MELODIOUS MOVIES, MUMBAI V. ITO 11(2), MUMBAI

ITA 7942/MUM/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100876 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 8 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2015
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 06-08-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 24-11-2011
• Court: TRIBUNAL
• Department Lawyers: M RAJAN
• Keywords: Business income
• Section: 143(3); 142(1); 133(6)

Judgement Text

, B IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI , . . , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND R.C. SHARMA , ACCOUNTANT MEMBER . / ITA NO. 7942 / MUM/ 201 1 ( / ASSESSMENT YEAR : 200 3 - 0 4 ) MELODIOUS MOVIES, 3 - E, NAAZ BLDG, LAMINGTON ROAD, MUMBAI - 400 0 04 .. / APPELLANT V/S ITO - 11 ( 2 ) AAYAKAR BHAVAN, MUMBAI - .... / RESPONDENT . / PERMANENT ACCOUNT NUMBER AA A F M6221D APPELLANT BY : SHRI BHUPENDRA SHAH (AR) REVENUE BY : SHRI M. RAJAN , (DR) / DATE OF HEARING 06 .0 8 .201 5 / DATE OF ORDER 14.08.2015 / ORDER . . , / PER R.C. SHARMA , A .M. THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST ORDER DATED 13 .0 9 .201 1 , PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) 3 , MUMBAI, AGAINST THE ASSESSMENT ORDER PASSE D UNDER SECTION 143(3) R.W. SECTION 254 OF THE INCOME TAX ACT , FOR THE MELODIOUS MOVIES 2 ASSESSMENT YEAR 200 3 - 0 4 . THE ASSESSEE HAS R AISED FOLLOWING GROUNDS OF APPEAL : - 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED AO ERRED IN TREATING SUNDRY CREDITO RS OF RS.50,23,944/ - AS INCOME U/S.41(1) EVEN THOUGH THE SAME HAS NOT BEEN WRITTEN OFF IN THE BOOKS OF THE APPELLANT AND THEREBY DISREGARDING SEVERAL CASE LAWS CITED BEFORE HIM. 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED AO ERRED IN TREATING SUNDRY CREDITORS OF RS.50,23,944/ - AS INCOME U/S.41(1) WITHOUT AFFORDING CROSS - EXAMINATION OF THOSE PARTIES AND JUST BECAUSE LIABILITIES HAVE BECOME TIME BARRED. 3. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO IN LAW, THE LEARNED CIT(A) ERRED IN CONFIRMING THE SAID ADDITION BY DISREGARDING SEVERAL CASE LAWS CITED BEFORE HIM AND RELYING UPON OTHER CASE LAWS WHICH ARE ALREADY DISTINGUISHED AND/OR HELD OTHERWISE IN SUBSEQUENT JUDGMENTS. 4. THE AO ALSO ERRED IN LEVYING INTEREST U/S.234A,B,C & ALSO INITIATING PENALTY U/S.271(1)(C). 2. THE BRIEF BACKGROUND OF THE CASE IS THAT THE ASSESSEE HAD FILED RETURN OF INCOME WITH RETURNED LOSS AT RS.1.55 LAKH WHICH WAS ASSESSED AT RS.59,36,946/ - VIDE ORDER U/S.143(3) DATED 20.01.2006 WHICH INTER - ALIA INCLUDED ADDITION OF RS.50,23,994/ - MADE U/S.69 AND 41(1) OF THE ACT. THE ADDITION OF 50,23,994/ - WAS CONFIRMED BY THE LD.CIT(A) AGAINST WHICH THE APPELLANT WENT BEFORE THE TRIBUNAL. THE TRIBUNAL HAS RESTORED THE ISSUE TO THE FILE OF THE AO WITH A DIRECTIO N TO DECIDE THE ISSUE AFRESH AFTER AFFORDING OPPORTUNITY TO THE ASSESSEE. 3. IN THE SECOND ROUND OF THE ASSESSMENT PROCEEDINGS THE ASSESSEE SUBMITTED COPY OF LEDGER ACCOUNT OF FOLLOWING PARTIES ON 16/11/2009 : MELODIOUS MOVIES 3 1. QUALITY EXHIBITORS. PAN - AAFQ0133G 2. CINE TRADERS GIR NO. FC/C - 326(3) 3. KISHORE TRADERS GIR NO. WD. 1(4)/K302(2) 4. GOPI CINEME AAAFG5475D 5. ESQUIRE EXHIBITORS, AAAFE2316H 6. SONA MILAP ASSOCIATES - NIL 7. ROMA ENTERPRISES NIL 8. PROMINENT ECHIBITORS - NIL 9. NEW EXCELSIOR TALKIES - AAAFN3822 D 10. EVERGREEN ENTERPRISES NIL 11. DECCAN TALIKIES - AAAFD2555M 12. ASHOK ENTERPRISES - NIL 13. ROMA FILMS GIR WD. - 1(4)/R - 334(8) 14. RAJESH TRADERS GIR WD. - 1(4)/K - 412(4) 4. THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE EVIDENCES IN THE FORM OF FIR M AND COPIES OF LEDGER ACCOUNT FILED BY THE ASSESSEE INTER - ALIA FOR THE REASONS THAT UPON THE CONFIRMATIONS, SIGNATURE OF PARTNER OF MELODIOUS AND SIGNATURE OF THE SIGNATORY THE ABOVE PARTIES WERE SAME; M EANING THEREBY THAT THESE WERE SIGNED BY THE SAME PE RSON. THE ASSESSEE SUBMITTED TO THE AO THAT THE SAME PERSON IS PARTNER IN MOST OF THE FIRM S AND THEREFORE SIGNATURES HAVE BEEN DONE BY THE SAME PERSON IN ALL THE CONFIRMATIONS . B UT THE AO WAS NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE , ON THE GROUN D THAT NO PROOF OF PARTNERSHIP DEED OR RETURN WAS SUBMITTED TO AUTHENTICATE THE SUBMISSION OF THE ASSESSEE AND THEREFORE , THE AO MADE THE ADDITION U/S. 4 1 (1) R . W . SECTION 69. THE ASSESSEE CONTESTED THE MATTER BEFORE THE LD. CIT(A) BUT THE POSITION REMAIN ED THE SAME AND THEREFORE THE LD. CIT(A) WAS ALSO NOT SATISFIED FOR WANT OF THESE CRUCIAL EVIDENCES MELODIOUS MOVIES 4 AND CONSEQUENTLY , THE L D. CIT(A) AFFIRM ED THE ORDER OF THE AO. PRECISE OBSERVATION AND FINDINGS OF LD. CIT(A) WAS AS UNDER: 1.3 I HAVE CONSIDERED THE FACTS AND PERUSED THE MATERIAL ON RECORD. IT IS SEEN THAT THE AD DITION OF RS. 50,23,944/ - WAS MADE U/S. 41 (1 )/69 IN THE ORIGIN AL ASSESSMENT I N RESPECT OF THE ABOVE SUNDRY CREDITORS, BECAUSE THE LETTERS AND N OTICES IS SUED U/S. 133(6) TO VA RIO US PARTIES WERE R ETUR N ED BACK UN SERVED AND I N SOME CASES, THE NOTICES WERE SERVED HAVE DENI ED THE TRANSACTI ONS WITH ASSESSEE. THE ADDITIONS SO MADE WAS ALSO CONFIRMED BY CIT(A) AGAINST WHICH THE APPELLANT HAS PREFERRED AN APPEAL B EFORE HON'BLE TR IBUNAL, WHO HAS RESTORED THE IS SUE TO THE FILE OF THE AO TO DECIDE THE ISSUE AS AFRE S H AFTER AFFORDING REASON ABLE OPPORTUN I TY TO THE ASSESSEE. IT IS NOTICED THAT THE APPELLANT WAS PROVIDED THE OPPORTUNITY VIDE NOTICE U/S 142(1) DATED 3 .11.2009, 3.12.2009 TO PROVE AND ESTABLISH THAT THE DOCUMENTARY EVIDENCE, ANY RECORD TO GENUINENESS OF THE SUNDRY CREDITORS AS PER THE BALANCE - SHEET. FIND THAT THE ASSESSEE H A S ONLY FURNISHED LEDGER ACCOUNT, COPY OF SUNDRY CREDITORS WHICH CONTAINS THE SIGN A TURE OF THE PARTNER OF MELIDIOUS MOVIES IN RESPECT OF ALL THE ABOVE 13 PARTIES. THI S SHOWS THAT THE SAME PARTNER IS ALSO A PARTNER OF ALL THE ABOVE FIRMS. BUT NO PROOF FOR PARTNERSHIP DEED OR RETURN WAS S UBMITTED BEFORE THE AO, TO PROVE THE GENUINENESS THAT THE PERSONS WHO SIGNED THE LEDGER COPY OF THE AF ORESAID FIRMS IS ALSO A PARTNER IN THE AFORESA ID FIRMS. THEREFORE, MERE FILING OF DETAIL S AND SELF - SIGNED LEDGER CONFIRMATION DOES NOT ESTABLISH THE GENU INENESS OF THE SUNDRY CREDITORS. MOREO VER, THE LIABILITIES STANDING IN THE BOOKS OF ACCOUNTS OF APPELLA NT HAVE BECOME TIM E BARRED. THEREFORE, THESE ARE NOT ENFOREABLE IN LAW BY THE SUNDRY - CREDITORS. IT IS ALSO NOTICED THAT LIABILITY IN THE CASE M/S. DECCAN TALKIES WAS EXISTING SINCE LAST 6 YEARS AND THE PAYMENT WAS NOT MADE BY THE ASSESSEE TO THE SAID PARTY . FURTHER, NO EVIDENCE HAS BEEN FILED DURING THE APPELLATE PROCEEDING S ALSO, WHETHER THE APPELLANT HAS PAID BACK THESE PAYMENTS TO THE CONCERNED PARTIES. IT IS ALSO NOTICED THAT THERE WAS NO PAN QUOTED ON THESE C ONFI RMATIONS AND ONLY GIR NO. WAS QU OTED WHI CH MEANS THAT THE PARTIES DO NOT EXIST AS OF NOW. THEREFORE, THE APPELLANT HAS NOT REQUIRED TO PAY BACK THE SUNDRY CREDITORS ANY MORE. THE MELODIOUS MOVIES 5 RELIANCE IS PLACED IN THE CASE OF SC DECISION IN THE CASE OF CIT VS. T. V. SUNDARAM IYANGAR & SONS 88 TAXMAN 429(SC), WHEREIN THE HON'BLE SUPREME COURT WHILE CONSIDERING A QUESTION ABOUT UNCLAIMED BALANCE IN THE MATTER OF BUSINESS INCOME IS HELD THAT, IF AN AMOUNT IS RECEIVED IN THE CASE OF TRA D ING TRANSACTIONS, EVEN THOUGH IT IS NOT T AXABLE IN THE YEAR OF RECEIPT AS BEI NG OF REVENUE CORRECTOR THE LOAN AMOUNT CHANGES IN ITS CORRECTOR AND WHEN THE AMOUNT BECOME ASSESSEE'S OWN MONEY BECAUSE OF L IMITATION OR BY A NY OTHER STATUTORY OF CONTRACTUAL TRITE AN D WHEN SUCH A THING HAPPENS, COM MON SENSE DEMAND THAT THE AMOUNT SHOULD BE TREATED AS INCOME OF THE ASSESSEE . SIMILARLY, THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF HINDUSTAN FOODS LTD. VS. DCIT , 178 TAXMAN 47 HELD THAT WHERE THE ASSESSEE UNIL A TERALLY TRANSFER THE UNCLAIMED VENTURE ACCOUNT BALANCE TO THE GENERAL RESERVE ACCOU NT AND FURTHER UTILIZE THE AMOUNT FOR THE PURPOSE OF ITS BUSINESS. THEN SUCH AMOUNT WOULD HAVE BEEN TREATED AS INCOME OF THE ASSESSEE BY WAY OF TRADING RECEIPTS. CONSIDERI NG THESE FACTS AND JUDICIAL PRONOUNCEMENTS AND MORE PARTICULARLY THE FINDINGS OF THE AO, THAT LIABILITIES SHOWN IN THE BALANCE - SHEET ARE NOT PROVED TO BE GENUINE LEAD TO INFER THAT THE AMOUNT OUTSTANDING IN THE BALANCE - SHEET W OULD NOT BE PAYABLE ANYMORE TO THE PARTIES AS THEY ARE NOT EX ISTING AS ON DATE. THEREFORE, THE AMOUNT STANDING CRED IT IN THE BOOKS OF ACCOUNTS OF APPELLA NT WOULD BE TAXA BLE IN THE HANDS OF THE ASSESSEE UNDER THE PROVISIONS OF SECTION 41 (1) OF THE ACT. HENCE, THE SAME IS UPHELD. THE CASE LAWS RELIED BY THE AR A RE DISTINGUISHABLE ON THE VERY FACT THAT IN THE A PPELL A NT'S CASE OUTSTANDING LIABILITIES APPEA RING IN THE BALANCE - SHEET DOES NOT APPEARS TO BE GENUINE. THEREFORE THE S AME WERE RIGHTLY HELD AS INCOME CHARGEA BLE TO TAX IN THE HANDS OF THE A PPELL A NT. ACCORDINGLY, THIS GROUND OF APPEAL IS THEREFORE DISMISSED. THE A SSESSEE FILED AN APPEAL BEFORE THE TRIBUNAL AND RAISED THE AFORESAID GROUNDS. MELODIOUS MOVIES 6 5. DURING THE COURSE OF HEARING BEFOR E US, WE RAISED A POINTED QUERY TO THE LEARNED COUNSEL APPEARING ON BEHALF OF THE ASSESSEE , TO SHOW US AS TO HOW THE SAME PERSON IS PARTNER IN ALL THE CONFIRMA TIONS AND ASKED THE L D. COUNSEL TO SHOW US COPIES OF BALANCE SHEETS , INCOME TAX RETURNS, PARTNER S HIP DEED AND A NY OTHER EVIDENCES WITH THE HELP OF WHICH THE ASSERTION OF THE ASSESSEE COULD BE AUTHENTICATED . BUT L D. COUNSEL WAS NOT READY WITH THESE EVIDENCES. HOWEVER, LD. COUNSEL MADE SUBMISSIONS AT THE BAR THAT IN CASE THE MATTER IS SENT BACK TO AO AND ONE OPPORTUNITY IS GRANTED THEN ALL THESE EVIDENCES WOULD BE SUBMITTED TO THE AO IN SUPPORT OF THE CLAIM OF THE ASSESSEE . ON THE OTHER H AND, THE LD. DR RELIED ON THE FINDINGS RECORDED BY THE A.O. AND THE LD. CIT(A) AND SUBMITTED THAT INSPITE OF GIVING DUE OPPORTUNITY EVEN DURING SECOND ROUND OF APPEAL, THE ASSESSEE COULD NOT FURNISH ANY DOCUMENTARY EVIDENCE SO AS TO CLAIM THAT THERE WAS NO CESSATION OF LIABILITY. 6. WE HAVE CONSIDERED THE RIVAL CONTENTIONS CAREFULLY AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND FROM THE RECORD THAT T HE ASSES SEE HAS FILED RETURN OF INCOME W ITH RETURNED LOSS AT RS.1.55 LAKH WHICH WAS ASSESS ED AT RS.59,36,946/ - VIDE ORDER U/S . 143(3) DATED 20/1/06, WHICH INTER - ALIA INCLUDED ADDITION OF RS.50,23,994/ - MADE U/S 69 AND 41 (1) OF THE ACT. THE ADDITION OF MELODIOUS MOVIES 7 RS.50,23,994/ - WAS CONFI RMED BY THE CI T (A) AGAINST WHICH THE APP ELLANT WENT BEFORE THE TRIBU NAL . THE TRIBUNAL HAS RESTORED THE ISSUE TO THE FILE OF THE AO WITH A DIRECTION TO DECIDE THE ISSUE AFRESH AFTER A FFORDI NG OPPORTUNITY TO THE ASSESSEE. IN THE SET ASIDE PROCEEDINGS THE AO FOUND THAT SIGNATURE OF PARTNER OF MELODIOUS AND SIGNATURE OF THE AB OVE PARTIES ARE SAME WHICH MEANS THE SAME PARTNERS IS ALSO BE PARTNER OF THE ABOVE S AID FIRMS. HOWEVER, NO PROOF OF PARTNERSHIP DEED OR RETURN EXCEPT IN THE CASE OF M/S. DECCAN T ALIKES, WAS SUBMITTED TO AUTHENTICATE THE SAME, THEREFORE, IT IS VERY HARD TO B ELIEVE THAT THE CONFIRMATIONS ARE GENUINE. MOREOVER, NO PROPER SUBMISSION WAS MADE WHAT WAS SOUGHT FOR AS PER THE ITAT'S DECISION IN THIS CASE. ACCORDINGLY, THE AO HAS GIVEN ONE MORE OPPORTUNITY VIDE NOTICE U/S. 142(1) DATED 3.12.2009 AND TO PROVE AND ESTA BLISH THAT DOCUMENTARY EVIDENCE IN REGARD TO THE GENUINENESS OF THE SUNDRY CRE DITORS AS PER THE BALANCE - SHEET. E VEN AS PER THE FINDINGS RECORDED BY THE LD. CIT(A) , THE ASSESSEE COULD NOT SUBSTANTIATE HIS CLAIM OF CESSATION OF LIABILITY. THE DETAILED FINDIN G RECORDED BY THE LOWER AUTHORITIES COULD NOT BE CONTROVERTED BY THE LD. AR BY PLACING ANY EVIDENCE ON RECORD SO AS TO PURSUE AND TAK E A DIFFERENT VIEW TH E N THAT TAKEN BY THE LOWER AUTHORITIES . ACCORDINGLY, WE DO NOT FIND ANY REASON TO INTERFERE IN THE FIN DINGS RECORDED BY THE LOWER AUTHORITIES RESULTING INTO CONFIRMING THE ADDITION OF RS.50,23,944/ - MADE U/S.41(1)/69 OF THE ACT. MELODIOUS MOVIES 8 7 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT O N DAY OF 14 TH AUGUST, 2015. SD/ - SD/ - ( JOGINDER SINGH ) (R.C. SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED : 14 .0 8 .2015 PATEL / COPY OF THE ORDER FORWARDED TO : (1) / THE ASSESSEE ; (2) / THE REVENUE; (3) ( ) / THE CIT(A ) ; (4) / THE CIT, MUMBAI CITY CONCERNED ; (5) , , / THE DR, ITAT, MUMBAI ; (6) / GUARD FILE . / TRUE COPY / BY ORDER / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI