AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2025 (1) TMI 1608
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....ed facts of the case are that the assessee is an individual, who runs a film production house under proprietorship name M/s Shree Swami Samarth Pictures ( in short 'Samarth Pictures') . 2.1 For assessment year AY2012-13, the assessee filed original return of income on 29/03/2013 declaring total income at Rs.9,06,228/-. For assessment year AY 2013-14, the assessee filed original return of income on 28/07/2013 declaring total income at Rs.6,04,200/- which was scrutinized under section 143(3) of Act on 29/12/2015 accepting the returned income. Similarly, for assessment year AY 2014-15, the assessee filed original return of income on 28/11/2014 declaring total income at Rs.12,46,360/-. 2.2 Subsequently, a search and seizure action under section 132 of the Act was carried out on 08/12/2015 at the premises of M/s Nadiawala Grandson Entertainment Private Limited, alongwith residence of Sh Satish Salve ( Chief Finance officer of Ms/s Viking Media and Entertainment private limited), who was allegedly engaged in providing accommodation entries to M/s Nadiawala Grandson Entertainment Private Limited. In said search, certain documents relating to 'Samarth Pictures ' were found and seized....
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....ct is no arrival in the eyes of law as the same has been accorded on presumption and without application of mind and consequently the assessment order u/s 153C of the Act is null and Void as approval granted under section 153D is mechanical in nature and without application of Mind. 4.2 Identical grounds and additional grounds have been raised in the remaining two appeals also except change of amount. 4.3 We have heard rival submission of the parties on the issue of admissibility of the additional grounds. As the grounds raised are legal in nature and not requiring investigation of fresh facts, same are admitted for adjudication in view of the settled principle in the case of NTPC Ltd. 229 ITR 283 (SC). 5. Before us, the learned counsel for the assessee filed a paperbook containing pages 1 to 46. 6. In the additional ground, the assessee has challenged the validity of the assessment under section 153C of the Act. According to the assessee the approval granted by the competent authority under section 153D of the Act has been accorded on presumption, without application of the mind, which is mechanical in nature, consequently the assessment order under section 153C is nul....
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....i) Decision of Hon'ble Allahabad High Court in the case of PCIT vs Sapna Gupta in ITA No. 88 of 2022. (iv) Decision of Hon'ble Delhi High Court in the case of PCIT vs Shiv Kumar Nayyar in ITA 285/2024 & CM Appela 28994/2024 (v) Decision of Mumbai Bench of Tribunal in the case of Arch Phamalabs Ltd in ITA No. 6656/Mum/2017 for AY 2011-12 and other appeals. (vi) Decision of Hon'ble Delhi High Court in the case of PCIT Vs M/s MDLR Hoteles P Ltd in ITA 593/2023 (vii) Decision dated 24/04/2024 of Delhi Bench of Tribunal in the case of Veena Singh in ITA No. 294 & 295/Del/2022 for AY 2016-17 and 2017-18 7. On the contrary, the Ld. DR submitted that all the additional grounds have been raised merely on the basis of the presumptions and suspicion that the learned Additional Commissioner of Income-tax i.e. approving authority had not gone through the seized material and assessment records leading to allegation of nonapplication of the mind by the approving authority. The learned DR submitted that after collecting all the material from the search premises, each and every material is being analysed from the angle of possible tax evasion and an 'appraisal....
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.... reporis and seized/impounded materials as per the Law. Since the offices of the range head and the assessing officer (AO) were at the same floor i.e. 19th floor in the Air India Building the discussion or meetings were called by the range head or sought by the AO to discuss such cases. The AO had to discuss the assessment records, reply from the assessee etc. across the table with the range head on the one to one discussion basis as such type of search/survey cases are sensitive in nature. Furthermore, approvals are granted for more than single assessment years in combined manner to save the resources of the government and to protect the interest of revenue as deliberations on such cases have already been done to conclude the assessment proceedings in holistic and logical conclusion. In the instant case, such practice was followed. Hence, proper and regular discussions, analysis of appraisal report and seized/impounded materials have been taken place to reach the logical conclusion to finalise the assessment orders and in this way, thorough application of mind was there to conclude the assessment proceedings in the present case along with other such cases where a....
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....of the meeting with the Assessing Officer. The reason for the same is that the Assessing Officer and the Addl.CIT meet a number of times every day. Therefore, it is not a practice to write each and every meeting with the Assessing Officer in Income Tax Department. (3) In this case the offices of the range head and the assessing officer were at the same floor i.e. 19th floor in the Air India Building, sometimes the discussion or meetings were called for by the range head and sometimes meetings were sought by the AO to discuss the group case. The meeting between the Assessing Officer and the Addl.CIT were held on a regular basis as I have already said in the above point, Assessing Officer and the Addl.CIT meet very often. (4) The modifications or amendments are suggested on regular basis. The monitoring is done on regular basis and at every stage of the investigation and the examination of the records, the suggestion is being given. Therefore, it is not possible to submit all the suggestions given and no order sheet is being maintained for discussion and meeting with the Assessing Officer. Actually the Addl.CIT is involved in the process from the start of the assess....
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....learly admitted that due application was done. The dictionary meaning of judicious says 'showing good judgement'. It is submitted that if the assessment order is correct in every way, seized material is just a few documents and already discussion has been held many times in person, as per the practice in central range, considering the sensitive nature of cases, a simple order with no complications can be called judicious. In fact, in this case, some corrections were suggested by the Range head before passing the order. It is also submitted that, in a situation where no additionor deletion or any correction to the order is required or suggested and the Range head agrees with AO, a simple approval can also be said to suffice. 5. Regarding assessee's contention that there is single approval for all years it is submitted that different approval has been granted as all the AYrs are clearly mentioned. It is only an approval on a single page. In this regard it is submitted that in case different pages had been used for each AY, even then the sum and substance would have been same. 6. Reliance is placed on Hon'ble ITAT MUMBAI BENCH "C", MUMBAI decision in ....
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....ion made by the Assessing Officer and the additional Commissioner of income-tax in their respective affidavits. In the decisions relied upon by the assessee the main ratio is that approval granted in mechanical manner without application of mind is not sustainable in law. In the decisions relied upon of coordinate benches main allegation that the Assessing Officer only forwarded letter seeking approval without enclosing assessment records or appraisal report on seized material. In the affidavits filed before us, it has been unequivocally stated by the Assessing Officer as well as the Additional Commissioner of Income-tax that all the issues involved in the assessments were discussed on regular basis from time to time between the two authorities as both the authorities were sitting on same floor of office building. The ld DR submitted that the approving authority after considering the queries raised by the Assessing Officer and the reply of the assessee in the light of appraisal report and seized record, had examined each issue dealt in the draft assessment order properly and thereafter only approval was granted. In the cases cited by the learned counsel for the assessee the fact of....
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....ee. Admittedly, the department, in reply to RTI application clarified that neither copy of approval request letter filed by the AO to the Addl. Commissioner, nor copy of approval granted u/s 153D of the Act, was found in the assessment order folder. However, it was further stated that in the 153D approval folder maintained in the office of Addl.CIT, Range-4, the approval granted in other group cases were traced. The assessee claims that mere mentioning of having been taken approval u/s 153D in the assessment order is not sufficient and what is required to be seen is whether the department is able to provide copy of approval letter granted by the Addl.CIT, or not. Since the department has categorically stated that approval granted u/s 153D of the Act is not available in the assessment folder, obviously, benefit of doubt goes in favour of the assessee that no such approval has been taken by the AO u/s 153D before passing order u/s 143(3) r.w.s. 153A of the I.T. Act, 1961. 17. In the above factual background, if we examine the claim of the assessee by way of additional ground, we find that there is a serious suspicion raises about the conduct of the assessee in taking additio....
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....scharging the assessment functions. The administration action of the department is not very much relevant for the assessee to justify its case, on merits. Therefore, when assessee goes to question the administrative procedure, rather contending its case on merits, that too, after a lapse of 4 to 5 years, then obviously, a doubt arises about intend of the assessee in taking this ground and such an attempt is derail the issue on merits and to escape on technical ground. Therefore, we are of the considered view that there is no merit in the additional ground taken by the assessee challenging validity of assessment order passed by the AO u/s 143(3) r.w.s. 153A of the Income-tax Act, 1961. Although, the assessee has relied upon certain judicial precedents, we find that those case laws were rendered under different set of facts, where the assessee had taken the ground challenging validity of the assessment before the CIT(A) and also fact that there was no specific observation in the assessment order for taking approval required to be taken u/s 153D of the Income-tax Act, 1961. In this case, the AO has categorically recorded at para 7 of his assessment order in respect of approval taken u....
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....mitted that he was maintaining entire affairs of 'M/s Swami Samarth' on behalf of his wife Smt. Usha Satish Salve. During the course of assessment, the Assessing Officer analyzed the seized document belonging/related to the assessee. A detailed analysis along with scanned copy of the seized document is available from page 6 to page 12 of the impugned assessment order. The seized documents indicate payment in cash as well as through cheque on behalf of the proprietary concern of the assessee to various parties including Shri O.P. Sing, Shri Prashant Nirgude, Rajat, Nandu and director, Lionbel editor etc. The Assessing Officer observed that though the payments made by cheque were found to be entered in the books of accounts of the assessee, the cash expenditures were not entered in books of accounts. The Assessing Officer has aggregated the cash expenditure for three years amounting to Rs. 1,53,14,341/- and in the show cause notice issued asked the assessee to explain source of such cash expenditure. The relevant part of show cause notice issued by the Assessing Officer is reproduced as under: "4. As per the seized papers, your concern had incurred cash expenditure in the pr....
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....00,000/- due to financial miss-management by Mr. Navin Kumar Sharma, accordingly, an undertaking dated 26.09.2012 had been executed for increase of budget from Rs. 2,50,00,000/- to Rs. 3,25,00,000/-. As per the agreement, from time to time the assessee forwarded the details of receipt of cheque and cash to M/s Suresh Jajra and also the details of expenditure incurred in cash and cheque for the production of the film. The said details were provided through e-mail to Mr. Suresh Jajra. In view of the above submission, the assessee claimed that she was only the 'line producer' of the said film and all the expenses and receipt were on account of M/s Suresh Jajra HUF and the said expenses received did not belong to the assessee but the assessee was only a 'pass through entity'. During the assessment proceedings, the assessee filed a retraction statement of her husband Shri Satish Salve. But said retraction was rejected by the Assessing Officer due to lack to requisite affidavit along with supporting documentary evidences including sworn statement of 'panchas' i.e. witnesses. The assessee explained that payments received from Suresh Jajra HUF were in the nature of 'advance' receipt instea....
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....s agreed by Joint Producer that if project is not completed according to the schedule (Including Grace Period of 30 Days) then producer has the right to take the complete project from Joint Producer and has the right to allot the project to other Production House or producer will do himself as the case may be. f. It is agreed by Joint Producer that they are entitled only to rights expressly granted by Producer as per the terms of this agreement. All IPR always rest with Producer. Tentative Budget of the Film a. Producers hereby agree to invest upto Rs. 1,50,00,000/-(Rupees One Core Fifty Lacs only) for the purpose of production and completion of the said Picture in all respects, including censor and background music thereof, and for the purpose of preparation of one final release print of the said Picture. This amount is expected cost of the production as per the budget estimates prepared jointly by both the parties As per Schedule" B" b. Joint Producer hereby agrees and acknowledges that he will inform well in advance i.e. 7 days before to producer for requirement of funds. c. Joint Producer hereby agrees and acknowledges that producer will release fund after provid....
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.... producer unable to invest the funds in time, Joint Producer has right to take the finance from the third party and continue the project, in this event Joint Producer will return the amount invested till that date without any interest or profit, and also producer will not any rights on the said film and issue the NOC to Joint Producer. Net Profits and Distribution a. The Parties agree that if the Film project is coproduced and provided the Parties mutually determine it is commercially advantageous to do so, the Parties agree to enter into a distribution agreement with a distribution company to provide its services to distribute the Project in connection with the distribution of the Film. b. The Parties agree that all Net Profits from the exploitation of the Project shall be shared as follows: 80% to Producer and 20% to Joint Producer. Rights of the Project a. It is further agreed that after the recoupment by the Producer of the amounts financed under this agreement all the liens and charges credited to Producer under this agreement, or any other clause, shall come to an end and thereafter the copyrights, Intellectual Property Rights and other rights of the film, s....
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.... 6.4.2. The fact that the movie production has been undertaken by M/s Shree Swami Samarth Pictures in its capacity as a producer is also evident from the undertaking dt. 26.09.2012 submitted by the appellant in pages 46 to 48 of paper book Page. 6.4.3. The appellant has referred to clause No. 2 of the undertaking dt. 26.09.2012 wherein, Sh. Naveen Kumar Sharma has affirmed as follows:- "2. I solely take responsibility to sell the said Film at price of Rs 425 (Sale Price) Lac which intimated to me (Ground Zero) by Suresh B Jajra HUF Partner of Shree Swami Samarth Pictures." I am of the view that such a self-serving statement has no credibility as can be seen from the second page of this undertaking. The witnesses are Sh. O P Singh, Sh. Rajat Mukerjee and Sh. Rajiv Ranjan. Sh. Suresh B Jajra has not signed this document. This being the case, would it be fair to hold such a person as the sole architect of this entire transaction? To draw an analogy, if I were to draw an affidavit stating that I agree to buy the White House from the President of USA for a sum of Rs. 100 crores where there is no concurrence by the other party, does that make the credi....
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....truct a building by pooling funds from several investors, the builder is still accountable for all the financial transactions and cannot cite any investor who provided cash as the reason. The onus remains firmly on the appellant to explain its nexus with M/s Suresh Jajra HUF, terms of agreement between them, etc. The simple fact of the matter is that the appellant has incurred cash expenses which are not explained enough. Hence, I am of the view that the AO was right in bringing the unaccounted cash expenditure incurred for the movie, for which the appellant was involved in the capacity as producer, as unexplained expenditure u/s 69C of the Act." 11.2 Further, the assessee contended that actual cash expenditure mentioned in the loose papers was only of Rs. 1,41,96,735/- as against amount of Rs. 1,53,14,341/-. The bifurcation given by the assessee is reproduced as under: AY Alleged Cash Expenditure (Rs.) 2012-13 6,45,572/- 2013-14 1,35,51,163/- 2014-15 - Total 1,41,96,735/- 11.2 The Ld. CIT(A) however rejected the contention the of the assessee and sustained the additions observing as under: "6.10. Its evident that the appellant has....
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.... Salve husband of the assessee who used to look after the affairs of the assessee concern, has explained in his statement recorded u/s 132(4) of the Act on 09.12.2015 that out of total amount Rs. 1.64 crores was received from Mr. Suresh Jajra HUF as unaccounted cash. This statement was retracted after two years without any affidavit or providing any documents. The Ld. DR referred to para 7.9 of the impugned order and submitted that Shri Satish Salve himself stated that cash of Rs.1.53 crores was incurred by Swami Samarth Picture towards project of Rave Party Project which was done outside books of accounts. The Ld. DR referred to the agreement dated 12.04.2012 where Smt. Usha Salve is appearing in capacity of the producer and Mr. Navin Kumar Sharma is appearing in capacity of the joint producer. The Ld. DR further referred to the affidavit of Mr. Navin Kumar Sharma, as discussed by the Ld. CIT(A) in para 6.4 of the impugned Officer, that there was no mention of Suresh jajara, from whom cash is being claimed as received. He further submitted that the undertaking given by Shri Navin Kumar Sharma is self serving one and not signed by Shri Suresh Jajra. The Ld. DR submitted that ....