Petla Jagannadh, Hyd, Hyderabad V. ACIT, Central Circle-5 Hyd, Hyderabad

ITA 424/HYD/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6002 (ITAT-HYDERABAD)
• Duration Of Justice: 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 21-03-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 16-04-2015
• Court: TRIBUNAL
• Department Lawyers: B KURMI NAIDU
• Section: 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH ES B , HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER I.T.A. NO. 424 /H YD /201 5 ASSESSMENT YEAR: 20 11 - 1 2 SRI PETLA JAGANNADH, HYDERABAD [PAN: A EK PP2273E ] VS ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 5, HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI A. SRINIVAS, AR FOR REVENUE : SHRI B. KURMI NAIDU , DR DATE OF HEARING : 2 1 - 0 3 - 201 6 DATE OF PRONOUNCEMENT : 23 - 0 3 - 201 6 O R D E R PER B. RAMAKOTAIAH, A.M. : THIS IS AN ASSESSEE S APPEAL AGAINST THE ORDER OF THE COM MISSIONER OF INCOME TAX ( APPEALS ) - 12 , HYDERABAD , DATED 29 - 0 1 - 201 5 . 2. BRIEFLY STATED, A SSESSEE IS AN INDIVIDUAL WHO BY PROFESSION A FILM WRITER, D IRECTOR AND PRODUCER OF FILMS, FILED HIS RETURN OF INCOME FOR THE AY. 2011 - 12 ON 3 0 - 09 - 2011 DECLARING AN INCOME OF RS. 1,98,38,784/ - . THE CASE WAS TAKEN UP FOR SCRUTINY AND THE ASSESSMENT WAS COMPLETED ON A TO TAL INCOME OF RS. 2,45,24,936/ - . WHI LE COMPLETING THE ASSESSMENT, THE ASSESSING OFFICER (AO) MADE CERTAIN ADDITIONS. ONE OF THE ADDITIONS WAS AN AMOUNT OF RS. 10,00,000/ - , BEING CASH RECEIVED FROM M/S. R.R. MOVIE MAKERS. THIS ADDITION WAS MADE BASED ON A DOCUMENT FOUND AT THE I.T.A. NO. 424 / HYD / 201 5 SRI PETLA JAGANNADH : - 2 - : PREMISES OF M /S. R.R. MOVIE MAKERS WHEN THERE WAS A SEARCH AT THEIR PREMISES. AGGRIEVED BY THE ORDER OF AO, ASSESSEE PREFERRED AN APPEAL BEFORE CIT(A). CIT(A) DISMISSED THE APPEAL OF ASSESSEE BY SUSTAIN ING THE ADDITION OF RS. 10,00,000/ - MADE BY THE AO. AGGRIEVED BY THE ORDER OF CIT(A), ASSESSEE PREFERRED SECOND APPEAL BEFORE THE HON'BLE ITAT AND RAISED THE FOLLOWING GROUNDS: 1. THE ORD ER OF THE AO IS CONTRARY TO LAW, FACTS & CIRCUMSTANCES OF THE CASE. 2. THE AO OUGHT NOT TO HAVE ADDED AN AMOUNT OF RS. 10,00,000/ - BEING CASH PAID TO M/S. R.R. MOVIE MAKERS AS INCOME OF THE ASSESSEE. INVOKING THE PROVISIONS OF U/S. 292C OF THE INCOME TAX ACT. 3. THE APPELLATE COMMISSIONER OUGHT NOT TO HAVE CONFIRMED THE ORDER OF THE AO IN ADDITION AN AMOUNT OF RS. 10,00,000/ - . 4. THE APPELLATE COMMISSIONER OUGHT NOT TO HAVE CONFIRM THE ADDITION ON AN ENTIRELY DIFFERED PREMISE IGNORING THE FACT THAT THE AO HAS CONFIRMED THE ADDITION BASED ON THE PRESUMPTION U/S. 292C. 5. THE APPELLATE COMMISSIONER CAN NOT DRAW INFERENCE ON A DIFFE RENT PARAMETERS, WITHOUT FOLLOWING DUE PROCESS OF LAW. 6. ANY OTHER GROUNDS WHICH THE APPELLANT MAY URGE EITHER AT OR BEFORE THE DATE OF HEARING. 3 . THE ONLY ISSUE IN THIS APPEAL IS WITH REFERENCE TO ADDITION OF RS. 10,00,000/ - MADE IN ASSESSEES CA S E ON THE BASIS OF PAGES. A - 462 TO 468 CARRYING DETAILS OF MOVIE BUSINESS MAN STATED TO BE SEIZED FROM THE RESIDENCE OF SRI G.V. PHANEENDRA REDDY, THE PARTNER IN THE FIRM M/S. R.R. MOVIE MAKERS VIDE THE SEARCH ON 08 - 12 - 2011. IN THAT SEARCH, THE DOCUMENTS W ERE SEIZED INDICATING CERTAIN CASH PAYMENTS TO VARIOUS PEOPLE; ONE SUCH PERSON IS ASSESSEE, WHO IS THE DIRECTOR OF THE MOVIE. ON THE BASIS OF THE SAID DOCUMENT AND INVOKING THE PROVISIONS OF SECTION 292C , AO MADE THE ADDITION OF RS. 10 LAKHS STATED TO BE AMOUNT RECEIVED AND NOT DISCLOSED. I.T.A. NO. 424 / HYD / 201 5 SRI PETLA JAGANNADH : - 3 - : 4. ASSESSEE CONTENDED BEFORE THE LD. CIT(A) THAT PROVISIONS OF SECTION 292C ARE NOT APPLICABLE TO THE ASSESSEE AND THE SAID PHANEENDRA REDDY DENIED HAVING PAID ANY AMOUNTS IN CASH AND RELIED ON VARIOUS JUDGMENTS ALSO. LD . CIT(A), HOWEVER, RELYING ON THE EXTRACTS FROM THE DOCUMENTS, CONFIRMED THE AMOUNTS. 5. LD. COUNSEL AT THE OUT SET SUBMITTED THAT SIMILAR ADDITION ON THE BASIS OF THE SAME DOCUMENT WAS ALSO BROUGHT TO TAX IN THE HANDS OF SHRI G. MAHESH BABU, CINE ACTOR AND THE ITAT VIDE ITA NO. 256 AND OTHERS/HYD/2015 DT. 27 - 11 - 2015 CONSIDERED THE FACTS AND REJECTED THE CONTENTIONS OF THE DEPARTMENT AND DELETED THE ADDITION . HE FURTHER CONTENDED THAT PROVISIONS OF SECTION 292C WILL APPLY IN THE HANDS OF A PERSON WHO WAS SEARCHED AND ASSESSEE WAS NOT SEARCHED. THEREFORE, RELIANCE ON SECTION 292C IS NOT CORRECT. LD. DR HOWEVER, WHILE JUSTIFYING THE ACTION OF THE AO SUBMITTED THAT PROVISIONS OF SECTION 292C(2) WILL APPLY AND SUPPORTED THE ORDERS. 6. WE HAVE CONSIDERED TH E ISSUE AND EXAMINED. THE ADDITION IN THE HANDS OF SHRI G. MAHESH BABU , WHICH WAS DELETED BY THE CO - ORDINATE BENCH (WHEREIN AM IS ALSO CO - AUTHOR) HAS CONSIDERED THE SAME DOCUMENTS , AS UNDER: 34. THE ONLY OTHER GROUND THAT SURVIVES FOR CONSIDERA TION IS IN ITA NO.58/HYD/2015, WHEREIN, VIDE GROUND OF APPEAL NO.5, ASSESSEE HAS CHALLENGED THE ADDITION OF RS.2 CRORES MADE AS UNDISCLOSED INCOME. 35. BRIEFLY, THE FACTS ARE, IN THE COURSE OF SEARCH AND SIEZURE OPERATIONS CONDUCTED IN THE CASE OF SHRI J ETTI VENAKTA PHANINDRA REDDY, PRODUCER OF THE FILM BUSINESSMAN CERTAIN INCRIMINATING MATERIAL IN THE FORM OF LOOSE SHEETS WERE FOUND AND SEIZED. AS PER THE SEIZED MATERIAL, OVER AND ABOVE THE PAYMENTS RECEIVED IN CHEQUE TOWARDS REMUNERATION FOR ACTING IN THE FILM BUSINESSMAN, ASSESSEE HAD BEEN PAID CASH OF RS. 2 CRORES. WHEREAS IT WAS NOTICED BY THE ASSESSING OFFICER, ASSESSEE HAD ONLY SHOWN REMUNRATI0ON OF RS.4.87 CRORES, RECEIVED IN CHEQUE FROM THE MOVIE BUSINESSMAN WITHOUT DISCLOSING THE AMOUNT OF RS.2 CRORE IN CASH I.T.A. NO. 424 / HYD / 201 5 SRI PETLA JAGANNADH : - 4 - : AS REVEALED FROM SEIZED MATERIAL. THE ASSESSING OFFICER, THEREFORE, ISSUED SUMMONS TO BOTH ASSESSEE AND THE PRODUCER SHRI J.V.PHANINDRA REDDY. AS OBSERVED BY ASSESSING OFFICER, BOTH ASSESSEE AND SHRI REDDY FLATLY DENIED OF ANY PAYMENT HA VING BEEN MADE IN CASH OVER AND ABOVE THE CHEQUE PAYMENTS. ASSESSING OFFICER, HOWEVER, DISBELIEVED THE STATEMENTS OF ASSESSEE AND SHRI REDDY. HE OBSERVED THAT WHEN THE CHEQUE PAYMENTS RECORDED IN THE SEIZED MATERIAL WAS ACCEPTED AS CORRECT, CASH PAYMENT S RECORDED CANNOT BE DENIED. HE FURTHER OBSERVED, IN VIEW OF THE SPECIFIC PROVISION OF S.292C PRESUMPTION COULD BE, THE CONTENTS OF SEIZED MATERIAL ARE TRUE. THOUGH ASSESSEE STRONGLY PROTESTED BEFORE THE ASSESSING OFFICER BY STATING THAT LOOSE SHEETS SEIZE D FROM A THIRD PARTY CANNOT FORM THE BASIS FOR ADDITION AND ALSO RELIED UPON SOME JUDICIAL AUTHORITIES IN THAT CONTEXT, THE ASSESSING OFFICER REJECTING ALL CONTENTIONS OF ASSESSEE TREATED THE AMOUNT OF RS.2 CRORE AS THE UNDISCLOSED INCOME OF THE ASSESSEE FOR THE YEAR. THOUGH THE ASSESSEE CHALLENGED THE ADDITION IN APPEAL, THE LEARNED CIT(A) SUSTAINED THE ADDITION MORE OR LESS ADOPTING THE REASONING OF THE ASSESSING OFFICER. 36. LEARNED AUTHORISED REPRESENTATIVES SUBMISSIONS WHILE CONTESTING THE ADDI TION ARE TWO - FOLD. FIRSTLY, LOOSE SHEETS SEIZED FROM A THIRD PARTY, WILL HAVE NO EVIDENTIARY VALUE, HENCE CANNOT FORM BASIS FOR ANY ADDITION. HE SUBMITTED, ASSESSEE HAS RECEIVED HIS REMUNERATION FOR THE CONCERNED MOVIE ENTIRELY IN CHEQUE WHICH IS DULY REF LECTED IN HIS BANK ACCOUNT AS WELL AS BOOKS OF ACCOUNT. HE SUBMITTED, PRODUCERS BOOKS OF ACCOUNT ALSO REFLECT THE SAME AMOUNT. HE SUBMITTED BOTH ASSESSEE AS WELL AS THE PRODUCER APPEARING BEFORE THE ASSESSING OFFICER HAVE DENIED OF ANY CASH TRANSACTION. THEREFORE, SOLELY RELYING UPON A LOOSE SHEET SEIZED FROM A THIRD PARTY, HAVING NO EVIDENTIARY VALUE, ADDITION CANNOT BE MADE. THE SECOND ARGUMENT ADVANCED BY THE LEARNED AUTHORISED REPRESENTATIVE IS, EVEN ACCEPTING THAT CASH PAYMENT RECORDED IN THE SEIZED MATERIAL IS CORRECT, NO SPECIFIC DATE IS MENTIONED AGAINST SUCH PAYMENT. DRAWING THE ATTENTION OF THE BENCH TO THE SEIZED MATERIAL AT PAGE 3 OF THE PAPER - BOOK, HE SUBMITTED, DATES APPEARING AGAINST EACH PAY - MENT IS IN SEQUENCE. THEREFORE, IF THE PAYMENT RECORDED IN THE DOCUMENT IMMEDIATELY AFTER ASSESSEES NAME IS IN FEBRUARY, THEN IT MUST BE ACCEPTED THAT PAYMENT MADE TO ASSESSEE IS PRIOR TO THAT DATE, HENCE, IT WILL NOT RELATE TO THE IMPUGNED ASSESSMENT YEAR. THEREFORE, NO ADDITION CAN BE MADE IN THE IM PUGNED ASSESSMENT YEAR. IN SUPPORT OF HIS CONTENTION, LEARNED AUTHORISED REPRESENTATIVE RELIED UPON THE FOLLOWING DECISIONS - (A) PRADEEP AMRUTHLAL RUNWAL V/S.TRO (2014) 149 ITD 548(PUNE) (B) DCIT V/S. K. BABU RAO (2014) 39 CCH 0034 (HYD. TRIB) (C) DCIT V/S. C. KRIS HNA YADAV (2011) 46 SOT 250 (HYD) 37. LEARNED DEPARTMENTAL REPRESENTATIVE, RELIED UPON THE REASONING OF THE ASSESSING OFFICER AND THE CIT(A). I.T.A. NO. 424 / HYD / 201 5 SRI PETLA JAGANNADH : - 5 - : 38. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIES AND PERUSED THE MATERIALS ON RECORD. WE HAVE ALSO EXAM INED THE DECISIONS CITED AT THE BAR. UNDISPUTEDLY, THE BASIS FOR THE ADDITION OF RS.2 CRORES AS UNDISCLOSED INCOME IS A LOOSE SHEET SEIZED NOT FROM THE ASSESSEE, BUT FROM A THIRD PARTY, WHO HAPPENS TO BE PRODUCER OF A MOVIE IN WHICH ASSESSEE HAS ACTED. ON A PERUSAL OF THE SAID SEIZED DOCUMENT, A COPY OF WHICH IS AT PAGE 3 OF THE PAPER - BOOK, WE FIND IT CONTAINS CASH PAYMENTS MADE TO SOME PERSONS, ONE AMONGST THEM BEING THE ASSESSEE. ADMITTEDLY, APART FROM THIS DOCUMENT, NO OTHER EVIDENCE/MATERIAL WAS FOUND OR HAS BEEN BROUGHT ON RECORD TO DEMONSTRATE THAT CASH PAYMENT OF RS. 2 CRORE WAS ACTUALLY MADE TO ASSESSEE. MORE IMPORTANTLY, EVEN THOUGH A SEARCH OPERATION WAS ALSO CARRIED OUT IN THE CASE OF ASSESSEE, NO INCRIMINATING MATERIAL WAS FOUND. IT IS ALSO A FACT ON RECORD THAT PURSUANT TO SUMMONS ISSUED, BOTH THE ASSESSEE AS WELL AS THE PRODUCER OF THE MOVIE APPEARED BEFORE THE ASSESSING OFFICER AND DENIED OF HAVING MADE ANY CASH TRANSACTION AS RECORDED IN THE SEIZED DOCUMENT. IN FACT, A CONFIRMATION LETTE R OBTAINED FROM THE PRODUCER STATING THEREIN THAT ENTIRE REMUNERATIONS ARE PAID IN CHEQUES WAS ALSO SUBMITTED BEFORE THE ASSESSING OFFICER. FURTHER, REMUNERATION RECEIVED BY THE ASSESSEE FOR THE MOVIE BUSINESSMAN AS REFLECTED IN ASSESSEES BANK ACCOUNT A ND BOOKS OF ACCOUNT IS ALSO IN AGREEMENT WITH THE BOOKS OF ACCOUNTS MAINTAINED BY THE PRODUCER. IN THESE CIRCUMSTANCES, EXPLANATION FURNISHED BY SHRI PHANINDRA REDDY BEFORE THE ASSESSING OFFICER TO THE EFFECT THAT PAYMENTS RECORDED IN THE LOOSE SHEET ARE FOR ENHANCEMENT OF BUDGET FROM EXHIBITORS APPEARS PLAUSIBLE. MOREOVER, EXCEPT THE LOOSE SHEET SEIZED FROM THIRD PARTY, THERE IS NO OTHER EVIDENCE, WHICH COULD ESTABLISH THE CASH PAYMENT TO ASSESSEE. IN OUR VIEW, IN THE ABSENCE OF ANY OTHER CORROBORATIVE EVIDENCE TO PROVE THE CONTENTS OF THE SEIZED DOCUMENT TO BE CORRECT, IT WILL HAVE NO EVIDENTIARY VALUE IN THE EYE OF LAW, HENCE, NO ADDITION CAN BE MADE SOLELY RELYING UPON SUCH DOCUMENT. MORE SO, WHEN BOTH THE ASSESSEE AS WELL AS THE PERSON FROM WHOM THE DOCUMENT WAS SEIZED HAVE DENIED OF HAVING ENTERED INTO ANY SUCH TRANSACTION/ THEREFORE, IN OUR VIEW, THE ADDITION MADE BY THE ASSESSING OFFICER CANNOT BE SUSTAINED. 39. THERE IS ONE MORE ASPECT TO THE ISSUE. ON CAREFUL EXAMINATION OF THE SEIZED DOCUMEN T, IT IS SEEN, AGAINST THE NAME OF EVERY PERSON TO WHOM PAYMENT IS SUPPOSED TO HAVE BEEN MADE, A DATE IS MENTIONED. INTERESTINGLY, AGAINST ASSESSEES PAYMENT NO DATE IS MENTIONED. FURTHER, THE PAYMENT DATES ARE IN SEQUENCE. IT IS TO BE NOTED, AS PER THE SEIZED DOCUMENT, THE PAYMENT IMMEDIATELY AFTER ASSESSEE IS RS. 10 LAKHS TO PURI JAGANNADH IN FEBRUARY, 2011. SINCE, ALL SUBSEQUENT PAYMENTS ARE IN CHRONOLOGICAL ORDER, ASSESSEES CONTENTION THAT PAYMENT MADE TO HIM, IF AT ALL, IS PRIOR TO FEBRUARY, 2011 I S ACCEPTABLE. KEEPING THESE FACTS IN VIEW WHEN THE BENCH MADE A SPECIFIC QUERY TO LEARNED DEPARTMENTAL REPRESENTATIVE TO EXPLAIN HOW ASSESSING OFFICER HAS CORRELATED THE PAYMENT TO THE IMPUGNED ASSESSMENT YEAR, HE HAS NO VALID ANSWER FOR THE SAME. THEREFO RE, EVEN ACCEPTING FOR ARGUMENTS SAKE THAT CONTENTS OF SEIZED DOCUMENT ARE CORRECT, BUT CERTAINLY, IT CANNOT BE LINKED TO THE IMPUGNED ASSESSMENT YEAR. THUS, LOOKED AT FROM ANY ANGLE, THE ADDITION I.T.A. NO. 424 / HYD / 201 5 SRI PETLA JAGANNADH : - 6 - : CANNOT BE SUSTAINED. ACCORDINGLY, ALLOWING ASSESSEES GROU ND, WE DELETE THE ADDITION OF RS.2 CRORES. SINCE THE EVIDENTIARY VALUE OF THE D OCUMENT WAS CERTAINLY EXAMINED IN THE ABOVE SAID CASE AND IT WAS HELD T HAT IN THE ABSENC E OF ANY CORROBORATIVE EVIDENCE , THE SAME WILL NOT HAVE ANY EVIDENTIARY VALUE. THE REV ENUE DID NOT ESTABLISH THAT THE SAID DOCUMENT WAS NOT PREPARED FOR DISTRIBUTION PURPOSES. IT IS ALSO ON RECORD THAT ASSESSEE IN THE STATEMENT RECORDED SUBSEQUENT TO THE SEARCH ALSO DENIED THE DOCUMENT OR RECEIPT OF THE PAYMENTS. 7. THE RELIANCE ON SECTIO N 292C BY THE AO AND CIT(A) IS ALSO NOT CORRECT. PROVISIONS OF SECTION 292C ARE APPLICABLE IN A CASE WHERE A SEARCH WAS CONDUCTED OR CERTA IN DOCUMENTS WERE REQUISITIONED. THE PROVISIONS WERE APPLICABLE ONLY IN THE HANDS OF THE SEARCHED PERSON. ASSESSEE H AVING BEEN NOT COVERED BY THE PROVISIONS OF SECTION 132 OR 132A, THE SAID PROVISIONS OF 292C DOES NOT APPLY. MOREOVER, THE ASSESSMENT ORDER WAS NOT PASSED EVEN U/S. 153C . THEREFORE, THE ADDITION CANNOT BE SUSTAINED IN THE HANDS OF ASSESSEE ONLY BECAUSE C ERTAIN DOCUMENTS STATED TO HAVE BEEN FILED FOR THE PURPOSE OF MARKETING THE CINEMA AND NOT THE ACTUAL EXPENDITURE CANNOT BE CONSIDERED FOR MAKING AN ADDITION IN THE HANDS OF ASSESSEE. ACCORDINGLY, THE GROUNDS OF ASSESSEE ARE ALLOWED, THE ADDITION SO MADE IS DELETED. 8. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD MARCH , 201 6 SD/ - SD/ - (P. MADHAVI DEVI) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED 23 RD MARCH , 2016 TNMM I.T.A. NO. 424 / HYD / 201 5 SRI PETLA JAGANNADH : - 7 - : COPY TO : 1. SRI PETLA JAGANNADH , PLOT NO. 623/1, ROAD NO. 34, JUBILEE HILLS, HYDERABAD. 2 . ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 5, HYDERABAD. 3 . CIT (APPEALS) - 12 , HYDERABAD. 4. CIT - CENTRAL , HYDERABAD. 5 . D.R . ITAT, HYDERABAD. 6 . GUARD FILE.