ACIT 16(1), MUMBAI V. JACKIE SHROFF, MUMBAI

ITA 828/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8059 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-12-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2006-2007
• Appeal Filed On: 18-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AARJU GARODIA
• Assessee Lawyers: SHRI
• Keywords: Reopening of assessment

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL J BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI N.K. PRADHAN , ACCOUNTANT MEMBER ITA N O. 828/MUM/2016 ( ASSESSMENT YEAR : 2006 07 ) ACIT 16(1) R.NO.439, AAYAKAR BHAVAN M.K.MARG MUMBAI 400 020 . APPELLANT V/S SHRI JACKIE SHROFF 1401, 14 TH FLOOR VASTU CHS LTD., BAND STAND ROAD BANDRA (W) MUMBAI 400 050 PAN: AAJPS6596A . RESPONDENT APPELLANT BY : MS. AARJU GARODIA RESPONDENT BY : S HRI PANKAJ JAIN DATE OF HEARING 13/12/2017 DATE OF ORDER 15.12.2017 O R D E R PER SAKTIJIT DEY, J.M. THIS IS AN APPEAL BY THE DEPARTMENT AGA INST ORDER DATED 12/11/2015 OF LD. COMMISSIONER OF INCOME TAX (APPEALS) 4 , MUMBAI FOR THE A.Y.2006 07. 2 ITA NO.828/MUM/2016 SHRI JACKIE SHROFF 2. BRIEFLY THE FACTS ARE , THE ASSESSEE AN INDIVIDUAL FILED HIS RETURN OF INCOME ORIGINALLY ON 27/10/2006 DECLARING INCOME OF . .230. THE RETURN FILED BY THE ASSESSEE WAS PROCESSED UNDER SECTION.143(1) OF THE ACT ON 25/02/2008. SUBSEQUENTLY , ON THE BASIS OF INFORMATION RECEIVED THAT ASSESSEE HAS PAID SUBSTANTIAL AMOUNT FOR SCHOOL FEES OF HIS SONS. THE ASSESSMENT WAS REOPENED UNDER SECTION.147 OF THE ACT. THE ASSESSING OFFICER ALSO STATED THAT ADVANCES RECEIVED OF . .2,13,13,701/ HAS NOT BEEN CONSIDERED AS TAXABLE INCOME OF THE YE AR, THOUGH THE ASSESSEE WAS FOLLOWING CASH SYSTEM OF ACCOUNTING. HE FURTHER OBSERVED SIMILAR TO DISALLOWANCE OF INTEREST ON LOAN IN THE PRECEDING ASSESSMENT YEAR, DISALLOWANCE OF INTEREST HAS TO BE MADE IN THE IMPUGNED ASSESSMENT YEAR. DURING THE ASSESSMEN T PROCEEDINGS, THE ASSESSING OFFICER FOUND THAT THOUGH IN THE BALANCE SHEET THE ASSESSEE HAS SHOWN TOTAL ADVANCES OF . . 2,16,13,701/ , HOWEVER, HE HAS CREDITED AN AMOUNT OF . .97,58,062/ TO HIS PROFIT AND LOSS ACCOUNT TOWARDS PROFESSIONAL FEES. HE THEREFOR E, CALLED UPON THE ASSESSEE TO EXPLAIN WHY THE BALANCE AMOUNT OUT OF THE ADVANCES RECEIVED SHOULD NOT BE TREATED AS INCOME OF THE YEAR. 3. IN RESPONSE , IT WAS SUBMITTED BY THE ASSESSEE THAT IN THE RELEVANT FINANCIAL YEAR, HE HAS RECEIVED ADVANCES OF . .1,7 9,31,626/ FROM VARIOUS PRODUCERS . S INCE , THE AMOUNTS RECEIVED WERE IN THE 3 ITA NO.828/MUM/2016 SHRI JACKIE SHROFF NATURE OF ADVANCES AND WERE TO BE ADJUSTED , THE INCOME ACCRUING CAN ONLY BE CONSIDERED ON COMPLETION AND RELEASE OF THE FILM S . THE ASSESSEE SUBMITTED , IN CASE HE WAS UNABLE TO COMPL ETE THE FILM, HE WAS DUTY BOUND TO REFUND THE AMOUNT RECEIVED. WITHOUT PREJUDICE TO THE AFORESAID CONTENTION, IT WAS SUBMITTED BY THE ASSESSEE THAT THE ENTIRE AMOUNT RECEIVED DURING THE YEAR WAS TO THE TUNE OF . . 1,79,31,626/ . SINCE , THE ASSESSEE HAS OFFERED AN AMOUNT OF . .97,5 8,062/ AS INCOME FOR THE YEAR O UT OF THE TOTAL AMOUNT RECEIVED, O NLY THE BALANCE AMOUNT CAN BE ADDED TO THE INCOME OF THE ASSESSEE. 4. ON THE BASIS OF SUBMISSIONS MADE BY THE ASSESSEE THE ASSESSING OFFICER ADD ED AN AMOUNT OF . .81,73,564/ BEING THE BALANCE AMOUNT OF ADVANCES RECEIVED FROM PRODUCERS WHILE COMPLETING THE ASSESSMENT UNDER SECTION.143(3) R.W.S. 147 OF THE ACT ON 24/12/2009. WHEN THE MATTER STOOD THUS, THE ASSESSING OFFICER AGAIN REOPENED THE ASSESS MENT US/.147 OF THE ACT ON THE REASON THAT A PART OF THE ADVANCES RECEIVED FROM THE PRODUCERS AMOUNTING TO . . 97,58,062/ H AS ESCAPED ASSESSMENT. IN COURSE OF THE ASSESSMENT PROCEEDINGS, THOUGH , THE ASSESSEE OBJECTED TO THE REOPENING OF ASSESSMENT, HOWEVER , THE ASSESSING OFFICER REJECTING THE OBJECTIONS OF THE ASSESSEE PROCEEDED TO COMPLETE THE ASSESSMENT UNDER SECTION.143(3) R.W.S. 4 ITA NO.828/MUM/2016 SHRI JACKIE SHROFF 147 OF THE ACT VIDE ORDER DATED 26/02/2014. WHILE DOING SO, THE ASSESSING OFFICER OBSERVE D THAT OUT OF THE TOTAL AMOUNT OF . .1 ,79,31,626/ TOWARDS ADVANCES RECEIVED FROM VARIOUS PRODUCERS IN THE RELEVANT PREVIOUS YEARS, THE ASSESSEE HAS CREDITED ONLY AN AMOUNT OF . .97,58,062/ AS PROFESSIONAL INCOME TO THE PROFIT AND LOSS ACCOUNT AND HAS NOT OFFERED TO TAX THE BALANCE AMOUNT OF . .81,73,564/ . ACCORDINGLY, HE ADDED BACK THE AMOUNT OF . .81,73,564/ . OF COURSE, THE ASSESSING OFFICER ADDED AN AMOUNT OF . . 16,44,426/ PAID TOW ARDS SCHOOL FEES OF HIS SONS ON THE RE ASONING THAT SOURCE OF PAYMENT C OULD NOT BE EXPLAINED. 4. BEING AGGR IEVED OF THE ASSESSMENT ORDER SO PASSED , ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY CHALLENGING BOTH THE VALIDITY OF REASSESSMENT AS WELL AS THE MERITS OF THE ADDITIONS MADE. 5. LEARNED COMMISSIONER (A PPEALS ) AFTER CONSIDERING THE SUBMI SSIONS OF THE ASSESSEE IN THE CONTEXT OF FACTS AND MATERIALS ON RECORD, FOUND TH AT THERE IS NO ESCAPEMENT OF INCOME AS ALLEGED BY THE ASSESSING OFFICER WHILE REOPENING THE REASSESSMENT UNDER SECTION.147 OF THE ACT. THE LEARNED COMMISSIONER (A PPEALS ) FOUND THAT THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF PROFESSIONAL FEE WAS ALREADY ASSESSED AT THE HANDS OF THE ASSESSEE IN THE ORIGINAL 5 ITA NO.828/MUM/2016 SHRI JACKIE SHROFF ASSESSMENT. THEREFORE, HE HELD THAT ANY FURTHER ADDITION WOULD AMOUNT TO TAXING THE SAME INCOME TWICE. ACCORDINGLY, HE DELETED THE ADDITION MADE OF . .81,73,564/ . 6. THE LEARNED D EPARTMENTAL R EPRESENTATIVE RELYING UPON THE OBSERVATIONS OF THE ASSESSING OFFICER SUBMITTED THAT OUT OF THE ADVANCES RECEIVED DURING THE RELEVANT PREVIOUS YEAR THE ASSESSEE HAS NO T OFFERED A PART OF IT TO TAX, THEREFORE, THE ASSESSING OFFICER WAS JUSTIFIED IN REOPENING THE ASSESSMENT. 7. THE LD. AUTHORISED REPRESENTATIVE ON THE OTHER HAND STRONGLY SUPPORTING THE FINDING OF THE FIRST APPELLATE AUTHORITY SUBMITTED THAT OUT OF THE TO TAL ADVANCES RECEIVED OF . .1,79,31,676/ IN THE RELEVANT PREVIOUS YEAR, THE ASSESSEE HAD OFFERED . . 97,58,062/ IN THE RETURN OF INCOME FILED BY HIM. SUBSEQUENTLY , DURING ORIGINAL ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS A LSO OFFERED THE BALANCE AMOUNT OF . . 81,73,564/ OUT OF THE ADVANCES RECEIVED WHICH WAS ADDED TO THE INCOME OF THE ASSESSEE WHILE COMPLETING THE ASSESSMENT . HE THEREFORE, SUBMITTED ANY FURTHER ADDITION OF THE SAID AMOUNT CANNOT BE MADE. 8. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIAL ON RECORD. THE FACTS AND MATERIALS AVAILABLE ON RECORD CLEARLY INDICATE THAT IN THE RELEVANT PREVIOUS YEAR, THE TOTAL ADVANCES RECEIVED BY THE 6 ITA NO.828/MUM/2016 SHRI JACKIE SHROFF ASSESSEE FROM VARIOUS PRODUCERS AMOUNTED TO . .1,79,31,626/ . IN THE PROFIT AND LOSS ACCOUNT DRAWN UP BY THE ASSESSEE ON THE BASIS OF WHICH THE RETURN OF INCOME WAS FILED, THE ASSESSEE HAS CREDITED AN AMOUNT OF . . 97,58,062 / AS PROFESSIONAL FEES OUT OF THE TOTAL ADVANCES RECEIVED FROM THE PRODUCERS. ORIGINALLY , THE ASSESSING OFFICER REOPENED THE ASSESSMENT U NDER SECTION.147 OF THE ACT ON 20/10/2008 INTER ALIA ON THE GROUND THAT THE ASSESSEE HAS NOT OFFERED THE ADVANCES RECEIVED FROM PRODUCERS . IN COURSE OF THE ASSESSMENT PROCEEDING, THOUGH THE ASSESSEE JUSTIFIED THE PROFESSIONAL FEES OFFERED TO TAX AS PER THE RETURN OF INCOME, HOWEVER, HE AGREED TO OFFER THE BALANCE AMOUNT OF PROFESSIONAL FEES AMOUNTING TO . .81,73,564/ AS INCOME OF THE YEAR. ACCORDINGLY, THE ASSESSING OFFICER COMPLETED THE ASSESSMENT ADDING BACK THE AMOUNT OF . .81,73,564/ . SURPRISINGLY, THE ASSESSING OFFICER AGAIN REOPENED THE ASSESSMENT UNDER SECTION 147 OF THE ACT ALLEGING THAT OUT OF THE ADVANCES RECEIVED OF . .1,79,31,626/ ASSESSEE HAS NOT OFFERED TO TAX AN AMOUNT OF . .97,58,062/ WHICH IS COMPLETELY CONTRARY TO THE MATERIALS AVAILABLE ON RECORD. IN FACT IN PARAGRAPH OF 5.1 AND 5.2 OF THE IMPUGNED ASSESSMENT ORDER THE ASSESSING OFFICER HAS CONTRADICTED HIMSELF BY STATING THAT OUT OF THE TOTAL ADVANCES RECEIVED OF . .1,79,3 1 ,626/ , THE ASSESSEE HAS CREDITED THE AMOUNT OF . .97,58,062/ TO HIS PROFIT AND LOSS ACCOUNT AND THEREFORE, HE PROCEEDED TO AGAIN ADD BACK THE 7 ITA NO.828/MUM/2016 SHRI JACKIE SHROFF AMOUNT OF . .81,73,564 / WHICH HAS ALREADY BEEN ADDED IN THE ORIGINAL ASSESSMENT ORDER. THUS, THE FACTS AND MATERIALS ON RECORD REVEAL COMPLETE NON APPLICATION OF MIND BY THE ASSESSI NG OFFICER AND HIS CASUAL APPROACH IN REOPENING THE ASSESSMENT . IN FACT, THE COMPUTATION OF INCOME MADE BY THE ASSESSING OFFICER IN THE IMPUGNED ASSESSMENT ORDER CLEARLY DEMONSTRATES THAT THE COUPLE OF ADDITIONS MADE BY HIM HAVE ALREADY BEEN MADE IN THE ORIGINAL ASSESSMENT ORDER. THIS BEING THE FACTUAL POSITION, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. FIRST APPELLATE AUTHORITY IN DELETING THE ADDITION. GROUNDS RAISED ARE DISMISSED. 10. IN THE RESULT, DEPARTMENT APPEAL IS DISMISSED. O RDER PRONOUNCED IN THE OPEN COURT ON 15.12.2017 SD/ - SD/ - SD/ - N.K. PRADHAN ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 15.12.2017 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 8 ITA NO.828/MUM/2016 SHRI JACKIE SHROFF KARUNA SR. PRIVATE SECRETARY (DY./ASSTT. REGISTRAR) ITAT, MUMBAI