ACIT-16(1), MUMBAI vs. SALMAN KHAN, MUMBAI

आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member): -

1. Whether on the facts, in the circumstances of the case and as per law, the Ld. CIT(A) has erred in giving relief to the assessee and deleting the addition of Rs.1 crore as undisclosed income without going into the merit of the case and merely by relying on the order of CIT(A)-47, Mumbai in the case of M/s. Katrina Rosemary Turkotte (order no. CIT(A)-36/AP 274/2014-15 dated 20.03.2015) and also on the order of Ld. CIT(A)- 36, Mumbai in the case of M/s. Matrix India Entertainment Pvt. Ltd. (order No. CIT(A)- 36/AP-260/13-14 dated 23.03.2015)?

2. Whether on the facts, in the circumstances of the case and as per law, the Ld. CIT(A) erred in giving relief to the assessee and deleting the addition of Rs. 1 crore as undisclosed income merely by relying on the order of another CIT(A) without appreciating that the evidences of undisclosed income has been gathered in the case of the assessee from a search action and the evidences of search action are required to be analyzed independently for each of the persons involved in whose respect the evidence have been found?

3. Whether on the facts, in the circumstances of the case and as per law, the Ld. CIT(A) erred in giving relief to the assessee and deleting the addition of Rs.1 crore as undisclosed income merely by relying on the order of another CIT(A) without appreciating that the entries of cash receipts by the assessee have been found from the loose papers seized during the survey of M/s. Matrix India Entertainment Pvt. Ltd as well as from the digital data back-up of the Blackberry mobile of Miss Sandhya Ramachandran, employee of M/s. Matrix India Entertainment Pvt. Ltd., thus cannot be doubted upon?

4. Whether on the facts, in the circumstances of the case and as per law, the Ld. CIT(A) erred in giving relief to the assessee and deleting the addition of Rs.1 crore as undisclosed income without appreciating that the digital evidences gathered from the mobile of one of the employees corroborate with the evidences gathered from the loose papers seized at the premises of M/s. Matrix India Entertainment Pvt. Ltd. and hence cannot be brushed aside merely by relying on the order of another CIT(A).

5. Whether on the facts, in the circumstances of the case and as per law, the Ld. CIT(A) erred in giving relief to the assessee and deleting the addition of Rs.1 crore as undisclosed income merely by relying on the order of another CIT(A) without appreciating that when the cheque receipt as reflected in the digital evidence unearthed from the mobile back-up of Miss Sandhya Ramchandran matches that of the income shown by the assessee from the performance at Dhaka, the cash receipts reflected in the same digital evidence for the same performance should have necessarily been included in the Total income of the assessee".

6. The appellant prays that the order of CIT(A) on the above grounds be set aside and that of the Assessing Officer restored.”

Shri Salman Khan Assessment Year-2011-12 2.1 Facts in brief are that the assessee being a film artist was subjected to reassessment proceedings for the year under consideration. The assessment was framed u/s 143(3) read with Section 147 of the Income Tax Act, 1961 by Ld. Assistant Commissioner of Income Tax-11(1), Mumbai [in short ‘AO’] on 31/10/2014 wherein the total income of the assessee was redetermined at Rs.56.68 Crores after certain additions as against returned income of Rs.55.37 Crores filed by the assessee on 28/09/2011 which was processed u/s 143(1). The addition of Rs.1 Crore made by Ld. AO while framing assessment, on account of alleged undisclosed income is the sole subject matter of present appeal before us. 2.2 Pursuant to receipt of certain information from ACIT, Central Circle-47, Mumbai that there was a search at the residential premises of Ms. Sandhya Ramachandran, Manager of Ms. Katrina Rosemary Turkotte and an employee of M/s. Matrix India Entertainment Private Limited [in short ‘Matrix’] and during the consequent survey at premises of M/s Matrix, certain loose papers were impounded. Upon perusal of Page No. 5 of Annexure- A-1, it transpired that the assessee along with Ms. Katrina Kaif charged sum of Rs.1 Crore & Rs.75 Lacs in cash and another payment of Rs.75 Lacs and Rs.50 Lacs in cheque respectively for a certain stage performance. Upon further investigation, it was found that this payment pertained to Dhaka Performance held in February, 2011. From the perusal of digital data backup retrieved from the mobile of Ms. Sandhya Ramachandran, a conclusion was drawn that the assessee received a sum Shri Salman Khan Assessment Year-2011-12 of Rs.1 Crore in cash and Rs.75 Lacs in Cheque from Matrix for Dhaka performance. The said receipts of Rs.1 Crore was not disclosed in the return of income. 2.3 Consequently, Ld. AO upon forming requisite belief of escapement of income, issued notice u/s 148 on 03/01/2014 directing the assessee to respond to the same. In response, the assessee, vide letter dated 13/01/2014 offered original return of income as a return in response to notice u/s 148 and demanded reasons for reopening the assessment, which were duly supplied to the assessee in due course. The statutory notices u/s 143(2) was issued in due course. During reassessment proceedings, the assessee was directed to file the requisite details. 2.4 The assessee’s representative, in defense, submitted that the assessee and M/s Matrix receive numerous inquiries for show from organizers. In many cases, the organizers who were pitching the event call and make offers but these are not confirmed offers. Matrix do detail background check of the organizers and proceed only after verifying their credentials. In the above background, it was submitted that the amount of Rs.1 Crore in cash and Rs.75 Lacs in cheque, as mentioned in the loose papers found at the premises of M/s Matrix was a mere proposal which never materialized. Such an offer was stated to be made by a person claiming to be an organizer for a show to be held in Dhaka on 11/01/2011 but neither Salman Khan nor Katrina Kaif performed at any such show. The only show which the duo preformed in Dhaka was held on 24/02/2011 and that too with ATN records. The payments received for this show were well Shri Salman Khan Assessment Year-2011-12 documented and the copies of invoices raised by M/s Matrix on the organizers as well as the invoice raised by Salman Khan on Matrix was furnished. The payment received from ATN records was stated to be by wire transfer and payment made to Salman Khan was vide cheque as per details mentioned in the documents. The attention was drawn to the fact that professional remuneration received by the assessee for the show was Rs.85 Lacs and not Rs.75 Lacs as stated in the impounded documents, which would show that this was a totally different proposal. 2.5 However, not convinced with explanation, Ld. AO formed an opinion that the facts were correlated with one another, performance did materialize and remuneration was also received by the assessee against the performance. Mere denial of facts could not overrule the clinching evidences. Another point noted was the fact that the additions, on similar facts, were made in the case of Ms. Katrina Kaif also. Therefore, the amount of Rs.1 Crore was treated as assessee’s undisclosed income and added to his income for the year under consideration. 3.1 Aggrieved, the assessee agitated the stand of Ld. AO before Ld. Commissioner of Income Tax (Appeals)-4, Mumbai vide impugned order dated 23/06/2017. The assessee, while contesting the validity of reassessment proceedings, challenged the additions on merits. However, it was noted by Ld. CIT(A) that no regular assessment was framed u/s 143(3) and the impounded documents suggested possible escapement of income in the hands of the assessee and therefore, Ld. Assessing Officer rightly proceeded to exercise power u/s 148 r.w.s. 147 of the Income Tax Act.

Shri Salman Khan Assessment Year-2011-12 Therefore, the reassessment proceedings were validly initiated against the assessee. 3.2 On merits, the assessee challenged the additions by way of written submissions, which has already been extracted in the impugned order. The assessee, inter-alia, submitted that none of the parties concerned i.e. Sandhya, Matrix, Katrina, ATN or the assessee have confirmed to any cash receipts / payments in excess of amounts billed. There was no contrary statement except for a loose paper of a scribbling pad. Further, no information in the scribble pad tallied with actuals and therefore no sanctity or reliance could be placed on such loose document. It was also submitted that the basis of addition was a dumb document without therein being any circumstantial evidence to corroborate such facts. 3.3 The Ld. first appellate authority, after due consideration, noted that similar addition made on same facts in the case of Ms. Katrina Kaif & M/s Matrix was deleted by the first appellate authority vide orders dated 20/03/2015 & 23/03/2015 and therefore, to maintain judicial consistency, the addition was to be deleted. The operative portion of the impugned order, for ease of reference, could be extracted in the following manner: - 4.2 I have circumspected the facts & circumstances of the case and have carefully considered the findings of the Assessing Officer as well as rival submission of the Assessing Officer, carefully. I find that the similar addition was made on the basis of same loose paper in the case of Miss Katrina Rosemary Turkotte in A.Y.2011-12 which was, after considering the facts & circumstances of the case, deleted by the Ld. CIT(A)-47, Mumbai vide her order No. CIT(A)-36/AP.274/2014-15 dated 20.03.2015. I conquer with the finding of the Ld. CIT(A) because in this case also the Assessing Officer has made the addition on the ground that during the course of such action at the residential premises of Miss Sandhya Ramchandran, Manager of Miss Katrina Rosemary Turkotte and employee of M/s. Matrix India Entertainment Pvt. Ltd., a Shri Salman Khan Assessment Year-2011-12 loose paper was found in which there was a mention of receivable amounts of Rs.1,75,00,000/-. Out of this amount, Rs.75 lakhs was to be paid, as mentioned by the Assessing Officer to Miss Katrina and Rs.1 crore to the Appellant but Assessing Officer has not corroborated that there was an actual payment to the Assessee. The Assessing Officer has made the addition on the same analogy as was mentioned in the case of Miss Katrina. It is pertinent to mention that during the course of assessment proceeding, the Appellant had explained to the Assessing Officer by letter dated 16.10.2014 that he was receiving numerous inquiries for Show from M/s, Matrix India Entertainment Pvt. Ltd. and accordingly, reply was being given and such mention of Rs.1,75,00,000/- was a simple proposal which was not materialized because Show was not done in the month of January, 2011 and a person who was claiming to be organizer of the Show had not completed the deal, and due to that no performance was done by the Appellant or by Miss Katrina Kaif. However, later on Show was conducted on 24.02.2011 with ATN records. The income from this Show was of Rs.85 lakhs and not of Rs.75 lakhs which proves the fact that the same proposal was not there for this Show. The Ld. Assessing Officer has not refuted this factual clarification of the Assessee hence, finding given by the Ld. CIT(A) in the case of Miss Katrina is also applicable in this case. Further, similar addition was made in the case of M/s. Matrix India Entertainment Consultant Pvt. Ltd. which has been deleted by the Ld. CIT(A) vide order No. CIT(A)-36/AP-260/13-14 dated 23.03.2015. Thus, with a view to maintain judicial consistency, the addition made in the case of the Appellant of Rs.1 crore is deleted.

Aggrieved, the revenue is in further appeal before us. 4.1 The Ld. Departmental Representative [DR], assailing the stand of Ld. first appellate authority, drew our attention to the grounds raised by the revenue to submit that the additions were deleted merely by following the appellate orders in the case of the other assessees. It has been submitted that clinching evidences were found during search & survey operations which indicated that the assessee was in receipt of certain sums in cash for performance in a show and therefore, the addition as made by Ld. AO was quite justified. 4.2 The Ld. Authorized Representative for Assessee [AR], Shri Prakash K. Jotwani, on the other hand, reiterating the submissions as made before Shri Salman Khan Assessment Year-2011-12 first appellate authority, drew our attention to the fact that Tribunal has already confirmed the stand of Ld. first appellate authority in the case of Ms. Katrina Kaif and therefore, factual matrix being the same, identical view may be taken in the matter. The copy of the relevant order of the Tribunal has been placed on record.

5. We have carefully heard the rival submissions and perused relevant material on record. The position that emerges is that the assessee has been saddled with additions of Rs.1 Crore as undisclosed income during the reassessment proceedings. The basis of the addition was a loose paper found during survey operations on the premises of M/s Matrix Entertainment Pvt. Ltd. Upon perusal of the said paper, it was alleged by the revenue that the assessee was in receipt of a sum of Rs.1 Crore to perform a certain shown in Dhaka. However, except for this loose paper, there is nothing in record which corroborate the stand of revenue. This paper was found at the premises of a third party and the complete onus to prove that certain cash got exchanged between M/s Matrix and the assessee, was on revenue. This become all the more important since all the concerned parties viz. Ms. Sandhya, M/s Matrix, Ms. Katrina Kaif, ATN or the assessee, denied having entered into any such cash transactions. No cogent material has been brought on record to rebut the denial made by these parties. It is trite law that addition could not be made merely on the basis of presumption, guess-work, conjectures or surmises. The revenue, in our considered opinion, could not succeed in bringing any corroborative or Shri Salman Khan Assessment Year-2011-12 circumstantial evidence to lend any credence to the contents of the loose paper.