AAKASH FILMS PVT. LTD,MUMBAI vs. CIT -50, MUMBAI

2 & 1763/MUM/2021 (A.Y: 2013-14) M/s. Aakash Films Private Limited & M/s. Aakash Ashish Realtors Limited O R D E R PER S. RIFAUR RAHMAN (AM) 1. These appeals are filed by different assessees against different orders of the Learned Commissioner of Income Tax (Appeals)–50, Mumbai [hereinafter in short “Ld.CIT(A)”] dated 07.09.2021 for the A.Y. 2013-14.

2. Since the issues raised in both these appeals are identical, therefore, for the sake of convenience, these appeals are clubbed, heard and disposed off by this consolidated order. We are taking Appeal in the case of M/s. Aakash Ashish Realtors Limited in ITA.No. 1763/MUM/2021 for A.Y. 2013-14 as a lead appeal for adjudication.

3 & 1763/MUM/2021 (A.Y: 2013-14) M/s. Aakash Films Private Limited & M/s. Aakash Ashish Realtors Limited an amount of ₹.1.71 crores from M/s. Fastline Multitrade Pvt. Ltd., (FMPL). The above said entity is managed and controlled by Shri Praveen Kumar Jain (PKJ) an entry provider based in Mumbai. Further, it was stated that a survey was conducted in the case of M/s. Aakash Universal Limited on 22.01.2015 and during the course of pre-survey it was gathered that M/s.Aakash Universal Limited is suppressing its sales receipts by way of effecting sales without issuing sales invoices or issuing sales invoices at lower rates than the actual rates. It was further stated that the assessee group has taken bogus loans and advances from the entities managed and controlled by PKJ, a proved entry provider based in Mumbai. Based on the above reasons, Assessing Officer has reason to believe that the assessee has been involved in taking accommodation entries in the forms of loans and advances. The Assessing Officer after taking prior approval of Pr.CIT-(C)-4, Mumbai issued notice u/s. 148 of the Act and served on the assessee.

4. In response to the above said notice, assessee filed return of income on 12.03.2019 declaring total income of ₹. NIL. Subsequently a copy of the reasons recorded for issue of notice u/s. 148 was provided to the 4 & 1763/MUM/2021 (A.Y: 2013-14) M/s. Aakash Films Private Limited & M/s. Aakash Ashish Realtors Limited assessee and notices u/s. 143(2) and 142(1) were issued and served on the assessee along with the questionnaires.

5. In response to notice u/s. 142(1), assessee submitted response with a copy of Memorandum of Understanding (MOU) dated 01.11.2012 with FMPL for transfer of development cum sales rights in respect of property [all that piece and parcel of land bearing CTS No. 433A admeasuring about 1847.70 sq. Mtrs and CTS No. 433B admeasuring about 241.20 Sq. mtrs or thereabout of village Oshiwara, Taluka-Andheri, in the registration District of Mumbai Suburban District] for a Consideration of ₹.42,00,00,000/-. Further, it was submitted by letter dated 01.07.2019 that out of total consideration to be paid by FMPL, they paid only ₹.1,71,00,000/- and failed to make balance payment. Due to default of purchaser to pay the balance consideration as per MOU, the above said MOU was cancelled and assessee has repaid the entire consideration of money received from them without any interest as per cancellation Deed/Agreement entered on 29th March 2013. In order to verify the aforesaid transactions of the assessee with FMPL, the Assessing Officer issued notice u/s 133(6) of the Act dated 24.10.2019 to FMPL to file the relevant information confirm the nature of transaction. However, the 5 & 1763/MUM/2021 (A.Y: 2013-14) M/s. Aakash Films Private Limited & M/s. Aakash Ashish Realtors Limited notice was returned by post as "Unclaimed". Subsequently, Assessing Officer issued summons to the Managing Director of FMPL on 08.11.2019, however, no compliance is made by them.

6. In light of the above circumstances, Assessing Officer issued another notice dated 15.11.2019 to the assessee asking them to produce the Principal Officer of FMPL on 20.11.2019. Since there is no compliance from the assessee side, therefore Assessing Officer proceeded to make the addition to the extent of ₹.1.71 crores in the hands of the assessee, since assessee has not furnished any evidences to discharge the onus of burden of proof and explain the transaction with FMPL. The Assessing Officer further discussed in detail the legal position with regard to burden of proof in his order and made the addition as unexplained credit to the Books of Accounts u/s. 68 of the Act.

7. Aggrieved assessee preferred an appeal before the Ld.CIT(A) and made the following submissions: - “1. Initiation of reassessment proceedings by the Ld. AO was bad in law and the reassessment completed in pursuance is liable to be being invalid. 2. Re-opening in the absence of fresh material available on record is also invalid. The Ld. AO had no fresh tangible material on record to re-open the matter.

6 & 1763/MUM/2021 (A.Y: 2013-14) M/s. Aakash Films Private Limited & M/s. Aakash Ashish Realtors Limited 3. The allegation that advances booked by the assessee are bogus is just on the basis of a statement by third party.

4. Reopening of assessment cannot be made with an intention to review.

5. In the return of income filed u/s 139(1) of the Act, the appellant had disclosed the entire incomes and expenses for the relevant financial year. There is no allegation in the reasons recorded, that there was any failure on the part of the assessee to disclose the primary material facts. Thus, the exceptional power which is conferred upon the Assessing Officer to reopen an assessment has not been lawfully exercised by him in the present case.

8. The reasons to believe for reopening should be based on direct and circumstances evidence, such reasons could not be based on simply suspicion, rumor or gossip and in the present case the reopening is wholly based on statement of unrelated third party.

7 & 1763/MUM/2021 (A.Y: 2013-14) M/s. Aakash Films Private Limited & M/s. Aakash Ashish Realtors Limited 11. In support of above contentions, the appellant has placed reliance on various judicial pronouncements, details of which are available in its submissions and the same are kept on record.”

8. After considering the submissions of the assessee Ld.CIT(A) dismissed the legal grounds raised by the assessee in its appeal and further on merits also he has dismissed the appeal of the assessee with the following observations: “7.4.2 The appellant has submitted that during the year under consideration they had received a sum of Rs.1.71,00,000/- from M/s Fastline Multitrade P Ltd with whom they had entered into an MOU for transfer of Development cum Sales rights in, respect of property. The Ld. AO in the impugned order has given details of notices issued u/s 133(6) of the Act to M/s Fastline Multitrade P Ltd or summon issued to the Managing Director/Principal Officer of M/s Fastline Multitrade P Ltd, which were returned by the postal authority as 'unclaimed'. The Ld. AO has also observed that in view of above, the appellant was also requested to produce the party under consideration for examination, but the appellant failed to comply with said request of the Ld. AO. The Ld. AO has also stated that the Investigation Wing had carried out a survey u/s 133A of the Act on M/s Aakash Universal Ltd and the survey report stated that M/s Aakash Univeral Ltd and its subsidiaries were involved in taking bogus entries of loans/advances/capitals from Shri Praveen Jain Group of companies and such enquiries established that M/s Fastline Multitrade P Ltd, is a Praveen Jain Group company and is involved in issuance of bogus and accommodation entries to beneficiaries and the appellant was one of such beneficiaries. 7.4.3 During the appellate proceedings on 22.03.2021, the appellant has filed Paper Book and the appellant has certified that Page Nos.23-31 thereof is "Memorandum of Understanding Dt.01.11.2012 and Page Nos.32-35 thereof is "Cancellation/Termination Agreement for Memorandum of Understanding Dt. 29.03.2013. From perusal of said MOU it is observed that said agreement was entered at Mumbai on 01.11.2012 between M/s Aakash Ashish Realtors Ltd, the appellant, as "Vendors" and M/s Fastline MultiTrade P Ltd as "The Purchasers" for grant of Development cum Sale Rights from the 8 & 1763/MUM/2021 (A.Y: 2013-14) M/s. Aakash Films Private Limited & M/s. Aakash Ashish Realtors Limited Vendor to the Purchaser in respect of the property specified therein and signed by Shri Ramawatar B Jajodia, as Director of M/s Aakash Ashish Realtors Ltd and Shri Dinesh Bhuralal Hiran, as Director of M/s Fastline Multitrade P Ltd. Apparently, the said MOU has been entered into in presence of two witnesses, but names and addresses of such witnesses are not mentioned therein. Further, the said agreement has been notarized before Shri D. R. Kudrigi, Notary, Greater Mumbai & Thane District, Maharashtra, with Reg. No. 5597 and said Notary has put his signature with date 01.11.2012. The last Page of said MOU (Internal Page No.10 and Page No.31 of Paper Book) is titled as "MODE of PAYMENT and therein Shri Ramawatar B Jajodia, as Director of M/s Aakash Ashish Realtors Ltd has acknowledged receiving a sum of Rs.1,71,00,000/- and on said page also the seal of above Notary has been placed. The details of receipt of said sum of Rs.1,71,00,000/- has been given therein as under. MODE OF PAYMENT Sr. No. RTGS Dated Amount 1 UTR No. BCBMH1 23060001 24-50 01.11.2012 50,00,000/- 2 UTR No. BCBMH1 23070001 46-50 02.11.2012 50,00,000/- 3 UTR No. BCBMH1 230 7000156-50 02.11.2012 71,00,000/- Rs. 1,71,00,000- WE RECEIVED Rs 1.71,00,000/- Sd/- Mr. Ramawatar B Jajodia Director of M/s Aakash Ashish Realtors Ltd 7.4.4 From perusal of said last Page of MOU, certain discrepancies are quite apparent. Though, said MOU has been entered into. signed and notarized on 01.11.2012, the last Page of the same contains the details of payments made/received on 02.11.2012, apparently through RTGS. It is surprising as to how any agreement dated 01.11.2012, would contain the details of payment made/received on 02.11.2012, i.e. the dates subsequent to the date on which allegedly said agreement was entered into. This clearly proves that the said agreement was ante dated and is not genuine. Further, in said MOU the amount of Rs.71,00,000/- has been shown to be received on 02.11.2012, but in the ledger of M/s Fastline Multitrade P Ltd as appearing in the books of the appellant, it is observed that therein receipt of Rs.71,00,000/- has been shown on 05.11.2012.

9 & 1763/MUM/2021 (A.Y: 2013-14) M/s. Aakash Films Private Limited & M/s. Aakash Ashish Realtors Limited 7.4.5 As discussed above, during the appellate proceedings, the appellant has filed Paper Book and has certified that Page Nos.32- 35 thereof is "Cancellation/Termination Agreement for Memorandum of Understanding Dt. 29.03.2013. From perusal of said Cancellation Agreement it is observed that said agreement was entered into on 29.03.2013 between M/s Aakash Ashish Realtors) Ltd, the appellant, as Vendor and M/s Fastline MultiTrade P Ltd as Purchaser for cancelling the said MOU dated 01.11.2012 and signed by Shri Ramawatar B Jajodia, as Director of M/s Aakash Ashish Realtors Ltd and Shri Raju Patwa, as Director of M/s. Fastline Multitrade P Ltd. Apparently, the said cancellation agreement has been entered into in presence of two witnesses, but names and addresses of such witnesses are not mentioned therein. Further, the said agreement has been notarized before Shri D. R. Kudrigi, Notary, Greater Mumbai & Thane District, Maharashtra, with Reg. No. 5597 and said Notary has put his signature with date 29.03.2013. The last Page of said cancellation agreement (Internal Page No.5 and Page No.34 of Paper Book) is titled as "RECEIPT and therein Shri Raju Patwa, as Director of M/s Fastline Multitrade P Ltd has acknowledged receiving a sum of Rs.1,71,00,000/- and on said page also the seal of above Notary has been placed. The details of receipt of said sum of Rs.1.71,00,000/- has been given therein as under. MODE OF PAYMENT Sr. No. Cheque Dated Drawn On Amount 1 BARBH1 3082842835 23.03.2013 Bank of Baroda 2,50,000/- 2 000014 29.03.2013 Bank of Baroda 25,00,000/- 3 000015 29.03.2013 Bank of Baroda 25,00,000/- 4 000016 29.03.2013 Bank of Baroda 25,00,000/- 5 000011 29.03.2013 Bank of Baroda 19,50,000/- 6 000017 29.03.2013 Bank of Baroda 25,00,000/- 7 000018 29.03.2013 Bank of Baroda 24,00,000/- 8 BARBH1 3089708285 30.03.2013 Bank of Baroda 25,00,000/- Total 1,71,00,000/- WE RECEIVED Rs 1.71,00,000/- Sd/ M/s. Fastline Multitrade Private Limited 7.4.6 From perusal of said last Page of cancellation agreement, certain discrepancies are quite apparent. Though, the Cancellation Agreement has been entered into, signed and notarized on 29.03.2013, the last Page of the same contains the details of payments made/received on 30.03.2013 apparently

10 & 1763/MUM/2021 (A.Y: 2013-14) M/s. Aakash Films Private Limited & M/s. Aakash Ashish Realtors Limited through Cheque/RTGS No. BARBH13089708285 drawn on Bank of Baroda. It is surprising as to how any agreement dated 29.03.2013, would contain the details of payment made/received on 30.03.2013, i.e. the date subsequent to the date on which allegedly said agreement was entered into. This clearly proves that the said agreement was ante dated and is not genuine. 7.4.7 The above discrepancies in MOU and/or Cancellation Agreement do not prove authenticity of the same and from the same it is evident that the appellant has miserably failed to establish the genuineness of the transactions. The other aspect of the matter is that the Ld. AO has given details as to how the appellant has not complied with the request to produce the party under consideration for examination, though the notices u/s 133(6) of the Act issued and summon issued u/s 131 of the Act to M/s Fastline Multitrade P Ltd and their Managing Director/Principal Officer sent at the addresses provided by the appellant were returned by the Postal Authorities as unclaimed. Further, the appellant also did not provide any latest address of said party. In absence of such details it cannot be held that the appellant has proved the genuineness of transactions. Further, the enquiries conducted during above referred survey proceedings have proved that M/s Fastline Multitrdae P Ltd is bogus entity. The reliance placed by the appellant on various judicial pronouncements is misplaced as the facts adjudicated therein were different from the facts of the present case. 7.4.8 During the course of appellate proceedings, the appellant has placed reliance on the decision of the Hon'ble Mumbai Tribunal in the case of M/s Siddhivinayak Filaments P Ltd for AY 2012-13 in ITA No.3003/Mum/2017 and explained that the same party, i.e. M/s Fastline Multitrade P Ltd was involved therein and the Hon'ble Tribunal has decided the issue in favour of assessee. From perusal of said decision it is observed that therein the Hon'ble Tribunal has given a factual finding that the issue involved was receipt of unsecure loan from M/s Fastline Multitrade P Ltd and the assessee therein had paid interest on such loan and deducted TDS thereupon, which is not the case in appeal under consideration. Further, the Hon'ble Tribunal has taken note of the fact that the Ld. AO had not found any deficiencies in the said documents filed by the assessee and had merely relied upon the 11 & 1763/MUM/2021 (A.Y: 2013-14) M/s. Aakash Films Private Limited & M/s. Aakash Ashish Realtors Limited statements given by third party. However, in the present case, several discrepancies have been noticed in the said MOU and/or Cancellation Agreement, as discussed above, which do not prove their authenticity. Further, in the present case the Ld. AO has not made impugned addition only on the basis of statement of any third party, but has tried to carry out independent enquiries. However, the notices issued u/s 133(6) of the Act to M/s Fastline Multitrade P Ltd and summons issued to the Managing Director/Principal Officers of M/s Fastline Multitrade P Ltd were returned by the Postal Authorities as 'unclaimed. The Ld. AO had also requested the appellant to produce said party, but that was also not complied with. Other than above referred MOU or Cancellation agreements, which have been found to be non- genuine, the appellant could not submit any other evidence. Hence, the decision of the Hon'ble Tribunal in above referred case of M/s Siddhivinayak Filaments P Ltd is not applicable to the facts of the present case.”

9. Aggrieved, assessee is in appeal before us raising following grounds in its appeal: - “1. On the facts and circumstances of case and in law, Ld. CIT (Appeals) erred in confirming the reopening of the assessment.

2. On the Facts and circumstances of the case and in Law, Ld CIT(Appeals) erred in confirming the transaction of Rs. 1,71,00,000/- with M/s Fastline Multitrade Pvt Ltd. as the undisclosed income of the assesse in view of the section 68 of the act and thereby treating the same as unexplained credit in the books of the accounts of the assesse.

3. The appellant craves leave to add further grounds or to amend or alter the existing grounds of appeal on or before the date of hearing.”

10. Ld. AR filed its written submissions vide letter dated 16.06.2022, for the sake of clarity it is reproduced below: - 12 & 1763/MUM/2021 (A.Y: 2013-14) M/s. Aakash Films Private Limited & M/s. Aakash Ashish Realtors Limited “GROUND NO 2 3. The Ld AO erred in treating the transaction of Rs 1,71,00000 with M/s Fastline Multitrade Pvt Ltd as the undisclosed income of the assessee in view of section 68 of the IT Act 1961 and thereby treated the same as unexplained credit to books of accounts of the assessee During the relevant assessment year, the assessee company has received advances against booking of flat from the following party: S.No. Name of Company Amount (Rs.) 1. M/s Fastline Multitrade Pvt Ltd 1,71,00,000/- TOTAL 1,71,00,000/- The booking of flat got cancelled and the amount received for advances was repaid through bank. The Ld. AO relying on the statement of a third party treated the advances as bogus and added the advances to the income of assessee. At the outset it is submitted that, Learned Assessing Officer has ignored following vital facts outlined as under: a. Discharging of Onus The advances received by the assessee was through normal banking channels/ account payee cheques only. Following documents were submitted proving the Genuineness of the transaction, Identity of the creditor and Creditworthiness of the creditor at the time of assessment of the assessee. (refer the paper book) b. The Assessee's books of Accounts is Audited and were submitted to the learned Assessing officer and there were no adverse remarks of the Auditors in the said Report. Therefore, the transaction entered into by the assessee company cannot be doubted.

1. Section 68 of the Act reads as under: "Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year:"

13 & 1763/MUM/2021 (A.Y: 2013-14) M/s. Aakash Films Private Limited & M/s. Aakash Ashish Realtors Limited It is settled position that to prove the genuineness of the transaction, the burden lies on the assessee and to discharge the onus, the assessee must prove the following- a. Identity of the Creditor b. Capacity of the Creditor c. Genuineness of the Transaction Once the above conditions are proved prima facie by the assessee and the assessee has adduced evidence to establish prima facie the aforesaid, the onus shifts on the department. Three conditions enshrined in section 68 are clearly proved by the documents submitted during the assessment proceedings as under:- I To prove the identity a) Name, Address, PAN, Income-tax Jurisdiction, etc. of the creditor companies; The Company's Income-tax Jurisdiction details proved the identity as well as financial capacity i.e. creditworthiness of the companies. Hence, the aforesaid documents have proved the identity of the company. II. To prove the creditworthiness The Assessee has submitted the Ledger and relevant bank statement of the company The financials of the lenders companies proved the identity as well as financial capacity i.e. creditworthiness of the creditor's companies. a) Relevant Bank Statement b) Copy of Ledger Account 1. The AO treated advances as unexplained cash credit under section 68 of the Act on t.he alleged ground that the Assessee has not brought on record to prove the identity, genuineness of the transactions and creditworthiness of the investors without appreciating that the Assessee has submitted the copies of director report, balance sheet, bank statements, etc. clearly brought out the nature of the transactions, amount involved and scope of the transaction.

14 & 1763/MUM/2021 (A.Y: 2013-14) M/s. Aakash Films Private Limited & M/s. Aakash Ashish Realtors Limited 2. The Assessee has discharged its onus of proving the identity of the parties, genuineness of the transactions and the creditworthiness of the lender. Therefore, the Respondent humbly submits that the addition made under section 68 of the Act be deleted. III. To prove the Genuineness The Asseesee has submitted the Extract of Bank Statement of all above mentioned party, duly highlighting amount given by them to the Asseesee. a) Transaction through Account Payee Cheques. b) Bank Statement of the Asseesee 2. Non-compliance of notices u/s 133(6) cannot be a basis of addition. Non-compliance of summons under section 131 by the creditors cannot be the concern of the assessee 3. AO had come to a conclusion merely based on a statement of a third party, without bringing any credible documentary evidence to the contrary on record to nail the assessee. Reference in this regard can be made from the decisions made in the following judiciary ruling:- Sr Citation Particulars No 1. PCIT vs. Nishant Section 69A of the Income-tax Act, 1961 -Unexplained Construction (P.) Ltd. money (On money) - Assessee was engaged in [2019] 101 taxmann.com construction and development of housing projects - It was 180 (SC) subjected to survey operation during which certain documents were found and impounded - On basis of such documents, Assessing Officer came to conclusion that assessee had received on-money from sale of flats - He therefore, made certain addition to assessee's income - Tribunal, however, deleted said addition on ground that there was no reliable or independent evidence to come to conclusion that assessee had accepted on-money for sale of constructed properties -High Court upheld order passed by Tribunal -Whether, on facts, SLP filed against decision of High Court was to be dismissed - Held, yes 2. CIT vs. Jagdishprasad In course of assessee, Assessing Officer made addition to Mohanlal Joshi [2018] 99 assessee’s income on basis of confessional statement taxmann.com 288 (SC) made by one 'R' under Maharashtra Central Organised Crime Act, 1999, to effect that he had made certain unaccounted payments to assessee - Tribunal noted that statement of 'R1 had not been confronted to assessee to verify whether amount was actually paid - It was also 15 & 1763/MUM/2021 (A.Y: 2013-14) M/s. Aakash Films Private Limited & M/s. Aakash Ashish Realtors Limited Sr Citation Particulars No found that no corroborative evidence had been produced or brought on record to substantiate fact of alleged payment -Accordingly, Tribunal deleted impugned addition - High Court upheld order passed by Tribunal - Whether on facts, SLP filed against High Court's decision was to be dismissed -Held, yes [Para l][In favour of assessee] 3. CIT v. Ashok Kumar Jain Addition was held to be not justified merely on the basis (2014) 369 ITR 145 (Raj) of statement in the course of survey. (HC) 4. CIT v. M.P. Scrap Traders Addition cannot be made on the basis of statement in the (2015) 372 ITR 507 Guj course of survey. HC 5. Concept Communication No addition can be made merely on the basis of statement Ltd Vs DCIT (ITAT unless same is corroborated by documentary evidence. Mumbai) ITA No. From the record we also observe that corresponding 2800/Mum/2016 income booked by the assessee has not been disputed by lower authorities meaning thereby, income earned corresponding to the expenditure alleged to be bogus has been duly accepted by the lower authorities. Addition made on the basis of information not disclosed to the assessee is in violation of principles of natural justice No. Case Citation Observation/ Held 1. M/S ANDAMAN TIMBER Not allowing the assessee to cross-examine the witnesses INDUSTRIES V/s CCE by the Adjudicating Authority though the statements of CIVIL APPEAL NO. 4228 those witnesses were made the basis of the impugned OF 2006 order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected.

2. Lalchand Bhagat Assessment made without disclosing to the assessee the Ambica Dav V/s CIT (37 information supplied by the department and without giving ITR 28)(SC) any opportunity to the assessee to rebate the information is violation of fundamental rules of justice.

3. DHAKESWARI COTTON An assessment so made without disclosing to the assessee MILLS LTD. v. CIT the information supplied by the departmental [1954] 26 ITR 777 representative and without giving any opportunity to the assessee to rebut the information so supplied and declining to take into consideration all materials which the assessee wanted to produce in support of case constituted a violation of the fundamental rules of justice and called for interference on our part.

1. CIT V. BHUVANENDRA 303 ITR 235 (MAD.) 2. VINOD SOLANKI VS. UOI (233) ELT 157 (S.C.) 3. CIT V. KASHIRAM TEXTILE MILLS (P) LTD [2006]284 ITR 61 (GUJ)- 4. SARASWATHI OIL TRADERS V. CIT [2000] 254 ITR 259 (SC) -» Income cannot be assessed on mere statement basis. For assessment there has to be some evidence. Income cannot be assessed on mere retracted statement If no material to prove 17 & 1763/MUM/2021 (A.Y: 2013-14) M/s. Aakash Films Private Limited & M/s. Aakash Ashish Realtors Limited 1.Meghraj Jain V. UOI (Bombay High Court) 2. KailashbenManharlal Chokshi v. CIT [2008] 174 Taxman 433 (GUJ.) 3. M. Narayanan & Bros. v. Asstt. CIT [2011] 201 Taxman 207 (Mag.) 4. Bansal High Carbons (P)Ltd. 2009) 223 CTR 179 (Del).

5. Sanjeev Kumar Jain (2009) 310 ITR 178 (P&H) 6. CIT vs. K. Bhuvanendra and others (2008) 303 ITR 235 (Mad.) 7. Abid Malik Vs UOI, (2009TIOL272HC Del-FEMA) 8. CIT vs. Uttamchand Jain 320 ITR 554 (Bom), 9. Srinivas Naik (2009)117 ITD 201 (Bang) -> Addition cannot be made on assumption basis. There must be some material on record as evidence for addition. Addition made on the basis of presumption cannot be sustained in law.

7. CIT- IV v. Shree Rama Multi Tech Ltd [2O13] 34 taxmann.com 32 (Gujarat):-Expenditure cannot be disallowed on account of 'bogus purchase' only on basis of assumption and presumption 8. View taken in Modi creation Pvt. Ltd. Is also taken in following decision. i. CIT v/s Divine Leasing 85 Finance Ltd. 158 Taxmann 440 (Delhi) (2007). ii. Nemichand Kothari V/s CIT (136 Taxman 216) (Gau.) (2004). iii. CIT V/s Value Capital Services (P) Ltd. 307 ITR 334 (Delhi)(2008).

18 & 1763/MUM/2021 (A.Y: 2013-14) M/s. Aakash Films Private Limited & M/s. Aakash Ashish Realtors Limited Your honor can refer the page nos. 1-59 of the Paper Book; the details in length are submitted. Therefore, the findings given by the Ld. AO were in contradiction of section 68 of the Act. By submitting the above details, the Asseesee has discharged his primary onus of proving the advances as Genuine Transaction. However, the Ld. Assessing Officer without considering the facts and circumstances of the case erred in making addition of Rs. 1,71,00,000/- being the amount received towards advance u/s. 68 as Unexplained Cash Credit without having any jurisdiction. Thus all the ingredients of S.68 of the Act were fully proved and established before the learned Assessing Officer. The Honourable ITAT in assessee's own case, ITA No. 4287/MUM/2014 (Departmental Appeal) for AY 2010-11 uphold the order of CIT(A) and appeal filed by the revenue is dismissed, (copy enclosed)

12. Ld. AR submitted that the facts in the other case in ITA.No.1762/Mum/2021 are exactly similar and submissions made in ITA.No. 1763/Mum/2021 are equally application to this appeal also.

19 & 1763/MUM/2021 (A.Y: 2013-14) M/s. Aakash Films Private Limited & M/s. Aakash Ashish Realtors Limited 13. Considered the rival submissions and material placed on record, we observe that during survey conducted by DDIT(INV), Unit – 2(3), Mumbai in the case of M/s. Aakash Universal Limited and as per the survey report of that company it was observed that assessee has received an amount of ₹.1.71 Crores from FMPL an entity controlled by PKJ. In order to verify the above transactions, the case of the assessee was reopened and in the reopened assessment assessee has filed relevant documents relating to the receipt of an amount of ₹.1.71 crores. As per the details submitted by the assessee, assessee has submitted that assessee has received ₹.1.71 crores from FMPL through RTGS dated 01.11.2012 and 02.11.2012. However, the MOU filed by the assessee in support of the above transactions which is dated 01.11.2012 and it was also notarized on the same date as 01.11.2012. However, assessee has received two payments in 02.11.2012 through RTGS of ₹.50 lacs and ₹.71 lacs respectively. The revenue is doubting the whole transactions merely on the fact that the date of MOU is 01.11.2022 and assessee has received two payments on 02.11.2012. Further, assessee has submitted cancellation agreement dated 29.03.2012 and the same was notarized on the same date 29.03.2013. However, assessee has submitted acknowledgement of receipt of payment by FMPL in various dates starting

20 & 1763/MUM/2021 (A.Y: 2013-14) M/s. Aakash Films Private Limited & M/s. Aakash Ashish Realtors Limited from 23.03.2013 to 30.03.2013 all these payments are also routed through bank transfers.

21 & 1763/MUM/2021 (A.Y: 2013-14) M/s. Aakash Films Private Limited & M/s. Aakash Ashish Realtors Limited out through banking channels and also assessee has filed the bank statement in the Paper Book to show that the assessee has received the advances as per the MOU and also the settlement made by the assessee through bank. Therefore, merely because there is some mismatch and the date of settlement and the date of notarized document does not make the transaction non-genuine.

22 & 1763/MUM/2021 (A.Y: 2013-14) M/s. Aakash Films Private Limited & M/s. Aakash Ashish Realtors Limited the assessee has already brought on record various informations in support of the genuineness of the transactions and the onus is on Assessing Officer to bring on record the contrary evidences on non- genuineness of the transactions. Therefore, the Assessing Officer also has not carried on the verification properly. Considering the above discussions and fact on record we hold that assessee has proved the genuineness of transactions, creditworthiness and identity of the other party. Therefore, the addition made u/s. 68 of the Act is hereby deleted. In the result, Ground No. 2 raised by the assessee is allowed.

ITA.No. 1762/MUM/2021 (A.Y. 2013-14)

23 & 1763/MUM/2021 (A.Y: 2013-14) M/s. Aakash Films Private Limited & M/s. Aakash Ashish Realtors Limited Realtors Limited for the A.Y. 2013-14 is applicable mutatis mutandis to this appeal also. Accordingly, the appeal filed by the assessee is partly allowed.

Order pronounced in the open court on the 22nd November, 2022

Sd/- Sd/- (AMIT SHUKLA) (S. RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai / Dated 22/11/2022 Giridhar, Sr.PS Copy of the Order forwarded to: 1. The Assessee 2. The Respondent. 3. The CIT(A), Mumbai. 4. CIT 5. DR, ITAT, Mumbai 6. Guard file.

//True Copy// BY ORDER (Asstt. Registrar) ITAT, Mum

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “A”, MUMBAI

BEFORE SHRI AMIT SHUKLA, HON'BLE JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, HON'BLE ACCOUNTANT MEMBER

M/s. Aakash Films Private Limited v. Income Tax Officer – 16(1)(1) Room No. 436A, Plot No. A-51, MIDC Aayakar Bhavan, M.K. Road Marol Industrial Area Next to AIPMA Andheri (E), Mumbai - 400093 Mumbai - 400020 PAN: AAHCA5657K (Appellant) (Respondent)

CORRIGENDUM TO ORDER DATED 22.11.2022

1. An application dated 14th March, 2023 has been moved by the assessee requesting for passing corrigendum in the combined order passed by the Tribunal in ITA.Nos. 1762 & 1763/Mum/2021 dated 22.11.2022.

(A.Y: 2013-14) M/s. Aakash Films Private Limited 1763/Mum/2021. However, assessee has filed a separate and distinct grounds of appeal relating to the issues of depreciation and the bench due to oversight, Ground No. 2 was not adjudicated. This issue was brought to our notice by the assessee vide letter dated 14.03.2023, considering the fact the said ground is not adjudicated, after considering the material available on record, we proceeded to adjudicate this grounds of appeal in this corrigendum.

3. The relevant facts relating to this ground are during the assessment proceedings Assessing Officer observed that assessee has purchased Digital Beta Recorders of ₹.71,23,275/- and claimed depreciation of ₹.9,42,218/- thereon. Assessing Officer observed from the Sales Invoice, submitted by the assessee that it has purchased Digital Beta Recorders from M/s. DAV Broadcast Solutions, having address at E-114, Lower Gr Floor, Kalkaji New Delhi. The Assessing Officer has given the details of five (5) invoices at Page No. 10 of the Assessment Order.

4. Further, Assessing Officer observed that purchases are towards MACPRO 2.4 Ghz computers and its accessories. The assessee has declared all these assets under the Block Plant & Machinery and from the return of income, Assessing Officer observed that assessee does not have any unit

(A.Y: 2013-14) M/s. Aakash Films Private Limited at New Delhi, whereas all the above purchases are through Invoice of M/s DAV Broadcast Solutions, situated at Delhi, no documentary evidences of transport of these items from Delhi to Mumbai has been furnished by the assessee.

5. The Assessing Officer further observed that assessee has purchased items mentioned in Bill No. 339, whereas subsequent purchases made after around six months have Bill Nos. 268, 269 & 270. The chronological order of the Bill Book and Bill Numbers are not found to be consistent. He observed that the TIN Number mentioned in the Bill is erroneous. Considering the above facts, Assessing Officer treated the above purchases as bogus and disallowed the relevant depreciation.

6. Aggrieved, assessee preferred an appeal before the Ld.CIT(A) and submitted elaborate submissions and the relevant gist of the submissions are reproduced by the Ld.CIT(A) at Page No. 13 of the Ld.CIT(A) order. for the sake of clarity, it is reproduced below: -

“1. The Ld. AO has contended that the appellant does not have any unit at New Delhi, whereas all the above purchases are through Invoice of M/s DAV Broadcast Solutions, situated at Delhi. Contention of the AO that if an unit is located in a particular area, all the purchases has to be made from that area only is baseless, 2. The management of a company is responsible for preparing the financial statements. The Auditor is responsible for expressing an (A.Y: 2013-14) M/s. Aakash Films Private Limited opinion indicating that reasonable assurance has been obtained that the financial statements as a whole are free from material misstatement, whether due to fraud or error, and they are fairly presented in accordance with the relevant accounting standards, (e.g. International Financial Reporting Standards), 3. Tax Audit is concluded to achieve the following objectives: • Ensure proper maintenance and correctness of books of accounts and certification of the same by a tax auditor. • Reporting observations/discrepancies noted by tax auditor after a methodical examination of the books of account. • To report prescribed information such as tax depreciation, compliance of various provisions of Income tax law etc. • All these enables tax authorities in verifying the correctness of Income Tax returns filed by the taxpayer. Calculation and verification of total income, claim for deduction etc. also becomes easier.

1. The books are duly audited as per the relevant section of Income Tax Act and all the bills of purchases are part of Paper Book Pg. 78-83.”

7. After considering the submissions of the assessee, Ld.CIT(A) observed that assessee relied heavily on their accounts being audited. However, the said argument of the assessee is devoid of merits as the Auditor only conducts audit on the basis of details and documents submitted before them and they do not carry out any investigation to verify the genuineness or otherwise of such details and documents submitted by the assessee. Ld.CIT(A) also relied on the detailed finding of the Assessing Officer of not submitting the relevant challans, proof of equipment put to (A.Y: 2013-14) M/s. Aakash Films Private Limited use for the purpose of business etc., accordingly, he dismissed the ground raised by the assessee.

8. At the time of hearing, Ld. AR submitted as under: -

“Assessee has purchased Digital Beta Recorders of Rs. 71,23,275/- and claimed depreciation of Rs. 9,42,218/- thereon. The Ld. AO disallowed the depreciation on the ground that actual purchase could not be satisfactorily explained by the assessee. The Ld. AO contented that assessee does not have any unit at New Delhi, whereas all the above purchases are through Invoice of M/s DAV broadcast Solutions, situated at Delhi. Contention of AO that if an unit is located in a particular area, all the purchases has to be made from that area only is The management of a company is responsible for preparing the financial statements. The auditor is responsible for expressing an opinion indicating that reasonable assurance has been obtained that the financial statements as a whole are free from material mis statement, whether due to fraud or error, and that they are fairly presented in accordance with the relevant accounting standards (e.g., International Financial Reporting Standards). Tax audit is conducted to achieve the following objectives: • Ensure proper maintenance and correctness of books of accounts and certification of the same by a tax auditor • Reporting observations/discrepancies noted by tax auditor after a methodical examination of the books of account • To report prescribed information such as tax depreciation, compliance of various provisions of income tax law etc. All these enable tax authorities in verifying the correctness of income tax returns filed by the taxpayer. Calculation and verification of total income, claim for deductions etc. also becomes easier.

(A.Y: 2013-14) M/s. Aakash Films Private Limited We request your goodself to kindly consider the facts that the books are duly audited as per the relevant section of Income Tax Act.”

9. On the other hand, Ld. DR relied on the order of the lower authorities.

10. Considered the rival submissions and material placed on record, we observe that depreciation claimed by the assessee are disallowed with the reason that the Serial Bill Number used by M/s. DAV Broadcast Solutions are not serially numbered in the initial period and subsequent purchases made in the month of December. Further, it was observed that these MACPRO computers were bought in Delhi and assessee has not submitted any proof of transport challans. We also observed that first invoice submitted by the assessee was dated 24.03.2012, therefore as held by Assessing Officer it is not relevant for current Assessment Year. After considering the submissions of both the parties, we observe that computers purchased by the assessee initially dated 24.03.2012 and also purchased in Delhi may be, in our view, it is installed during the current Assessment Year, this should not be a reason to reject the above said purchases. Further, we observe that these computers were purchased in Delhi and brought to the place of assessee. What is relevant is these

(A.Y: 2013-14) M/s. Aakash Films Private Limited computers were installed and utilized in the business of the assessee and Assessing Officer has not verified anything to substantiate whether any computers were installed or not. Merely because it is purchased in Delhi he cannot proceed to disallow the same. With regard to difference in Serial Number used in Bill Number, these are the bills received by the assessee from the supplier and there is no remark or any qualification brought on record by the Assessing Officer with regard to genuineness of the supplier. We observe from the invoices submitted before us that, the supplier has used Serial No. 331 and 339 with reference to book No. 7 whereas other invoices with the Serial No. 268, 269 and 270 are with the book reference No. 6, it shows that supplier uses different book with the serial numbers. The method of billing carried on by the supplier has nothing to do with the assessee and with regard to verification to establish genuineness of the transaction, Assessing Officer should have asked for whether these computers were installed and if required he could have asked for certificate from the Statutory auditor. Therefore, we do not see any reason to dismiss the claim of the assessee merely on suspicion without properly verifying the documents submitted before tax authorities. Therefore, we are inclined to direct the Assessing Officer to allow the claim made by the assessee in this regard. Accordingly, Ground raised by the assessee is allowed.

(A.Y: 2013-14) M/s. Aakash Films Private Limited 11. The above corrigendum be read as part of the order dated 22.11.2022.

Corrigendum issued on 24th May, 2023