ITO 22(2)-1, NAVI MUMBAI V. AMRIT RAJIV & CO, MUMBAI

ITA 543/MUM/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75349 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: I
• Next Hearing Date: 13-01-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 20-01-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: O P SINGH
• Section: 143(3)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL I , BENCH MUMBAI , BEFORE SHRI R.C.SHARMA , A CCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICAL MEMBE R ITA NO. 543 / MUM/20 1 1 ( ASSESSMENT YEAR : 200 6 - 0 7 ) ITO 22(2) - 1, R.NO.419, 4 TH FLOOR, TOWER NO.6, VASHI RAILWAY STATION COMPLEX, VASHI, NAVI MUMBAI - 400 705 VS. M/S AMRIT RAJIV & CO., 501, ALPINE BLDG., OPP. SHALIMAR PETROL PUMP, CHEMBUR,MUMBAI - 4000 74 PAN/GIR NO. : A A DF A 1537 D ( APPELLANT ) .. ( RESPONDENT ) /REVENUE BY : SHRI O.P.SINGH /ASSESSEE BY : SHRI NISHIT GANDHI DATE OF HEARING : 13 TH JANUARY , 201 4 DATE OF PRONOUNCEMENT : 22 ND JANUARY , 201 4 O R D E R PER R.C.SHARMA ( A .M.) : THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A), DATED 20 - 10 - 2010 , FOR THE ASS ESSMENT YEAR 200 6 - 0 7 , IN THE MATTER OF ORDER PASSED UNDER SECTION 143(3) OF THE I.T. ACT. 2 . IN THIS APPEAL, THE REVENUE IS AGGRIEVED BY THE ACTION OF THE CIT(A) IN DELETING THE ADDITION MADE BY THE AO AFTER ACCEPTING THE RECONCILIATION STATEMENT IN CONTRA VENTION OF RULE 46A OF THE I.T. RULES. 3 . RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. 4 . THE FACTS IN BRIEF ARE THAT THE ASSESSEE FIRM IS ENGAGED IN THE BUSINESS OF SUPPLY OF JUNIOR ARTISTS TO VARIOUS FILM AND T.V. SERIAL ITA NO. 543 /20 1 1 2 PRODUCERS. DURING TH E COURSE OF SCRUTINY ASSESSMENT, THE AO FOUND THAT THE ASSESSEE DECLARED RECEIPT FROM BALAJI TELEFILMS LTD. OF RS. 2,71,96,662/ - AND RECEIVABLE OF RS. 9,80,462/ - AS INCOME. THERE WAS DIFFERENCE IN THE RECEIPT SHOWN BY ASSESSEE AND IN THE TDS CERTIFICATE ISSU ED BY M/S BALAJI TELEFILMS LTD. THEREFORE, A NOTICE U/S.133(6) OF THE I.T. ACT WAS ISSUED TO BALAJI TELEFILMS LTD. REQUESTING THEM TO SUBMIT THE COPY OF ACCOUNT. BALAJI TELEFILMS LTD. HAS SENT THE COPY OF ACCOUNT OF THE ASSESSEE. THE COPY OF ACCOUNT WAS SE NT BY THE AO TO THE ASSESSEE FOR RE CONCILIATION OF THE DIFFERENCE. THE ASSESSEES REPRESENTATIVE WAS ASKED ABOUT THE DIFFERENCE OF SUNDRY DEBTORS AS PER STATEMENT OF BALAJI TELEFILMS LTD. AND THAT AS PER BOOKS OF ACCOUNTS OF ASSESSEE . IN RESPONSE TO IT, SH RI BAID & CO. FILED A LETTER DT.08.12.2008 STATING (I) IN THIS REGARD, I WOULD LIKE TO STATE THAT THE ABOVE TWO ACCOUNTS CANNOT BE RECONCILED, BECAUSE OF THE REASON THAT M/ S. AMRIT RAJIV & CO. IS MAINTAINING THE BOOKS OF ACCOUNTS ON CASH BASIS AND WHE REAS M/S. B ALAJI TELEFILMS LTD. HAS BEEN MAINTAINING BOOKS OF ACCOUNTS ON MERCANTILE SYSTEM. THE RECONCILIATION CAN BE AVAILABLE ONLY TO AN EXTENT IN ONE MANNER, BY VERIFYING ALL PAYMENTS MADE BY BALAJI TELEFILMS LTD. IN THEIR BOOKS OF ACCOUNTS HAVE BEEN RE FLECTED ON THE DEPOS IT SIDE OF BANK STATEMENTS OF M/ S. AMRIT RAJIV & CO. (II) EVEN THOUGH M/ S. AMRIT RAJIV & CO. HAS BEEN MAINTAINING BOOKS OF ACCOUNTS ON CASH BASIS, THE SUNDRY DEBTORS HAVE BEEN REFLECTED IN THE BALANCE SHEET AS ON 31.03.2008 ONLY BECAU SE PART AMOUNT REFLECTED IN THE TDS CERTIFICATES (TDS CERTIFICATE WAS FOR F. Y.2005 - 06) WAS RECEIVED IN F. Y.2005 - 06 AND THE BALANCE ITA NO. 543 /20 1 1 3 PART AMOUNT RECEIVED IN THE NEXT FINANCIAL YEAR (I.E. F. Y.2006 - 07). HENCE, ONLY TO THE EXTENT OF THAT TDS CERTIFICATE THE SYSTEM OF ACCOUNTING HAS BEEN ON MERCANTILE BASIS. THE SAME IS ALSO A DOCUMENTARY EVIDENCES TO PROVE THAT THE ASSESSEE IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING. T HEREFORE, THE REMUNERATION AND ALLOWANCE FROM BALAJI FOR THE YEAR IS WORKED UPON THE BA SIS OF BILLS RAISED AS UNDER: OPENING CREDIT BALANCE AS PER BALAJI TELEFILMS LTD. : RS.45,73,709/ - ADD: BILL RAISED FOR SUPPLY OF ARTIST. : RS.3,23,01,870/ - RS.3,68,75,579/ - PAYMENT RECEIVED AS PER ASSESSEE RS.2,96,03,784/ - FROM BAL AJI: LESS AMOUNT RECEIVED OF EARLIER YEAR: RS. 4,93,712/ - RS.2,91,10,072/ - CLOSING BALANCE AS PER BALAJI TELEFILMS RS.77,65,507/ - ============ ON THE ABOVE FACTS, THE AO HELD THAT THE ASSESSEE HAS RAISED BILL AGAINST PROVIDING ARTISTS TO B ALAJI TELEFILMS FOR RS. 3,23,01,870/ - . THE ASSESSEE HAS PAID SERVICE TAX AMOUNTING TO RS. 13,72,361/ - FROM THE ABOVE CHARGES. THE BALANCE AMOUNT OF RS. 3,09,29,510/ - IS CHARGEABLE AS AMOUNT RECEIVED FOR PROVIDING JUNIOR ARTISTS WHERE AS ASSESSEE HAS SHOWN OF RS. 2,81,77,124/ - . ACCORDINGLY , DIFFERENCE OF RS. 27,52,385/ - WAS ADDED TO THE INCOME OF THE YEAR. 5 . THE ADDITION SO MADE WAS DELETED BY THE CIT(A) AFTER HAVING FOLLOWING OBSERVATIONS : - 5.5. I HAVE GONE THROUGH THE DETAILS OF PAYMENTS REFLECTED BY BALAJI TELEFILMS LTD. AS MADE TO THE APPELLANT DURING THE FINANCIAL YEAR 2005 - 06 AS WELL AS THE PAYMENTS REFLECTED BY THE APPELLANT AS RECEIVED DURING THE SAME PERIOD AND I FIND THAT SAME HAS BEEN PROPERLY RECONCILED ON ACCOUNT OF THE FOLLOWING: (I) CHEQUE ISS UED BY BALAJI TELEFILMS LTD. IN THE FINANCIAL YEAR 2005 - 06 FOR RS.4,93,712/ - HAS ALREADY BEEN ACCOUNTED FOR IN THE EARLIER FINANCIAL YEAR 2004 - 05 BY THE APPELLANT. ITA NO. 543 /20 1 1 4 (II) ALL THE CHEQUE NUMBER STARTING FROM SR.NO.2 TO 48 TOTALING TO RS.2,81,77,124/ - HAVE B EEN DULY ACCOUNTED FOR. (III) THE CHEQUE ISSUED ON 23.03.2006 FOR AN AMOUNT OF RS. 6,65,491/ - BY BALAJI TELEFILSM LTD. HAS BEEN ACCOUNTED FOR BY THE APPELLANT IN NEXT FINANCIAL YEAR I.E. F.Y. 2006 - 07 FOR THE REASON THAT SAME HAS BEEN RECEIVED ON 07.04.2006 . BY TAKING INTO ACCOUNT THESE AMOUNTS THE RECEIPT SHOWN BY THE APPELLANT FROM BALAJI TELEFILMS LTD. IS FULLY RECONCILED. AS REGARDS TDS AMOUNT THE APPELLANT WILL GET BENEFIT OF TDS MADE ONLY ON THE BASIS OF DATE OF TDS CERTIFICATE AND IF THE DATE ON THE CE RTIFICATE ARE WITHIN THE DATES 0 L.04.2005 AND 31.03.2006 ONLY THEN THE EFFECT IS TO BE GIVEN. HENCE, THE CREDIT FOR ONLY THOSE T DS CERTIFICATES FILED ALONG WITH THE RETURN STARTING FROM THE DATE 01.04.2005 TO TDS CERTIFICATE DATED 3L.0 1.2006 SHOULD BE GI VEN EFFECT TO. IN VIEW OF THE RECONCILIATION DONE THE ASSESSING OFFICER IS DIRECTED TO GIVE EFFECT OF TDS CERTIFICATES AS MENTIONED ABOVE. I AGREE WITH THE STAND TAKEN BY ASSESSING OFFICER THAT THERE CANNOT BE SUNDRY DEBTORS IF ASSESSEE IS FOLLOWING CASH M ETHOD. ACCORDING APPELLANT IS UNDER OBLIGATION TO RECAST ITS BALANCE SHEET FOR A.Y. 2006 - 07. ADDITION MADE ON ACCOUNT OF THE DISCREPANCY FOR AN AMOUNT OF RS.27 ,52,385 / - IS DELETED. 5.6. GROUND NO.2 RELATE TO DISALLOWANCE OF RS.12 LAKHS ON ADHOC BASIS OUT OF PAYMENT MADE TO JR. ARTISTS. THE ASSESSING OFFICER IN HIS ORDER IN PARA 5(III) HAS STATED AS BELOW : 'IT IS NOTICED FROM THE TRADING & PROFIT AND LOSS ACCOUNT THAT THE ASSESSEE HAS CLAIMED REMUNERATION AND ALLOWANCES TO JUNIOR ARTIST OF RS.2,84,27,82 / - . DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE'S REPRESENTATIVE WAS ASKED TO SUBMIT THE LIST OF JUNIOR ARTISTS WITH THE NAME AND ADDRESS AND AMOUNT PAID WITH VOUCHERS AND SUPPORTING BILL. IN RESPONSE TO IT, ASSESSEE'S A.R. STATED THAT THE FIRM DID NOT KNOW THE ADDRESS OF THE JUNIOR ARTIST. THEY BOOK THE ARTISTS AT DADAR. THERE I S ONE FIRM AT DADAR WHICH IS PROVIDING ARTIST ON DEMAND AND WE PAY DIRECTLY TO THE ARTIST AS PER THE AMOUNT FIXED. HOWEVER THERE ARE MANY NUMBER OF ARTIST. THE LIST IS V ERY BIG. THEREFORE, WE CANNOT ABLE TO SUBMIT LIST WITH ADDRESS AND AMOUNT PAID. HOWEVER, THE FIRM HAS MAINTAINED REGULAR BOOKS OF ACCOUNT IN WHICH THE PAYMENT MADE TO THE ARTIST HAVE BEEN RECORDED. HOWEVER, THE ASSESSEE HAS NOT SUBMITTED THE LIST. THEREFOR E, THE AUTHENTICITY OF THE EXPENSES CANNOT BE ASCERTAINED. THEREFORE, AN ADHOC DISALLOWANCE OF RS.2, 00,000/ - IS MADE ON ESTIMATED BASIS.' 6 . AGGRIEVED BY THIS ORDER, THE REVENUE IS IN FURTHER APPEAL BEFORE US. 7 . WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND FOUND FROM THE RECORD THAT THE AO HAS FOUND DIFFERENT OF RS. 27,52,385/ - IN THE INCOME ITA NO. 543 /20 1 1 5 ALLEGED TO BE RECEIVED FROM M/S BALAJI TELEFILMS VIS - - VIS SHOWN IN THE BOOKS OF ACCOUNTS . ON THE BASIS OF RECONCILIATION STATEMENT FURNISHED BEFORE THE CIT(A), THE CIT(A) RECORDED A FINDING THAT CHEQUE OF RS. 4,93,712/ - ISSUED BY BALAJI TELEFILMS WERE ACCOUNTED FOR BY THE ASSESSEE IN EARLIER FINANCIAL YEAR 2004 - 05. ACCORDINGLY, THE SAME WAS NOT REQUIRED TO BE ADDED IN THE CURRENT YEARS INCOME. THE CHEQUE ISSUED BY TH E BALAJI TELEFILMS ON 23 - 3 - 2006 AMOUNTING TO RS. 6,65,491/ - WAS ACCOUNTED FOR BY THE ASSESSEE IN THE NEXT FINANCIAL YEAR 2006 - 07 ON THE PLEA THAT SAME WAS RECEIVED ON 7 - 4 - 2006. WITH RESPECT TO VARIOUS CHEQUE S RECEIVED FROM BALAJI TELEFILMS, THE CIT(A) HAS R ECORDED A FINDING TO THE EFFECT THAT RS. 2,81,77,124/ - HAVE BEEN DULY ACCOUNTED FOR BY THE ASSESSEE. IN VIEW OF THIS FINDING, THE CIT(A) HAS DELETED THE DIFFERENT OF RS. 27,52,385/ - . HOWEVER, THE FINDING S RECORDED BY THE CIT(A) WITH REGARD TO INCOME OF RS. 4 ,93,712/ - IN EARLIER FINANCIAL YEAR 2004 - 05 AND INCOME OF RS. 6,65,491/ - IN THE NEXT FINANCIAL YEAR 2006 - 07, WERE NOT SUPPORTED BY THE DOCUMENTARY EVIDENCE PLACED ON RECORD. THEREFORE, IN THE INTEREST OF JUSTICE AND FAIRPLAY, WE RESTORE THIS APPEAL TO THE F ILE OF THE AO FOR EXAMINING THE ACTUAL ACCOUNTING OF ABOVE THESE TWO INCOMES IN THE FINANCIAL YEAR 2004 - 05 & 2006 - 07. IF THE AO FINDS THAT THE ASSESSEE WAS ACTUALLY ACCOUNTED FOR INCOME OF RS. 4,93,712/ - IN THE FINANCIAL YEAR 2004 - 05 AND RS.6,65,491/ - IN FI NANCIAL YEAR 2006 - 07 , THEN NO ADDITION IS WARRANTED. ACCORDINGLY, WE DIRECT THE AO TO VERIFY ALL THESE FACTS AND DECIDE THE ISSUE IN TERMS OF OUR ABOVE OBSERVATION S . WE DIRECT ACCORDINGLY. ITA NO. 543 /20 1 1 6 8 . IN THE RESULT, APPEAL FILED BY THE REVENUE IS ALLOWED IN PART F OR STATISTICAL PURPOSES . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 22 ND JANUARY. 201 4 . 22 ND JAN,2014 SD/ - SD/ - ( ) ( SANJAY GARG ) ( ) ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 22 /01/2014 /PKM , PS COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( ASSTT. REGISTRAR) / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A) - X, MUMBAI. 4. / CIT 5. / DR, ITAT, MUMBAI 6. GUARD FILE. / /TRUE COPY//