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Income Tax Appellate Tribunal, MUMBAI ‘B’ BENCH, MUMBAI
[Coram: Pramod Kumar (Vice President), and Amarjit Singh (Judicial Member)] Assessment year 2013-14 Shree Naurang Godavari Entertainment Ltd ……………….………Appellant C 1203, Runwal Elegant, Highland Park Andheri, Mumbai 400 058 [PAN: AAMCS9423J] Vs. Assistant Commissioner of Income Tax Circle 16(1), Mumbai ……………………Respondent Appearances by Staney Saldhana for the appellant A K Kardamfor the respondent Dates of the hearings : 16/12/2021 Date of pronouncement : 10/03/2022 O R D E R Per Pramod Kumar, VP:
1. 1. By way of this appeal, the assessee appellant has challenged correctness of the ex- parte order dated 12th December 2019 passed by the learned CIT(A) in the matter of assessment under section 143(3) of the Income Tax Act, 1961, for the assessment year 2012- 13.
2. Grievances raised by the assessee appellant, as set out in the memorandum of appeal, are as follows:
The Ld CIT(A)-4, erred in passing an ex-parte order and dismissing the appeal of the appellant. The appellant had not received notices and hence could not make proper representation before the Ld CIT(A) - 4, Mumbai thereby denying the appellant an opportunity and natural justice.
The Ld CIT(A) erred in confirming the addition of Rs 13,56, 45,767/-u/s Section 68 of the I. T Act, 1961 of unsecured loans received by the company and remaining outstanding made by the Ld AO who had not considered part details produced before him. The Ld. CIT(A) confirmed the same without giving proper opportunity thereby denying the appellant natural justice. The Ld AO may be directed to delete the same.
Assessment year 2013-14 Page 2 of 3
The Ld CIT(A), erred in confirming the disallowance of Rs.8,02,717/- being adhoc 15% out of total business expenses of Rs 53,51,442/- without considering that most details were produced before the Ld AO. The Ld CIT(A) confirmed the same without giving proper opportunity thereby denying the appellant natural justice. The Ld AO may be directed to delete the same.
4. The Ld CIT(A), erred in confirming the disallowance of Rs.1,62,27,100/- being adhoc 10% out of cost of production of Rs 16,22,71,000/- without considering details produced before the Ld AO. The Ld CIT(A) confirmed the same without giving proper opportunity thereby denying the appellant natural justice. The Ld AO may be directed to delete the same. 5. The appellant has filed an affidavit for circumstances for delay in filing the appeal which may be considered and the delay condoned. 6. The appellant prays that the grounds of appeal be admitted and allowed.
3. Having perused the condonation petition and having heard the parties on the same, we are inclined to condone the delay beyond sixty days for the reason that the delay is due to the impact of covid. We thus proceed to take up the matter on merits. To adjudicate on this appeal on merits, only a few material facts need to be taken note of. The assessee before us is a company promoted by one of well known Bollywood artist and comedian Rajpal Yadav, and his wife Radha Yadav. With a successful acting career to his credit, Rajpal Yadav formed this company to try his luck in film production and entertainment software, but this initiative turned out to be a complete disaster. The film, ‘Atta PataLapata’, produced by the assessee company was a complete flop. The offices of the company had to be shut down as the assessee company was not in a position to honour its financial commitments. One of the Delhi based creditor of the assessee company even filed criminal cases against the company and its directors. Rajpal Yadav, key person of the company and its director, had to face imprisonment and things went completely haywire. It was in this backdrop that there was no compliance to the assessment notices issued to the company, and, resultantly, an ex parte assessment was finalized which not only disallowed Rs 1.62 crores out of film production costs and some other business expenses, but also added Rs 13.56 crores as unexplained credits- including some of the credits in respect of which criminal proceedings were faced. Aggrieved, assessee carried the matter in appeal but once again, owing to extraordinarily tough patch of time that the promotors of the assessee company were going through, there was no compliance with the notices of hearing. The appeal filed by the assessee company was dismissed, aggrieved by which the assessee is in appeal before us.
We have heard the rival contentions, perused the material on record, and duly considered facts of the case in the light of the applicable legal position. 5. On a perusal of material on record, including affidavit filed by the director of the assessee company and the details of criminal cases being faced by the company and its directors, we are satisfied that the assessee was prevented by the sufficient cause from appearing before the authorities below, and, in any case, when someone goes through such an unfortunate patch of time, as the directors of the assessee company, actually did, everything