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Facts
The assessee filed three appeals challenging an order of the CIT(A) for assessment years 2003-04 to 2005-06. The appeals were filed in 2013 and the assessee failed to prosecute them, leading to an ex-parte decision. The assessee is engaged in film production and direction.
Held
The Tribunal held that the additions made by the AO under Section 68 of the Act for unsecured loans in AY 2004-05 and 2005-06 were rightly confirmed as the assessee failed to provide evidence. The addition for business profits based on a recovered financial statement was also confirmed for similar reasons.
Key Issues
Whether the additions made by the AO on account of unsecured loans and business profits were justified in the absence of assessee's cooperation and evidence.
Sections Cited
133A, 68, 147, 148, 143(3)
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Income Tax Appellate Tribunal, MUMBAI BENCH “B”, MUMBAI
Before: SHRI B.R. BASKARAN & SHRI SANDEEP GOSAIN
The assessee has filed these three appeals challenging the common order dated 24-12-2009 passed by Ld CIT(A)-3, Mumbai and they relate to the assessment years 2003-04 to 2005-06.
None appeared on behalf of the assessee. We notice that these appeals were filed in the year 2013. Since the assessee did not prosecute these appeals, the bench adjourned them sine die in the year 2015. Subsequently, these appeals were again fixed for hearing in August, 2024, but the notices sent to the assessee were returned unserved. In these circumstances, we proceed to dispose of these appeals ex-parte, without the presence of the assessee.
We heard Ld DR and perused the record. The assessee is engaged in the business of film production and direction. A survey u/s 133A of the Act was undertaken in December, 2006 in the cases of M/s Dhariwal Films P Ltd, to 812/Mum/2013 Mahendra Dhariwal M/s Evershine Films P Ltd and the assessee in order to find out compliance of various TDS provisions. Consequent thereto, these three assessment years were taken up for scrutiny. But the assessee did not co-operate with the AO. 3.1 Accordingly, the AO made adhoc addition of Rs.25.00 lakhs in AY 2003- 04. 3.2 In AY 2004-05, the AO noticed that the assessee is the proprietor of M/s Evershine Films and he has produced a film named “Tauba Tauba” in that concern. During the course of survey operations, financial statements relating to the above said concern were recovered from the computer system and it disclosed a profit of Rs.1,41,22,073/- therein. The AO assessed the same. Besides the above, the Balance sheet disclosed unsecured loans to the tune of Rs.73,02,500/-. In the absence of any explanation, the AO assessed the same u/s 68 of the Act. 3.3 In assessment year 2005-06, the AO noticed that the assessee has availed unsecured loans to the tune of Rs.52,03,380/-. In the absence of any explanation, the AO assessed the same u/s 68 of the Act.
Before Ld CIT(A), the assessee appeared and made certain submissions. However, the first appellate authority was not convinced with the submissions made by the assessee. Accordingly, he dismissed all the three appeals of the assessee. Hence, the assessee has filed these appeals.
We heard Ld D.R and perused the record. With regard to the additions made u/s 68 of the Act in AY 2004-05 and 2005-06, we notice that the assessee did not furnish any evidences to discharge the burden placed upon him u/s 68 of the Act. Accordingly, we are of the view that the tax authorities have rightly assessed the unsecured loans u/s 68 of the Act. 5.1 With regard to the addition of business profits, we notice that the same was based upon the financial statement recovered from the computer of the assessee. We notice that the assessee did not furnish any material to contradict the above said financial statement before the tax authorities and also before us. Accordingly, we confirm the order passed by Ld CIT(A) on this issue. to 812/Mum/2013 Mahendra Dhariwal 5.2 With regard to the addition of Rs.25.00 lakhs made on adhoc basis in AY 2003-04, we notice that there was no material available with the AO to make the above said addition. At the same time, the assessee also did not appear and co-operate with the AO. We notice that the AO was constrained to make the above said addition for the reason that the assessee had given loans through three of his proprietary concerns to certain related companies. There should not be any dispute that it is the responsibility of the assessee to explain the sources of the loans so given, but the assessee has failed to give any explanation. Hence, the Ld CIT(A) has confirmed this addition. In the facts of the case, we are of the view that the order so passed by Ld CIT(A) does not call for interference.
In the result, all the three appeals of the assessee are dismissed. Order pronounced in the open court on 17 March, 2025.