DEPUTY COMMISSIONER OF INCOME TAX, CEN CIR 2(2), CHENNAI, CHENNAI vs. CHANDRASEKARAN JOSEPH VIJAY, CHENNAI

आयकर अपीलीय अधिकरण, ‘सी’ न्यायपीठ, चेन्नई IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH, CHENNAI श्री एस एस विश्वनेत्र रवि, न्याविक सदस्य एवं श्री एस. आर. रघुनाथा, लेखा सदस्य के समक्ष BEFORE SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER AND SHRI S. R. RAGHUNATHA, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.332/Chny/2026 ननिाारण वर्ा / Assessment Year: 2020-21 The Deputy Commissioner of Chandrasekaran Joseph Vijay Income-tax, Central Circle 2(2) vs. 17/9, Vijay Shanti Four Seasons Chennai. 7th Cross Street, Shastri Nagar Besant Nagar, Chennai – 600 034. (अपीलार्थी/Appellant) [PAN: AABPV3488N] (प्रत्यर्थी/Respondent) अपीलार्थी की ओर से/Appellant by : Shri. Pelli Prem Kumar, Sr.AR प्रत्यर्थी की ओर से/Respondent by : Shri. R.Arun, CA

सुनवाई की तारीख/Date of Hearing : 01.07.2026 घोर्णा की तारीख/Date of Pronouncement: 10.08.2026 आदेश /O R D E R PER S.R. RAGHUNATHA, AM : This appeal has been preferred by the Revenue against the order passed by the Learned Commissioner of Income Tax, Appeal, CIT(Appeals), Chennai – 19 [hereinafter referred to as “the Ld. CIT(A)”], dated 20.11.2025, arising from the assessment order dated 11.07.2023 for the Assessment Year (AY) 2020-21 passed by the Deputy Commissioner of Income-tax, Central Circle 2(2), Chennai [hereinafter referred to as “the AO”], u/s. 271DA of the Income-tax Act, 1961 (hereinafter referred to as “the Act”).

:-2-: ITA. No.332/Chny/2026

:-3-: ITA. No.332/Chny/2026

on 06.02.2020, including a WhatsApp image from the mobile of Shri.E.Karthikeyan, (Vice-President, M/s.XB Film Creators), revealed that Rs.22 crores had been received through banking channels and an additional Rs.2.55 crores in cash across four transactions. The seized screenshot used coded references PPA, EK, and RG indicating employees of M/s.XB Film Creators, who were allegedly involved in handling the cash receipts. Further, during the search proceedings also, on an inquiry conducted u/s.131(1A) of the Act, wherein Shri.Lalith Kumar, partner of M/s.Seven Screen Studios, admitted that the seized screenshot represented reimbursements paid to M/s.XB Film Creators and acknowledged that the cash amounts were indeed paid to employees of Shri. Xavier Britto. Shri.Xavier Britto also admitted that such payments were unaccounted and offered the same as his undisclosed income. Based on this corroboration, the AO concluded that the assessee had indeed received Rs.2.55 crores in cash in violation of sec.269ST of the Act. Since the assessee failed to produce any material to refute the contents of the seized documents or substantiate his denial, and relying on the decision in the case of Mahabir Prasad Rungta v. CIT (2014) 43 taxmann.com 328 (Jharkhand), it was held by the Range Head that in the absence of rebuttal evidence, the presumption stands valid and the addition sustainable. In view of the above, the Range Head held that the receipt of Rs.2.55 crores in cash constituted a clear violation of sec.269ST of the Act and imposed a penalty of Rs.2.55 crores u/s.271DA of the Act by passing an order dated 11.07.2023.

:-4-: ITA. No.332/Chny/2026

where mentioned in the extracted photocopy order to even assume that the Appellant was a party to the alleged transaction of Rs.2,55,00,000/-. 3. Neither Investigating Officials nor the Assessing Officer has unearthed any evidence for receipt of the alleged sum of Rs. 2,55,00,000 by the Appellant. Statements were recorded during the course of search and post search operation on 05.02.2020, 12.03.2020 and on 26.10.2020 wherein the Investigating Officials have made roving enquires and posed questions with the preconceived notion and assumption that the Appellant is the Producer of the Movie titled Master. The Investigating Officials have not raised even a single question while recording statements on various dates pertaining to the alleged cash receipt of Rs. 2,55,00,000 which was subjected to tax in the order u/s 143(3) dated 28.09.2021. 4. Based the above, the First Appellate Authority in its order vide ITA No 1000/22- 23 dated 26.07.2023 in para 6.15.6 and 6.15.7 had deleted the addition alleged of Rs 2,55,00,000/- made in the order u/s 143(3) dated 28.09.2021. Copy of the order is enclosed herewith in A1. 5. Further, the final fact-finding Authority, Hon'ble ITAT in its order vide ITA 998/Chny/2023 dated 03.12.2024 in para 14 affirmed the order of the First Appellate Authority in deleting the addition of Rs 2,55,00,000/- Copy of the order is enclosed herewith in A2. 6. The Appellant submits that in as much as of the addition stands deleted negating the cash alleged cash receipt by the Appellant, the provisions of section 269ST of the Act have no application to the facts of the case which consequently renders the levy of penalty u/s 271DA invalid. C. Prayer: With the foregoing submissions, the Appellant prays your learned self to kindly delete the penalty levied in the order dated 11.07.2023 and thereby allow the appeal in full in the interest of natural justice.”

:-5-: ITA. No.332/Chny/2026

deletion of the addition of Rs.2.55 crores. Thus, the ld.CIT(A) finds that the concurrent findings of both the authorities conclusively established that the assessee neither received nor was in any manner connected with the alleged cash receipt and deleted the penalty imposed by the competent authority by passing an order dated 20.11.2025 by holding as under:-

“6.2.6 It is a settled proposition of law that when the very foundation on which a penalty is levied ceases to exist, the penalty cannot survive. The provisions of section 271DA of the Act can be invoked only upon clear establishment of a cash receipt in contravention of section 269ST of the Act. In the present case, not only is there no independent evidence of any such cash receipt by the appellant, but the addition made in the assessment itself has been nullified by the higher appellate authorities. Consequently, there remains no factual or legal basis for sustaining the penalty levied. 6.2.7 Further, the Range Head's reliance on the presumption u/s 132(4A) of the Act is misplaced, as the said presumption operates only against the person from whose possession or control the document is found. In this case, the alleged material was neither seized from the appellant's premises nor does it bear any reference to him. Moreover, no statement of the appellant recorded during the search or post-search proceedings indicates any admission or acknowledgment of cash receipt. Hence, the presumption is not applicable to the appellant. 6.2.8 Further, the appellant's contention that the proceedings u/s.271DA of the Act are dependent on the outcome of the assessment proceedings merits acceptance. Unlike the penalty(s) u/s.271D and 271E of the Act, which deal with acceptance and repayment of loans or deposits, penalty u/s.271DA is directly linked to the factual occurrence of a transaction prohibited u/s.269ST of the Act. Once the alleged cash transaction itself is found to be non-existent, the consequential penalty automatically fails. 6.2.9 Therefore, in view of the deletion of the underlying addition by both the CIT(A) and the ITAT, and in the absence of any cogent evidence demonstrating actual receipt of cash by the appellant, the penalty levied u/s.271DA of the Act cannot be sustained either on facts or in law. In light of the foregoing discussion, the undersigned is of view the very foundation of the penalty i.e., the alleged cash receipt of Rs.2.55 crores has been conclusively found to be baseless. Consequently, there is no violation of section 269ST attributable to the appellant. Therefore, all the grounds raised upon the levy of penalty are treated as allowed and the AO is directed to delete the amount of Rs.2.55 Crores levied as penalty vide order u/s.271DA of the Act dated 11.07.2023.”

“1. The Order of the learned Commissioner of Income Tax (Appeals) is erroneous on facts and in law. 2. The Ld.CIT(A) erred in deleting the penalty u/s.271DA which was based on the addition of amount received in cash to the tune of Rs.2.55Cr, being reimbursement

:-6-: ITA. No.332/Chny/2026

of expenses, without taking into consideration the findings of the search operation at the office premises of Shri Xavier Britto, the whatsapp chat in the screen shot, revealed that the payments were made by M/s.Seven Screen Studios to M/s. XB Film Creators towards for reimbursement of production expenses in cash. 3. The Ld.CIT(A) erred in holding that penalty u/s 271DA is not leviable when the Tribunal erred in deleting the impugned additions without considering the legal presumption u/s 132(4A) of 1 T Act that the 'contents of such books of account and other documents are true' in respect of the seized material found during the course of search proceedings without rebuttal of the same by the assessee & that the Department has agitated against the same by filing appeal u/s.260A of the Act before the Hon'ble High Court, Madras. 4. The Ld.CIT(A) failed to appreciate that the material having been found from the premises of the assessee u/s.132 r.w.s 292C of IT Act the presumption is that (i) that such books of account, other documents, money, bullion, jewellery or other valuable article or thing belong or belongs to such person & the onus is on the assessee to furnish evidence or explanations to rebut the same. 5. For these grounds and any other ground including amendment of grounds that may be raised during the course of appeal proceedings, the Order of the Ld.CIT(Appeals) may be set aside and that of the Assessing Officer may be restored.

“13. Another undisputed fact is that M/s XBFC obtained censor certificate from Central Board of Film Certification (CBFC) on 23-12- 2020. The CBFC certification has been issued in the name of Mr. Xavier Britto Swamikannu (M/s. XB Film Creators) as producer of the movie. In fact, as per the findings of Ld. CIT(A), the revenue from this project has already been offered to tax by XBFC as well as by

:-7-: ITA. No.332/Chny/2026

M/s Seven Screen Studio in their respective returns of income. This being so, the allegation of Ld. AO, in our considered opinion, would not survive. Therefore, we endorse the adjudication of Ld. CIT(A) in the impugned order. 14. Consequently, deletion of another addition of Rs.2.55 Crores would also stand confirmed since there is no involvement of the assessee in the said transaction. The transaction is between M/s Seven Screen Studios and M/s XB Film Creators. Therefore, no addition thereof could be made in the hands of the assessee. We order so.”

:-8-: ITA. No.332/Chny/2026

"13. Another undisputed fact is that M/s XBFC obtained censor certificate from Central Board of Film Certification (CBFC) on 23-12-2020. The CBFC certification has been issued in the name of Mr. Xavier Britto Swamikannu (M/s. XB Film Creators) as producer of the movie. In fact, as per the findings of Ld. CIT(A), the revenue from this project has already been offered to tax by XBFC as well as by M/s Seven Screen Studio in their respective returns of income. This being so, the allegation of Ld. AO, in our considered opinion, would not survive. Therefore, we endorse the adjudication of Ld. CIT(A) in the impugned order. 14. Consequently, deletion of another addition of Rs.2.55 Crores would also stand confirmed since there is no involvement of the assessee in the said transaction. The transaction is between M/s Seven Screen Studios and M/s XB Film Creators. Therefore, no addition thereof could be made in the hands of the assessee. We order so." 15. It is thus manifest that the alleged cash transaction of Rs.2.55 crores has been conclusively found, on facts, to be a transaction between M/s.XB Film Creators (producer) and M/s.Seven Screen Studios (co-producer), in which the assessee, who acted merely as the lead artist of the film “Master”, had no role whatsoever. This finding has attained finality qua the quantum proceedings and has not been shown to have been stayed or reversed by any higher forum. Penalty u/s.271DA of the Act can be levied only where it is established that a person has received a sum in cash in contravention of sec.269ST of the Act. Once the very factual substratum of such receipt, i.e., the addition of Rs.2.55 crores, stands obliterated by concurrent findings of the ld.CIT(A) and the co- ordinate Bench of this Tribunal, there remains no cash receipt by the assessee of which a contravention of sec.269ST of the Act, and consequently a penalty u/s.271DA of the Act, can be predicated.

:-9-: ITA. No.332/Chny/2026

addition, applies with equal, if not greater, force to a penalty u/s.271DA of the Act, which, unlike penalties u/s.271D and 271E of the Act that operate independently of the assessment on the footing of the assessee's own books, is directly and solely dependent upon the factual establishment of a cash receipt contravening sec.269ST of the Act. 17. As regards Ground Nos.3 and 4 raised by the Revenue touching upon the presumption available u/s.132(4A) and sec.292C of the Act, we find no merit therein. The said presumption, by its own terms, operates only qua the person from whose possession or control the books of account, documents or other material are found during the course of search. In the present case, it is not in dispute that the WhatsApp screenshot and the seized material were recovered from the search conducted at the premises of Shri.Xavier Britto/M/s.XB Film Creators on 06.02.2020, and not from the possession of the assessee. The material nowhere bears the name of the assessee, and no statement of the assessee recorded during the search or post-search proceedings contains any admission of having received the alleged cash. On the contrary, it is Shri.Xavier Britto who has himself admitted that the cash payments were unaccounted and has offered the very same amount as his own undisclosed income. In these circumstances, the presumption u/s.132(4A)/292C of the Act cannot be pressed into service against the assessee, who is a stranger to the seized document. The reliance placed by the Range Head on Mahabir Prasad Rungta v. CIT (2014) 43 taxmann.com 328 (Jharkhand) for the proposition that, in the absence of rebuttal, entries in seized material are to be accepted as true, does not assist the Revenue in the present case, since that presumption, even on its own terms, could only have operated against the person in whose possession the material was found, namely, Shri.Xavier Britto/M/s.XB Film Creators, and not against the present assessee. 18. The submission of the ld.DR that the Department has carried the deletion of the quantum addition in further appeal u/s.260A of the Act before the Hon'ble Madras High Court also does not advance the case of the Revenue. The mere filing of a further appeal, without anything more, does not suspend the binding

:-10-: ITA. No.332/Chny/2026

effect of the order of the co-ordinate Bench of this Tribunal, nor has it been shown that the operation of the said order has been stayed. The penalty proceedings before us must accordingly be decided on the basis of the quantum findings as they stand today. 19. In view of the foregoing discussion, we are of the considered opinion that the ld.CIT(A) has correctly appreciated the facts and the law in holding that, once the addition of Rs.2.55 crores has been deleted by concurrent findings of the appellate authorities, the very foundation for the levy of penalty u/s.271DA of the Act ceases to exist, and the penalty cannot be sustained either on facts or in law. We find no infirmity in the order of the ld.CIT(A) and the same is accordingly upheld. The grounds raised by the Revenue are, therefore, devoid of merit and are dismissed. 20. In the result, the appeal of the Revenue is dismissed.

Order pronounced in the court on 10th August, 2026 at Chennai.

Sd/- Sd/- (एस एस विश्िनेत्र रवि) (एस. आर. रघुनार्था) (S.S. VISWANETHRA RAVI) (S. R. RAGHUNATHA) न्याययक सदस्य/Judicial Member लेखा सदस्य/Accountant Member

चेन्नई/Chennai, ददनांक/Dated, the 10th August, 2026. Devadas आदेश की प्रनतललपप अग्रेपर्त/Copy to: 1. अपीलार्थी/Appellant 2. प्रत्यर्थी/Respondent 3.आयकर आयुक्त/CIT– Chennai/Coimbatore/Madurai/Salem 4. पवभागीय प्रनतननधि/DR 5. गार्ा फाईल/GF Digitally signed by DEVADAS DEVADAS GOPALANACHARY GOPALANACHARY Date: 2026.08.12 15:34:46 +05'30'