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Income Tax Appellate Tribunal, “B” BENCH, MUMBAI
Before: SHRI ABY T. VARKEY, JM & SHRI GAGAN GOYAL, AM
O R D E R
PER ABY T. VARKEY, JM:
This is an appeal preferred by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals)-4, Mumbai dated 29.08.2019 for the assessment year 2013-14.
The grounds of appeal
raised by the assessee is as under: - “1. On the facts and the circumstances of the appellant’s case and in law the Ld. CIT(A) erred in confirming AO’s action of making addition of Rs.75,94,000/- on account of unexplained cash deposits.
2. On the facts and the circumstances of the appellant’s case and in law the Ld. CIT(A) erred in confirming AO’s action of making addition of Rs.4,92,60,000/- on account of unexplained cash credit relating to the amount received during the previous year relevant to the assessment year 2013-14.
3. On the facts and the circumstances of the appellant’s case and in not directing the AO to delete the addition of Rs.6,93,02,104/- which is not relating to the assessment year 2013-14. 2 A.Y. 2013-14 Bholaram Malviya
4. On the facts and the circumstances of the appellant’s case and in directing the AO to assess the unexplained cash credit in the year’s the loan was received amounting to Rs.6,93,02,104/-.
5. The appellant craves leave to alter, amend, modify or substitute any ground or grounds and to add any new ground/(s) as may be necessary.”
3. The first ground of appeal of the assessee is against the action of the Ld. CIT(A) in confirming the action of the AO making an addition of Rs.75,94,000/- on account of unexplained cash deposits.
4. Brief facts the AO noted on this issue was that the assessee who is an individual had filed his return of income on 28.09.2013 declaring total income to the tune of Rs.12,62,258/-. Later, the case of the assessee was selected for scrutiny and the AO notes that the assessee was the business manager and also proprietor of M/s. B. R Entertainment. The AO noted that as per the AIR data, the assessee had deposited cash to the tune of Rs.77,94,000/- and has made credit card payments to the tune of Rs.3,49,000/-. So he asked the assessee to produce the source of cash deposits. The assessee gave his reply which the AO has reproduced at para no. 4.1 & 4.2 of his assessment order, and thereafter the AO notes that he issued summons to the assessee and his statement was also recorded (which has been reproduced by the AO from page no. 3 to 8 of the order wherein he has explained the source of cash deposit from agricultural/sale of cattle etc). Thereafter, the AO did not accept the assessee’s explanation regarding the source of the cash deposits. And thereafter he was pleased to add Rs.75,94,000/-. Aggrieved, the assessee preferred an appeal before the Ld. CIT(A) wherein the assessee produced additional evidences before 3 A.Y. 2013-14 Bholaram Malviya the Ld. CIT(A) and requested for admission of the same under Rule 46A of the Income Tax Rules, 1962 (hereinafter “the Rules”) and brought to the notice of the Ld. CIT(A) that those additional evidences are relevant and the assessee was unable to produce at the time of the assessment proceedings because he didn’t get sufficient time to collect the same. The Ld. CIT(A) was pleased to admit the additional evidences filed by the assessee. And thereafter he forwarded the same to the AO for his remand report vide letter dated 15.02.2018. The Ld. CIT(A) has reproduced the remand report furnished by the AO in his impugned order wherein the assessee had claimed that out of the cash deposit of Rs.75,94,000/- made in the bank account of M/s. BR Entertainment, cash deposit of Rs.70,00,000/- were made by Shri Indrajit Chatterjee which was out of the cash withdrawn by him from the bank account of M/s. BR Entertainment and for the balance amount (Rs.5,94,000/-) the assessee pleaded his inability to give the source of it. In respect to this explanation of assessee, the AO was of the opinion (in the remand report) that no supporting evidences were given by the assessee to show that cash deposits of Rs.70 Lakhs was made by Shri Indrajit Chatterjee, after having withdrawn the same from the bank account of M/s. BR Entertainment as claimed by the assessee. And the AO took note of the fact that the assessee has changed his version regarding source of cash deposits from that of sale of cattle etc which was given earlier by him during the assessment proceedings. So according to AO, the new explanation was an afterthought without any support evidences. So the AO did not accept the new-explanation given by assessee during the First Appellate 4 A.Y. 2013-14 Bholaram Malviya Proceedings. The Ld. CIT(A) gave a copy of the remand report for assessee’s reply. And pursuant to it, the assessee drew the attention of the Ld. CIT(A) to the bank-statement received from HDFC Bank account of M/s. B. R. Entertainment which reflected the cash withdrawal of Rs.97 Lakhs from (HDFC bank account no. 00192560003761 Richmond Road, Bangalore Branch) and cash deposited of Rs.70 Lakhs in the said bank account (same bank/HDFC) along with copy of the ledger account of HDFC Bank in the books of assessee. And the assessee offered balance cash of Rs.5,94,000/- as additional income for the year under consideration because he was unable to prove the source of it. The assessee also brought to the notice of the Ld. CIT(A) that Shri Indrajit Chatterjee who withdrew and deposited the cash was co-producer of the film ‘Joe bhi karwalo’ and to support this assertion brought to his notice the copies of media reports showing that Shri Indrajit Chatterjee was the co-producer of the film; and also invoices issued in the name of Shri Indrajit Chatterjee by “Hotel the Chancery Pavilion at Bangalore.” But the Ld. CIT(A) did not accept the contention of the assessee and was pleased to confirm the action of the AO. Aggrieved the assessee is before us.
We have heard both the parties and perused the records, we note that the assessee is an individual who had filed the return of income on 28.09.2013 declaring total income of Rs.12,62,258/-. In the assessment order, the AO has noted that the assessee was business manager to film artist; and was also the proprietor of a concern named M/s. BR Entertainment. And since the AIR report showed that the assessee had 5 A.Y. 2013-14 Bholaram Malviya deposited Rs.77,94,000/- and had made Credit Card payment of Rs.3,49,000/-, the AO asked the assessee to show the source of the same. Pursuant to which the assessee gave explanation vide letter dated 19.02.2016 (reproduced by the AO) wherein assessee, attributed source of cash to sale of cattle etc which was not accepted by the AO for want of credible material. Thereafter, the AO, directed the assessee to appear before him on 08.02.2016 and as per the request of the assessee, time was given upto 10.03.2016. And thereafter, the AO recorded his statement (assessee’s) which has been reproduced from page no. 3 to 8 of the assessment order dated 23.03.2016. During the examination by the AO, for question no. 5 assessees replied that in the year1990 he came to Mumbai and was involved in film production in various capacities and functioned inter-alia as manager, and then became production executive, then artist manager etc; and from the year 1996 onwards he became personal secretary to several film artists and that of casting directors. He also brought to AO’s notice that with passage of time, he became project designer. He also admitted that the he was proprietor of concern M/s. BR Entertainment, which was in operation for last three (3) years. It was also brought to the notice of the AO (as answer to question no. 7), that he met Shri Indrajit Chatterjee at Kolkata at a party organized by Shri Arshad Warsi and he (Shri Indrajit Chatterjee) showed interest to produce movie; and pursuant to which they prepared a partnership deed for it; and since the dates given by actors were expiring, they started the movie production. [Movie name “Joe Bhi Karwalo” which was released on 03.01.2014 and Shri Javed Jaafri and Ms. Soha Ali Khan as lead rolls]. Answering 6 A.Y. 2013-14 Bholaram Malviya to question no. 8, the assessee gave bank accounts details to AO as under: - “I have current account in the name of M/s. BR Entertainment at HDFC bank Versova Branch Account No. 00192560003761 and saving account (2) In my personal name in the same HDFC Bank bearing account no. 00191000089838. I also have a joint account with my son Rishikesh Malviya bearing account no. 0019130013592.”
And answer to question no. 9 regarding the source of the funds, the assessee had admitted to have taken a loan of (i) Rs.4.73 crores from Shri Indrajit Chatterjee and (ii) from Shri Ajay Bagdal (M/s. Rajvi Entertainment) of Rs.5 crores and (iii) loan from Shri Ramchandra about 50 Lakhs and (iii) from friends (Shri Shefani Rs.25 to 30 Lakhs). Answering to question no. 10, the assessee also brought to AO’s notice that the loan confirmation from Shri Indrajit Chatterjee could not be given since he was in police/judicial custody (arrested by the Kolkata Police) for alleged fraud of fixed deposit involving M/s. West Bengal Infrastructure Development Finance Corporation. And also he furnished the loan confirmation from all the other parties from whom he has availed loans. In order to substantiate the cash deposit, the assessee stated that he was into agriculture and has substantial agriculture income from which he has deposited cash Rs.7.70 Lakhs. He also brought to the notice of the AO to question no. 11 that his movie (joe bhi Carvallo) collected Rs.3.81 crores and sold the Satellite rights, Negative Rights, Internet Rights for Rs.75 Lakhs. He also brought to the notice of the AO as answer to question no. 22 that in the current account of M/s. BR Entertainment at HDFC Bank in the name 7 A.Y. 2013-14 Bholaram Malviya of M/s. BR Entertainment cheque/RTGS to the tune of Rs.5,25,50,000/- was deposited as under: - S. Date of Deposit Amount Cheque/RTGS Person from No. 1 17.12.2012 2500000 Cheque 5000000 2 28.12.2012 RTGS Rasraj Enclave 5000000 3 04.01.2013 RTGS Rammohan (RTGS) 5000000 Cheque 4 08.01.2013 M/s. Richmond Road 5000000 Cheque 5 12.01.2013 M/s. Richmond Road Cheque 6 15.01.2013 5000000 M/s. Madhuvan Dealers Cheque 7 21.01.2013 7500000 M/s. Rammohan Cheque 8 23.012.2013 9800000 Shri Rammohan Chaterjee Cheque 9 06.02.2013 250000 M/s. Evergreen Decoraters Cheque 10 08.02.2013 5000000 M/s. JCC Holdings Pvt. Ltd. Cheque 11 18.02.2013 2500000 M/s. Rasraj Enclave Total 52550000
The assessee also submitted to the AO that other than the cheque amounting to Rs.50 Lakhs which got bounced, balance amount of Rs.4.73 crores was funded by Shri Indrajeet Chaterjee in the various names and accounts belonging him as seen in the chart (supra). Thereafter, the AO again summoned him u/s 131 of the Act on 14.03.2016 to complete the enquiry and asked about the deposits of cash and the assessee submitted before the AO that the same was from agriculture/sale of cattle etc. The AO did not accept the explanation of the assessee regarding the cash deposits as from agriculture etc; and even though the AO noted that in assessee’s account (proprietary concern) cheque deposit was to the tune of Rs.4.87 crores. According to the AO, the assessee failed to prove the source of cash deposit to the tune of Rs.75,94,000/- and thus made an addition of the same as unexplained. On appeal, the assessee brought to the notice of the Ld. CIT(A) that out of Rs.75,94,000/- (deposited in HDFC Bank Account of M/s. BR Entertainment), Rs.75 Lakhs was deposited in the HDFC Branch situated at Richmond Road, Bangalore which was sourced out of the cash withdrawn from the same Branch and pursuant thereto, the Ld. CIT(A) called for remand report from the AO who was of the 8 A.Y. 2013-14 Bholaram Malviya opinion that though there was total cash deposit of Rs.75,94,000/-, the assessee’s contention that the cash deposit of Rs.70 Lakhs was made by Shri Indrajeet Chatterjee out of the cash withdrawn by him from the bank account of M/s. BR Entertainment itself has no supporting evidence to prove that the total cash deposited of Rs.70 Lakhs were out of cash withdrawn by Shri Indrajeet Chatterjee to the tune of Rs.75 Lakhs. According to AO other than, the Hotel bills of Shri Indrajeet Chatterjee, Railway ticket etc. and Media report about him co- producing the movie along with assessee the hindi Movie there was no other evidence. So he did not accept the ibid explanation of the assessee. In this respect, we note that an amount of Rs.97 Lakhs was withdrawn from the bank account of M/s. BR Entertainment. The details of withdrawal of cash and deposited of cash in the assessee’s bank account is as under: -
(i) Details of cash withdrawn by Shri Indrajit Chterjee of Rs.97 Lakhs is given below - Date Amount 05/01/2013 5,00,000 07/01/2013 3,00,000 08/01/2013 3,00,000 10/01/2013 6,00,000 11/01/2013 4,00,000 12/01/2013 4,00,000 15/01/2013 5,00,000 9 A.Y. 2013-14 Bholaram Malviya 16/01/2013 5,00,000 17/01/2013 5,00,000 18/01/2013 5,00,000 19/01/2013 5,00,000 21/01/2013 5,00,000 22/01/2013 5,00,000 23/01/2013 4,00,000 24/01/2013 5,00,000 24/01/2013 5,00,000 28/01/2013 4,00,000 29/01/2013 4,00,000 30/01/2013 2,00,000 31/01/2013 5,00,000 01/02/2013 5,00,000 04/02/2013 3,00,000 97,00,000
(ii) the cash deposited (Rs.70 Lakhs) is as under: - Date Amount 16/02/2013 5,00,000 18/02/2013 5,00,000 19/02/2013 5,00,000 10 A.Y. 2013-14 Bholaram Malviya 20/02/2013 5,00,000 21/02/2013 5,00,000 25/02/2013 5,00,000 27/02/2013 5,00,000 04/03/2013 5,00,000 05/03/2013 5,00,000 06/03/2013 5,00,000 07/03/2013 5,00,000 13/03/2013 5,00,000 18/03/2013 5,00,000 21/03/2013 5,00,000 70,00,000 8. From the aforesaid chart [furnished before the Ld. CIT(A)] and AO during remand report the authenticity of the details have not been commented upon by both authorities) it is discernable that cash amount of Rs.97 Lakhs has been withdrawn from assessee’s bank account from 05.01.2013 to 04.02.2013 and that cash (Rs.70 Lakhs) has been deposited in assessee’s bank account from 16.12.2013 to 21.03.2013. And assessee during the first Appellate proceeding has explained that the source of Rs.70 Lakhs deposit was from the aforesaid money withdraw to the tune of Rs.97 Lakhs. However, since the assessee could not produce the confirmation of this fact from Shri Indrajeet Chatterjee, the aforesaid claim made by the assessee was disbelieved. However, it has been brought to our notice that Shri 11 A.Y. 2013-14 Bholaram Malviya Indrajeet Chatterjee had committed a fraud of fixed deposit involving M/s. West Bengal Infrastructure Development Finance Corporation (hereinafter “WBIDFC”) and was arrested by police and that he was languishing in the prison from April, 2013 onwards. And it was brought to the notice of the AO/Ld. CIT(A) that when interrogated by the police (on fraud), he admitted to have diverted the fraudulent money for hindi film production. And to buttress this fact the Ld. AR drew our attention to the page no. 35 of PB (report of Telegraph dated 17.04.2013). From the aforesaid facts, the Ld. AR of the assessee urged before us that the source of deposit of Rs.70 Lakhs in the bank account of the proprietary concern of M/s. BR Entertainment (where the assessee is a proprietor), was from cash withdrawal of Rs.97 Lakhs. And we note that Rs.70 Lakhs have been deposited between 06.02.2013 and 21.03.2013 when this fact of cash withdrawal as well as cash deposit was brought to the notice of the AO (during remand report proceedings), the AO did not accept the justification of the later deposit of Rs.70 Lakhs on the ground that the assessee could not prove that it was Shri Indrajeet Chatterjee who had withdrawn Rs.97 Lakhs and had deposited Rs. 70 Lakhs in the bank account of M/s. BR Entertainment. However, from a perusal of the bank statement of M/s. BR Entertainment for FY. 2012-13 which is placed at page no. 36 to 46 of PB from which it is noted that Rs. 97 Lakhs was withdrawn between 05.01.2013 to 04.10.2013 (which has been highlighted in the bank statement) and deposit of Rs.70 Lakhs has been made between 10.02.2013 and 21.03.2013. In the light of the aforesaid, we are of the opinion that assessee need to be given one more opportunity to adduce 12 A.Y. 2013-14 Bholaram Malviya evidence from Shri Indrajeet Chaterjee that after withdrawal of amount he has deposited the same in assessee’s/proprietary bank account as contended by assessee even though we are aware that assessee has changed the source of income from sale of cattle etc. But taking into consideration the peculiar facts of the case, as noted supra we are inclined to set aside the impugned order of Ld. CIT(A) and restore the appeal back to the file of Ld. CIT(A) to decide afresh the issue as observed by us supra.
Ground no. 2 is against the action of the Ld. CIT(A) in confirming the action of the AO making an addition of Rs.4,92,60,000/- on account of unexplained cash credit.
Brief fact as noted by the AO for making an addition inter-alia of Rs.4.73 crores is as under: - “5.1.2 The assessee has furnished a News report dated 19/04/2013 published by the Telegraph, Kolkata in support of his claim for receipt of funds for his film from one, Indrajeet Chatterjee from West Bengal, but it does not contain the name of the assessee nor does the news of the fraud committed by Indrajeet Chatterjee put light on the transfer of funds to the assessee in the article published, hence does not bear any bearing with the transfer of funds to his account, The onus was on the assessee to provide documentary evidences in support of his credit and cash balances in his account by way of Confirmations, Agreements with Financers specified and terms and conditions of how and when dispersed and period to which it would apply alongwith the purpose to enter into the contract. But the assessee has failed to provide with any such agreement which would substantiate the amount of credits appearing in his bank accounts and further no Confirmations with respect to the Unsecured Loans of Rs.1,32,62,104/+ has been provided 13 A.Y. 2013-14 Bholaram Malviya by the assessee. Further, in answer to Question no, 10 of sworn statement recorded under oath dated 10-03-2016, also mentioned that he is unable to provide any Confirmations with regard to the credits in his account. Thus the source of the deposits of credits of Rs.11.86 crore [i.e.4.73cr + 5cr + 50 + 30 + 1.32 crores] remain to be explained and i: treated as unexplained Credit of the assessee and added back to the total income of the assessee. Addition: Rs.11,85,62,104/- 11. Aggrieved, the assessee preferred an appeal before the Ld. CIT(A) wherein the assessee brought to the notice of Ld. CIT(A) that out of the total addition of Rs.11,85,62,104/- under section 68 of the Act, receipt of Rs.6,93,02,104 pertained to other years and not of this relevant AY. 2013-14. (ie. Rs.4 crores from Shri Ajay begdai was received between 24.10.2013 to 01.01.2014; Rs.50 Lakhs from Shri Ramchandra on 16 & 17 May 2013; Rs.25-30 Lakhs from Shefan on 30.12.2013 all pertaining to AY. 2014-15) and it was brought to the notice of Ld. CIT(A) that Rs.1,13,02,104/- was the opening balance as on 31.03.2013. Therefore, Ld. CIT(A) did not confirm the addition of Rs.6,93,02,104/- (after calling for remand report). So we are concerned about balance Rs.4,92,60,000/- (i.e. Rs.11.85,62,104/- - Rs.6,93,02,104/-). And the assessee brought to the notice of the Ld. CIT(A) in respect of addition of Rs.4,73,00,000/- the following facts given in the form of chart as under: - S. Name Amount CIN Income Tax Jurisdiction Address No. 1 JCC Holding Pvt. Ltd. 50,00,000 U65999WB1993PTC058902 Ward 12(1), Kolkata 167/4, Lenin Sarani, PS- (PAN-AAACJ7214N) Bowbazar Kolkata-700072 68/5C, Ballygunge Place Ground Floor (Rear Side) Kolkata- 700019 2 Madhuvan Dealers Pvt. Ltd. 50,00,000 U51909WB1995PTC074965 Ward 12(1), Kolkata 167/4, Lenin Sarani, PS- (PAN – AACCM2074K) Bowbazar Kolkata-700072 13A, Deodar Street, Ground Floor Kolkata 700019 3 Rasraj Enclave Maker Pvt. Ltd. 1,00,00,000 U69191WB2004PTC099745 Room No. 3B83, SP Mukherjee (Director – Sh. Ram Mohan Road, Kolkata, WB 700026. Chatterjee 14 A.Y. 2013-14 Bholaram Malviya 4 Ram Mohan Chatterjee 2,73,00,000 DIN-06363881 ITO- Ward-3(2). VSP A-1, Dumurjala HIT Quarter, 43, Jagacha Howrah, WB-711104. 4,73,00,000
It was explained before the Ld. CIT(A) that Shri Ram Mohan Chaterjee director of M/s. Rasraj Enclave Maker Pvt. Ltd. had deposited Rs. 25 Lakhs each on 17.12.2012 & 18.02.2013, (Rs.50 Lakhs) and an amount of Rs.50 Lakhs on 28.12.2012 (total 1 crores). It was also brought to the notice of the Ld. CIT(A) that Shri Ram Mohan Chatterjee has given an amount of Rs.50 Lakhs each on 04.01.2013 and on 08.01.2013 (total Rs. one crore) and Rs.75 Lakhs on 21.01.2013 and on 23.01.2013 Rs.98 Lakhs (thus total Rs.2.73 crores). It was also brought to the notice of the Ld. CIT(A) that Shri Ram Mohan Chatterjee was the director of M/s. Rasraj Enclave Maker Pvt. Ltd. and an amount of Rs.50 Lakhs was given by M/s. Mahuvan Dealers Pvt. Ltd on 21.01.2013; Shri Ram Mohan Chatterjee 15.01.2013 and Rs.50 Lakhs by M/s. JCC Holding Pvt. Ltd. on 08.02.2013. Thus it was brought to the notice of the Ld. CIT(A) the source of Rs.4.73 cr along with name of the source, the CIN No./DIN No of the corporate entities which is discernable from the chart (supra) as well as the jurisdiction of the source and details of the amount has been clearly shown (supra) as well as the addresses of the sources has been furnished before the Ld. CIT(A); and it was also brought to his notice that the aforesaid payments were made by those entities/person on behalf of Shri Indrajit Chatterjee for film production; and the entire amount given was spent for making of film; and in order to substantiate the same relevant extract of books of account M/s. BR Entertainment was produced along with copies of the bank statement 15 A.Y. 2013-14 Bholaram Malviya which is found placed at page no. 50 to 62 of PB as well as at page no. 36 to 46 of PB which shows the utilization of funds for the production of film. It is noted from the extract of the books of accounts of M/s. BR Entertainment specifies the expenditure incurred in production of the film and the same was also brought to the notice of the Ld. CIT(A) which is found placed at page no. 63 to 65 of the PB. And it is noted that the Ld. CIT(A) had forwarded the additional evidences to the AO for remand report who has given the report as under: - a) “With respect to Rs. 4,73,00,000/- credited to the account of M/s. B.R. Entertainment from Shri Indrajit Chatterjee, the assessee, during appellate and remand proceedings, has submitted media report showing that Shri Indrajit Chatterjee was co-producer of the film alongwith details of expenses incurred in the production of film and bank book of M/s. B.R. Entertainment. The assessee has furnished copies of certain bills/vouchers exceeding Rs. 2,00,000/- incurred in making of the film at Bangalore. Comments on additional evidence: In the copies of media reports furnished by the assessee, it is reported that Mr. Indrajit Chatterjee was co-producer of the film titled as Joe Bhi Karwalo and reportedly have invested in movies. The copies of certain bills/vouchers of expenses furnished by the assessee claimed to have been incurred in making of the film at Bangalore during the year under consideration mainly consists of- Copies of invoices/bills of hotel The Chancery i) Pavilion, Bangalore and Hotel Nandhini, Bangalore in the names of Mr. Indrajit Chatterjee, Mr. Javed Jafferey, Ms. Tanya Pal, Mr. Sameer Sipi, Mr. AnsumanTakur, Mr. Samir Tiwari, Mr. Bhola Malvia, Mr. Asim Bajaj, Ms.
16 A.Y. 2013-14 Bholaram Malviya Soha Ali khan, M/s. B.R. Entertainment, Mr. Santosh & Mr. Dil Bahadur, Ms. Sakshi Sambhavani & Ms. Hinal, Mr. Nishant Purohir, Mr. Sandeep Singh, for their stay in hotel. Copies of bills and invoices of certain Make-up ii) Artists of Mumbai viz. Bharti D. Chavan, Arjun I. Bundela, Satish Kumar Samayik, Ramesh Dalvi, Natural Hair, Avadhoot Vardam, etc. iii) Copies of bills and invoices of Arvind Rathod, Location Recordist, Bangalore, Punith Cabs, Shanthi Tours & Travels & Siddhivinayak Vanity, Bangalore for providing vehicles/vanity vans etc. Copies of bills/invoices of Light & Light, Light iv) Craft & Sound Pvt. Ltd., Kodak Indain Pvt. Ltd., Devendra Sound, UNI 10 Media Works Pvt. Ltd., Prime Focus, S.J. Studio Flamingo Films, for providing lights, cameras, sound technical services, etc. Co-Artists v) Karnataka Film Television Association, All Karnataka Cine Stunt Director’s and Stunt Artist’s Association in the Name of M/s. B.R. Entertainment, etc.
From the details furnished by the assessee, prime facie, it appears that the said amount has been spent on making of the movie, however, the ld. CIT(A) may kindly adjudicate upon the issue in appeal on merits.”
Even though, the AO in the remand report proceedings (after considering the evidence produced before him) has accepted that the assessee’s proprietary concern M/s. BR Entertainment has incurred expenses for production of film titled as “Joe Bhi Karwalo” and has 17 A.Y. 2013-14 Bholaram Malviya acknowledged that assessee had submitted bills/vouchers/expenses for claiming that expenditure have been incurred in the making of the film at Bangalore; and has recorded a finding of fact albeit prima facie that the amount has been spent on making of the movie. However, the Ld. CIT(A) without giving any merit to the explanation given by the assessee regarding the identity & genuineness of the amount of Rs.4.73 crores which was credited in the books of account of M/s. BR Entertainment has added Rs.4,92,60,000/- out of total addition of Rs.11,85,62,104/- which was added by the AO (supra). The Ld. CIT(A) noted out of this total amount (Rs.11,85,62,104/-) Rs.1,32,62,104/- pertains to period prior to AY. 2013-14 i.e. opening amount; and Rs.5,75,00,000/- pertains to AY. 2014-15. And therefore he directed deletion of the same. Even though, the assessee brought to the notice that the three (3) corporate entities made an amount of Rs. 2 crores and Shri Ram Mohan Chatterjee director of Shri Rasraj Enclave Maker Pvt. Ltd. gave Rs.2.73 crores and had furnished the CIN/DIN no. as well as PAN number of Shri Ram Mohan Chatterjee along with their jurisdictional Income Tax Officers and their respective address, the Ld. CIT(A) had confirmed of Rs.4,92,60,000/-. We find that out of Rs.4.73 crores given by three (3) corporate entities/ Pvt. Ltd. companies namely (i) M/s. Madhuvan Dealers Pvt. Ltd. (Rs. 50 Lakhs) (ii) M/s. JCC Holding Pvt. Ltd. (Rs.50 Lakhs) and (iii) M/s. Rajraj Enclave Maker Pvt. Ltd. (Rs. 1 crores), we note from the evidences adduced before us (which needs to be verified) that the amounts have come through cheque/RTGS in the bank account maintained in the name of M/s. BR Entertainment (a separate bank account number 18 A.Y. 2013-14 Bholaram Malviya 00192560003761 was opened and maintained with HDFC Bank and a separate books of account were also maintained by the assessee of M/s. B. R. Entertainment which was solely for making the movie/film and placed for consideration of Ld. CIT(A) and AO at page 50 of PB) and the assessee had filed the CIN/DIN number of all the three (3) entities, their addresses and also has brought to the notice of the Ld. CIT(A)/AO, the details of jurisdictional ITO (where they are assessed). Thus, the assessee has shown the source of the amounts from three (3) corporate entities; and that balance amount has been given by Shri Ram Mohan Chatterjee whose PAN number was furnished ADFPC5528F and his address, the details of the Income Tax Officer were given and also brought to the notice that these amounts were given/provided to M/s. B. R. Entertainment on behalf of Shri Indrajit Chatterjee (co-producer) of movie; and that the same has been spend (details of which facts are discernable from extract from the books of accounts of M/s. BR Entertainment specifying expenditure incurred in production in film during the year which is found placed at page no. 63 to 64 of PB). We also note that the assessee had filed from the company master data the details of the three (3) corporate entities their respective certificate of incorporation and the copy of Form no. 23AC and audited financials of all the three entities; and perusal of the same reveals that the M/s. Madhuvan Dealers Pvt. Ltd. have share capital of Rs.1,00,73,400/- and reserve and surplus of Rs.7,11,15,754/- which has given an amount of Rs.50 Lakhs (to M/s. BR Entertainment) (refer page 81 of PB; M/s. JCC Holding Pvt. Ltd. had share capital of Rs.1,68,44,100/- and reserve and surplus of Rs.17,68,91,772/- which 19 A.Y. 2013-14 Bholaram Malviya has been given an amount of Rs.50 Lakhs to the assessee (refer page no. 105 of PB): M/s. Rasraj Enclave Maker Pvt. Ltd. had share capital of Rs.19,36,040/- and reserve and surplus of Rs.8,99,65,109/- which has given of Rs.1 crores to the assessee. It is also noticed that Shri Ram Mohan Chatterjee who had given Rs.2.73 crores was also the director of Shri Rasraj Enclave Maker Pvt. Ltd when the amount of Rs.2.73 cr was given to M/s. B. R. Entertainment. Since these facts aforestated are relevant it needs to be verified, we set aside the impugned order of Ld. CIT(A) regarding addition of Rs.4.73 crores and direct him to call for remand report for verifying the aforesaid details and thereafter to pass order on this issue in accordance to law after hearing the assessee.
Regarding an amount of Rs.9,60,000/- the assessee submitted that this amount was transferred from the current account of the proprietorship concern of M/s. BR Entertainment to the saving bank account of the assessee i.e. 00089838 with HDFC bank account. Thus, according to the assessee, from the current account of his proprietorship concern M/s. BR Entertainment i.e. A/c 00192560003761 an amount of Rs.9.60 Lakhs has been transferred to his saving bank account which fact has been brought to the notice of the AO and in the remand report placed at page no. 174 of PB. We note that the AO in the remand report observed about this “with respect to unsecured loan of Rs.9,60,000/- from M/s. BR Entertainment, the assessee has furnished the copy of ledger account in the books of assessee and……”
20 A.Y. 2013-14 Bholaram Malviya 15. And regarding Rs.10 Lakhs, the AO noted that the unsecured loan of Rs.10 Lakhs shown as outstanding from Shri Indrajit Chatterjee has been offered by the assessee as additional income for the year under consideration. Thus, we note that the AO has not disputed the claim of the assessee in respect of both the aforesaid amounts i.e. Rs.9,60,000/- has been received in the form of loan from proprietor concern to himself/assessee (saving bank account). Therefore, the source of Rs.9.60 Lakhs stands proved and since its nature of transaction is loan as noted by AO in his remand report, it cannot be taxed. And since AO has accepted that Rs.10 Lakhs has been offered by assessee as income in his remand report as well as the fact that assessee has offered the same for taxation. Therefore Rs.9.60 Lakhs and Rs.10 Lakhs ought to have been deleted by the Ld. CIT(A) as observed in the remand report of AO. Therefore, we direct deletion of addition of Rs.19.60 Lakhs. Thus, Rs.19.60 Lakhs stands explained, so Rs.19.60 Lakhs is directed to be deleted; and the addition of Rs.4.73 crores is set aside back to Ld. CIT(A) as directed (supra).
Ground no. 3 is against the action of the Ld. CIT(A) in not directing specific direction to the AO to delete the addition of Rs.6,93,02,104/- since it is (receipts) not pertaining to the relevant AY. 2013-14. In this regard, we note that at para no. 6.2.2, of the impugned order of the Ld. CIT(A) out of the total addition of Rs.11,85,62,104/- made by AO, the addition made of Rs.1,13,02,104/- pertains to period prior to AY. 2013-14 (opening balance); and Rs.5,75,00,000/- pertains to subsequent assessment year i.e. AY. 2014-15; and the Ld. CIT(A) at 21 A.Y. 2013-14 Bholaram Malviya page no. 17 of his order at para no. 6.2.11 has confirmed only the addition of Rs.4,92,60,000/- which amount was admittedly received during the year under consideration. This action of Ld. CIT(A) according to Ld. AR implies that other additions have been deleted however, no specific directions have been given by the Ld. CIT(A). Moreover, we also finds that the amount of Rs.1,13,02,104/- and Rs.5,75,00,000/- does not pertains to the relevant year under consideration as discussed (supra) and which fact has been accepted by AO in his remand report found placed at page 171 PB. And therefore it has to be deleted and no addition u/s 68 of the Act could have been legally made in the relevant assessment year i.e. AY. 2013-14, so we clarify this aspect and direct deletion if not done by AO himself [while giving effect to Ld CIT(A)’s impugned order].
Coming to ground no. 4 which is against the action of the Ld. CIT(A) directing the AO to assess the unexplained cash credit in the year in which it was received under Section 150(1) of the Act. According to the Ld. AR, the direction of the Ld. CIT(A) to the AO to assess the income of the assessee pertaining to the year in which the money was received could not have been done by the Ld. CIT(A) and for that he relied on the following decisions as under:-
(a) Mrs. R. H. Dave Vs. CIT [140 ITR 1035 (Cal)] (b) ITO Vs. Murlidhar Bhagwan Das [52 ITR 335 (SC)] (c) N. Kt Sivalingam Chettiar Vs. CIT [66 ITR 586 (SC)] (d) Bakshish Singh Vs. ITO [93 ITR 178 (SC)] 22 A.Y. 2013-14 Bholaram Malviya (e) ITO Vs. Sri Biswajit Chatterjee in dated 10.11.2017 (f) Shri Sanjay Thakur Vs. DCIT in ITA No. 3785/Del/2015 dated 12.07.2018.
Per contra, the Ld. DR vehemently supported the order of the Ld. CIT(A) and contended that Explanation to Section 251 of the Act as well as section 150(1) of the Act gave power to Ld. CIT(A) to record his findings/direction necessary for disposal of the appeal; and then in such an event, the limitation period as prescribed u/s 149 of the Act gets lifted. So he doesn’t want us to interfere in the impugned action of Ld. CIT(A).
We have heard both the parties. The issue is against the direction given by Ld. CIT(A) to AO to assess the income when it was received by the assessee. So first of all let us see to whether Ld. CIT(A) had power to give such a direction or not. For that we have to look at section 251 of the Act, which reads as under: -
(1) In disposing of an appeal, the Commissioner (Appeals) shall have the following powers-
(a) in an appeal against an order of assessment, he may confirm, reduce, enhance or annual the assessment.
(aa) in an appeal against the order of assessment in respect of which the proceeding before the Settlement Commission abates under section 245HA, he may, after taking into consideration all the material and other information produced by the assessee before, or the results of the inquiry held or evidence recorded by, the Settlement 23 A.Y. 2013-14 Bholaram Malviya Commission, in the course of the proceeding before it and such other material as may be brought on his record, confirm, reduce, enhance or annul the assessment;
(b) in an appeal against an order imposing a penalty, he may confirm or cancel such order or vary it so as either to enhance or to reduce the penalty
(c) in any other case, he may pass such orders in the appeal as he thinks fit.
(2) The Commissioner (Appeals) shall not enhance an assessment or a penalty or reduce the amount of refund unless the appellant has had a reasonable opportunity of showing cause against such enhancement or reduction. Explanation.-In disposing of an appeal, the Commissioner (Appeals) may consider and decide any matter arising out of the proceedings in which the order appealed against was passed, notwithstanding that such matter was not raised before the Commissioner (Appeals) by the appellant.”
It can be seen from the above that this provision empowers the appellate authority in an appeal against the order of assessment to confirm, enhance or annual the assessment. Before 01.06.2001, there was one more power and the same reads as under: - “Or he may set aside the assessment and refer the case back to the AO for making fresh assessment in accordance with the directions.”
24 A.Y. 2013-14 Bholaram Malviya 21. The CBDT in its Circular has also clarified that the power of the appellate commissioner does not include the power to set aside the assessment.
Now let us look at Section 150 of the Act which reads as under: - “150. (1) Notwithstanding anything contained in section-149, the notice under section-148 may be issued at any time for the purpose of making an assessment or reassessment or re- computation in consequence of or to give effect to any finding or direction contained in an order passed by any authority in any proceeding under this Act by way of appeal, reference or revision.
(2) The provisions of sub-section (1) shall not apply in any case where any such assessment, reassessment or re-computation as is referred to in that sub-section relates to an assessment year in respect of which an assessment, reassessment or re-computation could not have been made at the time the order which was the subject-matter of the appeal, reference or revision, as the case may be, was made by reason of any other provision limiting the time within which any action for assessment, reassessment or re- computation may be taken.”
A bare reading of Section 150(1) of the Act, it reveals that it is an enabling provision which extends the limitation time provided u/s 149 of the Act, which is turn prescribes the limitation time for re- 25 A.Y. 2013-14 Bholaram Malviya opening an assessment of assessment year. And it should be noted that sub-section (2) of Section 150 of the Act circumscribes even sub- section (1) of Section 150 of the Act which reiterates the principle of law that no direction by any authorities can extend the statutory limitation period prescribed by the Income Tax Act 1961.
Before us, it is urged that the first appellate authority had no power to direct the Assessing Officer to bring the amount to tax in another assessment year. According to Ld. AR, the appellate authority has to decide the matter relating only to the assessment year before him and not to any other year which he is not in seisin of and therefore has no power to give direction to the Assessing Officer for reopening of the completed assessment. Such directions according to Ld. AR are entirely uncalled for and are required to be expunged. In this respect reliance has been placed on the following case laws: a. Mrs. R. H. Dave v CIT [140 ITR 1035 (Cal)] (ABP 640- 645). b. ITO v Murlidhar Bhagwan Das [52 ITR 335 (SC)] (ABP 646-666). c. N. Kt. Sivalingam Chettiar v CIT [66 ITR 586 (SC)] (ABP 667- 671). d. Bakshish Singh v ITO [93 ITR 178 (Cal)] (ABP 721- 729). e. Order of the ITAT, Kolkata Bench, in the case of ITO v. Sri Biswajit Chatterjee in dated 10.11.2017 (ABP 672-679).
26 A.Y. 2013-14 Bholaram Malviya f. Order of the ITAT, Indore Bench, in the case of ACIT v. Shri Mukesh Sharma and others in ITA(SS) no, 88/Ind/2013 dated 04.06.2019 (ABP 680-712). g. Order of the ITAT, Delhi Bench, in the case of Shri Sanjay Thakur v. DCIT in dated 12.07.2018 (ABP 713-720).
We have carefully considered all the above contentions of the assessee. We have also considered the argument of the Ld. D.R. on this issue. The first issue to be decided is as to whether, while disposing of the assessee’s appeal for Assessment Year 2013-14, whether the Ld. CIT(A) has power to give directions to the Assessing Officer to reopen the assessment for any other Assessment Year’s. We find that a similar question was referred to the Hon'ble Calcutta High Court in the case of ‘Mrs. R.H. Dave vs. CIT’ (supra). This question was:
Whether, on the facts and in the circumstances of the case, the Tribunal having held that the Appellate Assistant Commissioner had no jurisdiction to direct the Income-tax Officer to bring the amount to tax in an assessment year not involved in the appeal before him, was justified in law in refusing to delete such direction given by the Appellate Assistant Commissioner ?
On the above question, the Hon'ble Calcutta High Court gave the following findings:
“The Tribunal, as we have mentioned before, came to a categorical finding that the AAC had no jurisdiction to direct the ITO to bring the amount to tax in the correct assessment year, for, he could only decide the matter relating to the assessment 27 A.Y. 2013-14 Bholaram Malviya year before him and not otherwise. This view of the Tribunal is corroborated by several decisions of the Supreme Court We may refer to the latest decision of the Supreme Court in the case of Rajinder Nath v. CIT , where the Supreme Court categorically observed that the expressions "finding" and "direction", in Section 153(3) were limited in meaning. The Supreme Court observed that a finding given in an appeal, revision or reference, arising out of assessment must be a finding necessary for the disposal of the particular case, that is to say, in respect of the assessee and in relation to the particular assessment year; to be a necessary finding, the Supreme Court observed, that it must be directly involved in the disposal of the case ; it was possible in certain cases that in order to render a finding in respect of A, a finding in respect of B might be called for; for instance where the facts showed that the income could belong to either A or B and to none else, a finding that it belonged to B or did not belong to B, would be determinative of the issue as to whether it could be taxed as A's income ; a finding respecting B was initially involved as a step in the process of reaching the ultimate finding respecting A; if, however, the finding as to A's liability could be directly arrived at without necessitating a finding in respect of B, then a finding made in respect of B was an incidental finding only and it was not a finding necessary for the disposal of the case pertaining to A.”
The Hon'ble Calcutta High Court finally held that the Tribunal was in error in declining to delete the directions contained in the order of the AAC.
28 A.Y. 2013-14 Bholaram Malviya 28. A similar view has been taken by the Hon'ble Calcutta High Court in the case of ‘Bakshish Singh vs. ITO’ (supra), under similar facts.
We also find that the following observations of the Hon'ble Supreme Court in the case of ‘ITO vs. Murlidhar Bhagwan Das’ (supra) are directly on the issue:
“That the expressions “finding” and “direction”, in the second proviso to section 34(3), meant respectively, a finding necessary for giving relief in respect of the assessment for the year in question, and a direction which the appellate or revisional authority,, as the case may be, was empowered to give under the sections mentioned in that proviso. A “finding”, therefore, could only be that which was necessary for the disposal; of an appeal in respect of an assessment of a particular year. The Appellate Assistant Commissioner might hold, on the evidence, that the income shown by the assessee was not the income for the relevant year and thereby exclude that income from the assessment of the year under appeal. The finding in that context was that the income did not belong to the relevant year. He might incidentally find that the income belonged to another year, but that was not a finding necessary for the disposal of an appeal in respect of the year of assessment in question.”
Following its above ratio, the Hon'ble Supreme Court, in its decision in the case of ‘N. KT. Sivalingam Chettiar vs. CIT’ (supra), observed that a finding within the second proviso to section 34(3) must be necessary for giving relief in respect of the assessment of the year in question; and that the word “finding” only covers material questions 29 A.Y. 2013-14 Bholaram Malviya which arise in a particular case for decision by the authority hearing the case or appeal which, being necessary for the subject of the controversy between the interested parties, or on which the parties concerned have been given a hearing.
Since no decision contrary to the above case laws has been brought to our notice, respectfully following the above decisions of the Hon'ble Supreme Court, High Courts and the Tribunal in M/s. Sahara City Homes, Bareilly Vs. ITO dated 31.01.2022 (ITA. No. 24/Lkw/2019 to we are of the view that the Ld. CIT(A) had no power to issue directions to the Assessing Officer to reopen the assessment for earlier/subsequent Assessment Years which was not in appeal before him.
Accordingly, the direction issued by the Ld. CIT(A) to the Assessing Officer to assess the un-explained cash credit in the year in which it was received is held to be unsustainable.