GAUTAM RODE, MUMBAI V. DCIT 15(3), MUMBAI

ITA 4013/MUM/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 84264 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Assessment Year: 2009-2010
• Appeal Filed On: 20-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PAVAN KUMAR BEER LA
• Assessee Lawyers: VIJAY MEHTA
• Keywords: Unexplained cash credit; Business income; Depreciation

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL G , BENCH MUMBAI , BEFORE SHRI R.C.SHARMA , A M & VIVEK VARMA , J M ITA NO. 4013 / MUM/20 1 3 ( ASSESSMENT YEAR : 200 9 - 10 ) SHRI GAUTAM RODE, 2102, B - WING, RNA ROYAL PARK, M.G.ROAD, MAHAVIR NAGAR, KANDIVLI (W), MUMBAI - 67 VS. DCIT - 15(3), MUMBAI PAN/GIR NO. : A IBPR 4504 K ( AP PELLANT ) .. ( RESPONDENT ) /ASSESSEE BY : SHRI VIJAY MEHTA /REVENUE BY : SHRI PAVAN KUMAR BEERLA DATE OF HEARING : 1 1 TH NOVEMBER , 201 4 DATE OF PRONOUNCEMENT 28 TH NOV. , 201 4 O R D E R PER R.C.SHARMA (A.M) : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER CIT(A) DATED 20 - 3 - 2013 , IN THE MATTER OF ORDER PASSED U/S. 143 ( 3 ) OF THE I.T. ACT, FOR THE ASSESSMENT YEAR 200 9 - 10 , WH EREIN FOLLOWING GROUNDS HAVE BEEN TAKEN : - THE GROUND OR GROUNDS OF APPEAL ARE WITHOUT PREJUDICE TO ONE ANOTHER. 1 .A) ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 13,41,506/ - MADE BY T HE AO TO THE INCOME OF THE APPELLANT ON ACCOUNT OF UNACCOUNTED PROFE S SIONAL RECEIPTS. B) THE LD. CIT(A) FAILED TO APPRECIATE THAT: - (I) THE LD. AO MADE THE ADDITION ONLY BY COMPA RING THE PROFESSIONAL RECEIPTS AS PER ONE LEDGER ACCOUNT SHOWING RS. 21,29, 569.65 FROM ITA NO. 4013 / 13 2 THE TALLY SOFTWARE IGNORING THE PROFESSIONAL RECEIPTS CREDITED IN OTHER LEDGER IN THE NAME OF BUSINESS INCOME; (II) THE PROFESSIONAL RECEIPTS TO THE EXTENT OF RS. 10,25,000/ - HAVE BEEN RECORDED TWICE IN THE AIR; (III) THE APPELLANT HAS SUBM ITTED PARTYWISE CONFIRMATION OF M/ S. BAG FILMS & MEDIA LTD. AND OTHERS IN RESPECT OF PROFESSIONAL FEES; AND (IV) THE APPELLANT HAS SUBMITTED RECONCILIATION OF THE PROFESSIONAL FEES VIS - A - VIS GROSS RECEIPTS SHOWN IN FORM 16A AND FORM 26AS. (C) IN REACH ING TO THE CONCLUSION AND CONFIRMING SUCH ADDITION, THE LD. CIT(A) OMITTED TO CONSIDER RELEVANT FACTORS, CONSIDERATIONS, PRINCIPLES AND EVIDENCES WHILE HE WAS OVERWHELMED, INFLUENCED AND PREJUDICED BY IRRELEVANT CONSIDERATIONS AND FACTORS. 2.(A) ON THE F ACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION TO THE EXTENT OF RS. 11,00,000/ - MADE BY THE AO TO THE INCOME OF THE APPELLANT ON ACCOUNT OF UNEXPLAINED CASH CREDITS U/S.68. (B) THE LD. CIT(A) FAILED T O APPRECIATE THAT THE NATURE AND SOURCE OF CASH CREDITS HAVE BEEN EXPLAINED SATISFACTORILY BY THE APPELLANT. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 3,37,340/ - TO THE INCOME OF THE APPELLANT BY WAY OF DISALLOWING CERTAIN PAYMENTS FOR EXPENSES INVOKING THE PROVISIONS OF SECTION 40(A)(IA). 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 1,25,452/ - MADE BY T HE AO TO THE INCOME OF THE APPELLANT BY WAY DISALLOWING TRAVELLING AND CONVEYANCE EXPENSES. 5. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.27,200/ - MADE BY THE AO TO THE INCOME OF THE APPELLANT BY WAY OF DISALLOWING DEPRECIATION ON MOTOR CAR. 2 . RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. FACTS IN BRIEF ARE THAT ASSESSEE IS A STAGE ARTIST ACTING IN T.V. AND OTHER SPONSORED PROGRAMMES . RETURN OF INCOME WAS FILED A T TOTAL IN COME OF RS.14,48,800/ - WHICH WAS ASSESSED BY THE AO AT RS.41,46,945/ - . A N ADDITION OF RS.13,41,506/ - WAS MADE ON ACCOUNT OF UNACCOUNTED PROFESSIONAL FEE. ITA NO. 4013 / 13 3 3 . WE HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND THAT THE AO HAS MADE THE ADDITION OF RS.13,41,506/ - ONLY BY COMPARING THE PROFESSIONAL RECEIPTS AS PER LEDGER ACCOUNT SHOWING RS. 21,29,569.65 FROM TALLY S OFTWARE IGNORING THAT THE PROFESSIONAL RECEIPTS WERE DULY CREDITED TO THREE LEDGER ACCOUNT UNDER THE HEAD BUSINESS INCOME. WE FOUND THAT PROFESSIONAL RE CEIPTS TO THE EXTENT OF RS. 10,25,000/ - WAS RECORDED TWICE IN THE AIR INFORMATION. WE FOUND THAT BEFORE THE LOWER AUTHORITIES, THE ASSESSEE HAS SUBMITTED PARTYWISE CONFIRMATION OF M/S BAG FILMS & MEDIA LTD., BALAJI TELEFILMS LTD., CINEYUG WORLD WIDE, HATS O FF PRODUCTIONS P. LTD. AND RGV FILM FACTORY LTD. , GIVING DETAILS INCOME RELATED TO FEES SHOWN IN THE TDS CERTIFICATE. WE FOUND THAT IN THE PROFIT AND LOSS ACCOUNT FILED WITH RETURN OF INCOME, ASSESSEE HAD SHOWN GROSS RECEIPTS OF RS. 48,56,561/ - AND THE BREA K UP OF INCOME GIVEN WAS AS UNDER : - BUSINESS INCOME 22,12,650/ - OTHER INCOME 4,98,941/ - PROFESSIONAL FEES 21,29,570/ - BANK INTEREST 15,401/ - TOTAL 4 8 , 56,561 / - THE ASSESSEE HAS ALSO FILED RECONCILIATION OF PROFESSIONAL INCOME WHICH GIVES BREAK UP OF THIS INCOME RECEIVED FROM VARIOUS PARTIES WHICH ARE UNDER : - ADAI MEHRA PRODUCTIONS 1,256,076 ANSHKA IMAGE P. LTD. 75,000 BAG FILMS & MEDIA LTD. 1,700,000 BALAJI TELEFILMS LTD., 140,000 CINEYUG WORLD WIDE, 100,000 HATS OFF PRODUCTIONS P . LTD. 180,000 RGV FILM FACTORY LTD. 200,000 FEES FROM OTHERS 1,190,084 BANK INTEREST 15,401 TOTAL 4,856,561 ITA NO. 4013 / 13 4 4 . WE FOUND THAT C ONFIRMATION OF M/S. BAG FILMS & MEDIA LTD. WAS SUBMITTED IN FORM 16A. THIS CONFIRMATION EXPLAINS FOLLOWING: A. M / S. BAG FILMS & MEDIA LTD. HAS PAID/CREDITED RS. 17,00,000 FROM 01.04.2008 TO 31.03.2009 TOWARDS PROFESSIONAL FEES. B. THUS, THE FIGURE OF FEES RECEIVED FROM M/S. BAG FILMS & MEDIA LTD. SHOWN IN FORM 26AS AT RS. 27,25,000 IS INCORRECT AND NOT CONFIRMED BY T HE PAYER ALSO. C. THE REASONS WHY IT IS INCORRECT WAS EXPLAINED AS UNDER : THE COMPARATIVE DATA GIVEN IN FORM NO. 26AS (AIR DATABASE) . SL. NO. DATE OF PAYMENT/ CREDIT AMOUNT PAID/CREDITED TDS DEDUCTED STATUS OF BOOKING RATE OF TDS SR.NO. IN 26AS 1 3 1.08.08 3,25,000 33,475 F 10.30% 1 2 30.09.08 3,75,000 38,625 F 10.30% 3 3 30.09.08 7,00,000 7,210 F 01.03% 4 4 30.09.08 5,00,000 56,650 F 11.33% 5 5 31.10.08 5,00,000 56,650 F 11.33% 6 6 31.08.08 3,25,000 33,475 U 2 ON ANALYZING THE INFORMATION OF THE ABOVE TABLE, IT CAN BE CONCLUDED AS UNDER: ITEM N O. 1 AND 2 A. ITEM NO. 1 AND 2, THE PAYER BAG FILMS & MEDIA LTD. HAS SHORT DEDUCTED TDS @ 10.30% INSTEAD OF THE CORRECT TDS RATE OF 11.33%. B. THIS SHORTFALL OF 1.03 % IS PAID VIDE ITEM NO.3 AT RS. 7,210 ON THE GROSS PAYMENT OF RS. 7,00,000 [I.E. TOTAL OF RS. 3,25,000 + 3,75,000]. C. TDS RETURN CANNOT BE UPLOADED ON THE NSDL SERVER UNLESS THE RETURN CONTAINS THE AMOUNT PAID/CREDITED' TO THE PAYEE IN THE RETURN AGAINST EACH TDS PAYMENT. D. THEREFO RE, THE PAYER HAS NO CHOICE EXCEPT TO MENTION THE FIGURE OF RS. 7,00,000 AGAIN AGAINST THE PAYMENT OF RS. 7,210. E. THE PAYER IN HIS TDS CERTIFICATE IN FORM NO. 16A HAS, THEREFORE NOT WRITTEN THE AMOUNT IN COLUMN 'AMOUNT PAID/CREDITED' IN S.NO.3 BUT SHOW N TDS DEDUCTION OF RS. 7,210 WHICH WAS SHORT DEDUCTED EARLIER. F. THEREFORE, IT EXPLAINS THE FACT THAT RS. 7,00,000 WAS INCLUDED TWICE IN THE FORM NO. 26AS (AIR DATABASE). ITA NO. 4013 / 13 5 ITEM NO.6 G. IN ITEM NO. 6, IN COLUMN 'STATUS OF BOOKING' FOR RS. 3,25,000 IS SHOWN AS 'U'. H. NOTE GIVEN BELOW FORM NO. 26AS, THE MEANING OF 'U' IS EXPLAINED AS UNDER: 'UNMATCHED (U) - DEDUCTORS HAVE NOT DEPOSITED THE TAXES OR HAVE FURNISHED INCORRECT PARTICULARS OF TAX PAYMENT I. THIS MEANS THAT THE DEDUCTORS HAVE NOT PAID TAXES AND THE ITEM IS UNMATCHED. J. THE DEDUCTOR HAS NOT PAID THE TAXES SINCE THIS IS THE INCORRECT ENTRY IN THE AIR DATABASE. THIS SUM HAS NOT BEEN ALSO RECEIVED BY ASSESSEE. K. THIS IS ALSO CONFIRMED BY THE FACT THAT THE PAYER M/S. BAG FILMS & MEDIA LTD. HAS NOT SHOWN THIS ITEM IN THE TDS CERTIFICATE ISSUED IN FORM NO. 16A. THUS THE AMOUNT OF RS. 7,00,000 AND RS. 3,25,000 WAS INCLUDED TWICE AND WAS ALSO EXPLAINED. 5 . AFTER COMPARING THE RECONCILIATION OF THE PROFESSIONAL FEES VIS - - VIS GROSS RECEI PTS SHOWN IN THE FORM 16A AND FORM 26AS, WE FOUND THAT PAYMENT IN RESPECT OF PROFESSIONAL FEES FOR WHICH TDS WAS DEDUCTED AT SOURCE WAS RECEIVED BY CHEQUES ONLY AND SAME WAS OFFERED FOR TAXATION IN THE RETURN OF INCOME. THUS, THERE IS NO DIFFERENCE IN THE TOTAL FEES ACCOUNTED FOR BY THE ASSESSEE AMOUNTED TO RS. 48,56,561/ - . ACCORDINGLY, WE DO NOT FIND ANY MERIT FOR THE ADDITION MADE BY THE AO OF RS. 13,41,506/ - AND CONFIRMED BY THE CIT(A). THEREFORE, THE AO IS DIRECTED TO DELETE THE ADDITION OF RS. 13,41, 506/ - . 6 . THE ADDITION OF RS. 14,50,000 / - WAS MADE BY THE AO U/S.68 OF THE ACT. THE CONTENTION OF THE ASSESSEE BEFORE THE LOWER AUTHORITIES WAS THAT THIS AMOUNT WAS RECEIVED AS A LOAN FROM FATHER. BY THE IMPUGNED ORDER, CIT(A) DELETED THE ADDITION OF RS. 3.5 LA KHS WHICH WAS THE BALANCE ITA NO. 4013 / 13 6 APPEARING AT THE BEGINNING OF THE YEAR. FOR THE BALANCE AMOUNT OF RS. 11 LAKHS, ASSESSEE IS IN FURTHER APPEAL BEFORE US. 7 . IT WAS CONTENDED BY LEARNED AR THAT INADVERTENTLY THE AMOUNT OF 11 LAKHS WAS SHOWN AS A LOAN FROM FATHER, W HEREAS THE AMOUNT WAS RECEIVED AS A PREMATURE PROCEEDS OF FDR. 8 . OUR ATTENTION WAS ALSO INVITED TO THE BANK STATEMENT PLACED ON RECORD INDICATING CREDIT OF FUND THROUGH PREMATURE ENCASHMENT OF FDR. ON 7 - 5 - 2008 , THERE WAS CREDIT OF RS.8 LAKHS IN RESPECT OF FDR NO.00195070059037 , ON 26 - 11 - 2008 , THERE WAS CREDIT OF RS.1.5 LAKHS IN RESPECT OF FDR NO.00195070064880 AND CREDIT OF RS.1.50 LAKHS ON 8 - 12 - 2008 IN RESPECT OF FDR NO.00195070064880. I T WAS CONTENDED THAT TOTAL CREDIT OF RS. 11 LAKHS WAS OUT OF PREMATURE ENCASHMENT OF VARIOUS FDR WITH HDFC BANK, HOWEVER, WRONGLY IT WAS SHOWN AS LOAN FROM FATHER. 9 . ON THE OTHER HAND, THE CONTENTION OF THE LEARNED DR WAS THAT ASSESSEE HAS NOT STATED SUCH FACT OF PREMATURE ENCASHMENT OF FDR AND SINCE ASSESSEE WAS UNABLE TO ESTABLISH THE CREDITWORTHINESS AND GENUINENESS OF LOAN TAKEN FROM FATHER, THE AO WAS JUSTIFIED IN MAKING THE ADDITION. 10 . WE HAVE CONSIDERED RIVAL CONTENTION, CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND FROM THE RECORD THAT INADV ERTENTLY THE ASSESSEE HAD STATED BEFORE THE AO THAT ALLEGED CREDIT OF RS.11 LACS IN THE BANK ACCOUNT WAS RECEIVED FROM FATHER SHRI SURINDER RODE. HOWEVER, THIS AMOUNT WAS CREDITED THROUGH PREMATURE ENCASHMENT OF ASSESSEES OWN FDR. THE ENTIRE FUND BELONGS TO THE ASSESSEE HIMSELF WHICH ARE VERIFIABLE FROM BANK STATEMENT PLACED ON RECORD. WE FOUND THAT ITA NO. 4013 / 13 7 ASSESSEE HAD DEPOSITED IN FIXED DEPOSIT OF HDFC BANK AND SAME DEPOSIT WERE MATURED AND CREDITED TO HIS ACCOUNT. THE ASSESSEE HAS ALSO SHOWN INTEREST INCOME THE REON. DETAILS OF FD IS AS UNDER: - DATE FIXED DEPOSIT TAKEN AMOUNT DATE FIXED DEPOSIT MATURED AMOUNT 7 - DEC - 07 GAUTAM RODE F/D 800,000 7 - MAY - 08 PREMATURED PROCEEDS OF F/D 800,000 27 - OCT - 08 GAUTAM RODE F/D 300,000 26 - NOV - 08 PREMATURED PROCEEDS OF F/D 150,0 00 7 - DEC - 08 PREMATURED PROCEEDS OF F/D 150,000 1,100,000 1,100,000 HENCE, THE ASSESSEE HAS INITIALLY INVESTED IN FIXED DEPOSIT OUT OF HIS PROFESSIONAL INCOME WITH HDFC BANK. THE FIXED DEPOSITS WERE MATURED AND CREDITED TO HIS ACCOUNT WHICH IS W RONGLY SHOWN AS LOAN FROM HIS FATHER. WE FOUND THAT ASSESSEE HAS RECEIVED AMOUNT OF RS.11 LACS BY PREMATURE ENCASHMENT OF ITS FDR. THE AMOUNT WAS CREDITED IN ASSESSEES BANK ACCOUNT NO.03221370002824 WITH HDFC BANK. WE HAD VERIFIED THE BANK STATEMENT PLACE D ON RECORD AND FOUND THAT ON 7 TH MAY , 200 8 ASSESSEE HAS GOT CREDIT OF RS.8 LAKHS THROUGH FDR NO. 00195070059037 CHEQUE NO.455851, ON 26 - 11 - 2008 RS.1.50 LAKHS THROUGH FDR NO.01195070064880, RS.1.50 LAKHS ON 8 - 12 - 2008 VIDE FDR NO. 00195070064880. THUS, IT IS CLEAR THAT ENTIRE AMOUNT OF RS.11 LAKHS WAS CREDIT ED IN ASSESSEES BANK ACCOUNT OUT OF MATURITY OF FDR AND NOT OUT OF ANY LOAN FROM ANY PRIVATE PARTY. ONCE IT IS ESTABLISHED THAT AMOUNT WAS MATURITY VALUE OF THE FDR AND ROUTED THROUGH BANK, THERE IS NO REA SON TO DOUBT THE GENUINENESS OF THE SUCH CREDIT ENTRY. ACCORDINGLY, WE DO NOT FIND ANY MERIT FOR ADDING THIS AMOUNT OF RS.11 LAKHS AND WE DIRECT THE AO TO DELETE THE ADDITION OF RS.11 LAKHS . SINCE THESE BANK STATEMENTS WERE NOT PLACED BEFORE THE LOWER AUTH ORITIES, IN THE INTEREST OF JUSTICE, WE ITA NO. 4013 / 13 8 DIRECT THE AO TO VERIFY ALL THESE THREE ENTRIES OF RS.8 LAKHS, 1.5 LAKHS AND 1.5 LAKHS ON THE RESPECTIVE DATES FROM BANK STATEMENT OF HDFC BANK AND TO DELETE THE ADDITION. WE DIRECT ACCORDINGLY. 11 . WITH REGARD TO TH E DISALLOWANCE OF RS.3,37,340/ - U/S.40(A)(IA), WE FOUND THAT ASSESSEE COULD NOT DEDUCT TAX IN RESPECT OF PAYMENT OF EXPENSES. ACCORDINGLY, THE AO WAS JUSTIFIED IN DISALLOWING A SUM OF RS.3,37,340/ - . 12 . THE ASSESSEE ALSO COULD NOT SUBSTANTIATE TRAVELLING AND CONVEYANCE EXPENSES OF RS.1,25,452/ - . ACCORDINGLY, THE AO WAS JUSTIFIED IN CONFIRMING DISALLOWANCE OF SUCH EXPENSES. 13 . THE ASSESSEE ALSO COULD NOT SUBSTANTIATE ITS CLAIM OF DEPRECIATION ON THE MOTOR CAR. ACCORDINGLY THE AO WAS JUSTIFIED IN MAKING A DDITION OF RS.27,200/ - AND THE CIT(A) WAS JUSTIFIED IN CONFIRMING THE SAME. 14 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED IN PART . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 28 /11/ 201 4 . 28 /11/ 2014 SD/ - SD/ - ( ) ( VIVEK VARMA ) ( ) ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 28 / 11 /2014 /PK M , PS COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A), MUMBAI. 4. / CIT 5. / DR, ITAT, MUMBAI 6. GUARD FILE. ITA NO. 4013 / 13 9 / BY ORDER, ( ASSTT. REGISTRAR) / ITAT, MUMBAI //TRUE COPY//