UE ARE NOT ON RECORD AND THE LD. 10 ITA NO. 2770/MUM/2015 MS. PRIYANKA CHOPRA COMMISSIONER OF INCOME TAX (APPEALS) HAS OBSERVED THAT THE ADDITION IS BASED UPON SEIZED MATERIAL, WE REMIT THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL CONSIDER THIS ISSUE IN LIGHT OF THE FA CTUAL RECORDS AND DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT AS ABOVE. 19 . ANOTHER ISSUE RAISED IS THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE ADDITION MADE BY THE ASSESSING OFFICER OF RS.14 LACS BEING ALLEGED NOTIONA L RENT FOR PENTHOUSE AT FLAT NO. 901 AND 904 OF NAVKARAN BUILDING. 20 . THE ASSESSEE HAS FURTHER RAISED ADDITIONAL GROUND WHICH READS AS UNDER: ADDITIONAL GROUND NO 3: - THE ADDITION OF RS 14,00,000 MADE IN THE ASSESSMENT ORDER PASSED U/S 143(3) R.W.SEC 1 53A FOR THE ASSESSMENT YEAR 2009 - 10 IN THE CASE OF THE APPELLANT AS INCOME FROM HOUSE PROPERTY FROM FLAT NO. 901 & 904 NAVKARAN APPTS IS BAD - IN - LAW BECAUSE THE ADDITION IS NOT BASED ON ANY DOCUMENT OR VALUABLE ASSET BELONGING TO THE APPELLANT SEIZED U/S. 1 32. 21 . WE FIND THAT IDENTICAL ISSUE WAS DEALT BY US IN THE ASSESSMENT YEAR 2008 - 09 IN ITA NO. 2769/MUM/2015) . IN THIS CASE, WE HAD HELD AS UNDER: APROPOS ADDITION OF RS.14 LACS ON ACCOUNT OF NOTIONAL RENT : 22. IN THIS REGARD, THE ASSESSEE HAS ALSO RAISE D ADDITIONAL GROUND WHICH READ AS UNDER: ADDITIONAL GROUND NO 3: - THE ADDITION OF RS 14,00,000 MADE IN THE ASSESSMENT ORDER PASSED U/S 143(3) R.W.SEC 153A FOR THE ASSESSMENT YEAR 2008 - 09 IN THE CASE OF THE APPELLANT AS INCOME FROM HOUSE PROPERTY FROM FLAT NO 901 & 904 NAVKARAN APPTS IS BAD - IN - LAW BECAUSE THE ADDITION IS NOT BASED ON ANY DOCUMENT OR VALUABLE ASSET BELONGING TO THE APPELLANT SEIZED U/S 132 . IT MAY BE MENTIONED THAT THESE ARE PURELY LEGAL GROUNDS. ALL THE FACTS NECESSARY TO DECIDE THE ADDITION AL GROUND OF APPEAL ARE ALREADY ON RECORD AND NO NEW EVIDENCE IS REQUIRED TO BE BROUGHT ON RECORD. 11 ITA NO. 2770/MUM/2015 MS. PRIYANKA CHOPRA 23 . ON THIS ISSUE, THE ASSESSING OFFICER MADE THE ADDITION BY OBSERVING AS UNDER: IN THE RETURN OF WEALTH FILED, THE ASSESSEE HAD CLAIMED THE PENTHOUSE AT 9 TH FLOOR IN NAVKARAN APARTMENTS AS EXEMPT AS AN OFFICE, BEING USED FOR THE BUSINESS PURPOSE. HOWEVER, DURING THE COURSE OF SEARCH, IT WAS NOTICED THAT THE FLAT NO.403 WAS USED AS OFFICE RATHER THAN 901. IN THIS REGARD, STATEMENT ON OATH OF ONE OF THE ASSES SEE'S EMPLOYEE MS. DEEPIKA PRAKASH W AS RECORDED U/S.132(4) OF THE I. T . ACT ON 24 - 01 - 2011, WHEREIN SHE STATED IN REPLY TO Q.5 THAT; AS PER MY KNOWLEDGE THE FLAT WAS PURCHASED BY MS. PRIYANKA CHOPRA IN 2008. THE FLAT WAS SINCE THEN NEVER UTILIZED FOR BUSINE SS OR RESIDENCE PURPOSE. HENCE THE FLAT IS VACANT SINCE IT WAS PURCHASED. ON FURTHER VERIFICATION IT IS NOTICED THAT THE SAID PENTHOUSE IS OF TWO DIFFERENT UNITS AND SEPARATE AGREEMENTS ARE MADE. FURTHER, AS ADMITTED ABOVE, THE PENTHOUSE WAS NOT UTILIZED SINCE A.Y.2009 - 10, HOWEVER, THE ASSESSEE IS CLAIMING DEPRECIATION ON THE SAME. IN THIS REGARD, THE ASSESSEE WAS ASKED TO SUBMIT THE DETAILS WITH SUPPORTING DOCUMENTARY EVIDENCE THAT THE SAID PENTHOUSE HAS BEEN USED FOR OFFICE PURPOSE AND WHY ANNUAL VALUE UNDER THE PROVISIONS OF SEC.23(L)(C) SHOULD NOT BE DETERMINED TREATING IT AS INCOME FROM HOUSE PROPERTY BY DISALLOWING DEPRECIATION. IN REPLY TO THE SAME THE ASSESSEE'S REPRESENTATIVE ORALLY STATED THAT THE SAID PENTHOUSE IS USED FOR KEEPING THE ASSESSEE'S DRESSES AS GODOWN, HOWEVER HE HAS NOT FURNISHED ANY DOCUMENTARY EVIDENCE THAT IT HAS BEEN UTILIZED FOR OFFICIAL USE. FURTHER, IT CAN BE SEEN THAT THE PROPERTY UNDER CONSIDERATION IS A PENTHOUSE WHICH IS LOCATED IN THE RESIDENTIAL AREA. HENCE, IT CANNOT BE CONSIDERED AS COMMERCIAL PROPERTY. THEREFORE, THE ANNUAL VALUE OF THE ABOVE SAID PROPERTIES HAS TO BE DETERMINED UNDER THE PROVISIONS OF SEC.23(L)(C) AND CHARGED UNDER INCOME FROM HOUSE PROPERTY. RELYING ON THE CASE OF SMT. RADHADEVI DALMIYA VS . CIT 125 I TR 134 THE TRIBUNAL HAD 'ADJUDGED THAT A FAIR RETURN OF ABOUT 7% ON THE INVESTMENT IN PROPERTIES CAN BE TAKEN INTO ACCOUNT FOR DETERMINING ANNUAL RATEABLE VALUE AND SHALL BE REGARDED AS JUST AND FAIR FOR DETERMINING THE ANNUAL VALUE OF THE ABOVE SAID PROPE RTIES. THEREFORE, THE ANNUAL VALUE OF THE ABOVE SAID PROPERTIES IS COMPUTED AS UNDER: S.NO FLAT NO. INVESTMENT VALUE (RS.) ANNUAL RENT (7% OF INVESTMENT) 1 PENTHOUSE 901 1,25,00,000 8,75,000 12 ITA NO. 2770/MUM/2015 MS. PRIYANKA CHOPRA 2 PENTHOUSE 904 75,00,000 5 ,25,000 TOTAL 2,00,00,000 14,00,000 THEREFO RE, DEEMED RENTAL INCOME OF RS. 14,00,000 I S CHARGED ON ESTIMATE BASIS AND IS TAXED ACCORDINGLY. FURTHER, AS THE PROPERTY HAS NOT BEEN USED FOR ANY OFFICIAL USE, THE DEPRECIATION CLAIMED ON PENTHOUSE AND DEPRECIATION ON FURNITURE & FIXTUR E TOTALING TO RS.21,88,367/ - IS DISALLOWED AND IS ADDED TO THE INCOME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. 2 4. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) AFFIRMED THE ACTION OF THE ASSESSING OFFICER. 2 5. AGAINST THIS ORDER, THE ASSESSEE IS IN APPEAL BEFORE US. 2 6. IN THIS REGARD, THE ASSESSEE HAS ALSO RAISED AN ADDITIONAL GROUND WHEREIN IT IS URGED THAT ADDITION IS NOT BASED UPON ANY INCRIMINATING MATERIAL. ON THE SAME REASONING, AS THE PREVIOUS GROUND ADJUDICATED BY US WHEREIN WE HAVE AD MITTED THE ADDITIONAL GROUND AND REMITTED THE ISSUE TO TH E FILE OF THE ASSESSING OFFICER. W E SIMILARLY ADMIT THIS GROUND. THE ASSESSING OFFICER IS DIRECTED TO CONSIDER THE ISSUE AFRESH IN ACCORDANCE WITH THE RATIO ARISING OUT OF THE ORDER OF THE HON'BLE JU RISDICTIONAL HIGH COURT DECISION IN THE CASE OF CONTINENTAL WAREHOUSING CORPORATION (NHAVA SHEVA) LTD. (SUPRA) . 22 . FOLLOWING THE AFORESAID PRECEDENT, WE SET ASIDE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH THE SAME DIRECTION. 2 3 . IN THE RESUL T, THIS APPEAL BY THE ASSESSEE STANDS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 16.01.2018 SD/ - SD/ - ( SANDEEP GOSAIN ) (S HAMIM YAHYA ) / J UDICIAL MEMB ER / A CCOUNTANT MEMBER MUMBAI ; DATED : 16.01.2018 . . ./ ROSHANI , SR. PS 13 ITA NO. 2770/MUM/2015 MS. PRIYANKA CHOPRA / 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