TaxTMI 
TaxTMI 
TaxTMI 
2025 (1) TMI 1608
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....ns 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, which revealed certain instances of acceptance and repayment of cash ....
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....er 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 null and void. 6.1 The submissions in support of the additional ground made by the learned counsel for the assessee are summarised as under: (i) The letter....
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....024 (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 report' is prepared by the Income-tax authority who conducts the search action. The learned DR further submitted that as per the procedure prescribed, a copy of the said appraisal report is sent to the concerned Assessing Officer, concerned Additional....
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....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 approval is sought. The report has been prepared by recollecting the memories, all the facts and events happened at that time. I, solemnly state that the contents of this affidavit are true to the best of my knowledge and beliefand that it conceals nothing and that no par....
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....nd 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 assessment process. Therefore, the changes in the assessment order, if any, is a continuous process. Therefore, there is no need to change the draft assessment order as the draft assessment order is being prepared after a due deliberation and discussion with the Assessing Officer. (5) I, the Addi,CIT in the case at that time is c....
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....ses, 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 the case of Pratibha Pipes & Structurals Ltd, DCIT, Cent. Cir. 17 & 28, Mumbai dated 10 -04-2019 (copy enclosed). In that case even the copy of approval was not available but still the decision was given in favour of revenue after considering the facts and circumstances. In that case also affidavit of the Range head was filed wherein it was categorically stated in his affidavi....
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....closing 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 discussion on various issues of assessment between the two authorities from time to time has not been brought on record and therefore in those decisions this aspect has not been considered. We further note that certain modifications were suggested to the Assessing Officer in the draft assessment order, which have been carried out by the Assessing Officer in the assessment order passed, which also shows that the ....
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....essee 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 additional ground challenging the issue of approval u/s 153D of the I.T. Act, 1961, for the first time, before the Tribunal. The assessee never disputed this issue before the lower authorities. The assessee has taken this issue for the first time before the Tribunal after ascertaining the fact in connection with its RTI application that no such approval was available in the assessment folder. When the assessee has not raised the iss....
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....n 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/s 153D and such reference has been further strengthened by the affidavits of two officer, who were part of assessment proceedings. Therefore, the case laws relied upon by the assessee cannot be considered as applicable to the facts of assessee case. 18. In this view of the matter and considering facts and circumstances of the case, we are of the considered view that there is no merit in the additional ground taken b....
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....n 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 production of the movie "Rave Party Project" amounting to Rs. 1,53,14,341/- which has been stated to be out of books of accounts of your concern. Under such circumstances explain with supporting evidences why the expenses aggregating to Rs. 1,53,14,341/- should not be treated as unexplained cash expenditure and added to your total income for the relevant A. Ys. as per break up of expenses tabulated below :- A. Y. Cash Expenses (Rs.) 2012-13 ....
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....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 instead of 'cash loans' as stated by the husband of the assessee i.e. Shree Satish Salve, in the statement recorded u/s 132(4) of the Act. In the retraction statement, Shri Satish Salve stated that said payments were not loans from Suresh Jajra HUF and he mistakenly stated that as loan during the statement recorded u/s 132(4) of the Act. In view of failure on the part of the assessee in explaining the source of the cash expenditure incurred, the Assessing Office....
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....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 providing the details of expected expenses. Credits b. And it is further agreed that all the publicity material, advertisement, prints, trailers, and paraphernalia of the said Picture will clearly mention therein as a:- Opening Title: SHREE SWAMI SAMARTH PICTURES Present in Associations With Zero Ground inc & H. N. Entertainment. Title Before the Film Start Produce by SHREE SWAMI SAMARTH PICTURES Naven Kumar Sharma Navin Parmar Records and Accounts a. Producer shall keep....
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....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, shall be held jointly by the Producers and Joint Producer in 80: 20 proportion. 6.3.1. From the above, it is clear evident that the risks and rewards of the movie 'Rave Party' lie with the producer i.e. the appellant. The appellant's contention that the entire transaction was on behalf of M/s Suresh Jajra HUF is not borne from the above agreement. There is no reference or a single clause to this effect in the entire agreement. 6.4. As far as the affidavit dt. 26.09.2012 of Mr. Naveen Kumar Sharma....
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.... 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 credibility of the undertaking vis-a-vis the other party any better? 6.4.4 To be sure, clause 3 of the above undertaking reads as follows:- "З. Net Profit (Sales Prices after TDS Less COP Rs. 325 Lacs = Balance) will be taken by Shree Swami Samarth Pictures and no money from this Net Profit will be shared with me (Ground Zero)." The above makes it clear that profits of the movie belong to M/s Shree Swami Samarth Pictures i.e. the appellant only. It is in this background that the case needs to be examined." 11.1 The Ld. CIT(A) further observed that expenses appe....
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....nexplained 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 cash receipts and cash expenditure but has not come clean on the same. As regards the sums which are actually spent, they are taxable u/s 69C. The remaining sums, being unaccounted cash and not having been disputed of being received by the appellant, are confirmed to be taxed u/s 69A of the Act. Accordingly, the following additions are confirmed for each of the 3 years:- AY Addition confirmed u/s 69C Addition confirmed u/s 69A Total addition confirmed 1 2012-13 6,45,572/- - 6,45,572/- 2 2013-14 1,35,51,163/- 3,67,606/- 1,39,18,769/- 3 2014-15 - 7,50,000/- 7,50,000/- Total 1,41,96,735/- 11,17,606....
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....ppearing 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 no evidence was filed to prove that movie was being produced by Mr. Suresh Jajra HUF and the assessee was only for name lending. According to the Ld. DR all risks and rewards of the project lied with the assessee. The Ld. DR submitted that there is no dispute as cash expenditure of Rs.1.5 crores has been incurred on the production of the movie and which is not appearing in the books of accounts of the assessee although expenditure incurred in cheque is appearing in the books of accounts of the assessee and therefore in terms of section 69C of the Act, the assessee was required to explain source and nature of the expenditure and due to failure on the part of the assessee, the lower autho....