ACIT 16(1), MUMBAI, MUMBAI vs. FOUNTAINHEAD ENTERTAINMENT PVT. LTD., MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL “F” BENCH MUMBAI BEFORE SHRI CHALLA NAGENDRA PRASAD, VICE PRESIDENT & SHRI MAKARAND VASANT MAHADEOKAR, ACCOUNTANT MEMBER ITA No. 1668/Mum/2026 (Assessment Year: 2018-19) ACIT 16(1) Fountainhead Entertainment Pvt. Room No. 439, Aayakar Vs. Ltd. Bhavan, M. K. Road, Mumbai-400 020 First Floor, New Era Mill Compound, 16 Mogul Lane, Matunga, Mumbai-400 016 PAN/GIR No. AABCO6341C (Applicant) (Respondent) Revenue by Shri Nishant Samaiya, Ld. DR Assessee by Shri A. B. Jawadwala, Ld. AR Date of Hearing 21.07.2026 Date of Pronouncement 27.07.2026 आदेश / ORDER PER MAKARAND VASANT MAHADEOKAR, AM: This appeal by the Revenue is directed against the order dated 23.12.2025 passed by the learned Commissioner of Income-tax (Appeals), National Faceless Appeal Centre, Delhi[hereinafter referred to as "the CIT(A)"], under section 250 of the Income Tax Act, 1961[hereinafter referred to as "the Act"], for

2 ITA No. 1668/Mum/2026 Fountainhead Entertainment Pvt. Ltd. the assessment year 2018-19, arising from the assessment order dated 20.04.2021 passed by the Assessing Officer under section 143(3) read with section 144B of the Act. Facts of the Case 2. The assessee is a company engaged in the business of event management, including developing, promoting, marketing, organizing and managing events, products, brands, corporate and business-theme functions, launches, ideas, public and media relations, press and publicity. The assessee is also engaged in designing and managing promotional activities, building brands through promotions and events for corporate entities, business and professional entities, institutions, groups and individuals. 3. For the year under consideration, the assessee originally filed its return of income on 23.10.2018 declaring total income of Rs. 8,61,35,280/-. Thereafter, the assessee filed a revised return of income on 04.03.2019 declaring total income of Rs. 8,53,15,700/-. The case was selected for complete scrutiny under the E-Assessment Scheme, 2019, inter alia, on the issues of refund claim, claim of any other amount allowable as deduction, increase in TDS in the revised return, and reduction of income in the revised return coupled with claim of refund. Notice under section 143(2) of the Act was issued and served upon the assessee on 22.09.2019. Subsequently, notices under section 142(1) of the Act dated 07.01.2020 and 29.01.2021, along with

3 ITA No. 1668/Mum/2026 Fountainhead Entertainment Pvt. Ltd. questionnaires, were issued. In response thereto, the assessee furnished online replies and details on various dates. 4. During the assessment proceedings, the Assessing Officer noticed from the case history and notings available on the ITBA system that the assessee had uploaded a set of financial statements consisting of the Profit and Loss Account and Balance Sheet as on 31.10.2018 along with Form 3CA, on the basis of which the revised return of income had been filed. The assessee also furnished a revised statement of income along with its reply dated 15.01.2020, wherein the net profit before tax as per the Profit and Loss Account was reported at Rs. 15,24,22,799/-. 5. Thereafter, along with its reply dated 22.03.2021, the assessee filed another set of audited financial statements dated 31.10.2018 for the assessment year 2018-19. The Assessing Officer observed that the said financial statements were at variance with the earlier financial statements. The assessee also furnished another computation titled “Revised statement of income”, wherein the net profit before tax was shown at Rs. 18,47,84,327/-. The Assessing Officer observed that the revised return had been filed on the basis of net profit before tax of Rs. 15,24,22,799/-, whereas in the statement furnished on 22.03.2021 the net profit before tax was shown at Rs. 18,47,84,327/- 6. Vide notice under section 142(1) dated 29.01.2021, the assessee was required to explain why the taxable income

4 ITA No. 1668/Mum/2026 Fountainhead Entertainment Pvt. Ltd. disclosed in the revised return was lower than that disclosed in the original return. In reply dated 22.03.2021, the assessee offered additional income of Rs. 5,81,45,477/-. The assessee stated that the additional income was being offered on account of an error or mistake inadvertently committed while filing the return of income, wherein incorrect income had been considered in the original computation. The assessee further stated that its refund claim would consequently stand reduced from Rs. 4,92,42,210/- to Rs. 3,69,59,501/-. 7. The Assessing Officer, however, did not accept the assessee’s contention that the additional income had been offered suo motu. On comparison of the revised return with the revised computation filed on 22.03.2021, the Assessing Officer noticed an increase in business income of Rs. 2,73,71,890/- and reduction in the claim of brought forward loss by Rs. 3,07,73,587/-, aggregating to Rs. 5,81,45,477/-. 8. The Assessing Officer noted that income from business was shown at Rs. 15,93,31,890/- in the revised return, whereas the revised computation filed on 22.03.2021 reflected business income of Rs. 18,67,03,780/-, resulting in a difference of Rs. 2,73,71,890/-. According to the Assessing Officer, the disclosure was made only after specific queries were raised in the course of scrutiny proceedings. He, therefore, made a separate addition of Rs. 2,73,71,890/- to the income from business and profession.

5 ITA No. 1668/Mum/2026 Fountainhead Entertainment Pvt. Ltd. 9. The Assessing Officer further observed that the assessee had claimed carry-forward of unabsorbed depreciation of Rs. 7,40,16,186/- in the revised return, whereas, in the revised computation furnished on 22.03.2021, the amount was reduced to Rs. 4,32,42,599/-. The Assessing Officer noted that out of brought forward unabsorbed depreciation of Rs. 7,40,16,186/-, an amount of Rs. 3,07,73,587/- had already been set off, leaving a balance of Rs. 4,32,42,599/- available for carry-forward. The excess claim of Rs. 3,07,73,587/- was, therefore, separately disallowed and added to the total income. 10. The Assessing Officer also examined the amount of Rs. 13,48,83,358/- appearing under the head “Any Other Amount Allowable as Deduction” in Schedule BP of the return of income. The assessee was asked to furnish the ledger account and documentary evidence in support of its eligibility for the deduction. The Assessing Officer observed that the amount had been claimed in the original as well as the revised return. He further observed that the assessee had stated in the revised computation furnished on 22.03.2021 that it had not claimed any amount under the said head. Since the assessee did not substantiate the deduction by documentary evidence, the Assessing Officer added Rs. 13,48,83,358/- to the total income. 11. The Assessing Officer further examined unsecured loans aggregating to Rs. 49,91,622/- reported in clause 31(a) of Form 3CD. According to the Assessing Officer, the assessee failed to furnish confirmations, returns of income, PANs and bank

6 ITA No. 1668/Mum/2026 Fountainhead Entertainment Pvt. Ltd. statements of the alleged lenders and, therefore, failed to establish their identity and creditworthiness and the genuineness of the transactions. Accordingly, the amount of Rs. 49,91,622/- was treated as unexplained cash credit under section 68 of the Act.

Particulars Amount Difference in income from business and profession Rs. 2,73,71,890/- Excess brought forward loss/unabsorbed depreciation Rs. 3,07,73,587/- “Any Other Amount Allowable as Deduction” Rs. 13,48,83,358/- Addition under section 68 Rs. 49,91,622/- Total additions Rs. 19,80,20,457/-

7 ITA No. 1668/Mum/2026 Fountainhead Entertainment Pvt. Ltd. 15. In respect of the addition of Rs. 2,73,71,890/-, the learned CIT(A) observed that the amount had already been considered by the assessee in the revised computation furnished before the Assessing Officer on 22.03.2021. The learned CIT(A) found that the Assessing Officer had taken the returned income of Rs. 8,53,15,700/- as the starting point and thereafter made a separate addition of Rs. 2,73,71,890/-, although the amount already formed part of the revised taxable income of Rs. 18,67,03,780/-. The learned CIT(A), therefore, held that no separate addition was required. 16. Regarding the addition of Rs. 3,07,73,587/-, the learned CIT(A) noted that the assessee had itself reduced the brought forward unabsorbed depreciation from Rs. 7,40,16,186/- to Rs. 4,32,42,599/- in the revised computation. Since the excess claim had already been withdrawn while computing taxable income, the learned CIT(A) held that a separate addition of the same amount was not called for. 17. Regarding the addition of Rs. 13,48,83,358/-, the learned CIT(A) examined the revised computation and found that the assessee had not claimed deduction of Rs. 13,48,83,358/- therein. The amount actually reduced under the relevant head was Rs. 1,20,45,670/-, comprising Rs. 11,95,880/- towards OCI impact on gratuity, Rs. 1,00,70,807/- towards recovery of doubtful debts and Rs. 7,78,983/- towards fair valuation of security deposit. The learned CIT(A) observed that proper

8 ITA No. 1668/Mum/2026 Fountainhead Entertainment Pvt. Ltd. explanations had been furnished regarding the said amount and, accordingly, deleted the addition of Rs. 13,48,83,358/-.

i. Whether on the facts and circumstances of the case and in law the Ld.CIT(A) erred in allowing the appeal of the assessee by ignoring that landmark 2006 Supreme Court case, Goetze (India) Ltd. vs. CIT, established that an Assessing Officer (AO) cannot entertain a claim for a deduction unless it's made through a properly filed revised income tax return? ii. Whether on the facts and circumstances of the case and in law the Ld.CIT(A) erred in allowing the appeal of the assessee by ignoring that only after the case having been picked up for scrutiny and the said notice u/s.142(1) dated 29.01.2021 having been served on the assessee, that the assessee has admitted to the under reporting income from business and excess carry forward of the loss claimed in the revised return?

9 ITA No. 1668/Mum/2026 Fountainhead Entertainment Pvt. Ltd. iii. Whether on the facts and circumstances of the case and in law the Ld.CIT(A) erred in allowing the appeal of the assessee by ignoring that the assessee offered additional income of Rs.5,81,45,477/- via a submission (reply) on 22.03.2021 during assessment proceedings- admitting to a mistake in the original return-but did not file a revised return under Section 139(5)of the Act? iv. Whether on the facts and circumstances of the case and in law the Ld.CIT(A) erred in allowing the appeal of the assessee by ignoring that the assessee claimed deduction as ‘Any other amount allowable as deduction’ of Rs.13,48,83,358/- in the original and revised return of income but claimed the same of Rs.1,20,45,670/- which was only an after thought subsequent to case having been picked up for scrutiny and the said notice u/s.142(1) dated 29.01.2021 having been served on the assessee. 2. The Ld. CIT (A)’s order is contrary in law and on facts and deserves to be set aside. 3. The appellant prays that the order of Ld. CIT (A) on the above ground be set aside and that of the AO restored. The appellant craves leave to amend or alter any ground or add a new ground that may be necessary at the time of hearing. 21. The learned Departmental Representative (DR) relied upon the assessment order. He submitted that, if the assessee intended to seek relief in respect of a claim not made in the return of income, it ought to have approached the competent authority by filing an application under section 119 of the Act. He further submitted that the learned CIT(A) erred in granting relief by overlooking the fact that the assessee admitted the under- reporting of business income and excess carry-forward of loss only after the case had been selected for scrutiny and notice under section 142(1) dated 29.01.2021 had been issued and served upon it.

10 ITA No. 1668/Mum/2026 Fountainhead Entertainment Pvt. Ltd. 22. The learned DR submitted that the revised computation furnished during the assessment proceedings could not substitute a valid revised return under section 139(5) of the Act. Relying upon the decision of the Hon’ble Supreme Court in Goetze (India) Ltd. v. CIT [2006] 284 ITR 323 (SC), he contended that a claim which was not made in the return of income could not be entertained by the Assessing Officer merely on the basis of a letter or revised computation. He, therefore, submitted that the order of the learned CIT(A) be set aside and that of the Assessing Officer be restored. 23. Per contra, the learned Authorised Representative supported the order passed by the learned CIT(A). He submitted that the assessee had not made any fresh claim resulting in reduction of its taxable income. On the contrary, the revised computation furnished on 22.03.2021 increased the business income by Rs. 2,73,71,890/- and reduced the claim of brought forward unabsorbed depreciation by Rs. 3,07,73,587/-, thereby increasing the taxable income by Rs. 5,81,45,477/-. 24. We have considered the rival submissions and perused the material placed on record. The principal objection of the Revenue is that the assessee sought to modify the income returned by furnishing a revised computation during the course of assessment proceedings, without filing a revised return under section 139(5) of the Act.

11 ITA No. 1668/Mum/2026 Fountainhead Entertainment Pvt. Ltd. 25. We find that the learned CIT(A), being the first appellate authority, was competent to entertain an additional or modified claim raised by the assessee. The restriction noticed in Goetze (India) Ltd. v. CIT(supra) is confined to the power of the Assessing Officer and does not curtail the jurisdiction of the appellate authorities. Therefore, the claims raised by the assessee through the revised computation cannot be rejected merely because they were not made through a revised return. 26. At the same time, the material on record shows that the assessee is a private limited company whose accounts are subject to audit. The assessment order records that the assessee had filed one set of audited financial statements on the basis of which the revised return was filed and subsequently furnished another set of audited financial statements along with the revised computation. The net profit before tax appearing in the earlier financial statements was Rs. 15,24,22,799/-, whereas the subsequent financial statements reflected net profit before tax of Rs. 18,47,84,327/-. The orders, however, do not identify the precise accounting entries, audit adjustments or other factual reasons responsible for this difference. 27. The revised computation furnished on 22.03.2021 reflected an aggregate increase in taxable income of Rs. 5,81,45,477/-, comprising an increase in business income of Rs. 2,73,71,890/- and a reduction in the claim of brought forward loss by Rs. 3,07,73,587/-. The business income was shown at Rs. 15,93,31,890/- in the revised return, whereas it was shown at

12 ITA No. 1668/Mum/2026 Fountainhead Entertainment Pvt. Ltd. Rs. 18,67,03,780/- in the revised computation. Similarly, the brought forward loss was shown at Rs. 7,40,16,186/- in the revised return, whereas the revised computation reflected the amount at Rs. 4,32,42,599/-. 28. We further note that the case had been selected for complete scrutiny specifically on the issues of the claim under the head “Any Other Amount Allowable as Deduction” in Schedule BP, increase in TDS in the revised return, reduction of income in the revised return coupled with the claim of refund, and the refund claim. Thus, the differences subsequently reflected in the revised computation directly related to the very issues for which the case had been selected for scrutiny. 29. The learned CIT(A) accepted the assessee’s claim on the basis that the increase in business income and reduction in brought forward loss had already been incorporated in the revised computation and, therefore, separate additions would result in duplication. However, it appears from the impugned order that the learned CIT(A) accepted the claim substantially on the basis of the submissions made by the assessee. There is no finding in the appellate order that the factual correctness of the revised figures was verified with reference to the books of account, ledger accounts, audited financial statements, audit working papers or supporting reconciliations. It is also not recorded that any remand report was called for from the Assessing Officer on the revised computation or the additional material relied upon by the assessee.

13 ITA No. 1668/Mum/2026 Fountainhead Entertainment Pvt. Ltd. 30. Similarly, in respect of the amount appearing under the head “Any Other Amount Allowable as Deduction”, the learned CIT(A) recorded that the amount actually claimed in the revised computation was Rs. 1,20,45,670/- and not Rs. 13,48,83,358/-. The amount of Rs. 1,20,45,670/- comprised Rs. 11,95,880/- towards OCI impact on gratuity, Rs. 1,00,70,807/- towards recovery of doubtful debts and Rs. 7,78,983/- towards fair valuation of security deposit. However, the impugned order does not record verification of the treatment of these amounts in the books of account or in the earlier years. Nor does it record that the Assessing Officer was afforded an opportunity to examine the factual basis of these claims through a remand report. 31. In these circumstances, though the learned CIT(A) was competent to admit the claims, the factual correctness and allowability of the revised claims required verification before relief could be granted. The appellate jurisdiction to entertain a claim is distinct from the requirement to verify the claim on facts. Since the relevant factual examination has not been carried out by either of the lower authorities, it is not possible for us to record a conclusive finding at this stage. 32. Accordingly, we admit the claims raised by the assessee through the revised computation. However, we set aside the findings of the learned CIT(A) on these issues and restore the matter to the file of the Assessing Officer for the limited purpose of verification.

14 ITA No. 1668/Mum/2026 Fountainhead Entertainment Pvt. Ltd. 33. The Assessing Officer shall verify the reconciliation between the two sets of audited financial statements, the increase in business income of Rs. 2,73,71,890/-, the reduction in brought forward loss of Rs. 3,07,73,587/-, and whether the aggregate amount of Rs. 5,81,45,477/- has already been duly incorporated in the revised computation and subjected to tax. He shall ensure that no amount already included in the taxable income is added again. 34. The Assessing Officer shall also verify the amount actually claimed under the head “Any Other Amount Allowable as Deduction” and examine the factual correctness and allowability of the components aggregating to Rs. 1,20,45,670/-. 35. The assessee is granted liberty to substantiate its claims by furnishing the audited financial statements, reconciliation statements, books of account, ledger extracts, audit reports, audit working papers, computations of income and such other supporting material as may be necessary. The Assessing Officer shall afford a reasonable opportunity of being heard to the assessee and decide the issues in accordance with law after due verification. 36. We clarify that the claims raised by the assessee stand admitted and the restoration is confined only to verification of their factual correctness and allowability. Accordingly, the grounds raised by the Revenue are allowed for statistical purposes.

15 ITA No. 1668/Mum/2026 Fountainhead Entertainment Pvt. Ltd. 37. In the result, the appeal of the Revenue is allowed for statistical purposes.

Order pronounced in the open court on 27.07.2026.

Sd/- Sd/- (CHALLA NAGENDRA PRASAD) (MAKARAND VASANT MAHADEOKAR) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, Dated 27/07/2026 Dhananjay, Sr.PS आदेश की प्रतितिति अग्रेतिि/Copy of the Order forwarded to : अपीलाथी / The Appellant 1. प्रत्यथी / The Respondent. 2. 3. संबंधधत आयकर आयुक्त / The CIT(A) 4. आयकर आयुक्त(अपील) / Concerned CIT धिभागीय प्रधतधनधध, आयकर अपीलीय अधधकरण, मुम्बई / DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file. 6. आदेशानुसार/ BY ORDER, सत्याधपत प्रधत //True Copy// 1. उि/सहायक िंजीकार ( Asst. Registrar) आयकर अिीिीय अतिकरण, मुम्बई / ITAT, Mumbai