STUDIO & ENTERTAINMENT LTD, MUMBAI V. ASST CIT RG 11(1), MUMBAI

ITA 4295/MUM/2016

AI Insights

The case involves S.J. Studio & Entertainment Ltd., which appealed against the order of the Commissioner of Income Tax (Appeals) confirming the addition of Rs. 81,07,050 to its income for the assessment year 2010-11. The addition was based on the finding that the company had inflated its sales figures by recording fictitious sales in the name of XYZ Private Limited to avail more credit facilities from the bank. The Tribunal examined the circumstances under which the sales were recorded, the lack of evidence for actual transactions, and the procedural adherence during the survey and assessment proceedings. The Tribunal concluded that the additions made were not substantiated by credible evidence and thus allowed the appeal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 123267 (ITAT-MUMBAI)
• Duration Of Justice: 6 year(s) 7 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 15-12-2022
• Assessment Year: 2010-2011
• Appeal Filed On: 21-06-2016
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Retraction; Set aside
• Section: 69; 142(1); 133A; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “C” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI SANDEEP SINGH KARHAIL (JUDICIAL MEMBER) ITA No. 4295/MUM/2016 Assessment Year: 2010-11 S.J. Studio & Entertainment Ltd., Ground Floor, Hindustan Oil Mills Compound, Kherani Road, Saki Naka, Andheri (East), Mumbai-400072. Vs. The ACIT, Range 11(1), 438, Aaykar Bhavan, M.K. Road, Mumbai-400020. PAN No. AAJCS 0805 P Appellant Respondent Assessee by : Mr. Rakesh Singh, Adv. Revenue by : Dr. Ujjwal Kumar Chavhan, CIT- DR Date of Hearing : 16/12/2022 Date of pronouncement : 13/02/2023 ORDER PER OM PRAKASH KANT, AM This appeal by the assessee is directed against order dated 16/02/2016 passed by the Ld. Commissioner of Income- tax(Appeals)-4, Mumbai [in short ‘the Ld. CIT(A)’] for assessment year 2010-11, raising following grounds: 1. The Ld. Commissioner of Income Tax (A) has erred in confirming the action of the Assessing Officer assessing the Income of the assessee at Rs. 1,20,85,400/ declared by the appellant in his return 2. The Ld. Commissioner of Income Tax (A) has erred in facts and in law in adding Rs. 81,07,050/ the Appellant even though it was explained that Appellant had nothing to sale and entry were inflated to apply for more credit facilities from the bank. 3. The order of Ld. Commissioner is wrong factually as well as legally and cannot be sustained. 2. At the outset, the application for condonation of the delay in submitting the appeal. He submitted that order of the Ld. CIT(A) dated 16/02/2016 was received by the assessee company on 05/04/2016 and therefore appeal was to be filed before the ITAT latest by 03/06/2016. However due to health probl resumed office in the month of May 2016, and thereafter only the appeal could be filed on 21/06/2016. He referred to the affidavit filed by the Director of the assessee company. The submitted that there is a reasonable and sufficient cause for delay in filing the appeal and it was not an intentional as the assessee is not benefiting in any manner by delay in filing appeal. The learne DR however objected for condoning the delay. 3. We have heard rival submission of the parties on the issue of condoning the delay in filing the appeal. In our opinion, due to medical reasons stated in the affidavit by the director of the assessee company, the assessee was prevented by sufficient cause S.J. Studio & 1,20,85,400/-/- instead of Rs. 34,80,498/ ed by the appellant in his return of income. The Ld. Commissioner of Income Tax (A) has erred in facts and in law in adding Rs. 81,07,050/- as sales of the Appellant even though it was explained that Appellant had nothing to sale and entry were inflated to apply for more credit facilities from the bank. The order of Ld. Commissioner is wrong factually as well as legally and cannot be sustained. the outset, the Ld. counsel of the assessee referre application for condonation of the delay in submitting the appeal. He submitted that order of the Ld. CIT(A) dated 16/02/2016 was received by the assessee company on 05/04/2016 and therefore appeal was to be filed before the ITAT latest by 03/06/2016. However due to health problems of the director Sh SS Hamid resumed office in the month of May 2016, and thereafter only the appeal could be filed on 21/06/2016. He referred to the affidavit filed by the Director of the assessee company. The submitted that there is a reasonable and sufficient cause for delay in filing the appeal and it was not an intentional as the assessee is not benefiting in any manner by delay in filing appeal. The learne DR however objected for condoning the delay. We have heard rival submission of the parties on the issue of condoning the delay in filing the appeal. In our opinion, due to medical reasons stated in the affidavit by the director of the assessee company, the assessee was prevented by sufficient cause S.J. Studio & Entertainment Ltd. 2 ITA No. 4295/M/2016 AY 2010-11 instead of Rs. 34,80,498/- as of income. The Ld. Commissioner of Income Tax (A) has erred in as sales of the Appellant even though it was explained that Appellant had nothing to sale and entry were inflated to apply for more credit facilities from the bank. The order of Ld. Commissioner is wrong factually as counsel of the assessee referred to application for condonation of the delay in submitting the appeal. He submitted that order of the Ld. CIT(A) dated 16/02/2016 was received by the assessee company on 05/04/2016 and therefore appeal was to be filed before the ITAT latest by 03/06/2016. ems of the director Sh SS Hamid, he resumed office in the month of May 2016, and thereafter only the appeal could be filed on 21/06/2016. He referred to the affidavit filed by the Director of the assessee company. The Ld. counsel submitted that there is a reasonable and sufficient cause for delay in filing the appeal and it was not an intentional as the assessee is not benefiting in any manner by delay in filing appeal. The learned We have heard rival submission of the parties on the issue of condoning the delay in filing the appeal. In our opinion, due to medical reasons stated in the affidavit by the director of the assessee company, the assessee was prevented by sufficient cause and could not file the appeal on time. In the circumstances, we admit the appeal for adjudication. 4. Briefly stated facts of the case are that duri consideration, the assessee was engaged in providing facilities of studio for production o assessee filed return of income on 24/09/2010 declaring total income of ₹34,80,500/ of income filed by the assessee was selected for scrutiny and statutory notices under the Income Act’), were issued and complied with. 4.1 During assessment proceedings, the Assessing Officer noticed that a survey action under section 133A of the Act was conducted in the case of the assessee on 04/03/2010. observed two discrepancies. accounts maintained in the computer was of actual cash of ₹80, difference of cash of rupees 4,96,911/ ₹1,57,05,468/-was shown in the profit and loss account generated at the time of the survey, but when being questioned as why the advance tax was not paid on the said profit earned , the director Sh Sahir Siraj Hamid in his statement dat actual profit must had been less due to certain expenses like S.J. Studio & the appeal on time. In the circumstances, we admit the appeal for adjudication. stated facts of the case are that during the year under , the assessee was engaged in providing facilities of studio for production of television serial and commercial film. The assessee filed return of income on 24/09/2010 declaring total 500/-for the year under consideration. The return of income filed by the assessee was selected for scrutiny and nder the Income-tax Act, 1961 ( ), were issued and complied with. During assessment proceedings, the Assessing Officer noticed that a survey action under section 133A of the Act was conducted in the case of the assessee on 04/03/2010. The survey team mainly observed two discrepancies. Firstly, cash balance in the books of accounts maintained in the computer was of ₹5,77, 80,500/- was found and therefore there was difference of cash of rupees 4,96,911/-Secondly was shown in the profit and loss account generated at the time of the survey, but when being questioned as why the advance tax was not paid on the said profit earned , the director Sh Sahir Siraj Hamid in his statement dated 04/03/2010 stated that actual profit must had been less due to certain expenses like S.J. Studio & Entertainment Ltd. 3 ITA No. 4295/M/2016 AY 2010-11 the appeal on time. In the circumstances, we ng the year under , the assessee was engaged in providing facilities of f television serial and commercial film. The assessee filed return of income on 24/09/2010 declaring total for the year under consideration. The return of income filed by the assessee was selected for scrutiny and tax Act, 1961 (in short ‘the During assessment proceedings, the Assessing Officer noticed that a survey action under section 133A of the Act was conducted The survey team mainly , cash balance in the books of 77,411/-, whereas was found and therefore there was ndly, net profit of was shown in the profit and loss account generated at the time of the survey, but when being questioned as why the advance tax was not paid on the said profit earned , the director Sh ed 04/03/2010 stated that actual profit must had been less due to certain expenses like depreciation, interest et agreed to pay an amount of 4.2 After 11 days of the surve statement of the assessee was recorded on 15/03/2010, Shri Sahir Siraj Hamid stated that profit was on the higher side due to one sales entry in the name of XYZ was made at the end of the every month from April, 2009 to Januar ₹81,07,050/-. He further submitted that XYZ was a fictitious, non existent entity and said entries showing increase in purpose of availing loan for expan 4.3 The Ld. Assessing Officer rejected the contention of the assessee as an afterthought for evading tax and held that same were actual sales which were intended to keep out of books. 5. Before the Ld. CIT(A), the assessee claimed tha evidence of receipt of XYZ Private Limited either in the form of the cash, cheque or demand draft. It was submitted by the assessee that burden was on the revenue authorities to prove that income sou in fact an income of the assessee. The assessee also explained that no such company in the name of XYZ private limited existed in the S.J. Studio & depreciation, interest etc. not debited to the profit loss account, but agreed to pay an amount of ₹ 25 lakhs towards the tax liability. After 11 days of the survey proceedings, when again the statement of the assessee was recorded on 15/03/2010, Shri Sahir Siraj Hamid stated that profit was on the higher side due to one sales entry in the name of XYZ was made at the end of the every month from April, 2009 to January 2010 having total amount of . He further submitted that XYZ was a fictitious, non existent entity and said entries were made for the purpose of turnover for presenting to the bank for the purpose of availing loan for expansion of the studio. Assessing Officer rejected the contention of the assessee as an afterthought for evading tax and held that same which were intended to keep out of books. Before the Ld. CIT(A), the assessee claimed tha evidence of receipt of ₹81,750/-by the assessee from the alleged XYZ Private Limited either in the form of the cash, cheque or demand draft. It was submitted by the assessee that burden was on the revenue authorities to prove that income sought to be taxed was in fact an income of the assessee. The assessee also explained that no such company in the name of XYZ private limited existed in the S.J. Studio & Entertainment Ltd. 4 ITA No. 4295/M/2016 AY 2010-11 not debited to the profit loss account, but 25 lakhs towards the tax liability. y proceedings, when again the statement of the assessee was recorded on 15/03/2010, Shri Sahir Siraj Hamid stated that profit was on the higher side due to one sales entry in the name of XYZ was made at the end of the every y 2010 having total amount of . He further submitted that XYZ was a fictitious, non- made for the purpose of turnover for presenting to the bank for the sion of the studio. Assessing Officer rejected the contention of the assessee as an afterthought for evading tax and held that same which were intended to keep out of books. Before the Ld. CIT(A), the assessee claimed that there was no by the assessee from the alleged XYZ Private Limited either in the form of the cash, cheque or demand draft. It was submitted by the assessee that burden was on ght to be taxed was in fact an income of the assessee. The assessee also explained that no such company in the name of XYZ private limited existed in the register of registrar of companies the contentions of the assessee observing as under: 3.3. I have considered the outcome of survey conducted u/s. 133A of the Income the findings of the Assessing Officer in assessment order, rival submission of the appellant and evidences on record, carefully. During the course of survey proceeding, it was found by the survey party that as per the profit & loss account as on 05.03.2010 generated from the computerized books of accounts, Net Profit was of Rs. 1,57,05,468/ Advance-tax. When this information was extracted from the evidences created by the Appellant, Appellant was confronted with these facts. However, no convincing explanation was given by the Appellant at the time of survey. Mr. Sahir Siraj examined and his statement on oath was recorded on 05.03.2010.When he was confronted with the evidences in possession that as per the profit & loss account generated from the computer, there was a Net Profit of Rs.1,57,05,468/ Director of the Company was not able to explain and had shifted his responsibility upon the Accountant on the ground that his Accountant had gone to his native place and all the necessary evidences would be given after his return. When initial explanatior. was that this much profit could not be there the business receipts was considerably less during the year and further it was clarified that such profit of Rs. 1,57,05,468/ reduced after claiming depreciation and oth expenditure which were yet to be entered. However, during the course of survey proceedings, the Director of the Company has admitted as under : ...to buy peace of mind and in order to avoid inconvenience, I am prepared to pay an amount of Rs.25 lacs towards the tax liability" 3.4. Subsequently on 15.03.2010, the Director has stated that he had discussed the matter that his Accountant S.J. Studio & er of registrar of companies. However, the Ld. CIT(A) rejected of the assessee observing as under: 3.3. I have considered the outcome of survey conducted u/s. 133A of the Income-tax Act, 1961 on 04.03.2010, the findings of the Assessing Officer in assessment order, rival submission of the appellant and evidences on ecord, carefully. During the course of survey proceeding, it was found by the survey party that as per the profit & loss account as on 05.03.2010 generated from the computerized books of accounts, Net Profit was of Rs. 1,57,05,468/-, nevertheless Appellant had not paid any tax. When this information was extracted from the evidences created by the Appellant, Appellant was confronted with these facts. However, no convincing explanation was given by the Appellant at the time of survey. Mr. Sahir Siraj Hamid, the Director was examined and his statement on oath was recorded on 05.03.2010.When he was confronted with the evidences in possession that as per the profit & loss account generated from the computer, there was a Net Profit of Rs.1,57,05,468/- , but no Advance-tax was paid, the Director of the Company was not able to explain and had shifted his responsibility upon the Accountant on the ground that his Accountant had gone to his native place and all the necessary evidences would be given after his turn. When initial explanatior. was that this much profit could not be there the business receipts was considerably less during the year and further it was clarified that such profit of Rs. 1,57,05,468/- would be reduced after claiming depreciation and oth expenditure which were yet to be entered. However, during the course of survey proceedings, the Director of the Company has admitted as under :- ...to buy peace of mind and in order to avoid inconvenience, I am prepared to pay an amount of Rs.25 wards the tax liability" 3.4. Subsequently on 15.03.2010, the Director has stated that he had discussed the matter that his Accountant S.J. Studio & Entertainment Ltd. 5 ITA No. 4295/M/2016 AY 2010-11 he Ld. CIT(A) rejected 3.3. I have considered the outcome of survey conducted tax Act, 1961 on 04.03.2010, the findings of the Assessing Officer in assessment order, rival submission of the appellant and evidences on ecord, carefully. During the course of survey proceeding, it was found by the survey party that as per the profit & loss account as on 05.03.2010 generated from the computerized books of accounts, Net Profit was of Rs. had not paid any tax. When this information was extracted from the evidences created by the Appellant, Appellant was confronted with these facts. However, no convincing explanation was given by the Appellant at the time of Hamid, the Director was examined and his statement on oath was recorded on 05.03.2010.When he was confronted with the evidences in possession that as per the profit & loss account generated from the computer, there was a Net Profit of tax was paid, the Director of the Company was not able to explain and had shifted his responsibility upon the Accountant on the ground that his Accountant had gone to his native place and all the necessary evidences would be given after his turn. When initial explanatior. was that this much profit could not be there the business receipts was considerably less during the year and further it was would be reduced after claiming depreciation and other expenditure which were yet to be entered. However, during the course of survey proceedings, the Director of ...to buy peace of mind and in order to avoid inconvenience, I am prepared to pay an amount of Rs.25 3.4. Subsequently on 15.03.2010, the Director has stated that he had discussed the matter that his Accountant who has stated that profit was on higher side due to sale entry made in the name of M/s. XYZ at the end of every month from April, 2009 to January, 2010. Mis. XYZ is not an existing party as there is a difference in Si.Nos. of Sales Bills of regular customers and Sale Bills shown in the name of Ms.XYZ. The contention that due to fictitious sale, profit has been inflated by R regard, it is pertinent to mention that clarification of the Appellant is not at all convincing one, rather found to be meaningless. When genuineness of books of accounts are claimed by the Appellant and it has never been admitted that Appellant maintains false Accounts, such outcome of profit & loss accounts that upto the date of survey i.e. 05.03.2010, there was a profit of Rs.1,57,05,468/ claim that sales were inflated in the name of non person, is of no avail becaus in the month of April, 2009, definitely cash might be generated or unaccounted income would have been channelized. The Appellant has failed to explain the cash balance appearing at the end of every month, therefore, the sales shown in any name cannot be ignored on the basis of such retraction. It is very evident from the evidences on record that Appellant has earned good profit but with a view to suppress the same, he has tried to advance "cooked seen from the reply to Question No. 13 of the statement dated 05.03.2010 that Appellant was explaining that this Net Profit of Rs. 1,57,05,468/ claiming depreciation and other expenses which were yet to be entered. It means so depreciation was to be reduced whereas subsequently, Appellant has changed the stand and had tried to make believe that sales was inflated by Rs.81,07.050/ 3.5. Further, it is pertinent to mention that in response to the notice us. 142( 20.11.2012 appellant has submitted explanation dated 11.12.2012 stating "As per the survey dated 04.03.2010, the income-tax officer on his visit to our Studio realized that on this day my accountant was on leave, and du that reasons the profit & loss account was shown at Rs.1.44 Crores. And after a couple of days hence when S.J. Studio & who has stated that profit was on higher side due to sale entry made in the name of M/s. XYZ at the end of every om April, 2009 to January, 2010. Mis. XYZ is not an existing party as there is a difference in Si.Nos. of Sales Bills of regular customers and Sale Bills shown in the name of Ms.XYZ. The contention that due to fictitious sale, profit has been inflated by Rs.81,07,050/-, in this regard, it is pertinent to mention that clarification of the Appellant is not at all convincing one, rather found to be meaningless. When genuineness of books of accounts are claimed by the Appellant and it has never been admitted at Appellant maintains false Accounts, such outcome of profit & loss accounts that upto the date of survey i.e. 05.03.2010, there was a profit of Rs.1,57,05,468/ claim that sales were inflated in the name of non- person, is of no avail because if sales has been inflated in the month of April, 2009, definitely cash might be generated or unaccounted income would have been channelized. The Appellant has failed to explain the cash balance appearing at the end of every month, therefore, hown in any name cannot be ignored on the basis of such retraction. It is very evident from the evidences on record that Appellant has earned good profit but with a view to suppress the same, he has tried to advance "cooked-up story" after 05.03.2010. It c seen from the reply to Question No. 13 of the statement dated 05.03.2010 that Appellant was explaining that this Net Profit of Rs. 1,57,05,468/- would be reduced after claiming depreciation and other expenses which were yet to be entered. It means some expenditure and depreciation was to be reduced whereas subsequently, Appellant has changed the stand and had tried to make believe that sales was inflated by Rs.81,07.050/- 3.5. Further, it is pertinent to mention that in response to the notice us. 142(1) of the Income-tax Act, 1961 dated 20.11.2012 appellant has submitted explanation dated 11.12.2012 stating "As per the survey dated 04.03.2010, tax officer on his visit to our Studio realized that on this day my accountant was on leave, and du that reasons the profit & loss account was shown at Rs.1.44 Crores. And after a couple of days hence when S.J. Studio & Entertainment Ltd. 6 ITA No. 4295/M/2016 AY 2010-11 who has stated that profit was on higher side due to sale entry made in the name of M/s. XYZ at the end of every om April, 2009 to January, 2010. Mis. XYZ is not an existing party as there is a difference in Si.Nos. of Sales Bills of regular customers and Sale Bills shown in the name of Ms.XYZ. The contention that due to fictitious , in this regard, it is pertinent to mention that clarification of the Appellant is not at all convincing one, rather found to be meaningless. When genuineness of books of accounts are claimed by the Appellant and it has never been admitted at Appellant maintains false Accounts, such outcome of profit & loss accounts that upto the date of survey i.e. 05.03.2010, there was a profit of Rs.1,57,05,468/-. The -existing e if sales has been inflated in the month of April, 2009, definitely cash might be generated or unaccounted income would have been channelized. The Appellant has failed to explain the cash balance appearing at the end of every month, therefore, hown in any name cannot be ignored on the basis of such retraction. It is very evident from the evidences on record that Appellant has earned good profit but with a view to suppress the same, he has tried up story" after 05.03.2010. It can be seen from the reply to Question No. 13 of the statement dated 05.03.2010 that Appellant was explaining that this would be reduced after claiming depreciation and other expenses which were yet me expenditure and depreciation was to be reduced whereas subsequently, Appellant has changed the stand and had tried to make - 3.5. Further, it is pertinent to mention that in response to tax Act, 1961 dated 20.11.2012 appellant has submitted explanation dated 11.12.2012 stating "As per the survey dated 04.03.2010, tax officer on his visit to our Studio realized that on this day my accountant was on leave, and due to that reasons the profit & loss account was shown at Rs.1.44 Crores. And after a couple of days hence when our Accountants joined back we once again went through our Books of Accounts and realized that the profit shown is actually not the real profit s taken into account for e.g.like depreciation, provisions entry, interest and other payment entry because the accounting year was not completed. And we never had profits of Rs.80 lakhs". 3.6. Thus, it is very evident that against inflated in profit & loss account as on 05.03.2010 expenditure like depreciation, provision entry, interest and other expenditure was to be claimed. It means profit shown was correct and only routine expenditure was to be claimed which Appellant therefore, the profit unearthed to the extent of Rs.1,57,05,468/ As regard various arguments, it is pertinent to mention that none of the arguments is tenable. In written submission, the Appellant has sh party as "XYZ Pvt. Ltd." whereas throughout the proceedings and in his statement the Director has referred to only "MIs. XYZ" and not "MIs. XYZ Put.Ltd.". Therefore, there is a twisting of fact. 3.7. It is meaningless to argue that name was not appearing in the register of ROC. Further, I find no merit in the argument that the Assessing Officer has not considered the explanation of the Appellant. It is not necessary for the Assessing Officer to accept the explanation which Assessing Officer has rightly rejected the cooked claimed to be explanation.Further, it is important to point out that the addition has not been made u/s.68 or 69 of the Income-tax Act, 1961 but addition has been account of suppression of income unearthed during the course of survey proceeding. Further, explanation that profit has been increased with a view to obtain credit facilities from the Bank, is not tenable because when subsequently, application was and when no further intention was there to obtain Bank loan, such entry if at all was fictitious, could be removed, S.J. Studio & our Accountants joined back we once again went through our Books of Accounts and realized that the profit shown is actually not the real profit since many entries were not taken into account for e.g.like depreciation, provisions entry, interest and other payment entry because the accounting year was not completed. And we never had profits of Rs.80 lakhs". 3.6. Thus, it is very evident that against the income inflated in profit & loss account as on 05.03.2010 expenditure like depreciation, provision entry, interest and other expenditure was to be claimed. It means profit shown was correct and only routine expenditure was to be claimed which Appellant had claimed. Subsequently. therefore, the profit unearthed to the extent of Rs.1,57,05,468/- cannot be substituted. As regard various arguments, it is pertinent to mention that none of the arguments is tenable. In written submission, the Appellant has shown name of alleged party as "XYZ Pvt. Ltd." whereas throughout the proceedings and in his statement the Director has referred to only "MIs. XYZ" and not "MIs. XYZ Put.Ltd.". Therefore, there is a twisting of fact. 3.7. It is meaningless to argue that name of this party was not appearing in the register of ROC. Further, I find no merit in the argument that the Assessing Officer has not considered the explanation of the Appellant. It is not necessary for the Assessing Officer to accept the explanation which is not acceptable at all. The Ld. Assessing Officer has rightly rejected the cooked-up story claimed to be explanation.Further, it is important to point out that the addition has not been made u/s.68 or 69 of tax Act, 1961 but addition has been made on account of suppression of income unearthed during the course of survey proceeding. Further, explanation that profit has been increased with a view to obtain credit facilities from the Bank, is not tenable because when subsequently, application was not moved to the Bank and when no further intention was there to obtain Bank loan, such entry if at all was fictitious, could be removed, S.J. Studio & Entertainment Ltd. 7 ITA No. 4295/M/2016 AY 2010-11 our Accountants joined back we once again went through our Books of Accounts and realized that the profit shown ince many entries were not taken into account for e.g.like depreciation, provisions entry, interest and other payment entry because the accounting year was not completed. And we never had the income inflated in profit & loss account as on 05.03.2010 expenditure like depreciation, provision entry, interest and other expenditure was to be claimed. It means profit shown was correct and only routine expenditure was to had claimed. Subsequently. therefore, the profit unearthed to the extent of As regard various arguments, it is pertinent to mention that none of the arguments is tenable. In written own name of alleged party as "XYZ Pvt. Ltd." whereas throughout the proceedings and in his statement the Director has referred to only "MIs. XYZ" and not "MIs. XYZ Put.Ltd.". of this party was not appearing in the register of ROC. Further, I find no merit in the argument that the Assessing Officer has not considered the explanation of the Appellant. It is not necessary for the Assessing Officer to accept the is not acceptable at all. The Ld. up story claimed to be explanation.Further, it is important to point out that the addition has not been made u/s.68 or 69 of made on account of suppression of income unearthed during the course of survey proceeding. Further, explanation that profit has been increased with a view to obtain credit facilities from the Bank, is not tenable because when not moved to the Bank and when no further intention was there to obtain Bank loan, such entry if at all was fictitious, could be removed, but it is very evident that right from April onwards Sales has been shown and cash has been generated or black money has been introduced in the name of sale. Such argument of the Appellant contradicts it's stand. Therefore, from this angle also, addition so made deserves approval. 3.8. Further, it is important to mention that when addition has not been made us.68 or 69 of tax Act, 1961, there was no occasion to rely upon the cases decided in the context of additional cash credit. None of the case laws relied upon by the Ld. A.R. is applicable to the facts of the case. Therefore, in the background of above discus fact and various references of the evidences, I also reach to the conclusion that additions so made by the Assessing Officer is correct, hence additions of Rs.81,07,050/ 6. Before us, Ld. containing page 1 to 246 and also filed copy of bills which were impounded during the course of survey proceedings. 7. Both the grounds of the appeal of addition of ₹81,07,050/ the submission made before the Ld. CIT(A) and further submitted that during the course of the survey even no bills or invoices in the name of XYZ Private Limited were found or impounded, which shows that only fictitious increasing the turnover support this contention, he also referred to the bills impounded, copy of which was obtained from the Assessing Officer through RTI S.J. Studio & but it is very evident that right from April onwards Sales has been shown and cash has been generated or black as been introduced in the name of sale. Such argument of the Appellant contradicts it's stand. Therefore, from this angle also, addition so made deserves approval. 3.8. Further, it is important to mention that when addition has not been made us.68 or 69 of the Income tax Act, 1961, there was no occasion to rely upon the cases decided in the context of additional cash credit. None of the case laws relied upon by the Ld. A.R. is applicable to the facts of the case. Therefore, in the background of above discussion of the fact and various references of the evidences, I also reach to the conclusion that additions so made by the Assessing Officer is correct, hence additions of Rs.81,07,050/- is sustained.” counsel of the assessee filed a paper bo containing page 1 to 246 and also filed copy of bills which were impounded during the course of survey proceedings. Both the grounds of the appeal of the assessee relate to the 07,050/-. The Ld. counsel of the assessee reiterated the submission made before the Ld. CIT(A) and further submitted that during the course of the survey even no bills or invoices in the name of XYZ Private Limited were found or impounded, which shows that only fictitious entries of the sales were made for increasing the turnover for the year under consideration. To support this contention, he also referred to the bills impounded, copy of which was obtained from the Assessing Officer through RTI S.J. Studio & Entertainment Ltd. 8 ITA No. 4295/M/2016 AY 2010-11 but it is very evident that right from April onwards Sales has been shown and cash has been generated or black as been introduced in the name of sale. Such argument of the Appellant contradicts it's stand. Therefore, from this angle also, addition so made 3.8. Further, it is important to mention that when the Income- tax Act, 1961, there was no occasion to rely upon the cases decided in the context of additional cash credit. None of the case laws relied upon by the Ld. A.R. is sion of the fact and various references of the evidences, I also reach to the conclusion that additions so made by the Assessing Officer is correct, hence additions of counsel of the assessee filed a paper book containing page 1 to 246 and also filed copy of bills which were impounded during the course of survey proceedings. he assessee relate to the counsel of the assessee reiterated the submission made before the Ld. CIT(A) and further submitted that during the course of the survey even no bills or invoices in the name of XYZ Private Limited were found or impounded, which entries of the sales were made for the year under consideration. To support this contention, he also referred to the bills impounded, copy of which was obtained from the Assessing Officer through RTI application. The Ld. company XYZ Private Limited is a fictitious and non is evident from the record of the no such entity existed 8. The Ld. Departmental Representative relying on the order of the l the course of the survey fictitious bills but only after 11 days of the survey, the assessee for the first time came out with afterthought only. He submitted that filing copy of bills impounded during survey by the and the difference amount has been correctly assessed by the learned AO as undisclosed in 9. We have heard rival submission of the part dispute and perused the relevant material on record. dispute, the assessee which was recorded in the books mainta to XYZ, was a fictitious entry for the purpose of availing bank loan and there being no real sale, the addition made by the Assessing Officer for the same is not justified. On the contrary, the Assessing Officer is of the view tha the assessee, whereas the claim of the assessee for removing the amount of S.J. Studio & Ld. counsel also submitted that the effect that company XYZ Private Limited is a fictitious and non is evident from the record of the Registrar of Companies ed in their record. Departmental Representative (DR) on the other hand, relying on the order of the lower authorities submitted that during the course of the survey, the assessee did not submit the fact of fictitious bills but only after 11 days of the survey, the assessee for the first time came out with this explanation which is an afterthought only. He submitted that filing copy of bills impounded during survey by the Ld. counsel of the assessee is of no assistance and the difference amount has been correctly assessed by the s undisclosed income of the assessee. We have heard rival submission of the parties dispute and perused the relevant material on record. the assessee has contended that sales of which was recorded in the books maintained on computer as sales was a fictitious entry for the purpose of availing bank loan and there being no real sale, the addition made by the Assessing Officer for the same is not justified. On the contrary, the Assessing Officer is of the view that same are actually sales made in cash by whereas recorded in the name of XYZ the claim of the assessee for removing the amount of S.J. Studio & Entertainment Ltd. 9 ITA No. 4295/M/2016 AY 2010-11 also submitted that the effect that company XYZ Private Limited is a fictitious and non-existent entity, ompanies (ROC) that R) on the other hand, authorities submitted that during the assessee did not submit the fact of fictitious bills but only after 11 days of the survey, the assessee for this explanation which is an afterthought only. He submitted that filing copy of bills impounded counsel of the assessee is of no assistance and the difference amount has been correctly assessed by the on the issue in dispute and perused the relevant material on record. Onthe issue in that sales of ₹81,07,050/- ined on computer as sales was a fictitious entry for the purpose of availing bank loan and there being no real sale, the addition made by the Assessing Officer for the same is not justified. On the contrary, the Assessing sales made in cash by recorded in the name of XYZ only ,therefore the claim of the assessee for removing the amount of ₹81,07,050/- from the sales cannot be accepted. We find that survey was conducted at the premises of the assessee on 04/03/2010, wherein books of accounts were found to be maintained on the computer and a profit and loss account based on the books of accounts was prepared for the period up to 04/03/2010, which was worked out to ₹1,57,05,468/-. When the director of the assessee company, Sh Sahid Siraj Hamid was asked to pay advance tax on said profit, he submitted that this profit figure was on higher side as depreciatio interest etc. expenses were not debited to the profit and loss account. When he was summoned before the Assessing Officer, he submitted that in case of regular sales Bill/ invoice from 1501 as on 01/04/2009, whereas Bill No. in the name o XYZ were shown having serial No. from 1 to 10 for a sum of 050/-. According to him, t entered only a fictitious entry for the purpose of showing higher turnover for availing loan from banks. 9.1 Further during the assessment proceedings, the assessee submitted that turnover of the assessee for the year consideration was less ( preceding year (Rs. 4.43 Crores) due to the reasons of recession in the market, fall in sales of ready to shoot studios, all India strike by TV serial production Guild, strike by film Federation against S.J. Studio & from the sales cannot be accepted. We find that survey was conducted at the premises of the assessee on 04/03/2010, wherein books of accounts were found to be maintained on the computer and a profit and loss account based on the books of accounts was red for the period up to 04/03/2010, which was worked out . When the director of the assessee company, Sh Sahid Siraj Hamid was asked to pay advance tax on said profit, he submitted that this profit figure was on higher side as depreciatio expenses were not debited to the profit and loss hen he was summoned before the Assessing Officer, he submitted that in case of regular sales Bill/ invoice from 1501 as on 01/04/2009, whereas Bill No. in the name o XYZ were shown having serial No. from 1 to 10 for a sum of . According to him, these were not actual sale entered only a fictitious entry for the purpose of showing higher turnover for availing loan from banks. ng the assessment proceedings, the assessee submitted that turnover of the assessee for the year consideration was less (Rs. 2.51 crores) as compared to immediately preceding year (Rs. 4.43 Crores) due to the reasons of recession in in sales of ready to shoot studios, all India strike by TV serial production Guild, strike by film Federation against S.J. Studio & Entertainment Ltd. 10 ITA No. 4295/M/2016 AY 2010-11 from the sales cannot be accepted. We find that survey was conducted at the premises of the assessee on 04/03/2010, wherein books of accounts were found to be maintained on the computer and a profit and loss account based on the books of accounts was red for the period up to 04/03/2010, which was worked out . When the director of the assessee company, Sh Sahid Siraj Hamid was asked to pay advance tax on said profit, he submitted that this profit figure was on higher side as depreciation, expenses were not debited to the profit and loss hen he was summoned before the Assessing Officer, he submitted that in case of regular sales Bill/ invoice number started from 1501 as on 01/04/2009, whereas Bill No. in the name of M/s XYZ were shown having serial No. from 1 to 10 for a sum of ₹81,07, not actual sales and was entered only a fictitious entry for the purpose of showing higher ng the assessment proceedings, the assessee submitted that turnover of the assessee for the year under Rs. 2.51 crores) as compared to immediately preceding year (Rs. 4.43 Crores) due to the reasons of recession in in sales of ready to shoot studios, all India strike by TV serial production Guild, strike by film Federation against theatre owners, major customers of the assessee did not shoot at the studio of the assessee in the year under consideration. 9.2 During the assessment proceeding, the assessee submitted the name of the said fictitious party was XYZ Private Limited. It was further submitted that there is no such company in the name of record of registrar of companies and therefore it supports the contention of the assessee of XYZ Private Limited being a fictitious entry. 9.3 In background of above facts, we find that firstly, the assessee during the course of the survey, brought to the notice of the income tax authorities, the figures of the profit w side. During the course of the survey proceedings, the accountant of the assessee was not available, and the director of the company cannot be expected to explain each and every entry of sales to the Income tax authorities, without particularly, about the monthly sales recorded in the name of XYZ. Secondly, the series of bills recorded in respect of the XYZ is different from the series in respect of the undisputed sales, which also indicate that thos the assessee himself is submitting that those sales are fictitious sales, then onus is on the Assessing Officer to establish whether those are cash sales. The income tax authorities have carried out survey at the premises of the assessee and no evidence suggesting S.J. Studio & theatre owners, major customers of the assessee did not shoot at the studio of the assessee in the year under consideration. During the assessment proceeding, the assessee submitted the name of the said fictitious party was XYZ Private Limited. It was further submitted that there is no such company in the name of record of registrar of companies and therefore it supports the tention of the assessee of XYZ Private Limited being a fictitious In background of above facts, we find that firstly, the assessee during the course of the survey, brought to the notice of the income tax authorities, the figures of the profit worked out were on higher side. During the course of the survey proceedings, the accountant of the assessee was not available, and the director of the company cannot be expected to explain each and every entry of sales to the ncome tax authorities, without specifically pointed out about the monthly sales recorded in the name of XYZ. Secondly, the series of bills recorded in respect of the XYZ is different from the series in respect of the undisputed sales, which also indicate that those are not part of regular sales. Thirdly, when the assessee himself is submitting that those sales are fictitious sales, then onus is on the Assessing Officer to establish whether those are cash sales. The income tax authorities have carried out the premises of the assessee and no evidence suggesting S.J. Studio & Entertainment Ltd. 11 ITA No. 4295/M/2016 AY 2010-11 theatre owners, major customers of the assessee did not shoot at the studio of the assessee in the year under consideration. During the assessment proceeding, the assessee submitted the name of the said fictitious party was XYZ Private Limited. It was further submitted that there is no such company in the name of record of registrar of companies and therefore it supports the tention of the assessee of XYZ Private Limited being a fictitious In background of above facts, we find that firstly, the assessee during the course of the survey, brought to the notice of the income orked out were on higher side. During the course of the survey proceedings, the accountant of the assessee was not available, and the director of the company cannot be expected to explain each and every entry of sales to the specifically pointed out to him, about the monthly sales recorded in the name of XYZ. Secondly, the series of bills recorded in respect of the XYZ is different from the series in respect of the undisputed sales, which e are not part of regular sales. Thirdly, when the assessee himself is submitting that those sales are fictitious sales, then onus is on the Assessing Officer to establish whether those are cash sales. The income tax authorities have carried out the premises of the assessee and no evidence suggesting cash sales by the assessee has been found. The assessee cannot substantiate more than that that no such party in the name of XYZ Private Limited exist in the registrar of companies. As far as the contention of the Assessing Officer that during statement recorded on 15/03/2010, the director stated only XYZ whereas in submission during assessment proceeding, the mentioned as XYZ Private Limited, we are of the opinion that name of the said fictitious party was entered in the books of account of the assessee, and the income tax authorities must have impounded soft copy of the same. The of ₹81,07,050/- appearing in the books of accounts found during the course of the survey, but despite specifically being asked no such information was provided or brought on record. In the circumstances, the allegation of the revenue, that nonexistence of XYZ Private Limited in the ROC does not support the case of the assessee, are rejected. We find that in the preceding assessment year the turnover of the assessee was of year under consideration turnover was only of therefore any such attempt for increasing the turnover for the purpose of availing bank loan by cannot be ruled out, though it is an illegal act should take note of this. opinion that it is the Assessing Officer establish whether those were the cash sales as claimed by him and S.J. Studio & cash sales by the assessee has been found. The assessee cannot substantiate more than that that no such party in the name of XYZ Private Limited exist in the registrar of companies. As far as the ention of the Assessing Officer that during statement recorded on 15/03/2010, the director stated only XYZ whereas in submission during assessment proceeding, the party’s mentioned as XYZ Private Limited, we are of the opinion that name d fictitious party was entered in the books of account of the assessee, and the income tax authorities must have impounded soft copy of the same. The Ld. DR was asked to produce sales ledger appearing in the books of accounts found during he course of the survey, but despite specifically being asked no such information was provided or brought on record. In the circumstances, the allegation of the revenue, that nonexistence of XYZ Private Limited in the ROC does not support the case of the ssessee, are rejected. We find that in the preceding assessment year the turnover of the assessee was of Rs.4.43 crore, and in the year under consideration turnover was only of therefore any such attempt for increasing the turnover for the pose of availing bank loan by an accountant or other person cannot be ruled out, though it is an illegal act and Bank Authorities should take note of this. In the circumstances, we are of the is the Assessing Officer, who was required to establish whether those were the cash sales as claimed by him and S.J. Studio & Entertainment Ltd. 12 ITA No. 4295/M/2016 AY 2010-11 cash sales by the assessee has been found. The assessee cannot substantiate more than that that no such party in the name of XYZ Private Limited exist in the registrar of companies. As far as the ention of the Assessing Officer that during statement recorded on 15/03/2010, the director stated only XYZ whereas in party’s name was mentioned as XYZ Private Limited, we are of the opinion that name d fictitious party was entered in the books of account of the assessee, and the income tax authorities must have impounded DR was asked to produce sales ledger appearing in the books of accounts found during he course of the survey, but despite specifically being asked no such information was provided or brought on record. In the circumstances, the allegation of the revenue, that nonexistence of XYZ Private Limited in the ROC does not support the case of the ssessee, are rejected. We find that in the preceding assessment 4.43 crore, and in the year under consideration turnover was only of ₹2.5 Crores, therefore any such attempt for increasing the turnover for the or other person and Bank Authorities In the circumstances, we are of the who was required to establish whether those were the cash sales as claimed by him and not the fictitious sales as claimed by the any such evidence of the cash sales, the addition confirmed by the Ld. CIT(A) is not justified and of the Ld. CIT(A) on the issue in dispute. The grounds of the appeal of the assessee accordingly allowed. 10. In the result, the appeal of the assessee is allowed. Order pronounced 1963 on 13/02/2023. Sd/- (SANDEEP SINGH KARHAIL JUDICIAL MEMBER Mumbai; Dated: 13/02/2023 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. The CIT(A)- 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. //True Copy// S.J. Studio & fictitious sales as claimed by the assessee any such evidence of the cash sales, the addition confirmed by the Ld. CIT(A) is not justified and accordingly, we set aside the finding of the Ld. CIT(A) on the issue in dispute. The grounds of the appeal of the assessee accordingly allowed. In the result, the appeal of the assessee is allowed. Order pronounced under Rule 34(4) of the ITAT Rules, 02/2023. Sd/- SANDEEP SINGH KARHAIL) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER Copy of the Order forwarded to : BY ORDER, (Assistant Registrar) ITAT, Mumbai S.J. Studio & Entertainment Ltd. 13 ITA No. 4295/M/2016 AY 2010-11 assessee. In absence of any such evidence of the cash sales, the addition confirmed by the set aside the finding of the Ld. CIT(A) on the issue in dispute. The grounds of the appeal In the result, the appeal of the assessee is allowed. the ITAT Rules, OM PRAKASH KANT) ACCOUNTANT MEMBER BY ORDER, (Assistant Registrar) ITAT, Mumbai