DCIT, Central Circle-03, New Delhi V. Luv Ranjan, Ghaziabad

ITA 3042/DEL/2022

• Counselvise Citation: [2024] 130 COUNSELVISE.COM (IT) 5598 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 7 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-08-2024
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 21-05-2024
• Assessment Year: misc
• Appeal Filed On: 28-12-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N. G. JOSEPH GANGTE
• Assessee Lawyers: NIRBHEY MEHTA
• Keywords: Unexplained expenditure; Income from undisclosed sources; Bogus
• Section: 132; 69C; 153A; 69A; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘E’, NEW DELHI Before Dr. B. R. R. Kumar, Accountant Member, Sh. Sudhir Kumar, Judicial Member ITA No. 3042/Del/2022 : Asstt. Year: 2017-18 DCIT, Central Circle-03, New Delhi-110055 Vs Luv Ranjan, R-11/40, Raj Nagar, Ghaziabad, U.P.-201002 (APPELLANT) (RESPONDENT) PAN No. AHGPR9364K ITA No. 3046/Del/2022 : Asstt. Year: 2017-18 Luv Ranjan, R-11/40, Raj Nagar, Ghaziabad, U.P.-201002 Vs ACIT, Central Circle-03, New Delhi-110055 (APPELLANT) (RESPONDENT) PAN No. AHGPR9364K Assessee by : Sh. Nirbhey Mehta, Adv. Revenue by : Sh. N. G. Joseph Gangte, CIT-DR Date of Hearing: 22.05.2024 Date of Pronouncement: 19.08.2024 ORDER Per Dr. B. R. R. Kumar, Accountant Member: The present appeals have been filed by the Revenue and the assessee against the orders of ld. CIT(A)-23, New Delhi dated 28.10.2022. 2. In ITA No. 3042/Del/2022, following grounds have been raised by the Revenue: “1. The Ld. CIT(A) is erred in restricting the addition of unexplained money of Rs. 3,62,07,075/- recorded in seized material related to illegal betting to Rs. 12,12,425/-. ITA Nos. 3042 & 3046/Del/2022 Luv Ranjan 2 2. That the Ld C1T(A) is erred in adjusting the losses against the income from illegal betting income without appreciating that addition was made on the basis of profit earned and money invested by the assessee in illegal betting activities irrespective of profit or loss. 3. That the Ld. CIT(A) is erred in deleting the addition made of Rs. 24,97,000/- on the basis of seized material (Page No. 4 of Annexure A-3) holding that no addition can be made on the basis of non-speaking documents without any corroborative material. 4. The Ld. CIT(A) is erred in accepting the explanation of the assessee that page no.4 of Annexure A-3 is in nature of a budgeting exercise for upcoming film without appreciating that even if it is assumed that page No. 4 of Annexure A-3 does not relate to betting activity and pertain to some film production activity, the amount mentioned therein and source of such expenditure has not been explained by the assessee. 5. The Ld. CIT(A) is erred in deleting the addition of Rs. 13,98,700/- u/s 69A on the basis of seized material (Page no. 25 of Annexure A-3) accepting the cash book produced by the assessee before the CIT(A) without appreciating that even the cash book produced by the assessee does not reflect these entries. 6. The Ld. C1T(A) is erred in deleting the addition of Rs. 14,29,000/- u/s 69C on the basis of seized material (Page No. 25 of Annexure A-3) accepting the cash book produced by the assessee before the CIT(A) without appreciating that even the cash book produced by the assessee does not reflect these entries.” 3. In ITA No. 3046/Del/2022, following grounds have been raised by the assessee: “1. That on the facts and circumstances of the case and in law the order passed by CIT 0 is contrary to the facts and bad in law. 2. That the on the facts and circumstances of the case and in law the CIT (A) was not justified in confirming addition of Rs. 12,12,425/- by holding the same to be on account of undisclosed income/profits from betting on cricket matches.” ITA Nos. 3042 & 3046/Del/2022 Luv Ranjan 3 4. Subsequent to the action conducted on 28.11.2018 u/s 132 of the Income Tax Act, 1961 proceedings u/s 153A have been initiated on the assessee. Income from Betting activities: 5. During the search operation conducted at Mumbai based on the loose documents Annexture as A-3, the Assessing Officer held that the assessee was involved in earning of income from betting. The details are as under: S. No Particulars Amount(in Rs.) A.Y. Nature of Income 1. Page No. 8 of Annexure A-3 50,77,500/- 2017-18 Unaccounted Betting Income 2. Page No. 7 of Annexure A-3 12,02,500/- 2017-18 -DO- 3. Page No. 6 of Annexure A- 3 4,34,075/- 2017-18 -DO- 4. Page No. 4 of Annexure A- 3 24,97,000/- 2017-18 -DO- 5. Page No. 3 of Annexure A- 3 94,57,000/- 2017-18 -DO- 6. Page No. 1 of Annexure A- 3 1,76,02,000/- 2017-18 -DO- TOTAL 3,62,07,075/- 6. Based on the above, the Assessing Officer has determined the income based on the figures mentioned on the seized material and brought an amount of Rs.3.62 Cr. u/s 69A of the Act. 7. Aggrieved, the assessee filed appeal before the ld. CIT(A) who modified the addition made by the AO and computed the net taxable income. ITA Nos. 3042 & 3046/Del/2022 Luv Ranjan 4 8. Aggrieved, the Revenue as well as the assessee filed appeal before the Tribunal. 9. Before us, the ld. DR submitted that the notings on the papers found and seized cannot be disputed and in the absence of plausible explanation, the Assessing Officer has rightly made the addition. On the other hand, the ld. AR relied on the order of the ld. CIT(A). 10. Heard the arguments of both the parties and perused the material available on record. 11. The typographical version of the seized material is as under: Gujarat Bangalore -1000000 [phone] [phone] [phone] (I) +500000 (I) -18100000 [phone] +500000 (H.B.) -1975000 +2760000 [phone] (I) -1882500 +2510000 Gujarat Bangalore -260000 + 500000 + 92500 - 250000 - 167500 + 250000 - 100000 + 150000 ITA Nos. 3042 & 3046/Del/2022 Luv Ranjan 5 eat Enq- 50 @ 41 eat Eng- 50 @ 26 Put Enq- 100 @ 42 eat Enq- 50 @ 14.5 Put Enq- 25 @ 30 eat Enq- 25 @ 14.5 Eng WI -20500 [phone] +50000 [phone] +8500 - -7200 +50000 [phone] +8750 [phone] +25000 40 X 4000 = 16000 0 40 X 3000 = 120000 60 X 1500 = 90000 50 X 1200 = 60000 150 X 300 = 45000 150 X 200 = 30000 25 X 3000 = 75000 20 X 2600 = 52000 2 X 1000= 20000 2 X 5000 = 10000 39000 0 272000 60 X 1000= 60000 60 X 6000 = 36000 96000 50 X 1000= 50000 25 X 4000 = 10000 50 X 4000 = 20000 0 50 X 1500 = 75000 12500 0 ITA Nos. 3042 & 3046/Del/2022 Luv Ranjan 6 56P- Eat IND- 10L HITESH 82P- PUT IND- 2L 85P- PUT IND- 2L 82P- PUT IND- 1L 45P- EAT ENG- 2.5L 45P- EAT ENG- 1L 40P- EAT ENG- 12L 67P- EAT IND- 2L 25P- EAT ENG- 5L 42P- PUT ENG- 3L 74P- PUT ENG- 1L 91P- PUT ENG- 1L 87P- EAT IND- 1L 67P- EAT IND- 2L R15- PUT 25000 53P- EAT IND- 10L 26P- EAT IND- 5L 45P- PUT IND- 2L IND ENG IND ENG (-)560000 (+)1000000 (+)82000 (-)100000 (+)164000 (-)200000 (+)100000 (-)45000 (+)170000 (-)200000 (-)134000 (+)200000 (+)250000 (-)135000 (+)48000 (+)55000 (+)1200000 (-)480000 (+)500000 (-)125000 (-)300000 (+)126000 (-)100000 (+)74000 (-)100000 (+)91000 (-)87000 (+)100000 (-)134000 (+)200000 (-)25000 (-)25000 (-)530000 (+)1000000 (-)130000 (+)500000 (+)90000 (-)200000 4,08,000 (+)1726000 ITA Nos. 3042 & 3046/Del/2022 Luv Ranjan 7 53P- EAT ENG- 10L 50P- EAT ENG- 5L 67P- PUT ENG- 10L 70P- PUT ENG- 5L 55P- PUT ENG- 5L 53P- PUT ENG- 2L 49P- EAT ENG- 15L 46P- EAT ENG- 3L 57P- EAT ENG- 5L 60P EAT ENG- 5L 28P- EAT ENG- 10L 22P PUT ENG- 5L 26P- PUT ENG- 25L 20.5P PUT ENG- 3L 24 P- PUT ENG- 6L 12.5P PUT ENG- 4L 13.5P PUT ENG- 5L -23500 -1100000 -10500 ENG WI ENG WI -530000 [phone] 500000 [phone] [phone] [phone] [phone] -735000 [phone] 300000 -285000 [phone] 500000 -280000 +1000000 [phone] [phone] [phone] [phone] [phone] [phone] 600000 12. After taking into consideration, the ld. CIT(A) computed the income derived by the assessee from betting and tabulated the same as under: S. No. Particulars Amount of addition (In Rs.) Matches between Actual Profit or loss 1 Page No.8 50,77,500/- Gujarat vs. Bangalore 6,27,500/- 2 Page No.7 12,02,500/- Gujarat vs. Bangalore -17,500/- 3 Page No.6 4,34,075/- England vs. West Indies 99,425/- 4 Page No.4 24,97,000/- Not related to betting (to be considered separately) N.A 5 Page No.3 94,57,000/- India vs. England 22,37,000/- 6 Page No.1 1,76,02,000/- England vs. West Indies -17,34,000/- Total 3,62,07,0757- 12,12,425/- ITA Nos. 3042 & 3046/Del/2022 Luv Ranjan 8 13. The ld. CIT(A) held that during the course of assessment proceedings explained the contents of the document. However, the Assessing Officer did not accept the reply and added the entire amount (Rs.3,62,07,075/-) as income u/s 69A of the Act. The ld. CIT(A) held that only the net amount could be brought to tax and the quantum of addition should have been the net of both negative and positive amounts. The ld. CIT(A) held that the quantum of profit or loss is completely different from the additions made by the AO on the basis of Annexure -A-3. The AO has made addition of Rs.3,62,07,075/- as income. But after adjusting loss from the gains or profit on each bet, the real income turns out to be Rs. 12,12,425/- instead of 3,62,07,075/- Thus, real income from betting on cricket matches is 12,12,425/- which is the result of positive and negative signs. Hence, keeping in view the entire factual matrix, we find no reason to interfere with the order of the ld. CIT(A) who rightly affirmed the net income for taxation after duly considering the gains as well as losses. 14. The result, the appeal of the assessee as well as the Revenue on this issue is dismissed. Unexplained Income u/s 69A/69C: 15. Based on the seized material page no. 25 of annexure 25 seized from the assessee’s premises at Bunglow No. 159, SVP Nagar, MHADA, Four Bunglows, Andheri, Mumbai. The AO made addition of Rs.13,98,700/- u/s 69A of the Act as unexplained income and Rs.14,29,000/- u/s 69C as unexplained expenditure. ITA Nos. 3042 & 3046/Del/2022 Luv Ranjan 9 16. The typographical version of above page is reproduced below for better understanding of this page: Debit Credit 1 Naren 200000 1 Aman 29000 2 Manish 50000 2 Aman Dad 1400000 3 Balley 50000 4 Ria 50000 5 Luv 50000 6 Naren 200000 7 Naren 100000 (20/3/17) 8 Manish 100000 (21/3/17) 9 Naren 200000 (21/3/17) 10 Naren 18700 (21/3/17) 11 Naren 50000 (22/3/17) 12 Manish 80000 (22/3/17) 13 Ayeaz 68000 (22/3/17) 14 Luv 182000 (22/3/17) 17. The AO held that the debit and credit entries were unaccounted income and expenses of the assessee in cash which have not been entered in the books of accounts. The AO made addition of all the debit entries u/s 69A and credited entries u/s 69C. 18. Aggrieved, the assessee filed appeal before the ld. CIT(A) who deleted the addition made by the AO. 19. Aggrieved, the Revenue filed appeal before the Tribunal. 20. Before us, the ld. DR submitted that the notings on the papers found and seized cannot be disputed and in the absence of plausible explanation, the Assessing Officer has rightly made the addition u/s 69A as well as u/s 69C. The income and expenditure have to be duly accounted in the books of account ITA Nos. 3042 & 3046/Del/2022 Luv Ranjan 10 failing which the same shall be treated as undisclosed income and unaccounted expenditure of the assessee. On the other hand, the ld. AR relied on the order of the ld. CIT(A). 21. Heard the arguments of both the parties and perused the material available on record. 22. The ld. CIT(A) held that on the top of these entries the narration written is "DEBIT". Against certain entries under the debit column dates are also mentioned which are 20.03.17, 21.03.17 & 22.03.17. On the right hand side of the page the narration on top is mentioned as "CREDIT". Under this column the entries mentioned are Aman - 29,000/-, Aman Dad - 14,00,000/-. The grand total of all debit entries is Rs. 13,98,700/- and that of credit entries is Rs. 14,29,000/-. 23. Before the AO, during the course of assessment proceedings the explanation furnished by the appellant with regard to this seized paper was that the jottings on the page pertained to cash withdrawn from bank for production related expenses of the film "Sonu Ke Titu Ki Sweety". It was further explained that the cash was utilized on shooting expenses of the film in Delhi/Noida and was handled by Mr. Aman and his Dad. It was clarified that Mr. Aman is spouse of Smt. Vinni Garg who is sister of the appellant and Mr. Aman is a resident of Ghaziabad. The money was paid as imprest to various persons including the production accountant Mr. Manish Parab, executive producer Mr. Naren Kumar and production assistant Mr. Ashvinder. The AO held that the above page details of debit and credit are written which are unaccounted income and expenses ITA Nos. 3042 & 3046/Del/2022 Luv Ranjan 11 of Sh. Luv Ranjan in cash not entered in the books of accounts. On this reasoning the debit entries amounting to Rs. 13,98,700/- have been added being unexplained income u/s 69A of the Act and credit entries amounting to Rs. 14,29,000/- have been added u/s 69C as unexplained expenditure. 24. It is a fact on record that the amounts were withdrawn from the declared bank account of Allahabad Bank A/c No. 50360779037. An examination of the same shows that the title of the account is "M/s Luv Films - SKTKS". Therefore, it emerges that a special bank account was opened for expenditure related to production of the film "Sonu Ke Titu Ki Sweety" (SKTKS). The examination of bank account further reveals that there is a cash withdrawal of Rs. 15,00,000/- on 09.03.2017 and Rs.5,00,000/- on 10.03.2017. The dates of cash withdrawals are very near to the dates of giving imprest advances mentioned in the seized documents which is 20.03.2017, 21.03.2017 & 22.03.2017. The ld. CIT(A) has gone through the entire cash book which is reproduced at page no. 20 to 24 of the order and categorically mentioned that the dates of withdrawal of cash from the bank account, the cash book and the seized material have been tallied and hence, the expenses disclosed cannot be considered as bogus. 25. Since, the assessee had cash available as evident from the bank statement and the cash book for meeting production expenses which is a general pattern of meeting expenses in outdoor shooting of the film, we hold that no addition u/s 69A and u/s 69C are called for and accordingly the decision of the ld. CIT(A) on this issue is affirmed. ITA Nos. 3042 & 3046/Del/2022 Luv Ranjan 12 26. In the result, the appeal of the Revenue is dismissed and the appeal of the assessee is also dismissed. Order Pronounced in the Open Court on 19/08/2024. Sd/- Sd/- (Sudhir Kumar) (Dr. B. R. R. Kumar) Judicial Member Accountant Member Dated: 19/08/2024 *Subodh Kumar, Sr. PS* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR