DCIT, CENTRAL CIRCLE-2(1), HYD, HYDERABAD vs. R.R.MOVIE MAKERS, HYD, HYDERABAD

This Revenue’s appeal for AY.2012-13 arises from the CIT(A)-12, Hyderabad’s order dated 20-11-2015 passed in case No.1114/2014-15, in proceedings u/s.143(3) of the Income Tax Act, 1961 [in short, ‘the Act’]. Case called twice. None appeared at assessee’s behest. It is accordingly proceeded ex-parte.

“5.0 Addition on account of income declared u/s.132(4) but not admitted in return of income - Rs.4,50,00,000/-.

Though the appellant did not raise a specific ground against the addition of Rs.4,50,00,000/- ground no.1 deal with the subject, as it refer to the assessment order, which is stated to be not based on facts. As far as the addition of Rs.4,50,00,000/- is concerned, the amount consists of two components, one being the amounts paid to artists in cash, to the extent of Rs.3,68,75,000/-, which were not reflected in books. Balance amount of Rs.81,25,000/- was representing the unverifiable nature of certain expenses claimed as production cost. In this regard, it may be pertinent to mention here that, the assessee firm while recasting the production account of movie, 'Businessman', has taken the total cost of the said movie at Rs.36,67,18,183/-, which included the amount of Rs.3,68,75,000/- being the amounts paid to artists, but not accounted in books. Similarly, the total/gross receipts/collections of said movie was taken at Rs.30,61,68,183/- which also included the said amount of Rs.3,68,75,000/-. Having accepted the returned loss, based on such accounts, there was no need for separate addition of Rs.3,68,75,000/- being made by the AO in assessment order, where the said amounts were forming part of the gross receipts as well. Hence, I have the considered opinion that there is no basis for making separate addition of Rs.3,68,75,000/-. However, the assessee did not include the amounts of Rs.81,25,000/-, as the amounts admitted in total income, having declared the same u/s.132(4) of I.T.Act. This amount was in fact representing the unverifiable nature of certain expenses that formed part of production cost of movie "Businessman', whose accounts were under Question/investigations, for the year under reference. The assessee neither could retract such declaration u/s.132(4), nor explain the verifiable nature of expenditure, with required information/evidence. Under the circumstances, the addition of Rs.81,25,000/- representing the unverifiable expenses/related to production cost is held to be sustained and this ground of appeal treated as Partly Allowed”.

3.1. A perusal of the above extracted detailed discussion suggests that the CIT(A) has deleted the impugned disallowance for the precise reason that the impugned sum already stood included in the gross-receipts/collections of the movie ‘Businessman’ amounting to Rs.30,61,68,183/-. There is not even an indication in the Revenue’s pleadings rebutting this clinching aspect of double disallowance/addition of the very sum. We thus see no reason to restore the instant issue back to the CIT(A) for his afresh adjudication on this count alone. This former ground is rejected.

Order pronounced in the open court on 21st April, 2021