DCIT, Jaipur V. HINDUSTAN BROADCASTING COMPANY PVT. LTD., Jaipur

ITA 42/JPR/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6258 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 5 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 11-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROLI AGARWAL
• Keywords: Unexplained investment; Unexplained expenditure
• Section: 142(1); 69; 144

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA. NO. 42/JP/2017 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2013-14 THE DCIT, CENTRAL CIRCLE- 3, JAIPUR. CUKE VS. M/S HINDUSTAN BROADCASTING COMPANY PVT. LTD. 18, SIYARAM STREET, TONK ROAD, DURGAPURA, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AACCH 0505 L VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI ROHAN SOGANI (CA) JKTLO DH VKSJ LS @ REVENUE BY : SMT. ROLI AGARWAL (CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 21/06/2018 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT : 25/06/2018 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A)-4, JAIPUR DATED 30.11.2016 FOR THE ASSES SMENT YEAR 2013-14 WHEREIN THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL AS UNDER:- 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE LD. CIT(A) WAS RIGHT IN DELETING THE ADDITION O F ITA NO. 42/JP/2017 DCIT VS. M/S HINDUSTAN BROADCASTING CO. PVT. LTD. 2 RS. 1,74,68,288/- MADE BY A.O. ON ACCOUNT OF UNDISC LOSED INVESTMENT IN EQUIPMENT U/S 69. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS RIGHT IN DELETING THE ADDITION OF RS . 1,77,70,520/- MADE BY A.O. ON ACCOUNT OF UNEXPLAINED EXPENDITURE FOR LICENSE FEE. 2. THE FACTS OF THE CASE ARE THAT A SEARCH WAS COND UCTED ON 31.07.2012 IN THE CASE OF SIYARAM (KATTA) GROUP, JA IPUR TO WHICH THE ASSESSEE BELONGS WHEREIN VARIOUS DOCUMENTS WERE FOU ND AND SEIZED. NOTICE U/S 142(1) OF THE IT ACT WAS ISSUED TO THE A SSESSEE AND IN COMPLIANCE OF WHICH, THE ASSESSEE DID NOT FILE ITS RETURN OF INCOME. THE AO THEREAFTER COMPLETED THE ASSESSMENT U/S 144 R.W. S. 153B(1)(B) OF THE ACT AT TOTAL INCOME OF RS. 3,52,38,808/-. THE B ASIS OF THE SAID ADDITION WAS A COPY OF E-MAIL COMMUNICATION RELATED TO THE ASSESSEE COMPANY WHICH WAS SEIZED FROM THE FACTORY PREMISES OF M/S SIYARAM EXPORTS INDIA PVT. LTD. REFERRED TO AS PAGE 46 & 47 TO EXHIBIT-1 OF ANNEXURE-AS. AS PER E-MAIL, COST OF EQUIPMENT WAS O F RS. 5.5 CRORES AND LICENSE FEE WAS RS. 2 CRORES AS AGAINST THE FIG URES AS RECORDED IN THE BALANCE SHEET WHICH WAS SEIZED FROM THE SAME PR EMISES WHEREIN THE COST OF EQUIPMENT HAS BEEN SHOWN AT RS. 3,75,31 ,712 AND LICENSE FEE HAS BEEN SHOWN AT RS. 22,29,480/-. 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A S HOW CAUSE NOTICE WAS ISSUED TO THE ASSESSEE SEEKING EXPLANATI ON REGARDING THIS DISCREPANCY, HOWEVER, IN ABSENCE OF ANY RESPONSE FR OM THE ASSESSEE, THE AO COMPLETED THE ASSESSMENT AND AN ADDITION OF RS. 1,74,68,288/- ON ACCOUNT OF UNDISCLOSED INVESTMENT IN EQUIPMENT U/S 69 OF THE ACT ITA NO. 42/JP/2017 DCIT VS. M/S HINDUSTAN BROADCASTING CO. PVT. LTD. 3 AND RS. 1,77,70,520/- ON ACCOUNT OF UNEXPLAINED EXP ENDITURE TOWARDS LICENSE FEE WAS MADE AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 4. THE ASSESSEE, BEING AGGRIEVED WITH THE ACTION OF THE AO, CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A), WHO, AF TER CALLING FOR THE REMAND REPORT FROM THE ASSESSING OFFICER, HAS SINCE DELETED THE SAID ADDITIONS IN THE HANDS OF THE ASSESSEE COMPANY. 5. NOW, THE REVENUE IS IN APPEAL AGAINST THE SAID F INDINGS OF THE LD CIT(A) WHICH IS CONTAINED AT PARA 3.2.3 OF HIS ORDE R WHICH IS REPRODUCED AS UNDER:- 3.2.3 I HAVE DULY CONSIDERED ASSESSEES SUBMISSION AND ALSO CAREFULLY GONE THROUGH THE ASSESSMENT ORDER. I HAVE ALSO TAKEN A NOTE OF FACTUAL MATRIX OF THE CASE AS WELL AS APPLI CABLE CASE LAWS RELIED UPON. THE ASSESSEE IS A PVT. LTD. COMPANY EN GAGED IN THE BUSINESS OF ELECTRONIC MEDIA AND SINCE FY 2009-10, IT WAS RUNNING A TV CHANNEL. THE ASSESSEE HAD APPLIED FOR TV NEWS CHANNEL LICENSE TO MINISTRY OF INFORMATION AND BROADCASTING ON 18.03.2008 AND GOT LICENSE FROM THE MINISTRY ON 26.02.2009 VID E REGISTRATION NO. 235/1/2009-TV(1) DT 26.02.2009. THE APPELLANT ASSESSEE INCURRED EXPENSES FOR ACQUIR ING THE LICENSE AMOUNTING TO RS. 10,00,000/- AND OTHER INCI DENTAL EXPENSES AMOUNTING TO RS. 12,29,480/- AGGREGATING T O RS. 22,29,480/-. DURING THE SEARCH OPERATION BALANCE SHEET PRINT OUT AS ON 16.05.2012 OF THE APPELLANT COMPANY WAS TAKEN FROM ACCOUNTING SOFTWARE TALLY AND THE SAME WAS SEIZED AS PER PAGE 1 TO 4 TO EXHIBIT 11. IN THE SEIZED BALANCE SHEET PRINT OUT, THE COST OF FIXED ASSETS WAS SHOWN AT RS. 3,75,31,711/- AND LIC ENSE FEE AT ITA NO. 42/JP/2017 DCIT VS. M/S HINDUSTAN BROADCASTING CO. PVT. LTD. 4 RS. 22,29,480/-. WITHOUT CARRYING OUT ANY INVESTIGA TION/ENQUIRY, AO HAS MADE ADDITION OF RS. 3,52,38,808/-, BEING TH E DIFFERENTIAL AMOUNT AS MENTIONED IN THE E-MAIL AND SEIZED BALANC E SHEET PRINT OUT, AS UNDER: PARTICULARS COST AS P ER EMAIL COST AS PER BALANCE SHEET DIFFERENCE TO BE TREATED AS UNDISCLOSED INCOME EQUIPMENT 5,50,00,000 3,75,31,712 1,74,68,288 LICENSE 2,00,00,000 22,29,480 1,77,70,520 TOTAL 7,50,00,000 3,97,61,192 3,52,38,808 HOWEVER, TO PROVE HIS CONTENTION AO HAS NOT CARRIED OUT ANY ENQUIRY/INVESTIGATION AO HAS NOT ALSO BROUGHT ON RE CORD ANYTHING TO PROVE THAT THE OUT OF BOOKS EXPENDITURE/INVESTME NT OF RS. 1.75 CRORE ON A/C OF COST OF EQUIPMENT AND RS. 1.78 CROR E ON A/C OF LICENSE WAS MADE DURING THE FY RELEVANT TO AY 2011- 12. IT IS ALSO PERTINENT TO MENTIONED HERE THAT AO HAS NOT EXAMINE D SH PRATAP RAO & SH VIRENDRA CHAUDHARY WHOSE NAMES ARE APPEARI NG IN THE E-MAIL DATED 11.12.2011. IT IS ALSO SUBMITTED THAT SINCE THAT CHANNEL HAD GO NE ON AIR IN FY 2010-11 PERTAINING TO AY 2011-12, ACCORDINGLY AN AL TERNATIVE PLEA WAS MADE THAT SUCH ADDITIONS CANNOT BE MADE IN THE CURRENT AY 2013-14. FURTHER, IN SUPPORT OF ITS CONTENTION ASSE SSEE HAS ALSO FILED A COPY OF FORMAL INVITATION FOR INAUGURAL FUN CTION ON 17.10.2010. THEREFORE, FROM THE ABOVE IT IS CLEAR THAT THE CHAN NEL HAS GONE ON AIR IN FY 2010-11 PERTAINING TO AY 2011-12. IN THE REMAND REPORT AO HAS ALSO NOT CONTROVERTED THESE FACTS. IN VIEW O F THESE FACTS IF ANY ADDITION ON A/C OF UNEXPLAINED INVESTMENT IS RE QUIRED TO BE MADE, IT HAS TO BE IN AY 2011-12 NOT IN AY 2013-14. ACCORDINGLY, ADDITION MADE BY THE AO IN AY 2013-14 CANNOT BE JUS TIFIED, HENCE, DELETED. ASSESSEES APPEAL IN GROUND NO. 2 & 3 ARE STANDS ALLOWED. ITA NO. 42/JP/2017 DCIT VS. M/S HINDUSTAN BROADCASTING CO. PVT. LTD. 5 6. THE LD. DR HAS VEHEMENTLY ARGUED THE MATTER AND RELIED ON THE FINDINGS OF THE ASSESSING OFFICER. PER CONTRA, THE LD. AR SUPPORTED THE FINDINGS OF THE LD CIT(A) AND HAS SUBMITTED THAT TH E E-MAIL COMMUNICATION WHICH HAS FORMED CONFIRMED THE BASIS OF ADDITION BY THE ASSESSING OFFICER IS IN RESPECT OF NEGOTIATION WITH A POTENTIAL JOINT VENTURE PARTNER FOR INVESTMENT IN THE ASSESSEE COM PANY AND THE SAID E-MAIL WAS SENT BY SHRI PRATAP RAO, CEO OF THE ASSE SSEE COMPANY TO SHRI VIRENDRA CHAUDHARY TO GIVE THE LATTER THE ES TIMATED COST FOR THE PURPOSES OF DETERMINING THE VALUATION. IT WAS SUBMI TTED THAT THE COST MENTIONED IN THE E-MAIL COMMUNICATION WAS NOT THE A CTUAL COST INCURRED AND THE ACTUAL COST INCURRED WAS DULLY REFLECTED IN THE BOOKS OF ACCOUNT. IT WAS FURTHER SUBMITTED THAT THE LICENSE COST WAS ESTIMATED AT RS. 2 CRORES IN THE E-MAIL COMMUNICATION AS AGAINST THE A CTUAL COST OF RS. 22,29,480/- INCURRED IN THE YEAR 2009 AND 2010 AND THE LICENCE COST WAS VALUED AT A HIGHER PRICE GIVEN THE FACT THAT GE TTING LICENSE FROM INFORMATION AND BROADCASTING MINISTRY, GOVERNMENT O F INDIA WAS VERY DIFFICULT. IT WAS FURTHER SUBMITTED THAT THE E-MA IL COMMUNICATION ALSO STATES ABOUT THE COST OF THE GOODWILL OF RS. 15 CRO RES WHICH SUPPORTS THE ASSESSEES POSITION THAT ALL THESE FIGURES WHIC H WERE APPEARING IN THE E-MAIL COMMUNICATIONS WERE ESTIMATES AND NOT AC TUAL COST IN THE CONTEXT OF DETERMINING THE APPROPRIATE VALUATION OF THE ASSESSEE COMPANY FOR THE PURPOSE OF POTENTIAL JOINT VENTURE WITH SHRI VIRENDRA CHAUDHARY. WITHOUT PREJUDICE TO THE ABOVE CONTENTIO NS, IT WAS SUBMITTED THAT EVEN IF THE CONTENTION SO RAISED BY THE REVENUE IS ACCEPTED, GIVEN THE FACT THAT THE CHANNEL HAD GONE ON AIR IN FINANCIAL YEAR 2010-11 PERTAINING TO ASSESSMENT YEAR 2011-12, IF ANY ADDITIONS IS ITA NO. 42/JP/2017 DCIT VS. M/S HINDUSTAN BROADCASTING CO. PVT. LTD. 6 TO BE MADE, IT HAS TO BE MADE IN ASSESSMENT YEAR 20 11-12 AND NOT IN THE IMPUGNED ASSESSMENT YEAR. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS NOT THE CASE OF THE REVE NUE THAT THE ASSESSEE HAS ADMITTED THE UNDISCLOSED INVESTMENT/EXPENDITURE IN THE STATEMENT RECORDED U/S 132(4) DURING THE COURSE OF SEARCH. T HE E-MAIL COMMUNICATIONS DATED 5.12.2011 AND 11.12.2011 WHICH HAS FORMED THE BASIS OF ADDITION IN THE HANDS OF THE ASSESSEE COMP ANY TOWARDS THE COST OF EQUIPMENT AND THE LICENSE FEE CAN THEREFORE BE A STARTING POINT AND THE BASIS FOR FURTHER INVESTIGATION BY THE ASSE SSING OFFICER AS TO THE ACTUAL INVESTMENT MADE BY THE ASSESSEE COMPANY AS A GAINST WHAT HAS BEEN RECORDED IN THE BOOKS OF ACCOUNT. HOWEVER, THE SAME CANNOT BE A SOLE BASIS FOR MAKING THE ADDITION IN HANDS OF THE ASSESSEE COMPANY. WE FIND THAT THERE IS NOTHING ON RECORD IN TERMS OF ANY ENQUIRY/INVESTIGATION WHICH HAS BEEN CARRIED BY THE ASSESSING OFFICER EITHER DURING THE ASSESSMENT PROCEEDINGS OR EVEN DU RING THE REMAND PROCEEDING. THE ASSESSING OFFICER HAS NOT BROUGHT ON RECORD ANY CREDIBLE VERIFIABLE EVIDENCE IN TERMS OF ASSESSEE C OMPANY HAVING INCURRED EXPENDITURE ON PURCHASE OF EQUIPMENTS AND GRANT OF LICENSE OVER AND ABOVE WHAT HAS BEEN STATED IN THE BOOKS OF ACCOUNTS OR THE VALUE OF EQUIPMENT AND THE COST OF OBTAINING THE LI CENSE IF SO PROCURED AT THE RELEVANT POINT IN TIME IS HIGHER THAN WHAT H AS BEEN STATED IN THE BOOKS OF ACCOUNTS. FURTHER, THERE IS NOTHING ON RE CORD WHICH SUGGESTS THESE ALLEGED INVESTMENTS HAVE BEEN MADE DURING THE YEAR UNDER CONSIDERATION. IN FACT, THE ASSESSING OFFICER HAS TAKEN ON RECORD THE BALANCE SHEET AS ON 16.05.2012 WHEREIN THE COST OF THE EQUIPMENT HAS ITA NO. 42/JP/2017 DCIT VS. M/S HINDUSTAN BROADCASTING CO. PVT. LTD. 7 BEEN STATED AS RS. 3,75,31,711/- AND LICENSE FEE AT RS. 22,29,480/-. THE LD. CIT(A) HAS ALSO RETURNED A FINDING THAT THE CHANNEL HAS GONE ON AIR IN THE FINANCIAL YEAR 20010-11 PERTAINING TO AS SESSMENT YEAR 2011- 12 AND IF ANY ADDITION HAS TO BE MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT, IT HAS TO BE IN A.Y. 2011-12 AND NOT I N THE IMPUGNED ASSESSMENT YEAR. IN LIGHT OF THE ABOVE DISCUSSIONS, WE DO NOT SEE ANY INFIRMITY IN THE FINDING AND ORDER OF THE LD. CIT(A ). HENCE, WE CONFIRM THE ORDER OF THE LD. CIT(A) AND BOTH THE GROUNDS OF APPEAL TAKEN BY THE REVENUE ARE HEREBY DISMISSED. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMI SSED. ORDER PRONOUNCED IN THE OPEN COURT ON 25/06/2018. SD/- SD/- FOT; IKY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 25/06/2018. *SANTOSH VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- DCIT, CENTRAL CIRCLE-3, JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT- M/S HINDUSTAN BROADCASTING COMPANY PVT. LTD., JAIPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE { ITA NO. 42/JP/2017} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR