SAMEER FATEH SHAIKH,MUMBAI V. ASSISTANT COMMISSIONER OF INCOME TAX 16(1), MUMBAI

ITA 2463/MUM/2025

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Sameer Fateh Shaikh, the proprietor of Blue Whale Entertainment, appealed against the order of the National Faceless Appeal Centre (NFAC), which upheld the assessment order disallowing expenses amounting to Rs. 1,97,57,904/- claimed under the head 'Contract Dubbing Charges'. The Assessing Officer (AO) had deemed these expenses as non-genuine, suspecting them to be bogus. The CIT(A) confirmed this disallowance, leading to the present appeal. The Tribunal found that the CIT(A) and the AO had not adequately considered the documentary evidence provided by the assessee, and that the entire transaction was deemed non-genuine without a thorough examination of the merits.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 778866 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-10-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2015-2016
• Appeal Filed On: 09-04-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SWAPNIL CHOUDHARY
• Assessee Lawyers: K. GOAPAL; OM KANDALKAR
• Keywords: Set aside; Opportunity of being heard; Additional evidence; Principle of natural justice; TDS; Bogus
• Section: 143(3); 131

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “G” BENCH, MUMBAI BEFORE JUSTICE (RETD.) C V BHADANG, PRESIDENT & MS PADMAVATHY S, AM I.T.A. No. 2463/Mum/2025 (Assessment Year: 2015-16) Sameer Fateh Shaikh, (Prop. Blue Whale Entertainment), Bunglow No. 13/126, Four Bunglow, Near Jankidevi Public School, Mhada Andheri (West), Mumbai-400053. PAN: BHAPS2848J Vs. ACIT-16(1), Room No. 439, Aayakar Bhavan, M.K. Road, Mumbai-400020. Appellant) : Respondent) Assessee by : Shri K. Goapal & Om Kandalkar, AR Revenue by : Shri Swapnil Choudhary, Sr. DR Date of Hearing : 18.09.2025 Date of Pronouncement : 10.10.2025 O R D E R Per Padmavathy S, AM: This appeal by the assessee is against the order of the Commissioner of Income Tax (Appeals) / National Faceless Appeal Centre (NFAC), Delhi [In short 'CIT(A)'] passed under section 250 of the Income Tax Act, 1961 (the Act) dated 19.03.2025 for Assessment Years (AY) 2015-16. The assessee raised the following grounds of appeal: Printed from counselvise.com 2 ITA No. 2463/Mum/2025 Sameer Fateh Shaikh “1. The National Faceless Appeal Centre, Delhi (hereinafter referred to as the 'NFAC'] erred in passing the order dated 19/03/2025 upholding the assessment order passed under section 143(3) of the Income tax Act, 1961 [hereinafter referred as 'the Act'] without appreciating the facts and circumstances of the case. The Appellant, therefore, prays that the order passed by the NFAC is unjust. Hence, the same may be quashed and set aside as the NFAC failed to consider that the action of the Ld. AO in making an addition to WIP account of Rs. 1,97,57,904/- being contrary to the principles of natural justice and equity. 2. The NFAC erred in ignoring the fact that the Learned ACIT 16(1) Mumbai, has failed in considering that Rs. 1,97,57,904/- were paid to various parties which was debited to the Profit and Loss account for various services rendered by them to the appellant for his business. 3. The NFAC erred in considering the fact that the appellant is service provider and in order to provide his outward services known as dubbing income he has to procure services of various artist, coordinators, directors, script writers, free lancers etc. The appellant will be unable to generate his revenues unless he sub-contracts his various assignments to above mentioned artists which are ancillary services to his main business object. 4. The NFAC has erred to consider that majority of the parties to whom the above payments were made aggregating of Rs. 1,97,57,904/- has given their confirmation with regards to their services rendered to the appellant and payments being received from him along with the ledger account of the appellant in their books of accounts and copies of their ITRs in few cases. 5. The NFAC erred in confirming the actions of the Ld.A.O. who inspite of the fact that her husband in capacity of legal representative of Mrs. Reena Pushpakant Panchal (one of the parties) had appeared before the Learned A O and confirmed that work was done by the her for the appellant did not record his statement has stated \"the veracity of the major party in these expenses remained unverified.\" It will not be out of place to mention that out of Rs. 1,97,57,904/- being total dubbing charges disallowed by the Learned AO, Mrs. Reena Panchal has rendered services of Rs. 1,37,40,224/- to the appellant. 6. The Learned A O has not considered that the addition of Rs. 1,97,57,704/- will lead to increase in the Net Profit ratio to 67% which can never exist in any industry. Printed from counselvise.com 3 ITA No. 2463/Mum/2025 Sameer Fateh Shaikh 7. The Learned A O and CIT (Appeals) have failed to consider that the service providers have levied and paid the service on the services so rendered to the appellant and that could have been verified by the Learned A O from the Service Tax department.” 2. The assessee is an individual and is engaged in the business of providing services in sound and recording industry for Post Production Media. The assessee filed the return of income for AY 2015-16 on 30.09.2025 declaring total income of Rs. 1,81,66,840/-. The case was selected for scrutiny and the statutory notices were duly served on the assessee. During the course of assessment, the Assessing Officer (AO) noticed that there is a large increase in creditors and accordingly issued summons under section 131(1) to some of the major creditors. All the parties except Mrs. Reena Panchal proprietor of M/s Dhruv Communications appeared in response to the summons and statements were recorded. The AO further noticed that the creditors are providing Artist Co-ordination Services to the assessee and that the assessee has debited expenses aggregating to Rs. 2,86,45,554/- towards dubbing and artist fee. The AO after examining the details filed and statement recorded held that the parties have not actually rendered any services and expenses booked are none- genuine in nature. The assessee submitted before the CIT(A) that the AO held the expenditure amounting to Rs. 1,97,57,904/- paid to various parties rendering artist co-ordination services as bogus on the premise that “ i) Some of the creditors were outstanding as on the Balance Sheet date without considering the fact that out of the amounts paid of Rs. 1,97,57,904/- (which are disallowed), the balance outstanding as on 31.03.2015 is Rs. 71,32,701/-only, which have been fully paid in the subsequent year .This fact was disclosed to the Learned AO at the time of Assessment proceedings. The Learned AO has also erred in not considering that in every trade, there are Debtors and Creditors and existence of creditors on the Balance Sheet date does not necessarily mean that no services are rendered by those parties and that these are bogus parties expenses. Printed from counselvise.com 4 ITA No. 2463/Mum/2025 Sameer Fateh Shaikh ii) That parties who appeared have all provided \"artist co ordination \"services and the nature of these services is itself is extremely dubious as it is in the nature of intangible services without adding any actual value. The Learned AO has failed to consider that out of the four persons summoned by her, three appeared, of which one of them, Mr. Mazhar Shaikh, has provided script writing services, Ms. Anjall Singh has not provided any services during the year, but only her previous years outstanding fees were paid during this year and only Mrs. Saroj Shah[prop: 14 Dreams] has provided artists One must appreciate that in this Industry, majority of the small dubbing artistes are free lancers and after a period of 3 years, it is not possible to remember all names and that too on ex tempore questioning.” 3. Aggrieved the assessee filed further appeal before the CIT(A). During the appeal proceeding the assessee submitted additional evidence and the CIT(A) called for a remand report from the AO. With regard to the major item debited to P&L A/c paid to M/s Dhruv Communications (proprietor Mrs. Reena Panchal), the AO submitted that Mrs. Reena Panchal did not appear and in her place Mr. Pushpadant Panchal her husband attended and that the AO did not record any statements from him. In response the assessee submitted that the office of M/s.Dhruv Communication has been shifted to Chennai but the parties still continue to render service to assessee. The assessee further submitted that the business was operated by Mr. Pushpadant Panchal in the name of his wife and that a day to day affair of the business is handled by him. The assessee also submitted documents such as the bank statement, copies of invoices raised along with details of grid describing name of the series, duration of each episode, airtime etc., copy of audited financial statements and the power of attorney from Mrs. Reena Panchal. The CIT(A) did not accept the submissions of the assessee stating that appearance of husband cannot be accepted and the documentary evidences are not adequate enough to conclusively established the genuineness of rendering of service. Accordingly, the CIT(A) confirmed the disallowance made by the AO. Printed from counselvise.com 5 ITA No. 2463/Mum/2025 Sameer Fateh Shaikh 4. The ld. AR argued that the only reason for the CIT(A) to confirm the addition is that the husband of the service provider appeared. The ld. AR further argued that the other documents submitted in support of the rendering of service such as invoice raised with relevant details, bank statements substantiating receipt of money, etc. have been completely ignored. The ld. AR also argued that in the remand report the only finding of the AO is that since the husband of Mrs. Reena Panchal appeared no statements were recorded. Accordingly, the ld. AR submitted that the lower authorities has erred in holding the payment as non-genuine merely for the reason that the summons was responded by the husband and that some of the parties from whom services are rendered are related to the assessee or to the Chartered Accountant. 5. The ld. DR on the other hand submitted that the assessee failed to discharge the onus of proving the identity of the parties from whom the services are utilised and therefore the lower authorities have correctly disallowed the entire expenditure. 6. We heard the parties and perused the material on record. The AO during the course of assessment issued summons under section 131(1) to various parties and has recorded a finding that all parties except Mrs. Reena Panchal have appeared in response to the summons (refer para 4.1 of AO's order). The AO recorded various findings with regard to the summons issued and statement recorded to come to the conclusion that the entire payment towards contract dubbing charges as bogus. The CIT(A) after calling for the remand report and based on the additional evidences confirmed the disallowance. In this regard, we notice that the CIT(A) has not recorded any adverse finding with regard to the various documentary evidences submitted by the assessee but has merely mentioned that submission of documents Printed from counselvise.com 6 ITA No. 2463/Mum/2025 Sameer Fateh Shaikh do not establish the genuineness of the expenditure claimed. We further notice that in the remand report the AO has recorded that for the major supplier Mrs. Reena Panchal the summons was attended by her husband and no recording of facts with regard to the documentary evidences submitted by the parties. The relevant extracts of the remand report. “2. With reference to the above mentioned subject, Kindly find enclosed herewith the letter dated 12.02.2020, received from the ACIT-16(1), Mumbai, with regard to submission of counter comments /representation in the case of Shri Sameer Fateh Shaikh PAN: BHAPS2848J for AY 2015-16. The AO has stated that the assessee has debited to the Profit & Loss A/c an amount of Rs. 1,97,57,904/ under the head Contract Dubbing Charges which were stated to have incurred to pay fees to writers and other \"voice over artists\". These expenses were disallowed and summons u/s. 131 were also issued to some of the major parties involved in these expenses, and their statements were also recorded. However, after examination of the documents the AO held that the said expenditure claimed under this head is bogus. Further, the AO has submitted that major supplier Mrs. Reena Panchal (Prop. Of M/s. Dhruv Communications), did not attended the proceedings and in place of her husband Shri Pushpadant Panchal, No statement was recorded in absence of concerned person. Thus the veracity of major party involved in these expenses remains unverified Most of suppliers are fresh filers or late filers for ITRs and in most of the cases no TDS was made on the subsequent expenses made by them. The issue involved in appeal may kindly be decided on merits.” 7. From the above it is not coming out clearly the specific reasons for rejecting the statements and the documents. Accordingly, we see merit in the argument of the ld. AR that the genuineness of the expenditure has been questioned merely for the reason that the parties are related to the assessee / CA and that for major supplier the summons was attended by her husband. Having held so it is relevant to notice that during the course of hearing, the ld. AR submitted the general power of attorney given by Mrs. Reena Panchal to her husband to submit that based on the said power of attorney Mr. Pushpadant Panchal attended the summons. However, on perusal of the power of attorney, we notice that it is general in nature Printed from counselvise.com 7 ITA No. 2463/Mum/2025 Sameer Fateh Shaikh and does not authorise Mr. Pushpadant Panchal to attend the Income tax proceedings on her behalf. From the perusal of the orders of the lower authorities we see merit in the contention that no findings have been recorded with regard to the various documentary evidences submitted by the assessee and that holding the entire transaction as non-genuine without examining the merits of the issue is not tenable. Therefore in our view in the interest of natural justice, the impugned issue has to be remanded back to the CIT(A) for proper consideration on the merits of the issue based on documentary evidences. Accordingly we direct the CIT(A) to examine the documentary evidences and details submitted by the assessee and pass a speaking on merits of the impugned issue in accordance with law. Needless to say that the assessee be given a proper opportunity of being heard. 8. In result, appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open court on 10-10-2025. Sd/- Sd/- (JUSTICE (RETD.) C.V. BHADANG) (PADMAVATHY S) President Accountant Member *SK, Sr. PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. DR, ITAT, Mumbai 4. 5. Guard File CIT BY ORDER, (Dy./Asstt. Registrar) ITAT, Mumbai Printed from counselvise.com "