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Facts
The assessee, a partnership firm engaged in film exhibition, appealed against the CIT(A)'s order confirming additions made by the AO. The additions pertained to unexplained cash collections of Rs. 7,25,000/- and bank receipts of Rs. 3,17,285/-.
Held
The Tribunal held that the assessee provided explanations and supporting documents for the cash and cheque collections, which were recorded in the books of account. The Tribunal found that the allegations of unrecorded collections were not correct.
Key Issues
Whether the additions made by the AO and confirmed by the CIT(A) regarding unexplained cash and bank collections are justified when the assessee has provided evidence of these collections being recorded in the books of account.
Sections Cited
68, 143(3)
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Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI
Before: SHRI GEORGE GEORGE K & SHRI JAGADISH
आदेश / O R D E R
PER JAGADISH, A.M : Aforesaid appeal filed by the assessee for Assessment Year (AY) 2017-18 arises out of the order of Learned Commissioner of Income Tax, National Faceless Appeal Centre (NFAC), Delhi [hereinafter “CIT(A)”] dated 16.05.2024 in the matter of assessment framed by Ld. Assessing Officer [AO] u/s. 143(3) of the Income-tax Act, 1961 (hereinafter “the Act”) dated 10.12.2019.
The effective ground of appeal in this appeal of assessee is against the order of Ld CIT(A) confirming the addition of cash collection of Rs. 7,25,000/- u/s. 68 of the Act and addition of income from other sources to the extent of Rs. 3,17,285/- by the AO in the assessment order.
The assessee is a partnership firm engaged in the business of purchase and exhibition of films in the theaters. During the year, the assessee has purchased distribution rights of two films namely Thodari and Bogan, which was released and screened during the year. The assessee has purchased distribution right of Thodari for Rs.
2,50,00,000/- and of Bogan for Rs.2,29,00,000/-. The assessee has collected shares from theaters in cash as well as in cheque. The A.O in the assessment order has made addition of cash collection of Rs. 81,11,185/- as assessee has not been able to explain the cash collection. The A.O has also made addition of Rs. 49,72,698/- of bank receipts as the assessee has not been able to reconcile the bank receipt. On appeal, before the Ld. CIT(A), the assessee made detailed submission explaining the source of cash deposit, and cheque deposit as collections from distribution of the film and duly recorded in the books of accounts. The Ld. CIT(A) called for remand report from the A.O and accepted the explanation of cash deposit to the extent of Rs 73,86,185 and confirmed addition of Rs. 7,25,000/-on this account.
Similarly ,the Ld. CIT(A) accepted cheque receipt to the extent of Rs 46,55,41 and confirmed the addition of Rs. 3,17,285/-. The assessee is in appeal against the said two additions sutained by the Ld CIT(A).
The Ld. A.R before us has submitted that the assessee has received collection from theaters on exhibition of two films in cash as well as cheque and all receipts have been duly recorded in the books of account. The Ld. A.R has submitted that the cash collection not accepted by Ld. CIT(A) are duly recorded in the cash book and shown in the collection register of Thodari and Bogan films. The Ld. AR in support of his contention has submitted copy of collection register and copy of cash book. As regard to bank receipt of Rs. 3,17,285/-, the Ld. AR has submitted that the deposit consists of two cheques amounting to Rs. 1,14,904/- received from Meenakshi Theatre and Rs. 2,02,381/- received from Rakhi Theatre and has been duly included in the books of account. The assessee has submitted relevant documents in support of the same. The Ld. AR has therefore submitted that all the cash and cheque receipts confirmed by Ld. CIT(A) have been duly recorded in the books of account.
On the other hand, the Ld. Departmental Representative supported the orders of the lower authorities.
We have heard the rival contentions, and perused the material available on record. The Ld. CIT(A) has confirmed the addition of Rs. 7,25,000/- as cash receipt received from distributor of the film, but not offered in profit and loss account as under:
Name of the film Cash collection received Receipts (in Rs.) from person/entity Thodari Vela Cinema 50,000/- P. Solon 2,00,000/- Sree Bhuvaneswari 2,25,000/- Bala Subramani 25,000/- S. Ganesan 25,000/- Bogan P.Solon 2,00,000/- Total 7,25,000/-
The Ld. AR has explained the receipt of cash and its accounting the books of accounts. The Ld. AR has submitted that on 21.09.2016, cash of Rs. 1,50,000/- has been collected and recorded from Velas Thilanoor, which includes Rs. 50,000/- said to be unexplained cash by the Ld. CIT(A). Similarly, Rs. 2,00,000/- has been collected on 20.09.2016 from Latha Chengalpal and Rs. 25,000/- was collected from Bhuvaneswari, Thirukalikundram on 21.09.2016. On 06.10.2016 Rs. 40,000/- has been collected from Balasubramania, kanchi and of Rs. 25,000/- has been collected on 29.10.2016 from Rajeswari. On 31.01.2017 Rs. 2,00,000/- in cheque has been collected from Tulasi Theatre which has been alleged to be cash from P. Solon. Thus, the allegation that collection has not been recorded in the books of account is not correct. We, therefore, delete the addition sustained by the Ld CIT(A) .
As regard to confirming the addition of the credit of Rs. 3,17,285/- in the bank account on 01.03.2017, the assessee has explained that sum of Rs. 3,17,285/- includes two cheques of Rs.2,02,381/- from Rakhi Theatre and Rs. 1,14,904/- received from Meenakshi theatre. These two cheques have been duly accounted in the books of account and therefore, no addition is called for on this account. Therefore, we delete the addition.
In the result, the appeal filed by the assessee is allowed.
Order pronounced on 20th December, 2024.