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Facts
Three appeals were filed against a common order of the CIT(A) concerning undisclosed income from assessment years 2012-13 to 2014-15. The additions were made under section 153C based on information found during a search at a third party's premises.
Held
The tribunal held that the additional grounds of appeal challenging the validity of the assessment on the basis of approval under section 153D were not sustainable as the approving authority had duly applied its mind. The tribunal further rejected the assessee's claim of being a 'pass through entity' and upheld the additions made for unexplained cash expenditure.
Key Issues
The primary issues were the validity of the assessment order due to alleged non-application of mind by the approving authority and the addition for unexplained cash expenditure.
Sections Cited
153C, 143(3), 132, 153D, 69C, 69A
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Income Tax Appellate Tribunal, MUMBAI BENCH “F” MUMBAI
Before: SHRI OM PRAKASH KANT & SHRI SANDEEP SINGH KARHAIL
These three appeals by the assessee are directed against a common order dated 15/09/2023 passed by the learned Commissioner of Income-tax(Appeals)-52, Mumbai [in short the Ld. CIT(A)] for assessment years 2012-13 to 2014-15 respectively, arising from orders passed under section 153C of the Income-tax Smt. Usha Satish Salvi 2 4237 & 4238/MUM/2023 Act, 196( in short the Act) by the Assessing Offi Act, 196( in short the Act) by the Assessing Officer ( in short the cer ( in short the AO), wherein he assessed undisclosed income based on information AO), wherein he assessed undisclosed income based on information AO), wherein he assessed undisclosed income based on information related to assessee found related to assessee found during search of third person. As common during search of third person. As common issue-in-dispute is involved in is involved in all the three appeals, all the three appeals, therefore, same were heard together and dispose were heard together and disposed off by way of this consolidated ff by way of this consolidated order for convenience and avoid repetition of facts. order for convenience and avoid repetition of facts.
Briefly stated facts of the case are that the assessee is an Briefly stated facts of the case are that the assessee is an Briefly stated facts of the case are that the assessee is an individual, who runs a film production house under proprietorship individual, who runs a film production house under proprietorship individual, who runs a film production house under proprietorship name M/s Shree Swami Samarth Pictures ( in short ‘Samarth name M/s Shree Swami Samarth Pictures ( in short ‘Samarth name M/s Shree Swami Samarth Pictures ( in short ‘Samarth Pictures’) . 2.1 For assessment year AY2012 For assessment year AY2012-13, the assessee filed ori 13, the assessee filed original return of income on 29/03/2013 declaring total income at return of income on 29/03/2013 declaring total income at return of income on 29/03/2013 declaring total income at ₹9,06,228/-. For assessment year AY 2013 . For assessment year AY 2013-14, the assessee filed 14, the assessee filed original return of income on 28/07/2013 declaring total income at original return of income on 28/07/2013 declaring total income at original return of income on 28/07/2013 declaring total income at ₹6,04,200/- which was scrutini which was scrutinized under section 143(3) of ed under section 143(3) of Act on 29/12/2015 29/12/2015 29/12/2015 accepting accepting accepting the the the returned returned returned income. income. income. Similarly, for assessment year AY 2014 assessment year AY 2014-15, the assessee filed original return of 15, the assessee filed original return of income on 28/11/2014 declaring total income at income on 28/11/2014 declaring total income at ₹12,46, 12,46,360/-. 2.2 Subsequently, a search and seizure action under section 132 Subsequently, a search and seizure action under section 132 Subsequently, a search and seizure action under section 132 of the Act was carried out on 08/12/2015 at the premises of M/s f the Act was carried out on 08/12/2015 at the premises of M/s f the Act was carried out on 08/12/2015 at the premises of M/s Nadiawala Grandson Entertainment Nadiawala Grandson Entertainment Private Limited Private Limited, alongwith residence of Sh Satish Salve ( Chief Finance officer of Ms/s Viking residence of Sh Satish Salve ( Chief Finance officer of Ms/s Viking residence of Sh Satish Salve ( Chief Finance officer of Ms/s Viking Media and Entertainment private limited), who was allegedly Media and Entertainment private limited), who was allegedly Media and Entertainment private limited), who was allegedly Smt. Usha Satish Salvi 3 4237 & 4238/MUM/2023 engaged in providing accommodation entries to M/s Nadiawala ed in providing accommodation entries to M/s Nadiawala ed in providing accommodation entries to M/s Nadiawala Grandson Entertainment Private Limited. In said search, certain Grandson Entertainment Private Limited. In said search, certain Grandson Entertainment Private Limited. In said search, certain documents relating to ‘Samarth Pictures documents relating to ‘Samarth Pictures ’ were found and seized, ’ were found and seized, which revealed certain instances of acceptance and repayment of which revealed certain instances of acceptance and repayment of which revealed certain instances of acceptance and repayment of cash loan and incurring of cash expenses by ‘Samarth Pictures’ out an and incurring of cash expenses by ‘Samarth Pictures’ out an and incurring of cash expenses by ‘Samarth Pictures’ out of its books of accounts. As the documents seized in the course of of its books of accounts. As the documents seized in the course of of its books of accounts. As the documents seized in the course of the search found to be related to the assessee and having bearing the search found to be related to the assessee and having bearing the search found to be related to the assessee and having bearing on her income , after following due procedure under the law , a on her income , after following due procedure under the law , a on her income , after following due procedure under the law , a satisfaction to the effect that it was a fit case to be covered under satisfaction to the effect that it was a fit case to be covered under satisfaction to the effect that it was a fit case to be covered under section 153C of the Act, was recorded by the relevant authorities section 153C of the Act, was recorded by the relevant authorities section 153C of the Act, was recorded by the relevant authorities and notice under section 153C of the Act was issued on and notice under section 153C of the Act was issued on and notice under section 153C of the Act was issued on 12/09/2017, requiring the assessee to prepare and file a true and 12/09/2017, requiring the assessee to prepare and file a true a 12/09/2017, requiring the assessee to prepare and file a true a correct returns of income including the undisclosed income for of income including the undisclosed income for of income including the undisclosed income for assessment years 2010 2010-11 to 2015-16. The assessee filed return of 16. The assessee filed return of income in respect of assessment years involved before us declaring income in respect of assessment years involved before us declaring income in respect of assessment years involved before us declaring total income as under: total income as under: S. no. AY Date of filing Total income 1. 2012 2012-13 13/11/2017 ₹9,06,230/- 2. 2013 2013-14 13/11/2017 ₹6,04,200/- - ₹12,46,360/- 3. 2014 2014-15 13/11/2017 2.3 In the assessments completed on 27/12/2017 under section he assessments completed on 27/12/2017 under section he assessments completed on 27/12/2017 under section 153C read with section 153A of the Act, the Assessing Officer made 153C read with section 153A of the Act, the Assessing Officer made 153C read with section 153A of the Act, the Assessing Officer made addition for unexplained cash expenditure in respect of the three unexplained cash expenditure in respect of the three unexplained cash expenditure in respect of the three assessment years as under: assessment years as under:
Smt. Usha Satish Salvi 4 4237 & 4238/MUM/2023 S. no. AY Additions 1. 2012-13 Rs. 6,45,572/- Rs. 6,45,572/ 2. 2013-14 Rs. 1,39,18,769/- Rs. 1,39,18,769/ 3. 2014-15 Rs. 7,50,000/- Rs. 7,50,000/
On further appeals, the Ld. CIT(A) rejected the contention of On further appeals, the Ld. CIT(A) rejected the contention of On further appeals, the Ld. CIT(A) rejected the contention of the assessee and sustained the addition for unexplained cash the assessee and sustained the addition for unexplained cash the assessee and sustained the addition for unexplained cash expenditure by way of a detailed finding in the impugned orders. expenditure by way of a detailed finding in the impugned orders. expenditure by way of a detailed finding in the impugned orders. Aggrieved, the assessee is in appeals before the Income Tax Aggrieved, the assessee is in appeals before the Aggrieved, the assessee is in appeals before the Appellate Tribunal (i e Tribunal (in short the ‘Tribunal’) by way of raising ) by way of raising grounds and additional ground as reproduced below. grounds and additional ground as reproduced below. grounds and additional ground as reproduced below.
Firstly, we take up the appeal for AY 2012 Firstly, we take up the appeal for AY 2012-13. The grounds 13. The grounds raised in appeal are reproduced as under: raised in appeal are reproduced as under:
On the facts and in Fact and in circumstances On the facts and in Fact and in circumstances of the case and in law, of the case and in law, The Ld. CIT(A) erred in confirming Rs. 6,45,572/ The Ld. CIT(A) erred in confirming Rs. 6,45,572/- as unexplained casti as unexplained casti expenses. U/s 69C of the Income Tax Act, 1961 and the reasons expenses. U/s 69C of the Income Tax Act, 1961 and the reasons expenses. U/s 69C of the Income Tax Act, 1961 and the reasons assigned by him, for doing so are wrong and contrary to the facts and assigned by him, for doing so are wrong and contrary to the facts and assigned by him, for doing so are wrong and contrary to the facts and circumstances of the case, p circumstances of the case, provisions of Income Tax Act, 1961 and rovisions of Income Tax Act, 1961 and rules made there rules made there under. 4.1 Before us, the assessee also raised following additional Before us, the assessee also raised following additional Before us, the assessee also raised following additional grounds:
On the Facts and in the circumstances of the case and in law the On the Facts and in the circumstances of the case and in law the On the Facts and in the circumstances of the case and in law the approval granted under section 153D of The Act is no approval granted under section 153D of The Act is no arrival in the arrival in the eyes of law as the same has been accorded on presumption and eyes of law as the same has been accorded on presumption and eyes of law as the same has been accorded on presumption and without application of mind and consequently the assessment order without application of mind and consequently the assessment order without application of mind and consequently the assessment order u/s 153C of the Act is null and Void as approval granted under u/s 153C of the Act is null and Void as approval granted under u/s 153C of the Act is null and Void as approval granted under section 153D is mechanical in nature and without ap section 153D is mechanical in nature and without application of Mind. plication of Mind. 4.2 Identical grounds and additional grounds have been raised in grounds and additional grounds have been raised in grounds and additional grounds have been raised in the remaining two appeals also the remaining two appeals also except change of amount except change of amount.
Smt. Usha Satish Salvi 5 4237 & 4238/MUM/2023 4.3 We have heard rival submission of the parties on the issue of e have heard rival submission of the parties on the issue of e have heard rival submission of the parties on the issue of admissibility of the additional additional grounds. As the grounds raised grounds raised are legal in nature and not requiring investigation of fresh facts, same legal in nature and not requiring investigation of fresh facts, same legal in nature and not requiring investigation of fresh facts, same are admitted for adjudication in view of the settled principle in the are admitted for adjudication in view of the settled principle in the are admitted for adjudication in view of the settled principle in the case of NTPC Ltd. 229 ITR 283 (SC). NTPC Ltd. 229 ITR 283 (SC).
5. Before us, the learned counsel for the assessee filed Before us, the learned counsel for the assessee filed Before us, the learned counsel for the assessee filed a paperbook containing pages 1to 46. paperbook containing pages 1to 46.
6. In the additional ground, the assessee has challenged the In the additional ground, the assessee has challenged the In the additional ground, the assessee has challenged the validity of the assessment under section 153C of the Act. According validity of the assessment under section 153C of the validity of the assessment under section 153C of the to the assessee the approval granted by the competent authority to the assessee the approval granted by the competent authority to the assessee the approval granted by the competent authority under section 153D of the under section 153D of the Act has been accorded on presumption, as been accorded on presumption, without application of the without application of the mind, which is mechanical in nature, mechanical in nature, consequently the assessment order under section 153C is null and consequently the assessment order under section 153C is null and consequently the assessment order under section 153C is null and void. 6.1 The submissions in support of the The submissions in support of the additional ground ground made by the learned counsel for the assessee are summarised as under: l for the assessee are summarised as under: l for the assessee are summarised as under: (i) The letter seeking letter seeking approval was submitted to the A approval was submitted to the Additional Commissioner of Income Commissioner of Income-tax i.e. the approving authority on tax i.e. the approving authority on 26/12/2017, 2017, which is at the fag end of the expiry which is at the fag end of the expiry of limitation limitation limitation of of of the the the assessment. assessment. assessment. The The The Ld Additional Commissioner has approved the assessment on same date Commissioner has approved the assessment on same date Commissioner has approved the assessment on same date i.e. 26/12/2017, which shows that the approval has been i.e. 26/12/2017, which shows that the approval has been i.e. 26/12/2017, which shows that the approval has been granted in haste granted in haste, without going through records. without going through records. (ii) Only the draft assessment order, without assessment record Only the draft assessment order, without assessment record Only the draft assessment order, without assessment record and seized material or apprai and seized material or appraisal report was sent to the sal report was sent to the Smt. Usha Satish Salvi 6 4237 & 4238/MUM/2023 approving authority with the letter for obtaining the approving authority with the letter for obtaining the approving authority with the letter for obtaining the approval. Therefore Therefore, the approving authority has granted the approving authority has granted approval without examining either the assessment record or approval without examining either the assessment record or approval without examining either the assessment record or the seized material. the seized material. (iii) A common and consolidated approval has A common and consolidated approval has been granted for been granted for the years AY 2010 AY 2010-11 to 2015-16 and 2016- -17 and there is no year was reasoning in the said approval. The approval no year was reasoning in the said approval. The approval no year was reasoning in the said approval. The approval has to be granted separately for each assessment year. has to be granted separately for each assessment year. has to be granted separately for each assessment year. (iv) The approval granted was not absolute. The approval granted was not absolute. (v) The approval is generic and li The approval is generic and listless and accorded in a stless and accorded in a blanket manner without any reference to any issue in blanket manner without any reference to any issue in blanket manner without any reference to any issue in respect of any of the assessment year. respect of any of the assessment year. (vi) The approval was granted in a mechanical and hurried The approval was granted in a mechanical and hurried The approval was granted in a mechanical and hurried manner without mentioning the reasons and without manner without mentioning the reasons and without manner without mentioning the reasons and without application of mind. The approving application of mind. The approving authority authority has not mentioned anything in the approval memo toward the anything in the approval memo toward the anything in the approval memo toward the process of deriving satisfaction so as to exhibit his process of deriving satisfaction so as to exhibit his process of deriving satisfaction so as to exhibit his application of mind. application of mind. The approving authority has not The approving authority has not objectively evaluated the draft assessment order with due objectively evaluated the draft assessment order with due objectively evaluated the draft assessment order with due application of the min application of the mind on the issue contained in such d on the issue contained in such order so as to derive its conclusive satisfaction that the order so as to derive its conclusive satisfaction that the order so as to derive its conclusive satisfaction that the proposed action of the Assessing Officer is in conformity proposed action of the Assessing Officer is in conformity proposed action of the Assessing Officer is in conformity with the subsisting law. with the subsisting law. 6.2 In support of above contentions the learned counsel relied on In support of above contentions the learned counsel relied on In support of above contentions the learned counsel relied on various decisions of ns of the coordinate benches of the T the coordinate benches of the Tribunal and Hon’ble High Court’s as follows: (i) Decision dated 06/06/2024 of Decision dated 06/06/2024 of Delhi bench of the T Delhi bench of the Tribunal in the case of Shri Guvinder Singh Duggal in to in the case of Shri Guvinder Singh Duggal in to in the case of Shri Guvinder Singh Duggal in ITA No. 860 to 863/Del/2021 for AY 2012 863/Del/2021 for AY 2012-13 to 2018-19.
Smt. Usha Satish Salvi 7 4237 & 4238/MUM/2023 (ii) Decision dated 29/04/2024 of Decision dated 29/04/2024 of Delhi Bench of Tribunal in Delhi Bench of Tribunal in the case of MDLR Airline (P) Ltd in & the case of MDLR Airline (P) Ltd in & the case of MDLR Airline (P) Ltd in ITA No. 1420 & 1421/Del/2023 for AY 2007 1421/Del/2023 for AY 2007-08 and 2008-09. 09. (iii) Decision of Hon’ble Allahabad High Court in the case of Decision of Hon’ble Allahabad High Court in the case of Decision of Hon’ble Allahabad High Court in the case of PCIT vs Sapna Gupta in ITA No. 88 of 2022. PCIT vs Sapna Gupta in ITA No. 88 of 2022. (iv) Decision of Hon’ble Delhi High Court in the case of PCIT vs of Hon’ble Delhi High Court in the case of PCIT vs of Hon’ble Delhi High Court in the case of PCIT vs Shiv Kumar Nayyar in ITA 285/2024 & CM Appela Shiv Kumar Nayyar in ITA 285/2024 & CM Appela Shiv Kumar Nayyar in ITA 285/2024 & CM Appela 28994/2024 (v) Decision of Mumbai Bench of Tribunal in the case of Arch Decision of Mumbai Bench of Tribunal in the case of Arch Decision of Mumbai Bench of Tribunal in the case of Arch Phamalabs Ltd in ITA No. 6656/Mum/2017 for AY 2011 Phamalabs Ltd in ITA No. 6656/Mum/2017 for AY 2011 Phamalabs Ltd in ITA No. 6656/Mum/2017 for AY 2011-12 and other appeals. and other appeals. (vi) Decision of Hon’b Decision of Hon’ble Delhi High Court in the case of PCIT Vs le Delhi High Court in the case of PCIT Vs M/s MDLR Hoteles P Ltd in ITA 593/2023 M/s MDLR Hoteles P Ltd in ITA 593/2023 (vii) Decision dated 24/04/2024 of Delhi Bench of Tribunal in Decision dated 24/04/2024 of Delhi Bench of Tribunal in Decision dated 24/04/2024 of Delhi Bench of Tribunal in the case of Veena Singh in ITA No. 294 & 295/Del/2022 for the case of Veena Singh in ITA No. 294 & 295/Del/2022 for the case of Veena Singh in ITA No. 294 & 295/Del/2022 for AY 2016-17 and 2017 17 and 2017-18 7. On the contrary, the On the contrary, the Ld. DR submitted that all the additional DR submitted that all the additional grounds have been raised merely on the basis of the presumptions grounds have been raised merely on the basis of the presumptions grounds have been raised merely on the basis of the presumptions and suspicion that the learned A and suspicion that the learned Additional Commissioner of Income dditional Commissioner of Income- tax i.e. approving authority had not gone through the seized tax i.e. approving authority had not gone through the seized tax i.e. approving authority had not gone through the seized material and assessment reco material and assessment records leading to allegation allegation of non- application of the mind application of the mind by the approving authority. proving authority. The learned DR submitted that after collecting all the material from the search after collecting all the material from the search after collecting all the material from the search premises, each and every material is being analysed from the angle premises, each and every material is being analysed from the angle premises, each and every material is being analysed from the angle of possible tax evasion of possible tax evasion and an ‘appraisal report’ is prepared by the prepared by the Income-tax authority who conducts uthority who conducts the search action. The learned the search action. The learned DR further submitted that as per the procedure prescribed, a copy DR further submitted that as per the procedure prescribed, DR further submitted that as per the procedure prescribed, of the said appraisal report is sent to the concerned Assessing of the said appraisal report is sent to the concern of the said appraisal report is sent to the concern Smt. Usha Satish Salvi 8 4237 & 4238/MUM/2023 Officer, concerned Additional Commiss dditional Commissioner of Income ioner of Income-tax (i.e. the approving authority) and approving authority) and the concerned Commissioner or Principal the concerned Commissioner or Principal Commissioner of Income Commissioner of Income-tax. Accordingly, he submitted that tax. Accordingly, he submitted that appraisal report of the case containing analysis of entire seized appraisal report of the case containing analysis of entire seized appraisal report of the case containing analysis of entire seized material related to case was already available with the approving d to case was already available with the approving d to case was already available with the approving authority. The learned DR filed affidavits from the approving The learned DR filed affidavits from the approving The learned DR filed affidavits from the approving authority as well as from the Assessing Officer who passed the authority as well as from the Assessing Officer who passed the authority as well as from the Assessing Officer who passed the assessment orders, in support of the contention that assessment assessment orders, in support of the contention that assessment assessment orders, in support of the contention that assessment orders were approved after due application of mind. oved after due application of mind. oved after due application of mind. The Assessing officer has deposed that officer has deposed that in the instant case, discussion on various in the instant case, discussion on various issues between him and approving authority happened regularly between him and approving authority happened regularly between him and approving authority happened regularly based on the appraisal reports and seized/impounded materials based on the appraisal reports and seized/impounded materials based on the appraisal reports and seized/impounded materials .For ready reference, content of the affidavit filed by the then reference, content of the affidavit filed by the then reference, content of the affidavit filed by the then Assessing Officer is reproduced as under: Assessing Officer is reproduced as under:
I, Pawan Bharti, Jt. Commissioner of Income Tax, (AU) I, Pawan Bharti, Jt. Commissioner of Income Tax, (AU) - 1(3), Thane stationed at Kalyan and office address at Mohan Plaza, 2nd floor, stationed at Kalyan and office address at Mohan Plaza, 2nd floor, stationed at Kalyan and office address at Mohan Plaza, 2nd floor, Wayale Nagar, Khadakkpada Wayale Nagar, Khadakkpada, Kalyan (W)-421301, do hereby solemnly hereby solemnly affirm and statedin the case of Usha S. Salvi for affirm and statedin the case of Usha S. Salvi for A. Y. 2012 A. Y. 2012-13 (ITA 4239M2023), 4239M2023), A.Y.2013 A.Y.2013-14 14 (ITA (ITA 42372023), 42372023), A.Y. A.Y. 2014-15 2014 (ITA 42382023) as under: 42382023) as under: It has been more than almost 7 years since these orders were passed It has been more than almost 7 years since these orders were passed It has been more than almost 7 years since these orders were passed after due discussion and guidance from time to time with the approval fter due discussion and guidance from time to time with the approval fter due discussion and guidance from time to time with the approval of Range Head as per the Law. Generally, the appraisal reports of such of Range Head as per the Law. Generally, the appraisal reports of such of Range Head as per the Law. Generally, the appraisal reports of such search/ survey cases are forwarded to the central charge hierarchy search/ survey cases are forwarded to the central charge hierarchy search/ survey cases are forwarded to the central charge hierarchy including the AO and Range head and in such type including the AO and Range head and in such type of cases, as per of cases, as per Law, approval for passing the assessment orders are to be given by the Law, approval for passing the assessment orders are to be given by the Law, approval for passing the assessment orders are to be given by the range head and so Range head has to apply his/her mind and has to range head and so Range head has to apply his/her mind and has to range head and so Range head has to apply his/her mind and has to give sufficient time. Since in such type of cases, regular discussion Since in such type of cases, regular discussion give sufficient time. between the range head and AO ha between the range head and AO happened regularly whenever ppened regularly whenever needed. Appraisal report or other communication with the needed. Appraisal report or other communication with the needed. Appraisal report or other communication with the investigation wing of the department and seized/impounded investigation wing of the department and seized/impounded investigation wing of the department and seized/impounded materials explored and discussed from time to time and materials explored and discussed from time to time and materials explored and discussed from time to time and thereafter assessment order finalised after approval from th thereafter assessment order finalised after approval from th thereafter assessment order finalised after approval from the range head. In this case also, such type of discussion happened range head. In this case also, such type of discussion happened range head. In this case also, such type of discussion happened Smt. Usha Satish Salvi 9 4237 & 4238/MUM/2023 regularly based on the appraisal reporis and seized/impounded regularly based on the appraisal reporis and seized/impounded regularly based on the appraisal reporis and seized/impounded materials as per the Law. materials as per the Law. Since the offices of the range head and the assessing officer Since the offices of the range head and the assessing officer Since the offices of the range head and the assessing officer (AO) were at the same floor i.e. 19th fl at the same floor i.e. 19th floor in the Air India Building the discussion oor in the Air India Building the discussion or meetings were called by the range head or sought by the AO to or meetings were called by the range head or sought by the AO to or meetings were called by the range head or sought by the AO to discuss such cases. The AO had to discuss the assessment records, discuss such cases. The AO had to discuss the assessment records, discuss such cases. The AO had to discuss the assessment records, reply from the assesse etc. across the table with the range head on the reply from the assesse etc. across the table with the range head on the reply from the assesse etc. across the table with the range head on the one to one discussion basis as such type of search/survey cases are ne discussion basis as such type of search/survey cases are ne discussion basis as such type of search/survey cases are sensitive in nature. sensitive in nature. Furthermore, approvals are granted for more than Furthermore, approvals are granted for more than single assessment years in combined manner to save the resources of single assessment years in combined manner to save the resources of single assessment years in combined manner to save the resources of the government and to protect the interest of revenue as d the government and to protect the interest of revenue as d the government and to protect the interest of revenue as deliberations on such cases have already been done to conclude the assessment on such cases have already been done to conclude the assessment on such cases have already been done to conclude the assessment proceedings in holistic and logical conclusion. In the instant case, such proceedings in holistic and logical conclusion. In the instant case, such proceedings in holistic and logical conclusion. In the instant case, such practice was followed. practice was followed. Hence, proper and regular discussions, analysis of appraisal report and Hence, proper and regular discussions, analysis of appraisal report and Hence, proper and regular discussions, analysis of appraisal report and seized/impounded materials have been taken place to ounded materials have been taken place to reach the logical reach the logical conclusion to finalise the assessment orders and in this way, thorough conclusion to finalise the assessment orders and in this way, thorough conclusion to finalise the assessment orders and in this way, thorough application of mind was there to conclude the assessment proceedings application of mind was there to conclude the assessment proceedings application of mind was there to conclude the assessment proceedings in the present case along with other such cases where ap in the present case along with other such cases where ap in the present case along with other such cases where approval is sought. The report has been prepared by recollecting the memories, The report has been prepared by recollecting the memories, all the facts and events happened at that time. and events happened at that time. I, solemnly state that the contents of this affidavit are true to the best of I, solemnly state that the contents of this affidavit are true to the best of I, solemnly state that the contents of this affidavit are true to the best of my knowledge and beliefand that it conceals nothing my knowledge and beliefand that it conceals nothing and that no part and that no part of it is false.
7.1 Similarly, the approving authority also deposed that all issues approving authority also deposed that all issues approving authority also deposed that all issues involved in the assessments were regularly discussed since the involved in the assessments were regularly discussed since the involved in the assessments were regularly discussed since the stage of issuing notice for query latter to the stage of making draft stage of issuing notice for query latter to the stage of making draft stage of issuing notice for query latter to the stage of making draft assessment order. The assessment order. The content of the affidavit filed by the then avit filed by the then learned Additional Commissioner of Income dditional Commissioner of Income-tax i.e. the arriving i.e. the arriving authority is reproduced as under: reproduced as under:
“Affidavit in case of Usha S. Salvi for A.Y.2012 Affidavit in case of Usha S. Salvi for A.Y.2012 Affidavit in case of Usha S. Salvi for A.Y.2012-13 (ITA 4239M2023) A. Y.2013-14 (ITA 4237M2023), A. Y.2014 14 (ITA 4237M2023), A. Y.2014-15 (ITA 4238M2023) I, Anu Krishna Aggarwal, Commissioner of Income Tax, Appeals (AU) I, Anu Krishna Aggarwal, Commissioner of Income Tax, Appeals (AU) I, Anu Krishna Aggarwal, Commissioner of Income Tax, Appeals (AU)-4, Delhi, having Office address at Room No. 108, Drum Shaped Building, Delhi, having Office address at Room No. 108, Drum Shaped Building, Delhi, having Office address at Room No. 108, Drum Shaped Building, IP Estate, Delhi Delhi- 110002, do hereby solemnly affirm and state in the 110002, do hereby solemnly affirm and state in the Smt. Usha Satish Salvi 10 4237 & 4238/MUM/2023 case of Usha S. Salvi for case of Usha S. Salvi for A. Y.2012-13(ITA 42392023), A.Y.2013 13(ITA 42392023), A.Y.2013-14 (ITA 4237M2023), A. Y.2014 4237M2023), A. Y.2014-15 (ITA 4238M2023) as under: (1) In search case, the search material and relevant record is in the (1) In search case, the search material and relevant record is in the (1) In search case, the search material and relevant record is in the possession of the Assessing Officer and the approval of the Assessment possession of the Assessing Officer and the approval of the Assessment possession of the Assessing Officer and the approval of the Assessment order is not a one order is not a one-day affair, it is done after a series of discussions with affair, it is done after a series of discussions with the Assessing Officer. The the Assessing Officer. The Assessing Officer and the Addl.CTT both Assessing Officer and the Addl.CTT both examine the records on regular basis. Therefore, the approval to the Therefore, the approval to the examine the records on regular basis. assessment order is given after a number of meetings are held assessment order is given after a number of meetings are held assessment order is given after a number of meetings are held and the whole case is understood. I have seen the records before the whole case is understood. I have seen the records before the whole case is understood. I have seen the records before giving approval of the case. giving approval of the case. The record is with the Assessing Officer. The record is with the Assessing Officer. He comes with the records for discussion and after understanding the He comes with the records for discussion and after understanding the He comes with the records for discussion and after understanding the content of the record, approval is given. It is not a the record, approval is given. It is not a case where approval case where approval is given in just one is given in just one day. (2) The approval was given on the same day as the letter for approval (2) The approval was given on the same day as the letter for approval (2) The approval was given on the same day as the letter for approval was received, does not mean that the case has been seen only on that was received, does not mean that the case has been seen only on that was received, does not mean that the case has been seen only on that day. The Addl.CIT and the Assessing officer both are involved in The Addl.CIT and the Assessing officer both are involved in The Addl.CIT and the Assessing officer both are involved in the case since the issue of the notices and before sending the se since the issue of the notices and before sending the se since the issue of the notices and before sending the questionnaire to the assessee, the record is examined by the questionnaire to the assessee, the record is examined by the questionnaire to the assessee, the record is examined by the Assessing Officer and the Addl.CIT both on a regular basis. Assessing Officer and the Addl.CIT both on a regular basis. Assessing Officer and the Addl.CIT both on a regular basis. It may not be brought on the record because generally, the practice of the brought on the record because generally, the practice of the brought on the record because generally, the practice of the department is that we don't write order sheet of the meeting with the artment is that we don't write order sheet of the meeting with the artment is that we don't write order sheet of the meeting with the Assessing Officer. The reason Assessing Officer. The reason for the same is that the Assessing Officer for the same is that the Assessing Officer and the Addl.CIT meet a number of and the Addl.CIT meet a number of times every day. Therefore, it is not times every day. Therefore, it is not a practice to write each and every meeting w a practice to write each and every meeting with the Assessing Officer in ith the Assessing Officer in Income Tax Department. Income Tax Department. (3) In this case the offices of the range head and the assessing officer (3) In this case the offices of the range head and the assessing officer (3) In this case the offices of the range head and the assessing officer were at the same floor i.e. 19th floor in the Air India Building, were at the same floor i.e. 19th floor in the Air India Building, were at the same floor i.e. 19th floor in the Air India Building, sometimes the discussion or sometimes the discussion or meetings were called for by the range eetings were called for by the range head and sometimes meetings were sought and sometimes meetings were sought by the AO to discuss the group the AO to discuss the group case. The meeting between the Assessing Officer case. The meeting between the Assessing Officer and the Addl.CIT were and the Addl.CIT were held on a regular basis as I have already said in the above held on a regular basis as I have already said in the above held on a regular basis as I have already said in the above point, Assessing Officer and the Addl.CIT meet very of Assessing Officer and the Addl.CIT meet very often. (4) The modifications or amendments are suggested on regular basis. (4) The modifications or amendments are suggested on regular basis. (4) The modifications or amendments are suggested on regular basis. The monitoring is done on regular basis and at every stage of the The monitoring is done on regular basis and at every stage of the The monitoring is done on regular basis and at every stage of the investigation and the examination of the records, the suggestion is investigation and the examination of the records, the suggestion is investigation and the examination of the records, the suggestion is being given. Therefore, it is not possible to sub being given. Therefore, it is not possible to submit all the suggestions mit all the suggestions given and no order sheet is being maintained for discussion and given and no order sheet is being maintained for discussion and given and no order sheet is being maintained for discussion and meeting with the Assessing Officer. Actually the Addl.CIT is involved in meeting with the Assessing Officer. Actually the Addl.CIT is involved in meeting with the Assessing Officer. Actually the Addl.CIT is involved in the process from the start of the assessment process. the process from the start of the assessment process. Therefore, the Therefore, the changes in the assessment changes in the assessment order, if any, is a continuous process. order, if any, is a continuous process. Therefore, there is no need to change the draft assessment order as the Therefore, there is no need to change the draft assessment order as the Therefore, there is no need to change the draft assessment order as the draft assessment order is being prepared after a due deliberation and draft assessment order is being prepared after a due deliberation and draft assessment order is being prepared after a due deliberation and discussion with the Assessing Officer. discussion with the Assessing Officer. (5) I, the Addi,CIT in the case at (5) I, the Addi,CIT in the case at that time is confirming that due that time is confirming that due application of mind was done in the case when the order was approved application of mind was done in the case when the order was approved application of mind was done in the case when the order was approved u/s. 153D and I was u/s. 153D and I was involved in the case from the day when the case involved in the case from the day when the case was assigned to the charge. was assigned to the charge.
Smt. Usha Satish Salvi 11 4237 & 4238/MUM/2023 1, solemnly state that the contents of this affidavit are 1, solemnly state that the contents of this affidavit are true to the best of true to the best of my knowledge and belief and that it conceals nothing and that no part my knowledge and belief and that it conceals nothing and that no part my knowledge and belief and that it conceals nothing and that no part of it is false.” 7.2 The learned DR submitted that no evidence learned DR submitted that no evidences have s have been filed by the assessee supporting his contention of non application of by the assessee supporting his contention of non by the assessee supporting his contention of non mind by the approving mind by the approving authority and in view of the affidavit authority and in view of the affidavits filed by the AO and approving authority deposing proper application of by the AO and approving authority deposing proper application of by the AO and approving authority deposing proper application of mind, the contentions of ld counsel of the assessee are liable to be mind, the contentions of ld counsel of the assessee are liable to be mind, the contentions of ld counsel of the assessee are liable to be rejected. In this regard, regard, contents of written submission filed by the contents of written submission filed by the ld DR is reproduced as under: is reproduced as under:
“………………. 2. With regard to the ground raised by the assesse
2. With regard to the ground raised by the assesse regarding non regarding non application of mind while granting approval us 153D of the Act it is application of mind while granting approval us 153D of the Act it is application of mind while granting approval us 153D of the Act it is submitted that the Ld JCIT had duly applied her mind. It was only after submitted that the Ld JCIT had duly applied her mind. It was only after submitted that the Ld JCIT had duly applied her mind. It was only after applying her mind applying her mind that she had suggested some changes and gave that she had suggested some changes and gave approval. As informed by the AO, the draft order is not available in As informed by the AO, the draft order is not available in As informed by the AO, the draft order is not available in records but it is humbly submitted that if a senior officer has confirmed records but it is humbly submitted that if a senior officer has confirmed records but it is humbly submitted that if a senior officer has confirmed that she had suggested some changes then the same would have been that she had suggested some changes then the same would have been that she had suggested some changes then the same would have been done by AO. Affidavits have also been filed by both officers i.e. the AO, Affidavits have also been filed by both officers i.e. the AO, Affidavits have also been filed by both officers i.e. the AO, as well as the Range head, wherein they have confirmed that due as well as the Range head, wherein they have confirmed that due as well as the Range head, wherein they have confirmed that due process was followed, various meetings were held on regular basis and process was followed, various meetings were held on regular basis and process was followed, various meetings were held on regular basis and only after the Range head was satisfied the appro only after the Range head was satisfied the approval was granted. This val was granted. This shows that the JCIT had applied her mind before granting approval u/s shows that the JCIT had applied her mind before granting approval u/s shows that the JCIT had applied her mind before granting approval u/s 153D. In this regard it is pertinent to mention that in the present case the present case the 3. In this regard it is pertinent to mention that in the seized material consists of only 3 Annexures. Thus this is not a seized material consists of only 3 Annexures. Thus this is not a seized material consists of only 3 Annexures. Thus this is not a case where huge case where huge seized material is there requiring extensive seized material is there requiring extensive discussions.
4. Regarding assessee's claim that JCIT should have applied her mind
4. Regarding assessee's claim that JCIT should have applied her mind
4. Regarding assessee's claim that JCIT should have applied her mind in judicious manner and then drawn conclusions it is submitted that the in judicious manner and then drawn conclusions it is submitted that the in judicious manner and then drawn conclusions it is submitted that the JCIT in her affidavit has clearly admitted that due appli JCIT in her affidavit has clearly admitted that due appli JCIT in her affidavit has clearly admitted that due application was done. The dictionary meaning of judicious says 'showing good done. The dictionary meaning of judicious says 'showing good done. The dictionary meaning of judicious says 'showing good judgement'. It is submitted that if the assessment order is correct in judgement'. It is submitted that if the assessment order is correct in judgement'. It is submitted that if the assessment order is correct in every way, seized material is just a few documents and already every way, seized material is just a few documents and already every way, seized material is just a few documents and already discussion has been held many times in person, as discussion has been held many times in person, as per the practice in per the practice in central range, considering the sensitive nature of cases, a simple order central range, considering the sensitive nature of cases, a simple order central range, considering the sensitive nature of cases, a simple order with no complications can be called judicious. In fact, in this case, some with no complications can be called judicious. In fact, in this case, some with no complications can be called judicious. In fact, in this case, some corrections were suggested by the Range head before passing the order. corrections were suggested by the Range head before passing the order. corrections were suggested by the Range head before passing the order. It is also submit It is also submitted that, in a situation where no additionor deletion or ted that, in a situation where no additionor deletion or Smt. Usha Satish Salvi 12 4237 & 4238/MUM/2023 any correction to the order is required or suggested and the Range head any correction to the order is required or suggested and the Range head any correction to the order is required or suggested and the Range head agrees with AO, a simple approval can also be said to suffice. agrees with AO, a simple approval can also be said to suffice. agrees with AO, a simple approval can also be said to suffice.
Regarding assessee's contention that there is single approval Regarding assessee's contention that there is single approval Regarding assessee's contention that there is single approval for all years it is submitted that different approval has been granted as all the years it is submitted that different approval has been granted as all the years it is submitted that different approval has been granted as all the AYrs are clearly mentioned. It is only an approval on a single page. In AYrs are clearly mentioned. It is only an approval on a single page. In AYrs are clearly mentioned. It is only an approval on a single page. In this regard it is submitted that in case different pages had been used this regard it is submitted that in case different pages had been used this regard it is submitted that in case different pages had been used for each AY, even then the sum for each AY, even then the sum and substance would have been same. and substance would have been same.
Reliance is placed on Hon'ble ITAT MUMBAI BENCH "C", MUMBAI 6. Reliance is placed on Hon'ble ITAT MUMBAI BENCH "C", MUMBAI 6. Reliance is placed on Hon'ble ITAT MUMBAI BENCH "C", MUMBAI decision in the case of Pratibha Pipes & Structurals Ltd, DCIT, Cent. Cir. decision in the case of Pratibha Pipes & Structurals Ltd, DCIT, Cent. Cir. decision in the case of Pratibha Pipes & Structurals Ltd, DCIT, Cent. Cir. 17 & 28, Mumbai dated 10 28, Mumbai dated 10 -04-2019 (copy enclosed). In that case even 2019 (copy enclosed). In that case even the copy of approval was not available but still the decision was given the copy of approval was not available but still the decision was given the copy of approval was not available but still the decision was given in favour of revenue after considering the facts and circumstances. In in favour of revenue after considering the facts and circumstances. In in favour of revenue after considering the facts and circumstances. In that case also affidavit of the Range head was f that case also affidavit of the Range head was filed wherein it was iled wherein it was categorically stated in his affidavit that he had issued necessary categorically stated in his affidavit that he had issued necessary categorically stated in his affidavit that he had issued necessary approval u/s 153D. approval u/s 153D.
We have considered the rival submission of the parties have considered the rival submission of the parties have considered the rival submission of the parties on the additional grounds raised by the assessee additional grounds raised by the assessee i.e. assailing impugned assailing impugned assessment order passed on the ground that approval grant assed on the ground that approval granted by assed on the ground that approval grant the approving authority is the approving authority is mechanical manner mechanical manner and without application of the mind. plication of the mind. For ready reference, a copy of the said copy of the said approval granted by the approving authority is reproduced as approval granted by the approving authority is reproduced as approval granted by the approving authority is reproduced as under:
To, DCIT-CC-4(4) Mumbai. Approval U/s 153D of the I T Act for assessment in the case of Smt Approval U/s 153D of the I T Act for assessment in the case of Smt Approval U/s 153D of the I T Act for assessment in the case of Smt Usha Satish Salvi Usha Satish Salvi (PAN-AQSPS6935J) for A.Ys. 2010-11 to 2015 11 to 2015-16 & 2016-17 - reg. ---------------------------- Please refer to the above. Please refer to the above. Draft: assessment orders in the abovementioned case u/s 143(3) r.w.s. : assessment orders in the abovementioned case u/s 143(3) r.w.s. : assessment orders in the abovementioned case u/s 143(3) r.w.s. 153C of the I T Act, T Act, 1961 for A.Ys. 2010-11 to 2015-16 and u/s 143(3) 16 and u/s 143(3) of the I T Act for A.Y. 2016 of the I T Act for A.Y. 2016-17 are hereby approved u/s 153D of the I T 153D of the I T Act, 1961 subject to the corrections made therein subject to the corrections made therein. After passing the . After passing the order, a copy of the same may be submitted to this office. order, a copy of the same may be submitted to this office.
Smt. Usha Satish Salvi 13 4237 & 4238/MUM/2023 8.1 The learned counsel for the assessee has mainly contended learned counsel for the assessee has mainly contended learned counsel for the assessee has mainly contended that except draft assessment orders, no material was available with that except draft assessment orders, no material was available with that except draft assessment orders, no material was available with the approving authority the approving authority. He has further alleged that approval was d that approval was granted on the same date of seeking such approval in a combined granted on the same date of seeking such approval in a combined granted on the same date of seeking such approval in a combined manner for all the assessment yea manner for all the assessment year involved. T r involved. The approving authority has merely authority has merely directed for certain modification in the f for certain modification in the final order but not specified said order but not specified said modification in the approval the approval order. But we find that except such allegation in support of the additional we find that except such allegation in support of the additional we find that except such allegation in support of the additional ground, no documentary evidence to support the allegations of non ground, no documentary evidence to support the allegations ground, no documentary evidence to support the allegations application of mind by the approving authority application of mind by the approving authority have been filed by have been filed by the assessee. Whereas the assessee. Whereas, on the other hand, the learned departmental on the other hand, the learned departmental representative has filed affidavits from the then Assessing Officer representative has filed affidavits from the then Assessing Officer representative has filed affidavits from the then Assessing Officer and the approving authority, wherein they have denied the and the approving authority, wherein they have denied the and the approving authority, wherein they have denied the allegations raised by the assessee but n gations raised by the assessee but no counter affidavit has been o counter affidavit has been filed by the assessee to controvert the deposition made by the essee to controvert the deposition made by the essee to controvert the deposition made by the Assessing Officer and the additional Commissioner of income-tax in Assessing Officer and the additional Commissioner of income Assessing Officer and the additional Commissioner of income their respective affidavits. In the decisions relied upon by the their respective affidavits. In the decisions relied upon by the their respective affidavits. In the decisions relied upon by the assessee the main ratio is that approval granted in mechanical the main ratio is that approval granted in mechanical the main ratio is that approval granted in mechanical manner without application of mind is not sustainable in law. In application of mind is not sustainable in law. In application of mind is not sustainable in law. In the decisions relied upon of coordinate benches main allegation that the decisions relied upon of coordinate benches main allegation that the decisions relied upon of coordinate benches main allegation that the Assessing Officer only forwarded the Assessing Officer only forwarded letter seeking approval letter seeking approval without enclosing assessment records or appraisal report on seized assessment records or appraisal report on seized assessment records or appraisal report on seized material. In the affidavits filed . In the affidavits filed before us, it has been unequivocally it has been unequivocally stated by the Assessing Officer as well as the A sessing Officer as well as the Additional sessing Officer as well as the A Smt. Usha Satish Salvi 14 4237 & 4238/MUM/2023 Commissioner of Income Commissioner of Income-tax that all the issues involved in the all the issues involved in the assessments were discussed assessments were discussed on regular basis from time to time from time to time between the two authorities e two authorities as both the authorities were sitting on as both the authorities were sitting on same floor of office building. The ld DR submitted that the same floor of office building. The ld DR submitted that same floor of office building. The ld DR submitted that approving authority after considering the queries raised by the approving authority after considering the queries raised by the approving authority after considering the queries raised by the Assessing Officer and the reply of the assessee Assessing Officer and the reply of the assessee in the light of appraisal report and seized record, had report and seized record, had examined each issue dealt examined each issue dealt in the draft assessment order in the draft assessment order properly and thereafter only approval properly and thereafter only approval was granted. In the cases cited by the learned counsel for the . In the cases cited by the learned counsel for the . In the cases cited by the learned counsel for the assessee the fact of assessee the fact of discussion on various issues of assessment discussion on various issues of assessment between the two authorities from time to time has not been brought een the two authorities from time to time has not been brought een the two authorities from time to time has not been brought on record and therefore in those decisions this aspect has not been on record and therefore in those decisions this aspect has not been on record and therefore in those decisions this aspect has not been considered. We further note that certain modifications were We further note that certain modifications were We further note that certain modifications were suggested to the Assessing Officer in the draft assessment order, suggested to the Assessing Officer in the draft assessment order, suggested to the Assessing Officer in the draft assessment order, which have been carried out by the Assessing Officer in the which have been carried out by the Assessing Officer which have been carried out by the Assessing Officer assessment order passed, which also shows that the approving assessment order passed, which also shows that the approving assessment order passed, which also shows that the approving authority approved the draft order not in mechanical manner, but authority approved the draft order not in mechanical manner, but authority approved the draft order not in mechanical manner, but after due application of mind. after due application of mind. The fact of modification suggested in The fact of modification suggested in the order itself shows that the approving authority ha s gone the order itself shows that the approving authority ha s gone the order itself shows that the approving authority ha s gone through drat assessment order and analyed the issue involved through drat assessment order and analyed the issue involved through drat assessment order and analyed the issue involved therein. In the cases relied upon by the assessee the fact of therein. In the cases relied upon by the assessee the fact of therein. In the cases relied upon by the assessee the fact of modification suggested by approving authority is not born out , modification suggested by approving authority is not born out , modification suggested by approving authority is not born out , which distinguish the case of the assessee with the cases relied istinguish the case of the assessee with the cases relied istinguish the case of the assessee with the cases relied upon by the assessee. upon by the assessee. In similar circumstances after considering In similar circumstances after considering Smt. Usha Satish Salvi 15 4237 & 4238/MUM/2023 affidavits filed by the Assessing Officer and the approving authority, affidavits filed by the Assessing Officer and the approving affidavits filed by the Assessing Officer and the approving ribunal in the case of Pratibha Pipes the coordinate bench of the T the coordinate bench of the Tribunal in the case of & Structural Ltd in to 3876/Mum/2015 and ITA & Structural Ltd in to 3876/Mum/2015 and ITA & Structural Ltd in ITA No. 3874 to 3876/Mum/2015 and ITA No. 7120/Mum/2016 in AY 2007 No. 7120/Mum/2016 in AY 2007-08 to 2009-10 and 2011 10 and 2011-12, upheld validity of approval granted under section 153D of the act of upheld validity of approval granted under section 153D of the act of upheld validity of approval granted under section 153D of the act of observing as under:
“16. We have heard both the parties, perused th 16. We have heard both the parties, perused th 16. We have heard both the parties, perused the materials available on record and gone through the orders of authorities available on record and gone through the orders of authorities available on record and gone through the orders of authorities below. There is no doubt with regard to the fact that as per below. There is no doubt with regard to the fact that as per below. There is no doubt with regard to the fact that as per provisions of section 153D, the AO needs to take prior approval from provisions of section 153D, the AO needs to take prior approval from provisions of section 153D, the AO needs to take prior approval from the Addl.Commissioner of the range in charge before the Addl.Commissioner of the range in charge before the Addl.Commissioner of the range in charge before passing any assessment order u/s 143(3) r.w.s. 153A of the Income assessment order u/s 143(3) r.w.s. 153A of the Income assessment order u/s 143(3) r.w.s. 153A of the Income-tax Act, 1961. It is also not in dispute that the AO, in his assessment order 1961. It is also not in dispute that the AO, in his assessment order 1961. It is also not in dispute that the AO, in his assessment order at para 7 had categorically stated that the mandatory requirement at para 7 had categorically stated that the mandatory requirement at para 7 had categorically stated that the mandatory requirement of approval u/s 153D of the Income of approval u/s 153D of the Income-tax Act, 1961 has been taken 961 has been taken from the Addl.CIT, Central Range from the Addl.CIT, Central Range- 4, Mumbai vide letter 4, Mumbai vide letter No.Addl.CIT/CR No.Addl.CIT/CR-4/Approvl-153D/2012-13 dated 25-03 03-2013. It is also not in dispute that the assessee has not raised any objection, also not in dispute that the assessee has not raised any objection, also not in dispute that the assessee has not raised any objection, whatsoever, with regard to the issue of approval u/ whatsoever, with regard to the issue of approval u/s 153D either s 153D either before the AO or before the first appellate authority. The assessee before the AO or before the first appellate authority. The assessee before the AO or before the first appellate authority. The assessee has taken the legal has taken the legal ground for the first time before the Tribunal by ground for the first time before the Tribunal by filing additional ground of filing additional ground of appeal. Therefore, the whole issue needs appeal. Therefore, the whole issue needs to be apprised in the light of above to be apprised in the light of above facts and also the conduct of the facts and also the conduct of the assessee. Admittedly, the department, in assessee. Admittedly, the department, in reply to RTI application reply to RTI application clarified that neither copy of approval request letter clarified that neither copy of approval request letter filed by the AO filed by the AO to the Addl. Commissioner, nor copy of approval granted u/s to the Addl. Commissioner, nor copy of approval granted u/s to the Addl. Commissioner, nor copy of approval granted u/s 153D of the Act, was fou of the Act, was found in the assessment order folder. However, it nd in the assessment order folder. However, it was further stated that in the 153D approval folder maintained in further stated that in the 153D approval folder maintained in further stated that in the 153D approval folder maintained in the office of Addl.CIT, Range Addl.CIT, Range-4, the approval granted in other group 4, the approval granted in other group cases were traced. The cases were traced. The assessee claims that mere mentioning of assessee claims that mere mentioning of having been taken approval u/s 153D taken approval u/s 153D in the assessment order is in the assessment order is not sufficient and what is required to be seen is not sufficient and what is required to be seen is not sufficient and what is required to be seen is whether the department is able to provide copy of approval letter granted by department is able to provide copy of approval letter granted by department is able to provide copy of approval letter granted by the Addl.CIT, or not. Since the department has categorically stated that Addl.CIT, or not. Since the department has categorically stated that Addl.CIT, or not. Since the department has categorically stated that approval granted u/s 153D of the Act is not available in the oval granted u/s 153D of the Act is not available in the oval granted u/s 153D of the Act is not available in the assessment folder, assessment folder, obviously, benefit of doubt goes in favour of the obviously, benefit of doubt goes in favour of the assessee that no such assessee that no such approval has been taken by the AO u/s approval has been taken by the AO u/s 153D before passing order u/s 143(3) 153D before passing order u/s 143(3) r.w.s. 153A of the I.T. Act, r.w.s. 153A of the I.T. Act, 1961.
Smt. Usha Satish Salvi 16 4237 & 4238/MUM/2023
In the above factual background, if we examine the claim of the 17. In the above factual background, if we examine the claim of the 17. In the above factual background, if we examine the claim of the assessee by way of additional ground, we find that there is a by way of additional ground, we find that there is a by way of additional ground, we find that there is a serious suspicion raises serious suspicion raises about the conduct of the assessee in taking about the conduct of the assessee in taking additional ground challenging the additional ground challenging the issue of approval u/ issue of approval u/s 153D of the I.T. Act, 1961, for the first time, before the I.T. Act, 1961, for the first time, before the Tribunal. The assessee Tribunal. The assessee never disputed this issue before the lower authorities. never disputed this issue before the lower authorities. never disputed this issue before the lower authorities. The assessee has taken this issue for the first time before the Tribunal assessee has taken this issue for the first time before the Tribunal assessee has taken this issue for the first time before the Tribunal after ascertaining the fact in connection ascertaining the fact in connection with its RTI application that with its RTI application that no such approval was available in the assessment folder. When the approval was available in the assessment folder. When the approval was available in the assessment folder. When the assessee has not assessee has not raised the issue before the CIT(A), then there is a raised the issue before the CIT(A), then there is a serious doubt arise in the serious doubt arise in the mind about the intend of the assessee to mind about the intend of the assessee to take a legal ground bef take a legal ground before the Tribunal. In this factual background, Tribunal. In this factual background, if we examine the contents of the if we examine the contents of the approval mentioned by the AO in approval mentioned by the AO in the assessment order coupled with affidavits the assessment order coupled with affidavits filed by two senior filed by two senior most officers, who were in charge of the assessment most officers, who were in charge of the assessment most officers, who were in charge of the assessment proceedings, we find that b we find that both officers have stated in their affidavits about oth officers have stated in their affidavits about requirement of law under the provisions of section 153D of the requirement of law under the provisions of section 153D of the requirement of law under the provisions of section 153D of the Income-tax Act, 1961. The then AO, Shri Milind Rajguru, Joint Act, 1961. The then AO, Shri Milind Rajguru, Joint Act, 1961. The then AO, Shri Milind Rajguru, Joint Commissioner of Income Commissioner of Income-tax (Retd) had filed an affidavit and stated (Retd) had filed an affidavit and stated that mandato that mandatory requirement of approval u/s 153D had been approval u/s 153D had been obtained. Further, Shri Abhijit Pathankar, the obtained. Further, Shri Abhijit Pathankar, the CIT(DR), has also filed CIT(DR), has also filed an affidavit and stated that he had granted approval an affidavit and stated that he had granted approval required to be given u/s given given u/s u/s 153D 153D 153D vide his vide vide his his letter letter letter No.Addl.CIT/CR No.Addl.CIT/CR-4/Approvl- No.Addl.CIT/CR 153D/2012-13 dat 13 dated 25-03-2013. Although, affidavit is not primary 2013. Although, affidavit is not primary evidence which cannot be accepted in absence of circumstantial which cannot be accepted in absence of circumstantial which cannot be accepted in absence of circumstantial evidences, but in this but in this case, the circumstantial evidence available in case, the circumstantial evidence available in the assessment record supports the assessment record supports the contents of affidavits filed by the contents of affidavits filed by both officers. Therefore, the affidavits filed officers. Therefore, the affidavits filed by the officers cannot be by the officers cannot be ignored, as not having any evidentiary value. The ignored, as not having any evidentiary value. The ignored, as not having any evidentiary value. The contents of affidavits filed by the officers coupled with circumstantial affidavits filed by the officers coupled with circumstantial affidavits filed by the officers coupled with circumstantial evidences available in the assessment folders clearly establish t available in the assessment folders clearly establish t available in the assessment folders clearly establish the fact of obtaining necessary approval u/s 153D of the I.T. Act. Though, copy obtaining necessary approval u/s 153D of the I.T. Act. Though, copy obtaining necessary approval u/s 153D of the I.T. Act. Though, copy of approval letter is not available in the assessment record, but the approval letter is not available in the assessment record, but the approval letter is not available in the assessment record, but the contents of approval letter issued by the competent authority has approval letter issued by the competent authority has approval letter issued by the competent authority has been reproduced in been reproduced in verbatim in the assessment order at para 7. ment order at para 7. Further, the approval granted in Further, the approval granted in other group cases is very much other group cases is very much available in the assessment folder. Therefore, it available in the assessment folder. Therefore, it cannot be said that cannot be said that no approval had been taken. Further, the approval u/s no approval had been taken. Further, the approval u/s no approval had been taken. Further, the approval u/s 153D is an administrative procedure which requ administrative procedure which requires to be complied with by the ires to be complied with by the officers, who is discharging the assessment functions. The officers, who is discharging the assessment functions. The officers, who is discharging the assessment functions. The administration administration action of the department is not very much relevant action of the department is not very much relevant for the assessee to justify for the assessee to justify its case, on merits. Therefore, when its case, on merits. Therefore, when assessee goes to question the assessee goes to question the administrative procedure, rather nistrative procedure, rather contending its case on merits, that too, after contending its case on merits, that too, after a lapse of 4 to 5 years, a lapse of 4 to 5 years, then obviously, a doubt arises about intend of the then obviously, a doubt arises about intend of the then obviously, a doubt arises about intend of the assessee in taking this ground and such an attempt is derail the issue on merits taking this ground and such an attempt is derail the issue on merits taking this ground and such an attempt is derail the issue on merits Smt. Usha Satish Salvi 17 4237 & 4238/MUM/2023 and to escape on techni and to escape on technical ground. Therefore, we are of the cal ground. Therefore, we are of the considered view considered view that there is no merit in the additional ground that there is no merit in the additional ground taken by the assessee taken by the assessee challenging validity of assessment order challenging validity of assessment order passed by the AO u/s 143(3) r.w.s. passed by the AO u/s 143(3) r.w.s. 153A of the Income 153A of the Income-tax Act, 1961. Although, the assessee 1961. Although, the assessee has relied upon certain judicial certain judicial precedents, we find that those case laws were rendered under precedents, we find that those case laws were rendered under precedents, we find that those case laws were rendered under different set of facts, where the assessee had taken the ground different set of facts, where the assessee had taken the ground different set of facts, where the assessee had taken the ground challenging validity of the assessment before the CIT(A) and also challenging validity of the assessment before the CIT(A) and also challenging validity of the assessment before the CIT(A) and also fact that there was no specif fact that there was no specific observation in the assessment order ic observation in the assessment order for taking approval required to be taken u/s 153D of the Income for taking approval required to be taken u/s 153D of the Income for taking approval required to be taken u/s 153D of the Income-tax Act, 1961. In this case, the AO has categorically recorded at para 7 Act, 1961. In this case, the AO has categorically recorded at para 7 Act, 1961. In this case, the AO has categorically recorded at para 7 of his assessment order in respect of approval taken u/s 153D and of his assessment order in respect of approval taken u/s 153D and of his assessment order in respect of approval taken u/s 153D and such reference has been further strengthened by the affidavits of nce has been further strengthened by the affidavits of nce has been further strengthened by the affidavits of two officer, who were part of assessment proceedings. Therefore, two officer, who were part of assessment proceedings. Therefore, two officer, who were part of assessment proceedings. Therefore, the case laws relied upon by the assessee cannot be considered as the case laws relied upon by the assessee cannot be considered as the case laws relied upon by the assessee cannot be considered as applicable to the facts of assessee case. applicable to the facts of assessee case.
In this view of the 18. In this view of the matter and considering facts and matter and considering facts and circumstances of the case, we are of the considered view that there circumstances of the case, we are of the considered view that there circumstances of the case, we are of the considered view that there is no merit in the additional ground taken by the assessee is no merit in the additional ground taken by the assessee is no merit in the additional ground taken by the assessee challenging validity of assessment order passed u/s 143(3) r.w.s. challenging validity of assessment order passed u/s 143(3) r.w.s. challenging validity of assessment order passed u/s 143(3) r.w.s. 153A of the I.T. Act, 1961 153A of the I.T. Act, 1961 in light of provisions of section 153D of in light of provisions of section 153D of the I.T.ACT, 1961. Hence, we reject additional ground taken by the the I.T.ACT, 1961. Hence, we reject additional ground taken by the the I.T.ACT, 1961. Hence, we reject additional ground taken by the assessee.” 8.2 In view of the aforesaid discussion and verification of view of the aforesaid discussion and verification of view of the aforesaid discussion and verification of records available, we are of the opinion that approval was granted by the available, we are of the opinion that approval was granted by available, we are of the opinion that approval was granted by additional Commissioner of income additional Commissioner of income-tax after due application of tax after due application of mind. The objections of the assessee raise mind. The objections of the assessee raised in an additional ground an additional ground are accordingly rejected. are accordingly rejected. The additional ground is accordingly is The additional ground is accordingly is dismissed.
Now, we take up the issue raised in the regular grounds we take up the issue raised in the regular grounds we take up the issue raised in the regular grounds challenging the finding of lower authorities on the merit of the challenging the finding of lower authorities on the merit of the challenging the finding of lower authorities on the merit of the addition.
The sole ground raised in the appeal relate to addition of The sole ground raised in the appeal relate to addition of The sole ground raised in the appeal relate to addition of unexplained cash expenditure u/s 69C of Rs.6,45,572/- for unexplained cash expenditure u/s 69C of Rs.6,45,572/ unexplained cash expenditure u/s 69C of Rs.6,45,572/ Smt. Usha Satish Salvi 18 4237 & 4238/MUM/2023 assessment year 2012 ent year 2012-13; Rs.1,69,18,719/- for assessment year for assessment year 2013-14 and Rs.7,50,000/ 14 and Rs.7,50,000/- for assessment year 2014 for assessment year 2014-15. 10.1 The brief facts qua the issue in dispute are that The brief facts qua the issue in dispute are that The brief facts qua the issue in dispute are that in view of allegation that Shri Satish Salve provided accommodation entries to allegation that Shri Satish Salve provided accommodation entries to allegation that Shri Satish Salve provided accommodation entries to M/s Nadiadwala Group ala Group, a search u/s 132 of the Act was carried out search u/s 132 of the Act was carried out on the residence of Shri Satish Salve on the residence of Shri Satish Salve, Chief Financial Officer Chief Financial Officer of M/s Media and Entertainment Pvt. Ltd. Media and Entertainment Pvt. Ltd., along with the search carried along with the search carried out in the case of out in the case of Nadiawala Grandson Entertainment Nadiawala Grandson Entertainment Private Limited ( in short the ( in short the ‘Nadiyadwala’ group) on 08.12.2015 group) on 08.12.2015. During the search of premises of premises of Shri Satish Salve, certain incrementing certain incrementing loose papers and jewellary jewellary worth Rs.2,69,780/- - and cash of Rs.3,50,000/- was found and seized. The document seized from the was found and seized. The document seized from the was found and seized. The document seized from the premises of Shri Satish Salve comprises of few documents relating es of Shri Satish Salve comprises of few documents relating es of Shri Satish Salve comprises of few documents relating to M/s Swami Samarth Pictures marth Pictures ( in short Samarath ( in short Samarath Pictures) i.e. proprietary concern of assessee, concern of assessee, which revealed incurring of cash which revealed incurring of cash expenses by M/s Swami Samarth Picture out of its bank accounts. expenses by M/s Swami Samarth Picture out of its bank accounts. expenses by M/s Swami Samarth Picture out of its bank accounts. During the course of search During the course of search, statement of Shri Satish Salve was statement of Shri Satish Salve was recorded wherein he admitted that he was maintaining entire affairs recorded wherein he admitted that he was maintaining entire affairs recorded wherein he admitted that he was maintaining entire affairs of ‘M/s Swami Samarth Swami Samarth’ on behalf of his wife Smt. Usha Sa behalf of his wife Smt. Usha Satish Salve. During the course of assessment Salve. During the course of assessment, the Assessing Officer the Assessing Officer analyzed the seized document belonging/rela the seized document belonging/related to the assessee. ted to the assessee. A detailed analysis along with scanned copy of the seized document is analysis along with scanned copy of the seized document is analysis along with scanned copy of the seized document is available from page 6 to page 12 of the impugned assessment order. available from page 6 to page 12 of the impugned assessment order. available from page 6 to page 12 of the impugned assessment order. The seized documents indicate payment in cash as well as through The seized documents indicate payment in cash as well a The seized documents indicate payment in cash as well a Smt. Usha Satish Salvi 19 4237 & 4238/MUM/2023 cheque on behalf of the proprietary concern of the assessee on behalf of the proprietary concern of the assessee to on behalf of the proprietary concern of the assessee various parties including Shri various parties including Shri O.P. Sing, Shri Prashant Nirgude, O.P. Sing, Shri Prashant Nirgude, Rajat, Nandu and director, Lionbel editor etc. The Assessing Officer Rajat, Nandu and director, Lionbel editor etc. The Assessing Officer Rajat, Nandu and director, Lionbel editor etc. The Assessing Officer observed that though the payments made by cheque were found to observed that though the payments made by cheque observed that though the payments made by cheque be entered in the books be entered in the books of accounts of the assessee, the cash of the assessee, the cash expenditures were not entered in books of accounts. The Assessing expenditures were not entered in books of accounts. expenditures were not entered in books of accounts. Officer has aggregated the cash expenditure for three years Officer has aggregated the cash expenditure for three years Officer has aggregated the cash expenditure for three years amounting to Rs.1,53,14,341/ amounting to Rs.1,53,14,341/- and in the show cause no and in the show cause notice issued asked the assessee to explain source of such asked the assessee to explain source of such cash expenditure. The expenditure. The relevant part of show cause notice issued by the Assessing Officer is relevant part of show cause notice issued by the Assessing Officer is relevant part of show cause notice issued by the Assessing Officer is reproduced as under: reproduced as under:
“4. As per the seized papers, your concern had incurred cash As per the seized papers, your concern had incurred cash As per the seized papers, your concern had incurred cash expenditure in the produ expenditure in the production of the movie "Rave Party Project" ction of the movie "Rave Party Project" amounting to Rs. 1,53,14,341/ amounting to Rs. 1,53,14,341/- which has been stated to be out of which has been stated to be out of books of accounts of your concern. Under such circumstances explain books of accounts of your concern. Under such circumstances explain books of accounts of your concern. Under such circumstances explain with supporting evidences why the expenses aggregating to Rs. with supporting evidences why the expenses aggregating to Rs. with supporting evidences why the expenses aggregating to Rs. 1,53,14,341/- should not be treated as unexplained cash expenditure not be treated as unexplained cash expenditure and added to your total income for the relevant A. Ys. as per break up and added to your total income for the relevant A. Ys. as per break up and added to your total income for the relevant A. Ys. as per break up of expenses tabulated below : of expenses tabulated below :- A. Y. Cash Expenses (Rs.) Cash Expenses (Rs.) 2012-13 6,45,572 2013-14 1,39,18,769 2014-15 7,50,000 10.2 During the course of the assessment proceedings, the assessee During the course of the assessment proceedings, the assessee During the course of the assessment proceedings, the assessee submitted that M/s Suresh submitted that M/s Suresh Jajera HUF was producing film title producing film titled ‘Rave Party Project’ with Mr. Naveen Sharma ‘Rave Party Project’ with Mr. Naveen Sharma i.e. pro proprietor of M/s Ground Zero Inc., b Ground Zero Inc., but M/s Suresh Jajera HUF did not own a Jajera HUF did not own a production house. So, tion house. So, Mr. Suresh Jajera approached Mr. Satish approached Mr. Satish Salve (i.e. the husband of the assessee) for services of production Salve (i.e. the husband of the assessee) for services of production Salve (i.e. the husband of the assessee) for services of production Smt. Usha Satish Salvi 20 4237 & 4238/MUM/2023 house of assessee namely of assessee namely M/s Shree Swami Samarth Picture for M/s Shree Swami Samarth Picture for producing said film under the producing said film under the banner of assessee. The assessee of assessee. The assessee further explained that as per the terms of agreement between M/s explained that as per the terms of agreement between M/s explained that as per the terms of agreement between M/s Suresh Jajera HUF and HUF and M/s Samarth Picture, M/s Suresh Jajra M/s Suresh Jajra HUF was responsible for transferring all funds to M/s Samarth responsible for transferring all funds to M/s Samarth responsible for transferring all funds to M/s Samarth Picture to be utilized as per the direction of M/s Naveen Kumar Picture to be utilized as per the direction of M/s Naveen Kumar Picture to be utilized as per the direction of M/s Naveen Kumar Sharma for making film title aking film titled ‘Rave Party Project’. Under the ‘Rave Party Project’. Under the agreement, Samarth Picture was required to provide details of funds Samarth Picture was required to provide details of funds Samarth Picture was required to provide details of funds received from M/s Suresh Jajra received from M/s Suresh Jajra HUF and incurred incurred for various expenditure for making the said film from time to time, to Mr. expenditure for making the said film from time to time expenditure for making the said film from time to time Suresh Jajra. Further, the assessee submitted that on 12.04.2012 urther, the assessee submitted that on 12.04.2012 urther, the assessee submitted that on 12.04.2012 the said agreement was officially documented. Under the terms of the said agreement was officially documented. Under the terms of the said agreement was officially documented. Under the terms of agreement, the producer i.e. M/s Suresh Jajra HUF was to invest agreement, the producer i.e. M/s Suresh Jajra HUF agreement, the producer i.e. M/s Suresh Jajra HUF Rs.1,50,00,000/- for the purpose of the production and completion for the purpose of the production and completion for the purpose of the production and completion of the said film. Up to September 26, 2012 funds of Rs.1.57 crores p to September 26, 2012 funds of Rs.1.57 crores p to September 26, 2012 funds of Rs.1.57 crores were received by M/s Samarth Picture from M/s Suresh Jajra HUF were received by M/s Samarth Picture from M/s Suresh Jajra HUF were received by M/s Samarth Picture from M/s Suresh Jajra HUF which is recorded in the bank account of the assessee. Further an which is recorded in the bank account of the assessee. Further an which is recorded in the bank account of the assessee. Further an amount of Rs.1.19 crores had been received from M/s Suresh Jajra amount of Rs.1.19 crores had been received from M/s Suresh Jajra amount of Rs.1.19 crores had been received from M/s Suresh Jajra HUF in cash which had been transferred to Mr. O.P. Sing for the cash which had been transferred to Mr. O.P. Sing for the cash which had been transferred to Mr. O.P. Sing for the expenses of the film as per the direction of Mr. Naveen Kumar expenses of the film as per the direction of Mr. Naveen Kumar expenses of the film as per the direction of Mr. Naveen Kumar Sharma till September 26, 2012 Sharma till September 26, 2012. As per the terms of agreeme s per the terms of agreement the funds had been received, h funds had been received, however, the ‘Rave Party Project Rave Party Project’ film had not been completed at that time. The budget of the said film was . The budget of the said film was increased to Rs.3,25,00,000/ increased to Rs.3,25,00,000/- due to financial miss due to financial miss-management Smt. Usha Satish Salvi 21 4237 & 4238/MUM/2023 by Mr. Navin Kumar Sharma, a by Mr. Navin Kumar Sharma, accordingly, an undertaking dated ccordingly, an undertaking dated 26.09.2012 had been executed for increase of budget from 26.09.2012 had been executed for increase of budget from 26.09.2012 had been executed for increase of budget from Rs.2,50,00,000/- to Rs.3,25,00,000/ to Rs.3,25,00,000/-. As per the agreement, . As per the agreement, from time to time the assessee forwarded the details of receipt of cheque the assessee forwarded the details of receipt of cheque the assessee forwarded the details of receipt of cheque and cash to M/s Suresh Jajra and also the details of expenditure and cash to M/s Suresh Jajra and also the details of expenditure and cash to M/s Suresh Jajra and also the details of expenditure incurred in cash and cheque for the production of the film. The said incurred in cash and cheque for the production of the fil incurred in cash and cheque for the production of the fil details were provided through e details were provided through e-mail to Mr. Suresh Jajra. In view of mail to Mr. Suresh Jajra. In view of the above submission, the assessee claimed that she was only the the above submission, the assessee claimed that she was only the the above submission, the assessee claimed that she was only the ‘line producer’ of the said film and all the expenses and receipt were of the said film and all the expenses and receipt were of the said film and all the expenses and receipt were on account of M/s Suresh Jajra HUF and on account of M/s Suresh Jajra HUF and the said expenses the said expenses received did not belong to the assessee but the assessee was only a received did not belong to the assessee but the assessee was only a received did not belong to the assessee but the assessee was only a ‘pass through entity pass through entity’. During the assessment proceedings, the . During the assessment proceedings, the assessee filed a retraction statement of her husband Shri Satish retraction statement of her husband Shri Satish retraction statement of her husband Shri Satish Salve. But said retraction was rejected by Salve. But said retraction was rejected by the Assessing Officer due the Assessing Officer due to lack to requisite affidavit along with supporting documentary to lack to requisite affidavit along with supporting documentary to lack to requisite affidavit along with supporting documentary evidences including sworn statement of including sworn statement of ‘panchas’ i.e. witnesses ’ i.e. witnesses. The assessee explained that payments received from Suresh Jajra The assessee explained that payments received from Suresh Jajra The assessee explained that payments received from Suresh Jajra HUF were in the nature of HUF were in the nature of ‘advance’ receipt instead of receipt instead of ‘cash loans’ as stated by the husband of the assessee as stated by the husband of the assessee i.e. Shree Satish Salve Shree Satish Salve, in the statement recorded u/s 132(4) of the Act. In the retraction the statement recorded u/s 132(4) of the Act. In the retraction the statement recorded u/s 132(4) of the Act. In the retraction statement, Shri Satish Salve stated that said payments were not Shri Satish Salve stated that said payments were not Shri Satish Salve stated that said payments were not loans from Suresh Jajra HUF loans from Suresh Jajra HUF and he mistakenly stated that as loan and he mistakenly stated that as loan during the statement recorded u/s 132(4) of the Act. In view of during the statement recorded u/s 132(4) of the Act. In view of during the statement recorded u/s 132(4) of the Act. In view of failure on the part of the assessee in explaining the source of the failure on the part of the assessee in explaining the source of the failure on the part of the assessee in explaining the source of the Smt. Usha Satish Salvi 22 4237 & 4238/MUM/2023 cash expenditure incurred cash expenditure incurred, the Assessing Officer in the assessment the Assessing Officer in the assessment order passed u/s 143(3) r.w.s. 153C dated 27.12.2017 assessed the 43(3) r.w.s. 153C dated 27.12.2017 assessed the 43(3) r.w.s. 153C dated 27.12.2017 assessed the unexplained cash expenditure u/s 69C of the Act for assessment unexplained cash expenditure u/s 69C of the Act for assessment unexplained cash expenditure u/s 69C of the Act for assessment years 2012-13 to 2014 13 to 2014-15 as under:
Particulars Amount (Rs) Amount (Rs) (a) Unexplained cash expenditure u/s 69C for AY 2012-13 Unexplained cash expenditure u/s 69C for AY 2012 6,45,572/- 6,45,572/ (b) Unexplained cash expenditure u/s 69C for AY 2013 cash expenditure u/s 69C for AY 2013-14 1,39,18,769/- 1,39,18,769/ (c) Unexplained cash expenditure u/s 69C for AY 2014-15 Unexplained cash expenditure u/s 69C for AY 2014 7,50,000/- 7,50,000/ 11. On further appeal, the Ld. CIT(A) rejected the contention of the On further appeal, the Ld. CIT(A) rejected the contention of the On further appeal, the Ld. CIT(A) rejected the contention of the assessee that the assessee was merely assessee that the assessee was merely a pass through entity an pass through entity and the entire expenditure was incurred on behalf of the Suresh Jajra the entire expenditure was incurred on behalf of the Suresh Jajra the entire expenditure was incurred on behalf of the Suresh Jajra HUF. The relevant finding of the Ld. CIT(A) is reproduced as under: HUF. The relevant finding of the Ld. CIT(A) is reproduced as under: HUF. The relevant finding of the Ld. CIT(A) is reproduced as under:
“6.2. One of the primary contention of the appellant is that 6.2. One of the primary contention of the appellant is that 6.2. One of the primary contention of the appellant is that the movie was being made by M/s Suresh Jajra HUF, funds the movie was being made by M/s Suresh Jajra HUF, funds the movie was being made by M/s Suresh Jajra HUF, funds were provided by them and that the appellant has merely e provided by them and that the appellant has merely e provided by them and that the appellant has merely lent its name for this purpose. It is further stated that M/s lent its name for this purpose. It is further stated that M/s lent its name for this purpose. It is further stated that M/s Shree Swami Samarth Pictures is not responsible for any cost Shree Swami Samarth Pictures is not responsible for any cost Shree Swami Samarth Pictures is not responsible for any cost escalation or financial mismanagement in the production of escalation or financial mismanagement in the production of escalation or financial mismanagement in the production of the movie. I am unabl the movie. I am unable to accept this contention of the e to accept this contention of the appellant. The agreement of film production dt. 12.04.2012 appellant. The agreement of film production dt. 12.04.2012 appellant. The agreement of film production dt. 12.04.2012 produced by the appellant shows that the agreement has produced by the appellant shows that the agreement has produced by the appellant shows that the agreement has been entered by Smt. Usha S. Salvi in her capacity as been entered by Smt. Usha S. Salvi in her capacity as been entered by Smt. Usha S. Salvi in her capacity as "PRODUCER" and Sh. Naveen Kumar Sharma in his capacit "PRODUCER" and Sh. Naveen Kumar Sharma in his capacit "PRODUCER" and Sh. Naveen Kumar Sharma in his capacity as "JOINT PRODUCER". Some of the relevant clauses of the as "JOINT PRODUCER". Some of the relevant clauses of the as "JOINT PRODUCER". Some of the relevant clauses of the agreement are extracted and placed below: agreement are extracted and placed below:- Contents of the Agreement General WHEREAS producer desire to produce a Motion Picture WHEREAS producer desire to produce a Motion Picture in colour 35 MM in Hindi Language named "RAVE in colour 35 MM in Hindi Language named "RAVE PARTY", starring Divyendu Sharma, Rajkumar Yadav Divyendu Sharma, Rajkumar Yadav and Others, directed by Rajat Mukherjee hereinafter and Others, directed by Rajat Mukherjee hereinafter referred to as the "said FILM". Scope of work c. It is agreed by Joint Producer that they will execute c. It is agreed by Joint Producer that they will execute the project in time frame fixed by the producer, As per the project in time frame fixed by the producer, As per Schedule A as per mutually agreed by both the parties. s per mutually agreed by both the parties. d. It is agreed by Joint Producer that if project is not d. It is agreed by Joint Producer that if project is not Smt. Usha Satish Salvi 23 4237 & 4238/MUM/2023 completed according to the schedule (Including Grace completed according to the schedule (Including Grace Period of 30 Days) then producer has the right to take Period of 30 Days) then producer has the right to take the complete project from Joint Producer and has the complete project from Joint Producer and has the right to allot the project to other Production House or right to allot the project to other Production House or producer will do himself as the case may be. producer will do himself as the case may be. f. It is agreed by Joint Producer that they are entitled f. It is agreed by Joint Producer that they are entitled only to rights expressly granted by Producer as per the only to rights expressly granted by Producer as per the terms of this agreement. All IPR always rest with ys rest with Producer. Tentative Budget of Tentative Budget of the Film a. a. Producers Producers hereby hereby agree agree to to invest invest upto upto Rs. Rs. 1,50,00,000/-(Rupees One Core Fifty Lacs only) for the (Rupees One Core Fifty Lacs only) for the purpose of production and completion of the said purpose of production and completion of the said Picture in all respects, including censor and backgrou Picture in all respects, including censor and background music thereof, and for the purpose of preparation of one music thereof, and for the purpose of preparation of one final release print of the said Picture. This amount is final release print of the said Picture. This amount is expected cost of the production as per the budget expected cost of the production as per the budget estimates prepared jointly by both the parties As per estimates prepared jointly by both the parties As per Schedule" B" b. Joint Producer hereby agrees and acknowledges that y agrees and acknowledges that he will inform well in advance i.e. 7 days before to he will inform well in advance i.e. 7 days before to producer for requirement of funds. c. Joint Producer hereby agrees and acknowledges that Joint Producer hereby agrees and acknowledges that producer will release fund after providing the details of producer will release fund after providing the details of expected expenses. Credits b. And it is further agreed that all the publicity material, b. And it is further agreed that all the publicity material, advertisement, prints, trailers, and paraphernalia of the advertisement, prints, trailers, and paraphernalia of the said Picture will clearly mention therein as a: said Picture will clearly mention therein as a:- Opening Title: SHREE SWAMI SAMARTH PICTURES Present in Associations With Zero Ground inc & H. N. Entertainment. Title Before the Film Start Produce by SHREE SWAMI SAMARTH PICTURES Produce by SHREE SWAMI SAMARTH PICTURES Naven Kumar Sharma Navin Parmar Records Records and and Accounts a. Producer shall keep or cause to be kept at a mutually a. Producer shall keep or cause to be kept at a mutually Smt. Usha Satish Salvi 24 4237 & 4238/MUM/2023 agreed upon location all books of account and agreed upon location all books of account and records, and all contracts for the business and operations of the and all contracts for the business and operations of the Film Project. Each of the parties shall have the right to Film Project. Each of the parties shall have the right to inspect the books of account and records related to the inspect the books of account and records related to the business and operations of the film project upon one business and operations of the film project upon one week notice to the other. b. All the money inflow and out flow for this project will b. All the money inflow and out flow for this project will be through and approved by producer and Joint be through and approved by producer and Joint Producer. Representation and Representation and Warranties Producer represents and warrants to Joint Producer Producer represents and warrants to Joint Producer that: i. It has the right and capacity to enter into t i. It has the right and capacity to enter into this Agreement Agreement and fully perform all its obligations and fully perform all its obligations hereunder, ii. It owns all right, title and interest in and to the ii. It owns all right, title and interest in and to the Project and the Licensed Materials, including but not Project and the Licensed Materials, including but not limited limited to copyright to copyright and and the the Interactive Interactive Rights, Rights, Intellectual rights are or shall be wholly original to e wholly original to Producer or the Producer has acquired or will acquire Producer or the Producer has acquired or will acquire the necessary rights from third parties to contribute the necessary rights from third parties to contribute same for use in the Project. iii. The Producers have not created any lien, charge, iii. The Producers have not created any lien, charge, mortgage mortgage encumbrance encumbrance or or right right of of any any nature nature whatsoever on release or the distribution, exhibition whatsoever on release or the distribution, exhibition and exploitation rights of the said Picture for any of the and exploitation rights of the said Picture for any of the territories of the World or on the prints or publicity territories of the World or on the prints or publicity materials, Music, satellite rights, Ring Tones, Caller materials, Music, satellite rights, Ring Tones, Caller tunes or any other such rights including rights which cluding rights which may come existence in future, of the said Picture for may come existence in future, of the said Picture for any of the territories of the World or on the Income any of the territories of the World or on the Income recoveries and realizations from the distribution, recoveries and realizations from the distribution, exhibition and exploitation of the said Picture in any of exhibition and exploitation of the said Picture in any of the territories of the world or on the negatives, positives the world or on the negatives, positives or other materials of the said Picture or otherwise or other materials of the said Picture or otherwise howsoever. iv. The Producer will invest the said amount in time iv. The Producer will invest the said amount in time frame and should not affect the shooting schedule due frame and should not affect the shooting schedule due to unavailability of funds. v. If the producer unable to invest the funds in time, r unable to invest the funds in time, Joint Producer has right to take the finance from the Joint Producer has right to take the finance from the third party and continue the project, in this event Joint third party and continue the project, in this event Joint Producer will return the amount invested till that date Producer will return the amount invested till that date without any interest or profit, and also producer without any interest or profit, and also producer will not any rights on the said film and issue the NOC to Joint any rights on the said film and issue the NOC to Joint Smt. Usha Satish Salvi 25 4237 & 4238/MUM/2023 Producer. Net Net Profits Profits and and Distribution a. The Parties agree that if the Film project is co a. The Parties agree that if the Film project is co- produced and provided the Parties mutually determine produced and provided the Parties mutually determine it is commercially advantageous to do so, the it is commercially advantageous to do so, the Parties agree to enter into a distribution agreement with a agree to enter into a distribution agreement with a distribution company to provide its services to distribute distribution company to provide its services to distribute the Project in connection with the distribution of the the Project in connection with the distribution of the Film. b. The Parties agree that all Net Profits from the b. The Parties agree that all Net Profits from the exploitation of the Project shall be shared as follows: ct shall be shared as follows: 80% to Producer and 20% to Joint Producer. 80% to Producer and 20% to Joint Producer. Rights of the Project a. It is further agreed that after the recoupment by the a. It is further agreed that after the recoupment by the Producer of the amounts financed under this agreement Producer of the amounts financed under this agreement all the liens and charges credited to Producer all the liens and charges credited to Producer under this agreement, or any other clause, shall come to an end agreement, or any other clause, shall come to an end and thereafter the copyrights, Intellectual Property and thereafter the copyrights, Intellectual Property Rights and other rights of the film, shall be held jointly Rights and other rights of the film, shall be held jointly by the Producers and Joint Producer in 80: 20 by the Producers and Joint Producer in 80: 20 proportion.
6.3.1. From the abov 6.3.1. From the above, it is clear evident that the risks and e, it is clear evident that the risks and rewards of the movie 'Rave Party' lie with the producer i.e. rewards of the movie 'Rave Party' lie with the producer i.e. rewards of the movie 'Rave Party' lie with the producer i.e. the appellant. The appellant's contention that the entire the appellant. The appellant's contention that the entire the appellant. The appellant's contention that the entire transaction was on behalf of M/s Suresh Jajra HUF is not transaction was on behalf of M/s Suresh Jajra HUF is not transaction was on behalf of M/s Suresh Jajra HUF is not borne from the above agreement. There borne from the above agreement. There is no reference or a is no reference or a single clause to this effect in the entire agreement. single clause to this effect in the entire agreement. 6.4. As far as the affidavit dt. 26.09.2012 of Mr. Naveen 6.4. As far as the affidavit dt. 26.09.2012 of Mr. Naveen 6.4. As far as the affidavit dt. 26.09.2012 of Mr. Naveen Kumar Sharma is considered (Pages 38 Kumar Sharma is considered (Pages 38 - 41 of PB), I find that 41 of PB), I find that it is merely a mechanism by which the terms and execution it is merely a mechanism by which the terms and execution it is merely a mechanism by which the terms and execution have been laid down between Mr. Naveen Kumar Singh e been laid down between Mr. Naveen Kumar Singh e been laid down between Mr. Naveen Kumar Singh (Joint Producer) and the appellant. In the said stamped but (Joint Producer) and the appellant. In the said stamped but (Joint Producer) and the appellant. In the said stamped but unsigned affidavit, Sh. Sharma has referred to delay in the unsigned affidavit, Sh. Sharma has referred to delay in the unsigned affidavit, Sh. Sharma has referred to delay in the project, cost escalation and has stated that project, cost escalation and has stated that mismanagement mismanagement was from his side. He has agr was from his side. He has agreed to guarantee the sell out of eed to guarantee the sell out of the film at the minimum price of Rs. 4.25 crores and that he the film at the minimum price of Rs. 4.25 crores and that he the film at the minimum price of Rs. 4.25 crores and that he shall adequately compensate the producers. It is also evident shall adequately compensate the producers. It is also evident shall adequately compensate the producers. It is also evident from the following 2 clauses of the affidavit: from the following 2 clauses of the affidavit:- "13) That I, on behalf of M/s. Ground Zero INC., declare and "13) That I, on behalf of M/s. Ground Zero INC., declare and "13) That I, on behalf of M/s. Ground Zero INC., declare and confirm to, at my own expense, indemnify, save, and hold confirm to, at my own expense, indemnify, save, and hold confirm to, at my own expense, indemnify, save, and hold harmless the Producers and its successors, licensees, harmless the Producers and its successors, licensees, harmless the Producers and its successors, licensees, Smt. Usha Satish Salvi 26 4237 & 4238/MUM/2023 assigns, agents, representatives, and affiliates from and assigns, agents, representatives, and affiliates from and assigns, agents, representatives, and affiliates from and against any and all claims against any and all claims, demands, causes of action, demands, causes of action, obligations, liability, loss and damage in business, costs, and obligations, liability, loss and damage in business, costs, and obligations, liability, loss and damage in business, costs, and expenses (including reasonable attorneys' fees), incurred or expenses (including reasonable attorneys' fees), incurred or expenses (including reasonable attorneys' fees), incurred or sustained by reason of or ansing out of any breach or alleged sustained by reason of or ansing out of any breach or alleged sustained by reason of or ansing out of any breach or alleged breach of any of the warranties, represe breach of any of the warranties, representations, obligations, ntations, obligations, or deliverables herein agreed upon and made by me, or deliverables herein agreed upon and made by me, or from any reliance upon any such warranties, any reliance upon any such warranties, representations, representations, obligations, or agreements; obligations, or agreements; 14) That, I on behalf of M/s. Ground Zero INC., do hereby That, I on behalf of M/s. Ground Zero INC., do hereby That, I on behalf of M/s. Ground Zero INC., do hereby declare and confirm that M/s. Sh declare and confirm that M/s. Shree Swami Samarth Pictures ree Swami Samarth Pictures are the absolute Copyright Holders of all the Rights of the are the absolute Copyright Holders of all the Rights of the are the absolute Copyright Holders of all the Rights of the said Film, free from all encumbrances as mentioned herein. said Film, free from all encumbrances as mentioned herein. said Film, free from all encumbrances as mentioned herein. and the said rights vest exclusively with them and shall in and the said rights vest exclusively with them and shall in and the said rights vest exclusively with them and shall in any event stand relinquished and surrendered to th any event stand relinquished and surrendered to them:" em:" 6.4.1. From the above, it is re 6.4.1. From the above, it is re-affirmed that the risks and affirmed that the risks and rewards of the movie rewards of the movie belong to M/s. Shree Swami Samarth belong to M/s. Shree Swami Samarth Pictures i.e. the proprietary concern of the appellant. Again, Pictures i.e. the proprietary concern of the appellant. Again, Pictures i.e. the proprietary concern of the appellant. Again, this affidavit does not speak of M/s Suresh Jajra HUF. this affidavit does not speak of M/s Suresh Jajra HUF. this affidavit does not speak of M/s Suresh Jajra HUF. 6.4.2. The fact t 6.4.2. The fact that the movie production has been hat the movie production has been undertaken by M/s Shree undertaken by M/s Shree Swami Samarth Pictures in its Swami Samarth Pictures in its capacity as a producer is also evident from the undertaking capacity as a producer is also evident from the undertaking capacity as a producer is also evident from the undertaking dt. 26.09.2012 submitted by the appellant dt. 26.09.2012 submitted by the appellant in pages 46 to 48 in pages 46 to 48 of paper book of paper book Page.
Smt. Usha Satish Salvi 27 4237 & 4238/MUM/2023 Smt. Usha Satish Salvi 28 4237 & 4238/MUM/2023 6.4.3. The appellant 6.4.3. The appellant has referred to clause No. 2 of the has referred to clause No. 2 of the undertaking dt. undertaking dt. 26.09.2012 wherein, Sh. Naveen Kumar 26.09.2012 wherein, Sh. Naveen Kumar Sharma has affirmed as follows: Sharma has affirmed as follows:- “2. I solely take responsibility to sell the said Film at price of solely take responsibility to sell the said Film at price of solely take responsibility to sell the said Film at price of Rs 425 (Sale Price) Lac which intimated to me (Ground Zero) Rs 425 (Sale Price) Lac which intimated to me (Ground Zero) Rs 425 (Sale Price) Lac which intimated to me (Ground Zero) by Suresh B Jajra HUF sh B Jajra HUF Partner of Shree Swami Samarth Partner of Shree Swami Samarth Pictures." I am of the view that such a self I am of the view that such a self-serving statement has no serving statement has no credibility as can be seen from the second page of this credibility as can be seen from the second page of this credibility as can be seen from the second page of this undertaking. The witnesses are Sh. O P Singh, Sh. undertaking. The witnesses are Sh. O P Singh, Sh. undertaking. The witnesses are Sh. O P Singh, Sh. Rajat Mukerjee and Sh. Rajiv Ranja Mukerjee and Sh. Rajiv Ranjan. Sh. Suresh B Jajra has not n. Sh. Suresh B Jajra has not signed this document. This being the case, would it be fair to document. This being the case, would it be fair to document. This being the case, would it be fair to hold such a person as the sole architect of this entire hold such a person as the sole architect of this entire hold such a person as the sole architect of this entire transaction? To draw an analogy, if I were to draw an transaction? To draw an analogy, if I were to draw an transaction? To draw an analogy, if I were to draw an affidavit stating that I agree to buy the White House affidavit stating that I agree to buy the White House from the from the President of USA for a sum of Rs. 100 crores where there is President of USA for a sum of Rs. 100 crores where there is President of USA for a sum of Rs. 100 crores where there is no concurrence by the other party, does that make the no concurrence by the other party, does that make the no concurrence by the other party, does that make the credibility of the undertaking vis credibility of the undertaking vis-a-vis the other party any vis the other party any better?
Smt. Usha Satish Salvi 29 4237 & 4238/MUM/2023 6.4.4 To be sure, clause 3 of the above undertaking reads as To be sure, clause 3 of the above undertaking reads as To be sure, clause 3 of the above undertaking reads as follows:- "З. Net Profit (Sales Prices after TDS Less COP Rs. 325 Lacs = Net Profit (Sales Prices after TDS Less COP Rs. 325 Lacs = Net Profit (Sales Prices after TDS Less COP Rs. 325 Lacs = Balance) will be taken by Shree Swami Samarth Pictures and will be taken by Shree Swami Samarth Pictures and will be taken by Shree Swami Samarth Pictures and no money from this Net Profit will be shared with me (Ground no money from this Net Profit will be shared with me (Ground no money from this Net Profit will be shared with me (Ground Zero)." The above makes it clear that profits of the movie belong The above makes it clear that profits of the movie belong The above makes it clear that profits of the movie belong to M/s Shree Swami Samarth Pictures i.e. the appellant only. It M/s Shree Swami Samarth Pictures i.e. the appellant only. It M/s Shree Swami Samarth Pictures i.e. the appellant only. It is in this background that the case needs to be examined. is in this background that the case needs to be examined. is in this background that the case needs to be examined.” 11.1 The Ld. CIT(A) further observed that expenses appearing in The Ld. CIT(A) further observed that expenses appearing in The Ld. CIT(A) further observed that expenses appearing in loose papers incurred in cheque were duly entered in the books of loose papers incurred in cheque were duly entered in the books of loose papers incurred in cheque were duly entered in the books of accounts of the assessee. The Ld. CIT(A) referred to the balance counts of the assessee. The Ld. CIT(A) referred to the balance counts of the assessee. The Ld. CIT(A) referred to the balance sheet for financial year 2012 sheet for financial year 2012-13, wherein the assessee had wherein the assessee had accounted for three movie projects including counted for three movie projects including ‘Rave Party Rave Party’ and the creditors and other particulars were shown project-wise. The Ld. creditors and other particulars were shown project creditors and other particulars were shown project CIT(A) noted that there is no entry related to Mr. Suresh Jajra HUF CIT(A) noted that there is no entry related to Mr. Suresh Jajra HUF CIT(A) noted that there is no entry related to Mr. Suresh Jajra HUF in balance sheet as on 31.03.2013. The relevant finding of the Ld. balance sheet as on 31.03.2013. The relevant finding of the Ld. balance sheet as on 31.03.2013. The relevant finding of the Ld. CIT(A) is reproduced as under: CIT(A) is reproduced as under:
6.7. The balan 6.7. The balance sheet for FY 2012-13 of the appellant shows that it 13 of the appellant shows that it has accounted. for 3 movie projects including 'Rave Party' and the has accounted. for 3 movie projects including 'Rave Party' and the has accounted. for 3 movie projects including 'Rave Party' and the creditors and other particulars are shown project wise. As far as creditors and other particulars are shown project wise. As far as creditors and other particulars are shown project wise. As far as unsecured loans are concerned, they are from 4 parties including unsecured loans are concerned, they are from 4 parties including unsecured loans are concerned, they are from 4 parties including Suresh B Jajra. There is no entry related to Suresh B Jajra HUF in the esh B Jajra. There is no entry related to Suresh B Jajra HUF in the esh B Jajra. There is no entry related to Suresh B Jajra HUF in the balance sheet as on 31.03.2013. Thus, the books of account paint a balance sheet as on 31.03.2013. Thus, the books of account paint a balance sheet as on 31.03.2013. Thus, the books of account paint a totally different picture. totally different picture. 6.8. Contrary to its written submissions, the appellant has not produced 6.8. Contrary to its written submissions, the appellant has not produced 6.8. Contrary to its written submissions, the appellant has not produced any evidence that the evidence that the movie was produced by M/s Suresh Jajra HUF movie was produced by M/s Suresh Jajra HUF and that the appellant was only a name lender. If the appellant claims and that the appellant was only a name lender. If the appellant claims and that the appellant was only a name lender. If the appellant claims that M/s Suresh Jajra HUF was actually the producer, it needs to prove that M/s Suresh Jajra HUF was actually the producer, it needs to prove that M/s Suresh Jajra HUF was actually the producer, it needs to prove the same. Unfortunately, no such documents seem to have been found the same. Unfortunately, no such documents seem to have been found the same. Unfortunately, no such documents seem to have been found during the search, and most certainly, no such evidence has been ing the search, and most certainly, no such evidence has been ing the search, and most certainly, no such evidence has been furnished before me as well (as part of submissions before AO). furnished before me as well (as part of submissions before AO). furnished before me as well (as part of submissions before AO). Maybe the appellant had its own separate financial relationships or the appellant had its own separate financial relationships or the appellant had its own separate financial relationships or understanding with M/s Suresh Jajra HUF, but the fact remains understanding with M/s Suresh Jajra HUF, but the fact remains understanding with M/s Suresh Jajra HUF, but the fact remains that the appellant is the producer of the movie and has right to all risk and the appellant is the producer of the movie and has right to all risk and the appellant is the producer of the movie and has right to all risk and Smt. Usha Satish Salvi 30 4237 & 4238/MUM/2023 rewards arising therefrom. The funding of the movie by availing loans rewards arising therefrom. The funding of the movie by availing loans rewards arising therefrom. The funding of the movie by availing loans from M/s Suresh Jajra HUF is of no consequence. To draw an analogy, from M/s Suresh Jajra HUF is of no consequence. To draw an analogy, from M/s Suresh Jajra HUF is of no consequence. To draw an analogy, if a builder were to construct a buildin if a builder were to construct a building by pooling funds from several g by pooling funds from several investors, the builder is still accountable for all the financial investors, the builder is still accountable for all the financial investors, the builder is still accountable for all the financial transactions and cannot cite any investor who provided cash as the transactions and cannot cite any investor who provided cash as the transactions and cannot cite any investor who provided cash as the reason. The onus remains firmly on the appellant to explain its nexus reason. The onus remains firmly on the appellant to explain its nexus reason. The onus remains firmly on the appellant to explain its nexus with M/s Suresh Jajra with M/s Suresh Jajra HUF, terms of agreement between them, etc. The HUF, terms of agreement between them, etc. The simple fact of the matter is that the appellant has incurred cash simple fact of the matter is that the appellant has incurred cash simple fact of the matter is that the appellant has incurred cash expenses which are not explained enough. Hence, I am of the view that expenses which are not explained enough. Hence, I am of the view that expenses which are not explained enough. Hence, I am of the view that the AO was right in bringing the unaccounted cash expenditure incurred the AO was right in bringing the unaccounted cash expenditure incurred the AO was right in bringing the unaccounted cash expenditure incurred for the movie, for which the appellant was involved in the capacity as or the movie, for which the appellant was involved in the capacity as or the movie, for which the appellant was involved in the capacity as producer, as unexplained expenditure u/s 69C of the Act. producer, as unexplained expenditure u/s 69C of the Act.
11.2 Further, the assessee contended that actual cash expenditure Further, the assessee contended that actual cash expenditure Further, the assessee contended that actual cash expenditure mentioned in the loose papers was only of Rs.1,41,96,735/- as mentioned in the loose papers was only of Rs.1,41,96,735/ mentioned in the loose papers was only of Rs.1,41,96,735/ against amount of Rs.1,53,14,341/ against amount of Rs.1,53,14,341/-. The bifurcation given by the . The bifurcation given by the assessee is reproduced as under: assessee is reproduced as under:
AY Alleged Cash Expenditure (Rs.) 2012-13 6,45,572/- 2013-14 1,35,51,163/- 2014-15 - Total 1,41,96,735/- 11.2 The Ld. CIT(A) however rejected the The Ld. CIT(A) however rejected the contention the of the contention the of the assessee and sustain assessee and sustained the additions observing as under: as under:
“6.10. Its evident that the appellant has cash receipts and cash 6.10. Its evident that the appellant has cash receipts and cash 6.10. Its evident that the appellant has cash receipts and cash expenditure but has not come clean on the same. As regards the sums expenditure but has not come clean on the same. As regards the sums expenditure but has not come clean on the same. As regards the sums which are actually spent, they are taxable which are actually spent, they are taxable u/s 69C. The remaining u/s 69C. The remaining sums, being unaccounted cash and not having been disputed of being sums, being unaccounted cash and not having been disputed of being sums, being unaccounted cash and not having been disputed of being received by the appellant, are confirmed to be taxed u/s 69A of the Act. received by the appellant, are confirmed to be taxed u/s 69A of the Act. received by the appellant, are confirmed to be taxed u/s 69A of the Act. Accordingly, the following additions are confirmed for each of the 3 Accordingly, the following additions are confirmed for each of the 3 Accordingly, the following additions are confirmed for each of the 3 years:- AY Addition Addition Total addition confirmed u/s confirmed confirmed u/s u/s confirmed 69C 69A 1 2012-13 2012 6,45,572/- - 6,45,572/- 2 2013-14 2013 1,35,51,163/- 3,67,606/- 1,39,18,769/- 3 2014-15 2014 - 7,50,000/- 7,50,000/- Total 1,41,96,735/- 11,17,606/- 1,53,14,341/- Smt. Usha Satish Salvi 31 4237 & 4238/MUM/2023
Before us, the Ld. counsel for the assessee reiterated the Before us, the Ld. counsel for the assessee reiterated the Before us, the Ld. counsel for the assessee reiterated the submissions made before the lower authorities and submitted that submissions made before the lower authorities and submitted that submissions made before the lower authorities and submitted that assessee was only a ‘ ‘pass through entity’ for incurring the expenses for incurring the expenses for the production of the movie on behalf of Shri Suresh Jajra HUF. for the production of the movie on behalf of Shri Suresh Jajra for the production of the movie on behalf of Shri Suresh Jajra The Ld. counsel submitted that movie has now been completed and The Ld. counsel submitted that movie has now been completed and The Ld. counsel submitted that movie has now been completed and given to Shri Suresh Jajra given to Shri Suresh Jajra HUF for distribution and release and and release and assessee has no right over the movie which assessee has no right over the movie which in fact can be verified fact can be verified even today by the Assessing Officer. The assessee submitted that even today by the Assessing Officer. The assessee submit even today by the Assessing Officer. The assessee submit the cash belonged to Shri Mr. Suresh Jajra HUF and it was not to Shri Mr. Suresh Jajra HUF and it was not to Shri Mr. Suresh Jajra HUF and it was not a loan to the assessee. The Ld. counsel submitted that during the loan to the assessee. The Ld. counsel submitted that during the loan to the assessee. The Ld. counsel submitted that during the course of assessment, the addition has been made on the basis of course of assessment, the addition has been made on the basis of course of assessment, the addition has been made on the basis of the statement of assessee’s husband without any cross verification the statement of assessee’s husband without any cross the statement of assessee’s husband without any cross done with Mr. Suresh Jajra. The Ld. counsel contended that this done with Mr. Suresh Jajra. The Ld. counsel contended that this done with Mr. Suresh Jajra. The Ld. counsel contended that this fact was also brought to the notice of the Ld. CIT(A) that no cross fact was also brought to the notice of the Ld. CIT(A) that no cross fact was also brought to the notice of the Ld. CIT(A) that no cross verification are made regarding the nature of the amount. It is verification are made regarding the nature of the amount. It is verification are made regarding the nature of the amount. It is further submitted that assessee provided a PAN number of Mr. further submitted that assessee provided a PAN further submitted that assessee provided a PAN Suresh Jajra. Before us, the assessee also filed a registered Suresh Jajra. Before us, the assessee also filed a registered Suresh Jajra. Before us, the assessee also filed a registered agreement (which was not filed before the lower authorities) to agreement (which was not filed before the lower authorities) to agreement (which was not filed before the lower authorities) to support that movie belong support that movie belonged to M/s Suresh Jajra HUF hence the to M/s Suresh Jajra HUF hence the amount received was not amount received was not a loan and the expenses incurr loan and the expenses incurred on the production of the movie was also on account of M/s Suresh Jajra production of the movie was also on account of M/s Suresh Jajra production of the movie was also on account of M/s Suresh Jajra HUF and the assessee was only and the assessee was only a pass through entity. The Ld. through entity. The Ld. counsel submitted that the statement on the basis of which counsel submitted that the statement on the basis of counsel submitted that the statement on the basis of Smt. Usha Satish Salvi 32 4237 & 4238/MUM/2023 addition was made, was made, has been retracted by the husband of the has been retracted by the husband of the assessee.
On the contrary, the Ld. Departmental Representative (DR) On the contrary, the Ld. Departmental Representative (DR) On the contrary, the Ld. Departmental Representative (DR) relied on the order of the lower authorities and submitted that Shri relied on the order of the lower authorities and submitted that Shri relied on the order of the lower authorities and submitted that Shri Satish Salve husband of the assessee who use Satish Salve husband of the assessee who used to look after the to look after the affairs of the assessee concern affairs of the assessee concern, has explained in hi as explained in his statement recorded u/s 132(4) of the Act on 09.12.2015 that out of total recorded u/s 132(4) of the Act on 09.12.2015 that out of total recorded u/s 132(4) of the Act on 09.12.2015 that out of total amount, Rs.1.64 crores crores was received from Mr. Suresh Jajra HUF as received from Mr. Suresh Jajra HUF as unaccounted cash. This statement was retracted after two years unaccounted cash. This statement was retracted after two years unaccounted cash. This statement was retracted after two years without any affidavit or providing any documents. The Ld. DR without any affidavit or providing any documents. The without any affidavit or providing any documents. The referred to para 7.9 of the impugned order and submitted that Shri referred to para 7.9 of the impugned order and submitted that Shri referred to para 7.9 of the impugned order and submitted that Shri Satish Salve himself stated that stated that cash of Rs.1.53 crores cash of Rs.1.53 crores was incurred by Swami Samarth Picture towards project of Rave Party Project by Swami Samarth Picture towards project of Rave Party Project by Swami Samarth Picture towards project of Rave Party Project which was done outside books of accounts. The Ld. DR referred to which was done outside books of accounts. The Ld. which was done outside books of accounts. The Ld. the agreement dated 12.04.2012 where Smt. Usha Salve is the agreement dated 12.04.2012 where Smt. Usha Salve the agreement dated 12.04.2012 where Smt. Usha Salve appearing in capacity of the producer and Mr. Navin Kumar capacity of the producer and Mr. Navin Kumar capacity of the producer and Mr. Navin Kumar Sharma is appearing in is appearing in capacity of the joint producer. The Ld. DR capacity of the joint producer. The Ld. DR further referred to the affidavit of Mr. Navin Kumar Sharma, as further referred to the affidavit of Mr. Navin Kumar Sharma further referred to the affidavit of Mr. Navin Kumar Sharma discussed by the Ld. CIT(A) in para 6.4 of the the Ld. CIT(A) in para 6.4 of the impugned impugned Officer, that there was no mention of Suresh jajara , that there was no mention of Suresh jajara , from whom cash is from whom cash is being claimed as received as received. He further submitted that He further submitted that the undertaking given by Shri Navin Kumar Sharma undertaking given by Shri Navin Kumar Sharma is self serving is self serving one and not signed by Shri Suresh Jajra. and not signed by Shri Suresh Jajra. The Ld. DR submitted that no The Ld. DR submitted that no evidence was filed to prove evidence was filed to prove that movie was being produced by Mr. movie was being produced by Mr.
Smt. Usha Satish Salvi 33 4237 & 4238/MUM/2023 Suresh Jajra HUF and the assessee was only Suresh Jajra HUF and the assessee was only for for name lending. According to the Ld. DR all According to the Ld. DR all risks and rewards of the project lie of the project lied with the assessee. The Ld. DR submitted that there is no dispute as with the assessee. The Ld. DR submitted that there is no dispute as with the assessee. The Ld. DR submitted that there is no dispute as cash expenditure of Rs.1.5 crores has been incurred on the cash expenditure of Rs.1.5 crores has been incurred on the cash expenditure of Rs.1.5 crores has been incurred on the production of the movie and which is not appearing in the books of production of the movie and which is not appearing in the books of production of the movie and which is not appearing in the books of accounts of the assessee although expenditure incurred in cheque accounts of the assessee although expenditure incurred in ch accounts of the assessee although expenditure incurred in ch is appearing in the books of accounts of the assessee and therefore is appearing in the books of accounts of the assessee and therefore is appearing in the books of accounts of the assessee and therefore in terms of section 69C of the Act in terms of section 69C of the Act, the assessee was required to the assessee was required to explain source and nature of the expenditure and due to failure on explain source and nature of the expenditure and due explain source and nature of the expenditure and due the part of the assessee the part of the assessee, the lower authorities are the lower authorities are justified in sustaining the addition in terms of section 69C of the Act. sustaining the addition in terms of section 69C of the Act. sustaining the addition in terms of section 69C of the Act.
We have heard rival submissions of the parties and perused We have heard rival submissions of the parties and perused We have heard rival submissions of the parties and perused the relevant material on record. The only issue is with regard to the relevant material on record. The only issue is with regard to the relevant material on record. The only issue is with regard to source and nature of the cash expenditure incurred a and nature of the cash expenditure incurred a and nature of the cash expenditure incurred as appearing in the document seized from the premises of the husband of the the document seized from the premises of the husband of the the document seized from the premises of the husband of the assessee. It is not in dispute that assessee. It is not in dispute that the cash expenditure has the cash expenditure has not been incurred. The . The claim of the assessee is that she claim of the assessee is that she is an intermediate party and expenses have party and expenses have been incurred on beh been incurred on behalf of Mr. Suresh Jajra HUF Mr. Suresh Jajra HUF, but we find that all the expenditure incurred but we find that all the expenditure incurred in cheque on the production of the movie have been duly entered in in cheque on the production of the movie have been duly entered in in cheque on the production of the movie have been duly entered in the books of accounts of the assessee and therefore, the cash the books of accounts of the assessee and therefore, the cash the books of accounts of the assessee and therefore, the cash expenditure incurred was also required to be entered in the books expenditure incurred was also required to be entered expenditure incurred was also required to be entered of accounts of the assessee of accounts of the assessee, which has not been done by the which has not been done by the assessee and therefore onus assessee and therefore onus lies on the assessee to explain source to explain source Smt. Usha Satish Salvi 34 4237 & 4238/MUM/2023 of such expenditure. The assessee is claiming amount expenditure. The assessee is claiming amount as advance expenditure. The assessee is claiming amount received from Mr. Suresh Jajra HUF. Before the Ld. Mr. Suresh Jajra HUF. Before the Ld. Mr. Suresh Jajra HUF. Before the Ld. CIT(A) the assessee claimed that Assessing Officer assessee claimed that Assessing Officer should have should have made cross verification from M/s Suresh Jajra HUF. In our opinion, M/s Suresh Jajra HUF. In our opinion, M/s Suresh Jajra HUF. In our opinion, since the assessee is claiming that said cash expenditure was incurred by Mr. assessee is claiming that said cash expenditure was incurred by Mr. assessee is claiming that said cash expenditure was incurred by Mr. Suresh Jajra, the onus onus lies on the assessee to produce roduce him before the Ld. Assessing Officer or the Ld. CIT(A) along with source of cash the Ld. Assessing Officer or the Ld. CIT(A) along with source of cash the Ld. Assessing Officer or the Ld. CIT(A) along with source of cash expenditure but no such effort was made by the expenditure but no such effort was made by the assessee and the assessee and the assessee wants to shift his onus to th to shift his onus to the Assessing Officer e Assessing Officer to establish that cash was advanced by Shri Suresh Jajra HUF. Now a cash was advanced by Shri Suresh Jajra HUF. Now a cash was advanced by Shri Suresh Jajra HUF. Now a period of more than 12 years period of more than 12 years has elapsed and the limitation for and the limitation for taking any action in the hands of Mr. Suresh Jajra HUF within the taking any action in the hands of Mr. Suresh Jajra HUF within the taking any action in the hands of Mr. Suresh Jajra HUF within the provision of the Income provision of the Income-tax has already expired and therefore, tax has already expired and therefore, making such claim for making for making enquiry from Mr Suresh jajera from Mr Suresh jajera and shifting the burden on Shri Suresh Jajra HUF is of no relevance. s of no relevance. Accordingly, we reject the contention of the assessee and uphold Accordingly, we reject the contention of the assessee and Accordingly, we reject the contention of the assessee and the finding of the Ld. CIT(A) on the issue in dispute. The addition on the finding of the Ld. CIT(A) on the issue in dispute. The addition on the finding of the Ld. CIT(A) on the issue in dispute. The addition on the merit for all the three years is accordingly confirmed. merit for all the three years is accordingly confirmed. merit for all the three years is accordingly confirmed.
In the result, the appeals of the assessee for all the three years In the result, the appeals of the assessee for all the three years In the result, the appeals of the assessee for all the three years are dismissed.