DCIT, Bangalore V. Sri. Sudeep Sanjeev, Bangalore

ITA 839/BANG/2015

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 2408 (ITAT-BANGALORE)
• Duration Of Justice: 5 year(s) 5 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 04-11-2020
• Assessment Year: 2006-2007
• Appeal Filed On: 01-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R PREMI
• Assessee Lawyers: R RAMAKRISHNA
• Keywords: Opportunity of being heard; Audit objection; Difference of opinion; Change of opinion; Reassessment proceedings
• Section: 142(1); 147; 131; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI. B.R. BASKARAN, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER ITA NO.839/BANG/2015 ITA NO.170/BANG/2016 ASSESSMENT YEAR : 2006 07 & 2007-08 THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE-2(3)(1), BENGALURU. VS. SRI SUDEEP SANJEEV, NO.359, 17 TH CROSS, 26 TH MAIN, J.P NAGAR, BENGALURU-560 078. PAN AMMPS 5150 K APPELLANT RESPONDENT APPELLANT BY : SMT. R PREMI, JCIT (DR) RESPONDENT BY : SHRI R RAMAKRISHNA, C.A DATE OF HEARING : 04-11-2020 DATE OF PRONOUNCEMENT : -11-2020 ORDER PER BEENA PILLAI, JUDICIAL MEMBER PRESENT APPEALS HAS BEEN FILED BY REVENUE AG AINST COMMON ORDER DATED 04/03/2015 PASSED BY LD.CIT(A)-4, BANGA LORE. COMMON ISSUE INVOLVED IN THE PRESENT APPEAL IS AGAI NST QUASHING OF REASSESSMENT PROCEEDINGS BY LD.CIT(A) ON THE BAS IS OF CHANGE OF OPINION. 2. REVENUE HAS CHALLENGED THE REASSESSMENT BEEN QUA SHED FOR BOTH YEARS UNDER CONSIDERATION BY LD.CIT(A), ON THE GROUND THAT, PAGE 2 OF 9 ITA NO.839/BANG/2015 ASSESSEE DID NOT PRODUCE ANY EVIDENCE TO CLAIMED EX PENSES TOWARDS THE PRODUCTION COST INCURRED DURING THE YEA RS UNDER CONSIDERATION AND FAILED TO SUBSTANTIATE THE DIFFER ENCE IN THE PRODUCTION COST ADOPTED IN THE RETURN OF INCOME FIL ED AND FORM 52A FILED IN SPITE OF OPPORTUNITY OF BEING HEARD GR ANTED TO ASSESSEE. 3. AS THE ISSUES RAISED IN BOTH YEARS UNDER CONSIDE RATION BY REVENUE ARE IDENTICAL AND ON SAME FACTS, BOTH PARTI ES DO NOT HAVE ANY OBJECTION IN THE APPEALS BEING DISPOSED OFF BY WAY OF COMMON ORDER. 4. WE NOTE THAT, ORIGINAL ASSESSMENT ORDER FOR ASSE SSMENT YEARS 2006-07 AND 2007-08 WAS COMPLETED BY LD.AO ON 30/12/2008 AND 30/12/2009 RESPECTIVELY. SUBSEQUENTL Y, NOTICE UNDER SECTION 148 WAS ISSUED ON 13/10/2010 FOR BOTH YEARS. SUMMONS UNDER SECTION 131 WAS ISSUED WHICH WAS RECE IVED BY ASSESSEE AFTER THE DATE OF HEARING AND ASSESSEE FIL ED A BRIEF NOTE ON THE NATURE OF BUSINESS COPY OF THE RETURN FILED IN RESPONSE TO NOTICE UNDER SECTION 142(1) OF THE ACT. THE LD.AO C OMPLETED THE ASSESSMENT BASED ON MATERIALS AVAILABLE ON RECORD. LD.AO COMPLETED THE ASSESSMENT BY MAKING ADDITION BEING, DIFFERENCE BETWEEN THE PRODUCTION COST INCURRED BY ASSESSEE AS PER INCOME TAX RETURN AND THAT DECLARED IN FORM 52A. 5. AGGRIEVED BY THE ADDITION MADE BY LD.AO, ASSESSE E PREFERRED APPEAL BEFORE LD.CIT(A). PAGE 3 OF 9 ITA NO.839/BANG/2015 6. LD.CIT(A) UPON VERIFICATION OF THE FACTS, NOTED THAT, THERE WAS NO FAILURE ON PART OF ASSESSEE TO FULLY AND TRU LY DISCLOSE ALL MATERIAL FACTS NECESSARY FOR ORIGINAL ASSESSMENT. H E SUBMITTED THAT FORM 52A IS A MANDATORY REQUIREMENT AS PER SEC TION 285B, WHEREIN, AN ASSESSEE IS TO FILE STATEMENT REGARDING ANY PAYMENT MADE IN RESPECT OF PRODUCTION OF A CINEMATOGRAPH, F ILM THAT EXCEEDS RS.50,000/-. ASSESSEE SUBMITTED THAT, RETUR N HAS BEEN FILED BASED ON EXPENDITURE CLAIMED AS PER PROFIT AN D LOSS ACCOUNT WHICH IS HIGHER THAN WHAT IS DISCLOSED IN FORM 52A. HE THUS SUBMITTED THAT, THE AMOUNT DISCLOSED IN FORM 52A AL READY STANDS SUBSUMED IN THE PRODUCTION COST DISCLOSED IN PROFIT AND LOSS ACCOUNT. 7. LD.CIT(A) ON CONSIDERING THE SUBMISSIONS OF ASSE SSEE OBSERVED AS UNDER: 5. THE FACTS OF THE CASE ARE VERY CLEAR THAT THE AO WAS IN POSSESSION OF BOTH PROFIT & LOSS ACCOUNT AND FORM 52A IN THE O RIGINAL PROCEEDINGS. HE HAS ALSO THOROUGHLY EXAMINED THE EX PENDITURE CLAIMED VIS--VIS P&L ACCOUNT AS WELL AS FORM 52A O F THE ASSESSEE AND MADE HIS DISALLOWANCES IN THE ORIGINAL ASSESSME NT. HENCE, I HAVE NO HESITATION IN APPLYING THE ABOVE MENTIONED APEX COURT'S DECISION WHOSE RULING COMES IN THE NATURE OF BINDIN G PRECEDENT. RESPECTFULLY FOLLOWING THE HON'BLE COURT, IT IS HEL D THAT THE AO HAS REOPENED THE ASSESSMENT ON THE BASIS OF CHANGE OF O PINION' AND THUS THE SAME CANNOT BE SUSTAINED IN FIRST APPEAL. REASS ESSMENT PROCEEDINGS STAND QUASHED AND HENCE THERE IS NO NEC ESSITY TO GO INTO THE MERITS OF THE CASE. 6. THE FACTS ARE IDENTICAL IN THIS YEAR TOO AND THE REASONS RECORDED BY THE AO ARE AS UNDER :- 'DURING THE COURSE OF AUDIT BY THE C&AG ON 'TAXATIO N OF ASSESSES ENGAGED IN FILM AND TELEVISION ACTIVITIES', IT WAS POINTED OUT BY THE AUDIT PARTY THAT DURING THE A. Y. 2007-08 ALSO THE FILM 'SHANTINIVAS', THE EXPENDITURE INCURRED WAS SHOWN A S RS. 1,44,65,8451- AS AGAINST RS. 55,75,2901- SHOWN IN T HE FORM PAGE 4 OF 9 ITA NO.839/BANG/2015 52A. HENCE, TO EXAMINE SUCH A HUGE VARIATION, THE A SSESSMENT FOR THE A. Y. 2007-08 IS ALSO REOPENED U/S. 147 OF THE I.T.ACT.' 7. FOLLOWING MY DECISION IN THE EARLIER YEAR, THE R EASSESSMENT IS QUASHED ACCORDINGLY. 8. AGGRIEVED BY THE ORDER PASSED BY LD.CIT(A) REVEN UE IS IN APPEAL BEFORE US NOW FOR BOTH YEARS UNDER CONSIDERA TION. 9. LD.SR.DR SUBMITTED THAT LD.CIT(A) ERRED IN QUASH ING THE REASSESSMENT BY HOLDING THAT, THERE IS A CHANGE OF OPINION. SHE SUBMITTED THAT, LD.AO WHILE PASSING ORIGINAL ASSESS MENT ORDER DID ANALYSED THE ISSUE AND THEREFORE NO OPINION WAS EXPRESSED BY HIM. HE SUBMITTED THAT, IT WAS BASED ON AUDIT OBJEC TION THAT, THE REOPENING NOTICES WERE ISSUED TO ASSESSEE FOR YEARS UNDER CONSIDERATION. 10. ON THE CONTRARY, LD.AR SUBMITTED THAT, DURING O RIGINAL ASSESSMENT PROCEEDINGS, ASSESSEE FILED ALL DETAILS CALLED BY LD.AO AS PER NOTICE ISSUED UNDER SECTION 142(1). SHE SUBM ITTED THAT, LD.AO AFTER VERIFYING DETAILS FILED BY ASSESSEE PAS SED ASSESSMENT ORDER UNDER SECTION 143(3). HE SUBMITTED THAT, ADDI TIONS MADE IN ORIGINAL ASSESSMENT ORDERS WERE SUBJECT MATTER OF C HALLENGE BEFORE THIS TRIBUNAL . HE SUBMITTED THAT THIS TRIBUNAL BY ORDER DATED 14/03/2014 AND 10/02/2016 DISPOSED OFF THE AP PEALS FOR YEARS UNDER CONSIDERATION THAT AROSE OUT OF ORIGINA L ASSESSMENT ORDER PASSED UNDER 143(3). IT HAS BEEN SUBMITTED TH AT FOR ASSESSMENT YEAR 2006-07 ISSUE REGARDING EXPENDITURE CLAIMED HAS BEEN REMANDED TO LD.AO FOR FRESH CONSIDERATION. 11. FOR ASSESSMENT YEAR 2007-08, LD.AR SUBMITTED TH AT, ASSESSEE DID NOT CLAIM ANY EXPENSES UNDER PRODUCTIO N COST PAGE 5 OF 9 ITA NO.839/BANG/2015 PERTAINING TO FILM SHANTHI NIWAS. HE REFERRED TO PAGE 81- 82 OF PAPER BOOK, WHEREIN, SAID AMOUNT HAS BEEN CLAIMED A ND SHOWN AS WORK IN PROGRESS. 12. HE THUS PLACED RELIANCE ON ORDER OBSERVATIONS O F LD.CIT(A). EVEN OTHERWISE, LD.AR SUBMITTED THAT, DECLARATION U NDER SECTION FORM 52A IS A STATEMENT BY ASSESSEE IN RESPECT OF P RODUCTION COST THAT EXCEEDS RS.50,000/-, DUE TO ANY PERSON ON BEHA LF OF ASSESSEE. HE SUBMITTED THAT, THE STATEMENT UNDER FO RM 52A IS USED BY THE DEPARTMENT TO CHECK INFLATION OF EXPENDITURE BY FILM A PRODUCER, AND TO ENABLE TO GET INFORMATION ABOUT RECIPIENT OF PAYMENT FOR NECESSARY ACTION FOR THEIR CASE. IT WAS THUS SUBMITTED BY LD.AR THAT, REOPENING HAS BEEN RIGHTLY QUASHED BY LD.CIT(A) AS DETAILS STATED IN FORM 52A REGARDING P AYMENTS PAID/PAYABLE TO THE RECIPIENTS ALREADY WOULD BE SUB SUMED IN THE EXPENDITURE CLAIMED IN THE PROFIT AND LOSS ACCOUNT. 13. WE HAVE PERUSED SUBMISSIONS ADVANCED BY BOTH SI DES IN LIGHT OF RECORDS PLACED BEFORE US. 14. ON PERUSAL OF THE RECORDS WE NOTE THAT AS THE A PPEAL WAS PENDING BEFORE THE LD.CIT(A) FOR YEARS UNDER CONSID ERATION, THE ASSESSMENT WAS REOPENED VIDE ISSUANCE OF NOTICE DAT ED 28/09/2010. THE REASONS RECORDED REVEAL THAT, REOPE NING NOTICE WAS ISSUED TO ASSESSEE DUE TO DISCREPANCY POINTED O UT IN AUDIT OBJECTION BETWEEN COST OF PRODUCTION INCURRED AS PE R THE RETURN OF INCOME AND AS PER FORM 52A. PAGE 6 OF 9 ITA NO.839/BANG/2015 15. WE NOTE THAT FOLLOWING WERE THE DIFFERENCE NOTE D BY AUDIT TEAM: EXPENDITURE CLAIMED AY:2006-07 (IN RS.) AY: 2007-08(IN RS.) AS PER ROI 1,17,87,687/- 1,44,65,845/- AS PER FORM 52A 52,10,142/- 55,75,290/- DIFFERENCE 65,77,545/- 88,90,555/- 16. LD.AR DREW OUR ATTENTION TOWARDS FORM 52A PLAC ED AT PAGE 54-56 FOR ASSESSMENT YEAR 2006-07 AND 76-77 FOR ASS ESSMENT YEAR 2008-09. IT IS SUBMITTED THAT, FOR ASSESSMENT YEAR 2006-07 AND 2007-08 COST OF PRODUCTION WAS CONSIDERED AS WO RK IN PROGRESS WHICH IS CLEAR FROM THE STATEMENT OF AFFAI RS FOR 31/03/2007 PLACED AT PAGE 81-82 OF PAPER BOOK. HE A LSO DREW OUR ATTENTION TO PAGE 83, BEING THE STATEMENT OF AF FAIRS FOR YEAR- END 31/03/2008 WHEREIN, THE SAID PRODUCTION COST IS CLAIMED AS EXPENDITURE. IN THE WRITTEN SUBMISSION PLACED AT PA GE 41-52 OF PAPER BOOK, LD.AR HAS SUBMITTED THAT THIS TRIBUNAL HAS REMANDED THE MATTER BACK TO LD.AO FOR FRESH ADJUDIC ATION ON THE ISSUE OF DISALLOWANCE WHICH INCLUDES THE ALLEGED AD DITION MADE IN REASSESSMENT PROCEEDINGS. 17. WE NOTE THAT SECTION 285 B OF THE ACT REQUIRES ANY PERSON CARRYING ON PRODUCTION OF CINEMATOGRAPHIC FILM DURI NG THE WHOLE OR ANY PART OF THE FINANCIAL YEAR TO FILE THE STATE MENT BEFORE LD.AO WITHIN 30 DAYS FROM THE END OF SUCH FINANCIAL YEAR OR WITHIN 30 PAGE 7 OF 9 ITA NO.839/BANG/2015 DAYS FROM THE DATE OF COMPLETION OF THE PRODUCTION OF THE FILM WHICHEVER IS EARLIER. 18. THE STATEMENT IS NECESSARILY TO CONTAIN THE PAY MENTS THAT EXCEEDS RS.50,000/- IN THE AGGREGATE MADE BY SUCH P ERSON TO EAT SUCH PERSON ENGAGED BY HIM IN SUCH PRODUCTION. 19. FROM THE STATEMENT IS REFERRED TO BY LD.AR PLAC ED IN PAPER BOOK AT PAGE 54-56, 76-81, IT IS CLEAR THAT FORM 52 RELEVANT FOR FINANCIAL YEAR 2005-06 AND 2006-07 RELEVANT TO ASSE SSMENT YEAR UNDER CONSIDERATION WAS FILED BY ASSESSEE BEFORE LD .AO ON 09/01/2008 BEING THE YEAR IN WHICH THE PRODUCTION O F THE FILM WAS COMPLETED. WE THEREFORE, DO NOT FIND ANY INFIRM ITY IN THE OBSERVATIONS OF LD.CIT(A), AS THE REASSESSMENT WAS INITIATED BASED ON CHANGE OF OPINION. 20. ON MERITS WE NOTE THAT, THERE IS NO DISPUTE REG ARDING COMPLIANCE UNDER SECTION 285B, WITHIN THE RELEVANT PERIOD. IT IS AN ADMITTED POSITION THAT, PRODUCTION COST CLAIMED BY ASSESSEE FOR ASSESSMENT YEAR 2006-07 IS REMANDED BY THIS TRIBUNAL TO LD.AO FOR FRESH CONSIDERATION. ASSESSEE PLACED THE COPY OF THE ORDER PASSED BY THIS TRIBUNAL FOR ASSESSMENT YEAR 2006-07 AT PAGES 97-101 OF PAPER BOOK. FOR ASSESSMENT YEAR 200 7-08, WE NOTE THAT, ASSESSEE HAS NOT CLAIMED PRODUCTION COST AS EXPENDITURE WHICH IS CLEAR FROM PAGE 82 OF PAPER BO OK. WE NOTE THAT PRODUCTION COST HAS BEEN CONSIDERED AS WORK IN PROGRESS. WE THEREFORE DO NOT FIND ANY MERIT IN THE APPEALS F ILED BY REVENUE FOR YEARS UNDER CONSIDERATION. PAGE 8 OF 9 ITA NO.839/BANG/2015 ACCORDINGLY GROUNDS RAISED BY REVENUE STANDS DISMIS SED. IN THE RESULT APPEALS FILED BY REVENUE STANDS DISMI SSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH NOV, 2020 SD/- SD/- (B.R BASKARAN) (BEENA PILLAI) ACCOUNTANT MEMBER JUDICIAL ME MBER BANGALORE, DATED, THE 27 TH NOV, 2020. /VMS/ COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE PAGE 9 OF 9 ITA NO.839/BANG/2015 DATE INITIAL 1. DRAFT DICTATED ON ON DRAGON SR.PS 2. DRAFT PLACED BEFORE AUTHOR -11-2020 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER -11-2020 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. -11-2020 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS -11-2020 SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON -11-2020 SR.PS 7. DATE OF UPLOADING THE ORDER ON WEBSITE -11-2020 SR.PS 8. IF NOT UPLOADED, FURNISH THE REASON -- SR.PS 9. FILE SENT TO THE BENCH CLERK -11-2020 SR.PS 10. DATE ON WHICH FILE GOES TO THE AR 11. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 12. DATE OF DISPATCH OF ORDER. 13. DRAFT DICTATION SHEETS ARE ATTACHED NO SR.PS