DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 3, DELHI vs. SUPER CASSETTES INDUSTRIES PRIVATE LIMITED, DELHI

PER Ms. MADHUMITA ROY, JM:

3
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

3 | P a g e

The captioned appeals have been preferred by the assessees and the Revenue, as the case may be, against respective orders of learned CIT(Appeals) which in turn arose against respective orders of Assessing Officer(s), as detailed below.
ITA no./assessment year
Appellant
Order appealed against
AO’s order
1. ITA No.
2713/Del/2023 (A.Y.
2015-16)
Super Cassettes
Industries Pvt.
Ltd.
CIT(A)-23, New Delhi dt. 31.07.2023 DIN:
ITBA/APL/M/250/2023-
24/1054734942(1)
DCIT, Central Circle-3,
New Delhi. Dt.
09.08.2021
2. ITA No.
2714/Del/2023
(A.Y. 2016-17)
-do-
CIT(A)-23, New Delhi dt. 28.07.2023
-do- dt. 09.08.2021
3. ITA No. 7/Del/2024
(A.Y. 2017-18)
-do-
CIT(A)-23, New Delhi dt. 07.11.2023
-do- dt. 09.08.2021
4. ITA No.
51/Del/2024 (A.Y.
2018-19)
-do-
CIT(A)-23, New Delhi dt. 10.11.2023 DIN:
ITBA/APL/M/250/2023-
24/1057881179(1)
-do- dt. 09.08.2021
5. ITA No.
271/Del/2024 (A.Y.
2019-20)
-do-
CIT(A)-23, New Delhi dt. 28.11.2023 D. No.
1244/Dt. 29.11.2023
-do- dt. 17.09.2021
6. ITA No.
2511/Del/2023 (A.Y.
2013-14)
DCIT, Central
Circle-3, New
Delhi. V. Super
Cassettee
CIT(A)-23, New Delhi dt. 21.06.2023 D.No.
940/21.06.23
-do- dt. 09.08.2021
7. ITA No.
2512/Del/2023 (A.Y.
2014-15)
-do-
CIT(A)-23, New Delhi dt. 21.06.2023 D. No.
945/21.06.2023
-do- dt. 09.08.2021
8. ITA No.
2702/Del/2023 (A.Y.
2015-16)
-do-
CIT(A)-23, New Delhi

4
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

4 | P a g e

326/Del/2024 (A.Y.
2019-20)
13.ITA No.
2510/Del/2023 (A.Y.
2013-14)
DCIT, Central
Circle-3, New
Delhi. V.
Bhushan Dua
CIT(A)-23, New Delhi dt. 27.06.2023 D.No.
977/28.06.23
-do- dt. 09.08.2021
14.ITA No.
2509/Del/2023 (A.Y.
2014-15)
-do-
CIT(A)-23, New Delhi dt. 27.06.2023 D. No.
978/28.06.2023
-do- dt. 09.08.2021
15.ITA No.
2950/Del/2023 (A.Y.
2015-16)
-do-
CIT(A)-23, New Delhi dt. 17.08.2023 D.
No./093 dt. 18.08.23
-do- dt. 09.08.2021
16.ITA No.
2951/Del/2023 (A.Y.
2016-17)
-do-
CIT(A)-23, New Delhi dt. 17.08.2023
-do- dt. 09.08.2023
17.ITA No.
279/Del/2024 (A.Y.
2017-18)
-do-
CIT(A)-23, New Delhi dt. 21.11.2023 D. No.
1240/21.11.23
-do- dt. 09.08.2021
18.ITA No.
280/Del/2024 (A.Y.
2018-19)
-do-
CIT(A)-23, New Delhi dt. 21.11.2023 D. No.
1239/21.11.23
-do- dt. 09.08.2021
19. ITA No.
281/Del/2024 (A.Y.
2019-20)
-do-
CIT(A)-23, New Delhi dt. 30.11.2023 D. No.
1248/30.11.23
-do- dt. 09.08.2021
20. ITA No.
1845/Del/2024 (2019-
20)
-do- v. Lav
Ranjan
CIT(A)-23, New Delhi dt. 08.02.2024 DIN:
ITBA/APL/M/250/2023-
24/1060645621(1)
-do- dt. 25.09.2021

5
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

5 | P a g e acquires copy rights in various sound recordings from film producers, composers and artists. It also produces in house music albums/ songs by engaging singers, composers and lyricists. The sound recordings so acquired or created in house are thereafter commercially exploited through physical and digital medium. The commercial exploitation of sound recordings through physical medium is carried out by sale of CDs, cassettes and pen drives. The commercial exploitation through digital medium is carried out through licensing arrangements with FM
Radio Stations, Satellite TV Channels, streaming service providers like Sportify,
Kanha.com, Savvan etc. and social media platforms such as YouTube and Face
Book etc.
3.1
A search action under Section 132 of the Income Tax Act, 1961
(hereinafter referred to as the “Act”) was conducted on Super Cassettes
Industries Pvt Ltd (“SCIPL” group) on 29.11.2018. Subsequently the case of the assessee company along with others was centralised to the charge of PCIT,
Central Delhi-I by and under the order under section 127(1) dated 10.12.2020. Based upon the search action, assessment orders were passed under Section 153A in the case of the appellant company for A.Y. 2013-14 to 2018-19 and under Section 143(3) for A.Y. 2019-20. The search proceedings were conducted on SCIPL group on 28.11.2018 and by then the assessment for AY 2013-14 to AY 2015-16 were already completed and therefore, AY 2013-14 to AY 2015-16
were unabated assessments and AY 2016-17 to AY 2019-20 were abated

6
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

6 | P a g e assessments. Before us, the revenue is in appeal for AY 2013-14 to AY 2019-20
and the appellant is in appeal for AY 2015-16 to AY 2019-20. 4. A perusal of the grounds of appeals, would indicate that there are certain common grounds, in both the assessee’s appeal and the Revenue’s appeals which are as follows:- i.
Addition on account of Income of SCIPL Retained in BDML UAE in order to avoid payment of taxes in India for AY 2013-14 and AY 2014-
15. ii.
Addition on account of Unaccounted Cash Transactions on the basis of seized data with Sonal (Excel Sheet) for AY 2015-16, 2016-17 and 2017-18. iii.
Addition on account of Diversion of Income in Dubai through BKK
Investment LLC FZ (Dubai) for AY 2015-16 to AY 2019-20

iv.
Addition on account of disallowance of consultancy charges and printing expenses considering them as bogus expense for AY 2013-14 to AY 2017-18. v.
Addition on account of disallowance of legal and professional service from Rohit Tandon group considering them as bogus expense for AY 2013-14 to AY 2017-18. vi.
Addition on account of disallowance of advertisement expense from Sadhna Group considering them as bogus expense for AY 2014-15 to AY
2019-20. vii.
Addition on account of disallowance of Commission expense paid to Sanjay Singhal and M/s Balaji Agencies for AY 2016-17 and 2017-18. 7
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

7 | P a g e viii. Addition on account of unaccounted cash received from Singers for AY 2016-17 to AY 2019-20. ix.
Addition on account of cash income & expenditure noted in Diary of Sudesh Kumari- Payment to Ved Prakash Chanana for AY 2018-19 and 2019-20. x.
Addition on account of diversion of Income in Bollywood Digital
FZE by investing in property of London for AY 2016-17 and 2017-18. xi.
Addition on account of retention of Income in Dubai through M/s
Highpath Limited for AY 2017-18 to AY 2019-20. xii.
Addition on account of cash transaction conducted using the-
Codewords Tapes for AY 2018-19 and 2019-20. xiii. Addition on account of enhancement done in appeal by the CIT(A) in respect of Roy Movie / Raabta Expenses for AY 2015-16 and AY 2018-
19. The common grounds are addressed first as under:

Common Grounds

Assessment
Year
Amount of Income retained
2013-14
2,43,45,103
2014-15
7,12,97,129

8
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

8 | P a g e

9
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

9 | P a g e was treated as diversion of income of SCIPL in the hands of BDML in a tax-free juri iction by the assessing authorities in the assessment orders passed for A.Y.
2007-08 to A.Y. 2014-15 pursuant to search action undertaken on SCIPL on 29.11.2018. The operations of BDML and the arrangement between SCIPL and BDML was later discontinued, A.Y. 2014-15 being the last year. Hence, from assessment year 2015-16 onwards the entire exploitation of its copyrighted content outside territory of India was carried out by SCIPL on its own. Details of additions made from AY 2007-08 to AY 2014-15 on this issue is tabulated as under:

Assessment year
Royalty Received
2007-08
3,69,88,901
2008-09
5,70,15,876
2009-10
1,17,62,546
2010-11
51,87,893
2011-12
3,40,78,168
2012-13
3,89,95,596
2013-14
2,43,45,103
2014-15
7,12,97,129

10 | P a g e been carried out by SCIPL on its own since inception and hence there was no need for setting up a separate company i.e. BDML for acting as an intermediary.
To illustrate a copy of agreement dated 03.04.2006 entered into between SCIPL and M/s Viva Entertainment FZE Dubai was recovered during search and seizure operation. This agreement is for distribution of Audio Cassettes, Video CDs and DVDs which clearly indicates that SCIPL is capable of entering agreements for commercial exploitation of its copy righted contents directly with foreign parties. The main purpose behind setting up BDML is only to create a façade for diversion of income of SCIPL to a tax-free juri iction.
b)
Agreement with foreign entities are being done by BDML and drafted in India’s office of SCIPL. During the course of search action many agreements executed between BDML and other parties such as World Space Inc., Hungama
Media, Media Concept etc. were found and seized from the office premises of SCIPL. This shows that so-called licensing agreements in the name of BDML are actually being executed from India by SCIPL with the sole intention to divert the income of SCIPL to a tax-free juri iction.
c)
BDML is actually not doing any business activity in Dubai. It is a case of diversion of income of SCIPL in the hands of BDML, a foreign entity located in a tax free juri iction, to escape the tax in India. BDML has been allowed to keep 40-50% of license fee from exploitation of sound recordings of SCIPL in foreign territories while the intellectual property in whole actually belongs to 11
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

11 | P a g e

M/s SCIPL.
d)
The contention of the assessee that BDML is a separate legal entity having its own independent existence and therefore its income cannot be taxed in the hands of SCIPL is not acceptable. The concept of lifting the corporate veil disregards separate identity of the company and looks behind true owners or real person who are in control of the company. Whenever a dishonest use is made to the legal entity like BDML, the tax authorities can always lift the corporate veil to go to the root of the transaction. In the present case BDML did not do any business except for helping the assessee to evade tax to divert licensing income to a foreign juri iction.
5.4
The additions so made from AY 2007-08 to 2012-13 were deleted by the CIT(A) by appreciating the facts and circumstances and concluding that there was sufficient explanation or the reason for which BDML was incorporated in Dubai and the conclusive findings of the CIT(A) deserves to be reproduced herein below for further analysis and determination of the grounds. The relevant paras 138 and 139 of the CIT(A) order for AY 2007-08 are reproduced below:-
“100.Thus, on the basis of above legal discussion the judicial view which emerges is that though a company is a separate legal entity different from its shareholders, however, at times the corporate veil can be pierced by the taxing authorities if it is found that the transactions are sham or bogus or of it is a case of shell company. In this background if we look at the facts of the present case
(i)
There is ample material brought on record by the appellant to establish the existence and functioning of the BDML as discussed in 12
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

12 | P a g e earlier part of this order. The AO has been unable to dislodge any evidence/material furnished by the appellant during assessment proceedings and instead on examining the material has simply overlooked the same by making a generalized statement that it is "self-serving".
(ii)
The appellant has explained the need for setting up BDML by explaining that a similar arrangement executed with a third party i.e.
Vanilla Electronics LLC in the past failed to generate any revenue and therefore the appellant was constrained to setup BDML for exploring incremental revenue through international licensing of its music content.
Copy of the agreement with Vanilla Electronics LLC and termination letter were filed during the scrutiny assessment proceedings for A.Y. 2007-
08 vide letter dated 16.03.2009 and therefore cannot be dismissed as after-thought.
This arrangement is also discussedinpara5.3oftheTransferPricing Report dated 05.10.2007 for A.Y.
2007- OS and therefore cannot be disregarded as an after-thought.
Another factor influencing the setting up of BDML as separate entity was the protection provided to SCIPL against damages which may be granted by International Courts in case of Copyright infringement.
(iii)
On the basis of records filed by the appellant it is also seen that the transactions between SCIPL and BDML including the licensing arrangement for international territory and sharing of revenue has been examined in the past by the assessing authorities and no infirmity was found.
(iv)
The search action did not detect any worthwhile evidence to indicate that BDML is a shell company or it only existed on paper. Some references have been made to certain material in the form of whatsapp chat and data recovered from emails to make out a case that control and management of funds and immovable properties of BDML was being carried out from India. However, as discussed in earlier part of this order the control and management of BDML continued to remain outside of India and all key management decisions were taken in Board meetings held outside
India.Thereisalackofanydirectevidencewhichmayhavebeenfoundasresult of the search action to suggest that the business of BDML was being carried out by SCIPL from India. There is no evidence to show that the negotiations between third parties like World Space Inc. or Hungama FZE

13
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

13 | P a g e were carried out on email from India or that employees of SCIPL in India were in touch with the aforesaid parties. Similarly, if BDML was a mere paper entity its entire records such as books of accounts, original license agreements, title deeds of immovable properties, original bank statements, original invoices and vouchers would have been based out of SCIPL's office and would have been detected in the search action.
(v)
On the contrary the correspondence exchanged between ICC and BDML, which is a third-party evidence, establishes the existence of BDML in Dubai.
101. The AO has failed to bring on record any cogent reasons for resorting to lifting of corporate veil and disregarding the independent existence of BDML. It has been held by the apex court in the case of Vodafone International Holdings B.V. (supra) that-
"In short, the onus will be on the Revenue to identify the scheme and its dominant purpose. The corporate business purpose of a transaction evidence of the fact that the impugned transaction is not undertaken as a colourable or artificial device. The stronger the evidence of a device, the stronger the corporate business purpose must exist to overcome the evidence of a device. [Para 68]"Thus, the onus is on the revenue to make out a case of a "device" if the intendment is to lift the corporate veil. However, on the basis of above discussion I find that there is a lack of evidence in the assessment order to hold that the legal arrangement between SCIPL and BDML was a device for evasion of taxes.”
5.5
We have heard the rival submissions made by the respective parties and we have pursued the material available on record.
5.6
At the outset Ld. Counsel for the assessee draws the attention of Bench towards the fact that this ground of appeal is already covered in assessee’s own case by the order of ITAT G Bench, Delhi Dated 18.09.2024 for AY 2007-08 to AY 2012-13 in ITAs Numbers ITAs No.214, 215, 216, 1290, 1291 &
1292/Del/2023 in which the additions made on account of income retained in 14
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

14 | P a g e

BDML were completely deleted and the order of the CIT (A) was upheld for these years. Relevant portion of the order is reproduced as under:
“8.1 In the case in hand, we appreciate that assessee had come up with a very categorical case that having problems in selling the products outside
India due to several regulatory impediment, the assessee had preferred to have an independent and distinct company based in Dubai and to let that entity deal with transactions of the territory beyond India. Thus, Shri
Bhushan Kumar being the 100% owner of the equity of BDML and being resident of India had every legitimate right for showing indulgence into the matters of his Dubai based company from India. It is quite irrational and not prudent to expecta businessman having huge network of business activities across various international territories to be present in those territories and to take exclusive assistance of the employees of those entities, who are located or resident, beyond India. On the contrary, for any matter which requires immediate attention or indulgence, Mr.
Bhushan Kumar was in his right to engage his immediate staff to help him. The Whatsapp chat relied by the AO may have been those instances where out of urgency or any other expediency Mr. Bhushan Kumar, himself or through counsel or any supporting employee of personal staff was actively or passively controlling the activities of BDML, Dubai.
9. Next, analyzing the business module of the two entities, there is no allegation of the AO that the transaction between them were not at arm’s length. Thus, there is no allegation that any benefit had accrued to BDML out of the transaction. In fact the facts relied by CIT(A) on page 54 is ample evidence to prove by facts and figure that assessee had derived benefits with new agreement with BDML in terms of higher revenue. We consider it expedient to reproduce that relevant para 68.4 from the order of CIT(A) herein below:-
“68.4 The international licensing revenue of SCIPL which existed prior to setting up of BDML in the year 2006 continued to remain in SCIPL even after the licensing agreement with BDML dated
10.04.2006. Details of Foreign Royalty income i.e., income earned by SCIPL from International Licensing for FY 2003-04 to FY 2015-
16 have been filed in the Paper Book. From an examination of the se details it is clear that the licensing agreements with foreign

15
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

15 | P a g e parties continued to remain as it is and no part of such foreign income was diverted to BDML. The revenue from BDMLwas on account of new parties which was sourced through the marketing efforts of BDML team. A comparative position of revenue earned through International Licensing from BDML and others is tabulated below:-
SUMMARY OF FOREIGN ROYALTY

BDML

%
of BDML

OTHERS

%
of OTHE
RS

TOTAL
F.Y
Amountin U Amountin INR
Amountin
U Amountin INR
Amountin
U Amount in INR
2003-04
-
- -
29,928
13,36,944
100
29,928
13,36,944

2004-05
-
- -
118,180
88,66,415
100
118,180
88,66,415

2005-06
-
- -
381,511
2,75,49,379
100
381,511
2,75,49,379

2006-07
829,074
3,69,88,901 44
684,935
4,66,76,535
56
1,514,009
8,36,65,436

2007-08
1,423,472
5,70,15,876 50
848,619
5,71,88,202
50
2,272,091
11,42,04,078

2008-09
231,980
1,17,62,546 16
779,549
6,25,68,086
84
1,011,529
7,43,30,632

2009-10
115,287
51,87,893
10
650,958
4,88,35,928
90
766,245
5,40,23,821

2010-11
734,533
3,40,78,168
30
1,502,176
7,81,22,307
70
2,236,709
11,22,00,475

2011-12
791,606
3,89,95,595
22
2,413,748
14,09,08,969
78
3,205,355
17,99,04,564

2012-13
442,354
2,43,45,100
7
5,428,359
32,89,08,450
93
5,870,713
35,32,53,551

2013-14
1,245,722
7,12,97,128
12
8,062,134
52,75,87,291
88
9,307,856
59,88,84,419

2014-15
-
-
-
9,625,455
59,31,00,630
100
9,625,455
59,31,00,630

16
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

16 | P a g e protection for claim for damages under the international law to the extent that BDML was exposed to substantial IPR liability risk by indemnifying
SCIPL for any damages exceeding one million U that may be awarded in any foreign court on account of any IPR infringement.

17 | P a g e considered to give the overseas rights to a separate entity with base in Dubai which can independently contest such international transaction issues according to the international laws. The CIT(A) has examined certain Board Resolutions wherein the Board meetings were held in Dubai in the presence of directors who were present in Dubai. The CIT(A) has examined the aspect that by giving rights to BDML there was no diversion of income existing in the hands of the assessee, rather, the new avenues of revenue were discovered by BDML and a part of which were received in India by the assessee and reported as income. We consider it relevant and pertinent to reproduce the findings of the CIT(A) in para 93-
95 as follows:-
“93. According to the appellant another reason for setting up
BDML as an independent entity was due to added protection it provided to SCIPL for claim for damages under the international law. Under the arrangement between SCIPL and BDML the later continued to be exposed to substantial IPR liability risk by indemnifying SCIPL for any damages exceeding 1 million U that may be awarded in any foreign court on account of any IPR infringement. This was a significant risk which got shifted from SCIPL to BDML particularly when it is customary for Courts in North America and Europe to award very high damages and penalty in cases of IPR infringement.
94. The appellant has furnished details of foreign royalty income earned by SCIPL from international licensing from F.Y. 2003-04 to F.Y. 2015-16, which also includes the income earned from BDML.
The summary of foreign royalty income is already reproduced in Para 68.4 of this appellate order. Upon examination of the data it emerges that in F.Y, 2006-07 (the year in which BDML was set up)
SCIPL earned revenue of 0.8 Million U from BDML and a revenue of 0.68 million U from other parties. In the immediately succeeding year i.e. F.Y. 2007-08 the revenue from BDML increased to 1.4 million U while that from the other parties increased to 0.84 million U . The same position continued over the years and finally in F.Y.2013-14 (after which the agreement with BDML got terminated), the revenue from BDML was 1.2million U while that from other parties was 8.06 million U . Thus, it has been rightly

18
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

18 | P a g e pointed out by the appellant that there was no shifting of existing international revenue of SCIPLto BDML but the income earned by BDML was through new sources which did not exist earlier. This is also vindicated by the fact that parties like World Space Inc. and Hungama FZE did not have any business with SCIPL prior to F.Y.
2006-07. 95. The A.O. has taken an argument that the activity of licensing could have been carried out by SCIPL on its own. In support of the same areferencehasbeenmadetoagreementdated03.04.2005betweenSCIPL and Viva Entertainment FZE, Dubai in the assessment order. With regard to the same, it has been clarified by the appellant that the said agreement is with regard to physical sale of audio cassettes,
CDs, DVDs in the Middle East Region, whereas the agreement between SCIPL and BDML is with regard to digital licensing for territory outside India. It has also been clarified that even after the setting up of BDML the said agreement for physical sale of products in middle east region continued with Viva Entertainment FZE,
Dubai.
13. Based upon the aforesaid discussion, we are of the considered view that the allegation of the AO that BDML was a sham entity has no substance. The AO has been unjust and not tried to understand the commercial expediency for the assessee to not venture into the foreign market on its own, but, by way of a separate and distinct company. There were no cogent reasons, based on direct evidences or circumstances, to establish that transactions of entering into agreement with BDML were sham and bogus. Thus, the conclusions drawn by the ld. CIT(A) require no interference and the grounds of the Revenue cannot be sustained.”

19 | P a g e

AY 2013-14 and 2014-15 are dismissed.

20
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

20 | P a g e

Manager of SCIPL, and Shri Bhushan Kumar. These communications included a table delineating revenue derived from artist management activities for the years
2015, 2016, and an estimated projection for 2017. Within these exchanges, Ms.
Sonal sought authorization from Shri Bhushan Kumar to share the revenue table with Shri Neeraj Kalyan, President of SCIPL, via WhatsApp, expressly avoiding the use of email due to the inclusion of a cash component in the reported figures.
6.3
Upon reconciliation, it was determined that the total receipts in the excel sheet sent on WhatsApp, inclusive of cash transactions, exceeded the amounts duly recorded in SCIPL’s books of accounts, which were confined to receipts processed through banking channels. Based on this discrepancy, the Assessing
Officer (AO) inferred that the differential amount constituted unrecorded cash receipts, thereby treating it as undisclosed income of SCIPL for the relevant assessment years, pursuant to the provisions of the Income Tax Act, 1961. 6.4
The additions so made were deleted by the CIT(A) by appreciating the facts and circumstances and concluding that no corroborative material of the excel sheet was found during the search under Section 132(4) of the Income Tax
Act, and no statements from key individuals (Ms. Sonal, Shri Neeraj Kalyan, or Shri Bhushan Kumar) were recorded in respect of this addition. The relevant paras of AY 2015-16 are reproduced below:-
“159. The contents of the assessment order and the submissions of the appellant have been carefully considered. Coming to the merits of the case and Ground No. 6, the appellant has contended that the A.O was not 21
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

21 | P a g e justified in making an addition of Rs.14,10,018/- by treating the said amount as unaccounted cash income from singers on the basis of excel sheet attached to a WhatsApp message found as a result of search action in the absence of any corroborating material.
160. The issue to be decided in the present ground is whether a presumption can be drawn only on the basis of an excel sheet containing year wise numerical figures without any corroborating material to reach a conclusion that unaccounted cash income was earned by the appellant from singers.
161. The AO has determined unaccounted cash income from singers for various years. It has been presumed by him that the numerical figures appearing in the excel sheet attached to the whatsapp message represent the real income of the appellant from singers i.e. income from artist management. He has compared these figures with the ledger account showing income from artist management as per books of accounts of the appellant and added the difference between the two figures as undisclosed cash receipts from singers.
162. The basis for the entire addition is the excel sheet mentioned above.
During the course of search action no other corroborating material has been found to support the Inferences drawn by the AO for making the impugned addition. From the assessment order, it is found that statement of any employee or Director particularly Ms. Sonal (music manager), Sh.
Neeraj Kalyan, Sh. Bhushan Kumar (Managing Director) have not been recorded at the time of search u/s 132(4) of the Act or during post search enquiries. It is also found that apart from relying on the excel sheet, the AO failed to make any enquiry on the impugned issue during the course of assessment proceedings.
163. Although, the copies of ledger account titled "Income from Artist" was available with the assessing officer and he has relied upon the same to derive the figures of Income from artist management as books of accounts.
The said ledger account also contains the names of various singers from whom the income has been earned. These names include famous singers and the AO could have easily carried out necessary enquiries to verify the contents of the excel sheet.
164. During the year no addition on account of alleged receipts from MIKA is added by the Assessing Officer.
165. The document does not indicate whether or not the appellant has actually received any receipts in cash and that such income in cash was not 22
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

22 | P a g e disclosed in the books of accounts. In the document, there are estimate also which is written as "(collection upto june + estimate)". On the basis of such noting, the presumption cannot be drawn that the appellant has actually received the money. Similarly, there is a noting for estimate for January to December 2015. The Assessing Officer has extrapolated and presumed that the appellant has actually received the money and that to in cash and not accounted in the books of accounts.
166. For the sake of argument only, even if it is believed that the appellant was supposed to receive any amount from singers and that it was not accounted in the books of accounts, the addition cannot be made. The undisclosed income cannot be taxed on due basis. The principles of 'Real
Income apply in respect of undisclosed income or expense.
167. The contents of the excel sheet and the foot note which appears below may be the starting points of enquiry and further investigations but these are by themselves not sufficient material to hold undisclosed cash receipts.
As discussed above the AO failed to conduct any enquiries during the assessment proceedings. Even at the time of search or during post-search investigations statements were not recorded regarding the contents of the excel sheet. No other corroborating material was found during search action. It is a predominant judicial view that no arbitrary addition to the income can be made by the Assessing Officer based on the dumb documents, loose papers containing scribbling, rough/vague notings, in the absence of any corroborative material, evidence on record and finding that such dumb documents had materialized into transactions giving rise to income of the assessee which had not been disclosed in regular books of account by the assessee.
168. The appellant has placed reliance in the case of CIT v. D.K. Gupta
174 taxman 476 in which the Hon'ble Delhi High Court upheld the order of the tribunal wherein it was held that Ad-hoc/dumb documents without any corroborative evidence/finding that the alleged documents have materialised into transactions cannot be deemed to be the Income of the assessee. On the similar lines, the Hon'ble Delhi ITAT in case of Ashwani
Kumar Vs. IΤΟ [1991] 39 ITD 183 held that in the case of dumb document, revenue should have necessary evidence to prove that the figures represent incomes earned by the assessee. Similar is the decision in the case of PCIT
V. Ajanta Footcare 84 taxmann.com 109. 169. On the basis of above discussion, it is held that material in the nature of a mere excel sheet containing certain figures is not sufficient to derive an inference about undisclosed receipts from singers in the absence of any 23
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
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23 | P a g e cogent and corroborating material/evidence and particularly lack of any enquiry from the alleged singers from whom such cash payments have been received. Since the corroborating material/evidence in the present case is completely missing and the addition is only based on presumption the impugned addition of Rs. 14,10,018/- is deleted and this ground of appeal is allowed. Ground No.6 is allowed.”

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24 | P a g e

25 | P a g e comparison revealed discrepancies between the revenue figures mentioned in the Excel sheet, pertaining to artist management income, and corresponding entries recorded in the ledger account of artist management income maintained in the appellant’s books of accounts. Based on this analysis, the AO concluded that the differential amount represented undisclosed cash receipts, which were not accounted for in SCIPL’s books, and accordingly, treated the same as undisclosed income.
6.9
We concurs with the findings of the Commissioner of Income Tax
(Appeals) [CIT(A)] that no corroborative evidence was recovered during the search conducted under Section 132(4) of the Income Tax Act, 1961, to substantiate the claims made by the Assessing Officer (AO). It is seen that no statements were recorded during post search investigation from key individuals, namely Ms. Sonal, Shri Neeraj Kalyan, or Shri Bhushan Kumar, whether during the search or in post-search inquiries. Furthermore, despite having access to the ledger account containing the names of singers, the AO failed to undertake any verification or inquiry during the assessment proceedings. Consequently, the addition proposed by the AO relies solely on an Excel sheet, unsupported by any additional evidence, rendering it factually and legally untenable.
6.10
The AO’s addition of Rs. 1,04,16,665 as undisclosed cash receipts attributed to *the artist “MIKA,” based on a footnote in the Excel sheet stating
“*MIKA Pending 5 months = 1,04,16,665,” with Rs. 41,66,666 allocated to 26
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
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26 | P a g e

Assessment Year (A.Y.) 2016-17 and Rs. 62,49,999 to A.Y. 2017-18, is found to be without merit. The AO failed to conduct any inquiry to verify the alleged receipts. The CIT (A) rightly observed that the Excel sheet lacks evidence to confirm that the appellant received the said amount in cash or that it was unaccounted for, particularly as the document includes estimates and projections.
Under the ‘Real Income’ principle, income cannot be taxed on a due basis without evidence of actual receipt. The absence of such proof renders the addition unjustified and unsustainable.
6.11
The CIT (A) correctly concluded that, while the Excel sheet and its footnote may serve as a starting point for inquiry, the AO’s failure to conduct any investigation, either during the search or in post-search proceedings, undermines the basis for the addition. In the absence of corroborative material, we finds that no arbitrary addition to the appellant’s income can be justified.
6.12
The CIT(A) appropriately relied on the decisions of the Hon’ble Delhi
High Court in CIT v. D.K. Gupta [2009] 174 Taxman 476 and the Hon’ble Delhi
ITAT in Ashwani Kumar v. ITO [1991] 39 ITD 183 which establish that ad-hoc or unsubstantiated documents, without corroborative evidence, cannot be deemed to represent the assessee’s income. We affirms the applicability of these judicial principles to the present case.
6.13
Having considered the submissions, evidence, and legal precedents, the findings of CIT(A) are upheld and the additions made by the AO are devoid of 27
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
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27 | P a g e evidential support and legally unsustainable. The lack of corroborative material, the AO’s failure to conduct necessary inquiries, and the reliance on established judicial precedents render the additions invalid. Accordingly, the deletion of additions on this ground by CIT(A) for AY 2015-16 to AY 2017-18 are upheld, and the Revenue’s grounds of appeal for these years are dismissed.

Assessment Year
Expenses Incurred
2015-16
6,14,08,363
2016-17
86,88,235
2017-18
2,12,02,003
2018-19
7,92,18,696
2019-20
4,29,32,219

28
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
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28 | P a g e

2015-16, will be applicable for AY 2016-17, AY 2017-18, 2018-19 and 2019-20, as the issues are identical and no new circumstances exist.
7.2
Brief facts of the case are that funds were provided by BDML and Bollywood Digital FZE to BKK to make the investment without charging any interest. All these entities are based out in Dubai and the controlling interest in these entities is with Bhushan Kumar and not with the appellant company. The shareholders of BKK are Bollywood Digital FZE (99%) and Sh. Bhushan Dua
(1%). The AO in the assessment order draws the observation that main purpose of BDML is diversion of income by the appellant in respect of copyright income and resultantly funds provided by BDML and Bollywood Digital FZE to BKK
Investment is also diversion of income. Further AO added the above-mentioned amounts to the total income of SCIPL alleging that funds remitted through
BDML and Bollywood Digital FZE to BKK Investment are logically foreign income of appellant retained outside India to avoid taxes in India.
7.3
The additions so made were deleted by the CIT(A) by appreciating the facts and circumstances and concluding that there was sufficient explanation or the reason for which BDML is not a sham entity and therefore investment made by BKK investment in property via funds received through BDML is not diversion of income. The Ld. CIT(A) while dealing with ground observed as follows in A.Y. 2015-16:

29
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
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29 | P a g e

“25. The contents of the assessment order and the submissions of the appellant have been carefully considered. Coming to the merits of the case and Ground No. 2, the appellant has contended that the A.O was not justified in making an addition of Rs.6,14,08,363/- on account of acquisition of immovable property by M/s BKK Investment LLC FZ
(foreign company) by treating the same as diversion of income of SCIPL in the hands of BDML.
26. The issue to be determined in this ground is whether the amount paid by M/s BKK Investment LLC FZ for acquisition of immovable property can be added in the hands of the appellant i.e. SCIPL. The assessing officer has made out a case that the funds invested in the acquisition of immovable property is nothing but income of SCIPL which was diverted to BDML and BD FZE and these entities gave loans to BKK Investments LLC FZ for making the investments in immovable property.
27. The relevant facts briefly recapitulated are as under:-
(i)
BKK Investment LLC FZ (Dubai) was incorporated on 01.05.2014. This entity is a Special Purpose Vehicle (SPV) which was incorporated for acquiring an immovable property in Dubai being Villa No. C-104, Mohammed Bin Rashid Al Makhtoum City,
District-I which was developed by M/s Meydan Shobha FZ LLC.
Further, 99% of the shareholding of BKK Investment LLC FZ was held by Bollywood Digital FZE and the remaining shareholding by Shri Bhushan Dua.
(ii)
In order to augment its revenue from international licensing of music, a foreign entity by the name of Bollywood Digital Music
Limited (BDML) was set-up on 03.04.2006 as Jebel Ali Free Zone company in Dubai. Its shareholding of 10,000 shares of AED 100
each were fully held by Shri Bhushan Kumar as single shareholder.
The directors of the said company at the time of incorporation were Shri Bhushan Kumar and Arvind Khosla. BDML. The license agreement dated 10.04.2006 between SCIPL and BDML gave license to BDML to commercially exploit the copyrighted contents of SCIPL by giving further license to users in territory outside India, pursuant to which BDML entered into further licensing agreement with various parties. The revenue earned from granting license to these parties was shared between SCIPL and BDML 50% each till
A.Y. 2014-15 after which this arrangement was discontinued. From A.Y. 2015-16 onwards SCIPL started earning revenue from international licensing of music on its own.
(iii) Bollywood Digital Music Limited (BDML) owns 100%
shareholding in its subsidiary company named JMD Investments
Ltd. which is a Jebel Ali Free Zone Company and in turn JMD

30
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
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30 | P a g e

Investments Ltd. owns 100% shareholding of Bollywood Digital FZE
(BD FZE) which is a SAIF Zone company (Sharjah Free Zone). The company BD FZE was incorporated on 03.09.013 and its manager/
director was Neha Shinde. Thus, Bollywood Digital FZE, in effect is step down subsidiary of BDML. Further, there is no activity carried out by JMD Investments Ltd. which is merely a holding company for the shares of BD FZE.
(iv)
BD FZE had it independent source of activity and income. The activities of BDFZE primarily included profit from portfolio investment in financial market in Dubai and earning of commission income. For the year ended 31.03.2015 it earned a net profit of 5.997 Million U .
28. The assessing officer has taxed the year wise investment made by BKK Investments FZE in the immovable property as income of SCIPL. The details of assessment year wise additions made are tabulated below:-

Sl. No.
Investment during the A.Y.
Amount of total investment in INR
1. 2015-16
6,14,08,363/-
2. 2016-17
86,88,235/-
3. 2017-18
2,12,02,003/-
4. 2018-19
7,92,18,696/-
5. 2019-20
4,29,32,219/-

Total
21,34,49,516/-

2015-16
0
9,81,121
9.81,121
62.59
6,14,08,363/-
2016-17
9,81,121
1,112,106
1,30,985
66.33
86,88,235/-
2017-18
1,112,106
1,439,146
3,27,040
64.83
2,12,02,003/-
Total cumulative investment as on 31.03.2018
9,12,98,601/-

Total investment made during the Asst. Year 2018-19

31 | P a g e reproduced in above para No. 8.2 was found & seized during the search reflecting the total cumulative investment made in the said property as on 20.03.2018 is 96,01,902 AED that comes out to be in INR 17,05,17,297/-
(Averaging 1AED=17.7587 INR). And the total cumulative investment in INR as on 31.03.2018 as tabulated above is amounting to RS.9,12,98,601/-.
So, the total Investment made from 1st April 2018 to 20.03.2018 is of Rs.
7,92,18,696/- (17,05,17,297 – 9,12,98,601).

Total investment made during the Asst. Year 2019-20

Bollywood Digital FZE
Particulars
31.03.2015
31.03.2016
31.03.2017
31.03.2018
Loan Outstanding in U 629,929
635,367
635,367
1,616,487
Loan Outstanding in INR (1
U = 3.67 AED = 19/-)
4,39,24,949
4,43,04,141
4,43,04,141
11,27,17,638

Bollywood Digital Music Ltd. (BDML)
Loan Outstanding in U 463,243
472,635
820,951
1,149,081
Loan Outstanding in INR (1
U = 3.67 AED = 19/-)
3,23,01,934
3,29,56,838
5,72,44,913
8,01,25,418
Grand Total U 1,093,172
1,108,002
1,456,318
2,765,568
Grand Total INR
7,62,26,883
7,72,60,979
10,15,49,054
19,28,43,056
Value of Immovable Property
Amount
Outstanding in U 981,121
1,112,106
1,439,146
2,747,307
Amount in INR
6,84,13,567
7,75,47,151
10,03,51,650
19,15,69,717

32
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

32 | P a g e of AED 1,20,02,375/- (22,80,45,125/- INR at 1AED_19 INR). Funds were provided by BDML and Bollywood Digital FZE to BKKI for investing in above said property on an interest free basis as mentioned in the audited balance sheets of BKKI. The structuring of companies and investments outside India has been done in such a manner that foreign based companies/entities are being controlled used by Sh. Bhushan Kumar in Dubai, USA, UAE etc for holding and acquiring various properties in foreign tax-free juri iction which should be taxed in India.

33
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

33 | P a g e except for the investment made in immovable property, funds for which has been provided by BDML and BDFZE. The seized material referred to in the assessment order is a notice for completion of the immovable property issued by the developer to M/s BKK Investment containing the sale value of the property, receipt issued by developer for part payment received, shareholder’s resolution authorising Beer Singh for taking possession of the immovable property, letter issued by the developer informing to replace the PDCs. None of these evidences or material point out that the company
BKK is being controlled or managed from India. Even if it is presumed that BKKI is being controlled or managed from India in that case as per the provisions of Section 6(3) of the Income Tax Act the income of BKKI can be made taxable in India but its income cannot be taxed in the hands of SCIPL. Further it is an uncontroverted position (even accepted in the assessment order) that BKK Investment did not have any business activity and as such did not earn any income therefore the question of taxing its income in the hands of SCIPL does not arise at all. Even the WhatsApp chats reproduced in the assessment order have all been initiated by the real estate agent in Dubai and sent to Beer Singh where the real estate agent is seeking details of immovable property and asking Beer Singh to further provide information so that the property could be listed with other agents for putting up on rent.

(a)
There is sufficient material on record to hold that M/s BDML had independent existence and functioned independently from Dubai.

(b)
There, existed genuine business purpose and reasons for setting up BDML in Dubai. Setting up of BDML was need based and creation of such company abroad cannot be simply termed as diversion of income unless the Assessing Officer can bring on record

34
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
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34 | P a g e with cogent reasoning and substantiate with evidence that it was a colourable device for diversion of income of the appellant.

(c)
The search action on SCIPL which had an element of surprise did not detect any original records of BDML in the nature of its books of accounts, invoices, vouchers, original license agreements, title deeds of immovable property, lease rental agreements of immovable properties owned by BDML, cheque books, bank statement etc. If the argument made regarding BDML being controlled and managed from India was taken to be true at least some original record of BDML would have been detected in the search action. Thus, on the basis of various documents on record point-wise clarification of the appellant on material found during search, it is established that the control and management of BDML during assessment year under appeal wa in Dubai only.

(d)
Even if it is held that BDML was controlled and managed from India its income cannot be taxed in the hands of SCIPL since it is a separate legal entity. Thus, even if the provisions of section 6(3) of the Income Tax Act were made applicable, then BDML is to be separately taxed in India on the basis of its residence being in India.
But under no circumstances, the income of BDML can be taxed in the hands of SCIPL. In the assessment order, the Assessing Officer has discussed and vehemently argued that BDML has place of effective management and control in India. If that be so, then it is not understandable as to why the income of BDML has been assessed t tax in the hands of SCIPL. If the Assessing officer believed that BDML had place of effective management and control in India, then the income accruing in India of BDML’s case should have been taxed in the hands of BDML only. Therefore, the addition made in the assessment order is not sustainable even on this ground.

(e)
There is no basis and rationale in terming the commercial arrangement between SCIPL and BDML as a case of “diversion of income” of SCIPL to BDML.

(f)
The AO has failed to bring on record any cogent reasons for resorting to lifting of corporate veil and disregarding the independent existence of BDML. It has been held by the apex court in the case of Vodafone International Holdings B.V. (supra) that –
“In short, the onus will be on the Revenue to identify the scheme and its dominant purpose. The corporate business purpose of a 35
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
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35 | P a g e transaction is evidence of the fact that the impugned transaction is not undertaken as a colourable or artificial device. The stronger the evidence of a device, the stronger the corporate business purpose must exist to overcome the evidence of a device. [Para 68]”. Thus, the onus is on the revenue to make out a case of a “device” if the intendment is to lift the corporate veil. However, on the basis of discussion in the appellate order there is a lack of evidence in the assessment order to hold that the legal arrangement between SCIPL and BDML was a device for evasion of taxes.

36
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
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36 | P a g e

Delhi for Assessment Years 2007-08 to 2012-13. In view of the same BDML was a separate and distinct company and not a sham entity. There is no ground for taxing the investment made by BKK Investments LLC in the hands of the appellant.

37
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
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37 | P a g e

38 | P a g e provisions of which section of the Income Tax Act. It seems the addtions have been made by the AO on the presumption that the impugned investment in property have been made from loan given by BDML to Bollywood Digital FZE.
Furthermore, as it has already been held that the income of BDML Dubai does not constitute a diversion of SCIPL’s income, the funds remitted by BDML
Dubai to BKK Investments LLC FZ, Dubai, cannot be characterized as a diversion of SCIPL’s income. The investments made by BKK Investments LLC
FZ, utilizing funds received from BDML Dubai, are legitimate and independent transactions. These investments do not represent a conduit for tax evasion or a mechanism to divert SCIPL’s income through BDML Dubai.
7.11 Accordingly, the decision of the CIT (A) for AY 2015-16 is upheld and the appeal of the revenue on this ground is dismissed. This will apply mutatis mutandis in other years wherein same grounds are raised having regard to the identical facts and circumstances of the matter.
8. Addition on account of disallowance of consultancy charges and printing expenses incurred during the years, considering them as bogus in nature has been challenged by the department and assessee too. Details of the expenses are tabulated as under.

Assessment
Year
Expenses Incurred

39
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
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39 | P a g e

2013-14
1,04,70,076 (Department Appeal)
2014-15
1,72,14,878 (Department Appeal)
2015-16
97,41,691 (Department Appeal)
2016-17
6,00,000 (Department Appeal) and Rs. 1,20,60,000 (Assessee Appeal)

40
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

40 | P a g e accommodation entries in the form of Bogus expenses to SCIPL. During assessment proceedings the AO issued summons to these entities u/s 131(1A) and based upon the same the AO drew conclusion that these entities did not provide any service and disallowed the expenses.
8.3
Further the AO relied upon the statement of Sachin Chauhan u/s 132(4) wherein he stated that all analog to digital conversion was done by the appellant in house and based upon same the AO disallowed expenditure of C-Cube
Technologies of Rs. 8,00,000/- which was for analogue to digital conversion of data.
8.4
The AO issued Summons to M/s Jask Exports Pvt. Ltd. under Section 131(1A) of the Income Tax Act. Based on their response, the Assessing Officer disallowed expenditure claimed alleging that the entity's business income was solely derived from SCIPL, and SCIPL's claim that Jask Exports provided business advisory services for a deal with M/s Flipkart India Pvt. Ltd. was incorrect.
8.5
The AO issued Summons to M/s Sagal International Pvt. Ltd. under Section 131(1A) of the Income Tax Act. Based on their response, the Assessing
Officer concluded that the entity's was not involved in any kind of business of printing and consultancy and disallowed expenditure claimed. The AO disallowed rental expenditure paid to M/s Karni Enterprises alleging that in 41
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

41 | P a g e respect of summons issued for cross verification, no one from the entity appears and only rental agreements were furnished via email.
8.6
The AO disallowed expenditure incurred from CTO Sarvshiksha Institute
Pvt Ltd, Sirohi Infotech Pvt Ltd and Exdeceed Global Solutions Pvt Ltd alleging that summons were issued to these entities but instead of appearing in person for cross verification, only documents were furnished via email. Lastly the AO alleged that principal officer of above companies is Varun Tandon who is an advocate and services provided by his companies require highly technical and engineering skills and therefore, expenses entries are only accommodation entries.
8.7
The additions so made in AY 2013-14, AY 2014-15 and AY 2015-16
were deleted by the CIT(A) by relying on the ratio of judgement of Hon’ble
Buildwell Pvt Ltd vide order dated 24.04.2022. The Ld. CIT(A) highlighted that assessment U/s 143(3) for AY 2013-14 to AY 2015-16 was completed much before the date of search i.e. 28.11.2018 and therefore, the said assessment is completed assessment. Since no incriminating material was found during the course of search, the addition made was liable to be deleted. Relevant paragraps of the appellate order of AY 2013-14 is reproduced as under:

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ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
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42 | P a g e

“150. It is seen from the records that return of income for the assessment year under consideration was filed on 30.11.2013. Assessment under section143(3) was taken up and assessment order was passed on 31.0.2015 assessing total income of Rs.
223,64,64,20/-. The date of search is 29.11.2018. Therefore, the assessment year under appeal is a completed assessment. From the examination of the assessment order it is apparent that no incriminating material was found during the course of search action qua the aforesaid disallowance. The appellant has placed reliance on the ratio of the decision of Hon'ble Delhi High Court in the case of Pr.CIT Vs. Kabul Chawla 61 Taxmann.com 421. This decision of Hon'ble Delhi High Court came up for consideration of the Hon'ble Supreme Court in the case of Pr.CIT Vs. Abhisar
Buildwell Pvt. Ltd. in Civil Appeal No. 6580 of 2021 and other connected appeals.
……….. .
151. Further, a letter dated 16.05.2023 was addressed to the Assessing Officer (DCIT, Central Circle-3, New Delhi) requiring to bring to the notice incriminating evidence, if any, found during search action on SCIPL. In response to the same, the Assessing
Officer has sent a letter dated 13.06.2023. On going through the contents of the said letter the relevant observations made pertaining to this issue are summarized as under:- i.
Books of accounts were seized from the premises of SCIPL and these become incriminating in nature when seen in the light of statements recorded during search and other findings during post search investigations.

ii.
The requisite incriminating evidences in the form of statement of Sachin Chauhan, Sample invoices/bills, ledger account and sample release orders have been attached to the above referred letter of the Assessing
Officer.

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ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

43 | P a g e search cannot be termed as incriminating material. Further, the statement recorded during search is also not incriminating material. Therefore, it is found that there is no incriminating material found during search regarding this addition.

"In view of the above, we are of the considered view that the regular books of accounts maintained by the assessee in tally software, now being referred by the· revenue, to justify the addition did not constitute incriminating material unearthed during the search."

"We have considered the aforesaid contentions and are of the view that no substantial question of law arises, as the matter is squarely covered by Kabul Chawla supra, which has been correctly applied to the facts of the case by the /TAT. The /TAT, in the impugned order has held that in the audited report filed by the assessee along with the report, cash book, ledger, bank book etc. were mentioned; that the respondent assessee was maintaining books on TALLY Accounting Software which was seized during the search and was being treated as incriminating material; however, regular books of account of the assessee, by no stretch of imagination, could be treated as incriminating material to form basis of framing assessment under Section 153A read with Section 143(3} of the Act."

44
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
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44 | P a g e

Where assessee during search conducted under section 132 made admission that a sum of Rs. 86 lakhs seized from his employee belonged to him and it represented undisclosed income and subsequently he retracted above admission and offered an explanation that said amount was verifiable from record and books of account and Assessing Officer did not accept explanation and added said amount in income as unexplained cash credit, impugned addition was not justified.

45
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

45 | P a g e

46 | P a g e statement recording of Shri Sachin Chauhan along with copies of sample invoices, ledgers etc are incriminating in nature.
8.10 From the above summarized content it is evident that no incriminating material was found during search for making the addition. The only document relied by the AO for making the additions are books of accounts seized, copy of invoices and ledger accounts and statement of Sachin Chuahan. It was argued that the books of accounts, copy of invoices and ledger accounts are not incriminating in nature. As regard the statement of Sachin Chauhan, the ld. Counsel argued that in the statement Sachin Chauhan had not mentioned anything to suggest that these expenses were not genuine. In his statement regarding work being done in- house was with reference to conversion of sound recording from physical to digital format. The other specific task i.e. conversion of physical metadata to digital format was outsourced from Rohit Tandon Group entities. The proof of work done was furnished before the CIT (A) in a pen drive.
8.11 The Ld Counsel drew our attention towards order of Micro Ankur developers Vs DCIT ITA No. 1046 to 1050/MUM/2019 and Pr CIT Central 2
New Delhi Vs Param Dairy Ltd in ITA 37/2021 and 41/2021 in which it was held that the regular books of accounts cannot be treated as incriminating material.
Further in the following cases also it was held that statement recorded cannot be held as incriminating material:

47
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

47 | P a g e
We have heard the rival submissions made by the respective parties; we have also perused the relevant materials available on record. The primary contention of the assessee for the Assessment Years 2013-14 till 2015-16 is that no addition can be made by the AO in these years in the absence of incriminating material since these years are unabated years. The CIT(A) in his order has duly verified this aspect by addressing a letter to the AO asking him the furnish the incriminating material relied upon for making the addition. It is seen that the AO in response has mentioned that the marterial relied upon is books of accounts, invoices and statement of Sachin Chauhan. These materials are not incriminating in nature and as regards the statement of Sachin Chauhan reproduced in the order it is neither incriminating in nature. We upon careful consideration of the facts and circumstances of the case, concur with the findings of the CIT(A) that no incriminating material was unearthed during the search proceedings during AY
2013-14 to AY 2015-16. The additions made by the Assessing Officer were solely based on surmises and conjectures, lacking any substantive evidence.
Furthermore, the additions pertains to unabated assessment years, as the original assessment under Section 143(3) of the Income Tax Act, 1961, was completed prior to the date of the search, i.e., 28th November 2018. 48
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

48 | P a g e

49
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

49 | P a g e

“APPELLATE FINDINGS & DETERMINATION
124. The contents of the assessment order and the submissions of the appellant have been carefully considered. Coming to the merits of the case and Ground No. 5, the appellant has contended that the A.O erred in disallowing the various types of expenses incurred through Rohit Tandon
Group companies amounting to Rs. 1,26,36,000/-Incurred by the appellant as not genuine by holding the same to be bogus expenses and in the nature of accommodation entries.
125. In the written submissions the appellant has argued that the expenses amounting to Rs. 1,26,36,000/- are genuine in nature. In support of the same, the appellant has provided copies of bills raised by respective companies of the Rohit Tandon Group. The summary of bills alongwith description of services and names of service provider companies are tabulated below:-
S. No.
Particulars
Amount (Rs.)
1. Paid to C-Cube Technologies Pvt. Ltd. for conversion from analogue to digital format for devotional contents
8,00,000/-

Total
1,26,36,000/-

50
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

50 | P a g e

51
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

51 | P a g e

S. No Particulars
Job Work Amount (Rs.)
Page No. of substantiati ng document
Commission
@ 5%
Page No.
of substantiat ing documents
1. B4U Broadband
4,50,00,000
468-478

6,50,00,000

32,50,000
467

52 | P a g e services provided for acting as business advisory for licensing deal between SCIPL and following licensees:-
(a) Disney Broadcasting (India) Limited for a deal value of Rs
7,00,00,000/- vide agreement dated 23.09.2015 (copy enclosed at Page
503 to 507 P/B Vol. 1)
(b) Pioneer Channel Factory Pvt Ltd for a deal value of Rs 3,87,20,000/- vide agreement dated 28.04.2014 (copy enclosed at Page 508 to 515 P/B
Vol.1)
134. In this regard, it has been explained that commission 5% on the deal of Rs. 7,00,00,000/- (between SCIPL and Disney Broadcasting (India) Ltd
& commission @ 5% on the deal aggregating to Rs 3,87,20,000/- (between
SCIPL with Pioneer Channel Factory Pvt Ltd) was paid for acting as business advisory. The expenditure has been Justified by stating that such licensing deals for copyrighted contents of SCIPL generate income/
revenue for SCIPL
135. In respect of the impugned transaction, the appellant has not been able to furnish any evidence of any services having been rendered by M/s
Jask Exports Pvt. Ltd. (M/s Jask). M/s Jask has no expertise in dealing with copyright matters. Apart from the appellant, no other person has received any such service from M/s Jask. The appellant at no point of time either during the course of assessment proceedings or investigation proceedings has been able to furnish any evidence to prove that any services were actually rendered by M/s Jask to the appellant. The key persons of M/s Jask did not co-operate in the investigation proceedings and could not establish their bonafide of rendering any services to the appellant.
136. Copyright is a highly specialized field of law. Advisory services for copyrights are highly technical and cannot be rendered by persons other than those qualified to do it. The appellant has not been able to furnish even the name of the employee of the company who interacted with the appellant for the advisory function. Advisory functions are generally carried out formally. The advice rendered is intimated on paper. No such evidence of advice rendered by M/s Jask has been furnished. No email between the appellant and M/s Jask has been furnished to show that M/s
Jask actually rendered any service to the appellant.the accounts of M/s
Jask do not reveal any other activity.

53
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

53 | P a g e

54
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

54 | P a g e

55
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

55 | P a g e

56
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

56 | P a g e

Jask, which lacks expertise in copyright matters and has no other clients besides the appellant. No correspondence, agreements, or records of advisory services were furnished, and M/s Jask’s key persons did not cooperate in investigations.
Copyright advisory is a specialized field requiring qualified expertise and the absence of evidence, such as emails or documentation, undermines the claim. The lack of other clients for M/s Jask further weakens the claim’s credibility.
Consequently, disallowance of Rs. 54,36,000 was upheld.
8.19 Further expenditure of Rs. 33,50,000/- was paid to four companies—M/s
C-Cube Technologies Pvt. Ltd., M/s CTO Sarvshiksha Institute Pvt. Ltd., M/s
Sirohi Infotech Pvt. Ltd., and M/s Endeceed Global Solutions Pvt. Ltd. for digital conversion services, specifically metadata conversion from physical to digital format. The conversion process involves two tasks: (i) converting audio songs from physical to digital format, and (ii) converting metadata from physical to electronic format. The appellant clarified that only the audio conversion was done in-house as confirmed in statement of Sachin Chauhan, while metadata conversion was outsourced to the four companies. The four companies lack the necessary manpower, computers, expertise, or experience in metadata conversion, and none are engaged in this business. They also had no other clients for such work besides the appellant.
8.20 The companies, controlled by Shri Rohit Tandon and his son Shri Varun
Tandon, could not demonstrate their capability or provide evidence of performing

57
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

57 | P a g e the claimed conversion work. The appellant, a market leader in the music industry with its own expertise and manpower, would unlikely outsource such technical work to inexperienced companies, undermining the plausibility of their claim. Despite opportunities during assessment and investigation proceedings, the appellant failed to substantiate the genuineness of the expenditure or prove that the conversion work was performed and utilized for business purposes.
8.21 We have heard the respective submissions made by the parties; we have also perused the relevant materials available on record. It appears from the records that that the Ld.AO has disallowed the impugned amount and added to the total income of the assessee is premised on the fact that based on information extracted from the data seized during search proceedings at SCIPL and Rohit
Tandon Group, it was observed that companies belonging to Rohit Tandon
(CTO Sarviksha Institute Pvt Ltd, C Cube Technologies Pvt Ltd, Sagal
International Pvt Ltd, Endecced Global Solutions Pvt Ltd, Karni Enterprises Pvt
Ltd, Sirohi Infotech Pvt Ltd, Jask Exports Pvt Ltd) are involved in providing accommodation entries in the form of Bogus expenses to SCIPL.

58 | P a g e the actual expenditure incurred was only Rs. 32,50,000/- and the AO had disallowed Rs. 38,50,000/-. In view of the same the deletion of Rs. 6,00,000/- by CIT(A) was on correct facts and need not be disturbed.

59
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

59 | P a g e and justifies the commission expense. The A.O.’s inference that Sagal lacked printing facilities is irrelevant, as it was only a commission agent and was not required to provide printing services but just facilitated in securing printing orders.
8.25 We observe that Rs. 54,36,000/- was paid to M/s Jask Exports Pvt. Ltd. for advisory services in licensing deals with Disney Broadcasting (India) Ltd. (Rs.
7,00,00,000/-) and Pioneer Channel Factory Pvt. Ltd. (Rs. 3,87,20,000/-), generating Rs. 10,87,20,000/- in licensing income. The assessee had furnished agreements with Disney Broadcasting (India) Ltd and Pioneer Channel Factory
Pvt. Ltd to justify the expenses and it is seen that the AO had not made any enquiry from Disney Broadcasting (India) Ltd and Pioneer Channel Factory Pvt.
Ltd to verify the genuineness of the expenditure. The assessee had furnished the bills, agreements deducted TDS and made payments through banking channels to establish its claim. The Ld. AO had brought no material on record to refute the claim of expenses and the disallowance was made on surmises and conjectures.
8.26 It is seen that the Ld. AO relied on Sachin Chauhan’s statement, that SCIPL conducted all analog-to-digital conversions in-house without understanding the various forms of conversion done by SCIPL in its organisation.
The Ld counsel has explained that Sachin Chauhan’s statement referred only to audio digitization, while metadata conversion was outsourced to four Rohit
Tandon Group entities. This fact was not verified either by the AO or by the 60
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

60 | P a g e

CIT(A). The assessee had infact furnished the details of converted data in pendrive before the AO and CIT(A) which was not verified or commented upon by both. This data submitted was evidencing metadata conversion done by Rohit
Tandon Group of companies. This data was not cross checked by the AO or CIT(A) with Rohit Tandon Group of Companies to prove the work’s nature and volume. Further certificate from CTO Sarvshiksha on record supporting the legitimacy of these transactions is a valid document which was not cross verified.
8.27 It is observed that documentary evidence including printing orders, licensing agreements, and metadata files substantiates the expenses. The AO and CIT(A) failed to verify these evidences, and the absence of any incriminating material found during search on this aspect undermines the disallowance. The low turnover of the service providers is irrelevant, as the assessee had provided evidence of services rendered.
8.28 We have examined the documentary evidence on record (invoices, agreements, metadata files) to verify the genuineness of the expenses. There is no dispute regarding the business expediency of these expenses. There is sufficient evidence to establish the genuineness of the expenditure. Having regard to the facts not been contradicted either by the AO or by the Ld. CIT(A) computation of disallowance of Rs. 1,20,36,000 on this ground by the CIT(A) is not substantiated and thus, deleted. The order of the CIT(A) in deleting disallowance of Rs.
6,00,000/- due calculation error is confirmed. As a result the appeal of the 61
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

61 | P a g e assessee on this ground is allowed and the appeal of revenue on this ground is dismissed.
9. Department has challenged the deletion of additions made on account of disallowance of legal and professional expenses paid to Rohit Tandon group as bogus. Details of the expenses are tabulated as under:

Assessment Year
Expenses Incurred
2013-14
1,50,00,000
2014-15
3,10,00,000
2015-16
3,95,00,000
2016-17
3,20,00,000
2017-18
80,00,000

62
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

62 | P a g e was involved in providing accommodation entries in the form of bogus legal and professional expenses to SCIPL. The retainer ship fees paid to Varun Tandon,
Rohit Tandon & Co., and T & T Law were deemed exorbitant and potentially bogus, as typical legal consultancy fees are Rs. 2-2.5 lakh, while payments like
Rs. 90 lakh (received 25/10/2012 against seven bills totalling Rs. 1 crore dated
16/10/2012) and Rs. 1.62 crore (received 07/05/2013 against twelve Rs. 15 lakh bills dated 04/04/2013) were made, often for entire years in advance. For FY
2013-14, Rs. 1.8 crore was credited on 07/05/2013, and Rs. 50 lakh quarterly payments were made in FY 2014-15 and April-June 2015-16, with an additional
Rs. 50 lakh for FY 2013-14 credited on 01/05/2014, suggesting accommodation entries among Rohit Tandon Group entities as alleged. Despite multiple summons, neither Sh. Rohit Tandon, its director or Sh. Bhushan Kumar, or any employee of SCIPL appeared for examination or provided details of services, such as list of court cases, appearance in court, judgments taken, or legal documents, beyond bills for confirmations for credibility of the expenses incurred.
9.3
The main arguments, contentions, reasons for making the disallowance summarized are as under:
(i) The legal contention raised by the assessee was rejected by holding that section 153A of the Act mandates the assessing officer to assess or reassess
"total income that includes disclosed as well as undisclosed income.

63
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

63 | P a g e

(ii) The search action on Rohit Tandon Group clearly revealed that Sh.
Rohit Tandon was involved in adjusting its unaccounted cash by taking accommodation entries of income nature from various parties. The transactions entered into by SCIPL with various Rohit Tandon Group entities are in the nature of accommodation entries where SCIPL has claimed bogus expenses and received cash in lieu of the cheques given to Rohit Tandon Group entities.
(iii) The claim being made by SCIPL that the legal expenses Incurred are genuine is not backed by concrete material or evidence. There is no proof of actual rendition of any legal services. Simply furnishing bills and invoices is not sufficient for claim of expenditure.
(iv) During the course of search on SCIPL and during post search investigations it has been noticed that accommodation entries in the form of bogus legal and professional expenses has been provided by Rohit
Tandon Group as the bills raised have been found non-genuine.
(v) Further, payments received in the hands of Rohit Tandon, were found to be exorbitant and thus bogus.

64
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

64 | P a g e

“181. The contents of the assessment order and the submissions of the appellant have been carefully considered. Coming to the merits of the case and Ground No. 5, the appellant has contended that the A.O erred in disallowing the legal and professional expenses amounting to Rs.
1,50,00,000/- incurred by the appellant as not genuine by holding the same to be bogus expenses.

S.No Date of Invoice
Nature of services provided and amount raised for the services
Amount (Rs.)
1. 16.10.2012
Professional fee for services rendered in connection with detailed analysis and legal opinion rendered on the amendments made in section 16, 17, 18, 19, 31(1)(b), 31D & 33 of the Copyright Act vide Copyright Amendment Bill,
2012, its impact retrospective and prospective.
15,00,000
2. 16.10.2012
Towards consolidated professional fee and expenses incurred for services rendered in connection with representing the matter CCI No.
40 of 2011 pending before DG Investigation,
Competition Commission of India.
20,00,000
3. 16.10.2012
Towards retainership fee for matters fixed before the Copyright Board for the periods 01.04.2012 to 30.06.2012
and 01.07.2012
to 30.09.2012
@Rs.10,00,000/- per quarter
20,00,000
4. 16.10.2012
Towards preparation of rejoinder affidavit, research and conferences in the matter writ petition no. 6255/2010 titled SCIPL Vs. UOI in Delhi HC
7,50,000
5. 16.10.2012
Towards drafting of special leave petition against the order dated 08.05.2012 passed by Division
Bench of Delhi High Court in FAO(OS) No. 423-
424 of 2011 in SCIPL Vs. IPRS
7,50,000
6. 16.10.2012
Towards retainership fee for matters fixed before the Copyright Board for the quarter from 10,00,000

65
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

65 | P a g e

66 | P a g e legal experts including Sh. Rohit Tandon & Sh. Varun Tandon and payments thereof were made to Sh. Rohit Tandon & Sh. Varun Tandon either directly in their name or to their law firm T&T Law or sole proprietorship Rohit Tandon & Co. as per the bills raised by them. As the volume of litigation is high T-Series always found itself short of legal experts and thus Sh. Rohit Tandon was hired on yearly retainer to advise T-
Series on all these legal matters on regular basis and rendered his expert opinion in various legal conferences with senior counsels, drafting of replies, suits, writs etc. The narration on the professional bills raised is self-explanatory. The appellant has also furnished copies of various judgments/orders, Writs, e-mail correspondence, opinions, reports, documents etc which have professional contribution and inputs from Rohit
Tandon and his associates. The appellant has further explained that in addition, their professional services were extensively used on day to day basis on diverse legal issues, such as, vetting and finalisation of employment/service contracts, film production agreements, copyright acquisition agreements, licensing agreements, vetting of termination notices, - including drafting and vetting of related agreements and contracts, seeking advice on various fiscal enactments, FEMA regulations, etc; seeking general legal advice on pending and prospective arbitration disputes and litigations pending and envisaged in courts and other legal foras, etc.

67
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

67 | P a g e

Details of evidence/material regarding professional services rendered by Rohit Tandon, Varun Tandon and T & T Law during various assessment years to SCIPL
File
No.
S.No Particular
Page No Volume I

1
Copy of legal opinion of Rohit Tandon dated July 30 2012
post Copyright Act Amendment in June 2012 on various section of the said Amendment. The opinion contains five discussions in response to queries raised by SCIPL (a company) regarding their position and legal strategies with respect to their existing repertoire of rights and future acquisitions of rights.
This document provides a comprehensive review of the changes brought about by the amendment and the legal implications for SCIPL. It is an important tool for SCIPL to understand the impact of the amendment on their business operations and to make informed decisions regarding their legal strategies going forward.
1-20
2
The "Copy of Mail dated September 29, 2013 from Rohit
Tandon" a comprehensive document that provides a summary of a meeting between T&T Law and T-Series. The meeting was focused on addressing various issues related to a case being heard by the Competition Commission of India
(CCI), Case No. 40-2011. This mail, written by Rohit
Tandon, provides a clear outline of the course of action to be taken by him in his capacity as a legal representative for SCIPL in this matter.
21-23
3
The "Copy of Trail Mails between T&T Law and SCIPL between November 15, 2012 and November 20, 2012" a collection of emails exchanged between T&T Law and SCIPL regarding the HT Media case. This mail trail provides a comprehensive record of the discussions and negotiations that took place between the parties during this period. The document also includes a copy of a relevant case law from the Competitive Commission of South Africa, which provides valuable context and guidance for the parties involved in the HT Media case.
24-66
4
Copies of comprehensive compilation of relevant case laws filed by Sh. Rohit Tandon/Sh. Varun Tandon, (partners of the law firm T&T Law) to the Competition Commission of India on behalf of their client, SCIPL On November 15th, 2012,
67-417
5
Copy of First Royalty Order dated 19th November 2002
passed by the Copyright Board at Hyderabad
418-452

68
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

68 | P a g e

Volume II

6
Copy of Second Royalty Order dated 25th August, 2010
passed by Copyright Board at Hyderabad. This order has a direct impact on the rights of Super Cassettes Industries Ltd
(SCIPL), even though SCIPL was not a party before the board during the proceedings leading to the issuance of this order.
453-510
7
Copy of Writ Petition no 6225 of 2010 filed on 13 September,
2010 alongwith supporting documents filed by Super
Cassettes Industries Ltd against impunged order dated 25
August, 2010 passed by Hon'ble Copyright Board along with supporting documents, which are likely to include evidence and arguments in support of their claims against the impugned order.
511-843
8
Copy of Delhi High Court Order dated 15th September, 2010
granting a stay on the enforcement of the Second Royalty
Order against SCIPL.
844-846
9
Copy of Director General's Report dated 17th September,
2012 pertains to complaint filed by HT Media against Super
Cassettes Industries Limited before the Competition
Commission of India
847-1035
Volume III

10
Copy of Economic Analysis of CCI Report dated 04th April,
2013 stating the findings on the report of Director General of the Competition Commission of India dated 17th
September , 2012
1036-1057
11
Copy of final order dated 1st October 2014 passed by the Competition Commission of India regarding the complaint filed by HT Media Limited
1058-1150
12
Copy Chart compiling the various applications for compulsory licensing under Section 31(1)(b) of the Indian
Copyright Act, filed by FM Radio Stations against Super
Cassettes Industries Limited.
1151-1158
13
Copy of Order dated 4th May, 2012 passed by the Hon'ble
Supreme Court of India in regards to Special Leave Petition
(SLP) filed by Super Cassettes Industries Limited.
1159-1174
14
Copies of Compilation of various decisions passed by Indian
High Courts around 2010-2011 regarding the requirement of separate licenses for broadcasting songs on FM Radio
Stations, including CS(OS) 1185/2006 and I.A Nos. 6486,
6487, 7027/2006 and CS(OS) 1996/2009 and IA no.
13692/2009, decided on 28th July, 2011
1175-1208
15
Copy of writ filed on 21 March, 2013 before Hon'ble Delhi
High Court challenging the provisions of the Copyright Act
Amendments being ultra vires of Constitution of India.
1209- 1436

69
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

69 | P a g e

16
Copy of reply in FIR no.290/02 under P.S.Okhla Indl Area,
Phase - 1, New Delhi in family settlement dispute of promoters and promoter's companies Ms/ Super Cassettes
Industries Ltd, M/s Tony Electronics Ltd & Ms/ Super
Electronics
1437-1476

70
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

70 | P a g e

“Q10. Please give details of entities from which you are receiving professional receipts?

Ans. I receive professional receipts from:
1. T&T Law
2. Rohit Tandon & Co.

Q11. Please give details of your major projects in the above firms from which you are earning professional receipts in the last one year?

Ans. T & T Law:
1. National Insurance Company
2. General Insurance Council
3. New India Insurance Council
4. Oriental Insurance
5. ISSCO-TOKIO GIC
6. GIPSA
7. Tenon Group
Rohit Tandon & co.
1. Super Cassettes
2. Outsourced work from bigger law firms like Luthra & Luthra and more.”

71 | P a g e professional services. There are different amounts being charged by different professional for providing same services. Thus, charging of a higher amount cannot be a criterion to term legal expenditure as bogus especially overlooking the elaborate material and evidence filed at the assessment stage in substantiation of actual rendition of legal and professional services and its utilisation in the legal disputes of SCIPL.
Rohit Tandon, M/s Rohit Tandon & Co., Varun Tandon and T&T Law have raised bills on the basis of negotiated amount with the appellant and the appellant through proper payment channels has paid the amount raised and has also paid TDS along with service tax. It is also noted that there is no evidence or material on record to allege or suggest that the amounts paid have come back to the appellant in the form of cash. Another aspect to be considered is that for payment towards professional services, there is no fixed criteria or benchmark. For rendering the same services two different individuals from the same profession may charge different fees depending on their experience, expertise and skill set. Thus, the quantum of professional fees paid to a professional cannot be questioned on the ground that the same is excessive.

72
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

72 | P a g e before the A.O, it is beyond its powers to bring Sh. Rohit Tandon before the A.O, as the appellant only engaged him for professional purposes and the interaction was nothing but a mere professional transaction. The appellant has contended that failure to produce Sh. Rohit Tandon before the A.O should not automatically lead to a conclusion that the expenses incurred by the appellant are bogus in nature. This contention of the appellant appears to be plausible.

“In view of the above discussion, it is found that the legal &
professional expenses incurred by the appellant are not in the nature of bogus/sham transactions. The appellant has furnished necessary and sufficient evidences such as bills raised, deposit of TDS along with payment of service tax, evidence of services having been rendered. Hence, the disallowance of Rs. 44,67,150/- on account of Legal & Professional charges paid to M/s Rohit Tandon & Co. is hereby deleted.”

73 | P a g e disallowance of Rs. 1,50,00,000/- on account of Legal & Professional charges is hereby deleted. Consequently Ground No. 5 is Allowed.”

74
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

74 | P a g e legal matters on regular basis and rendered his expert opinion in various legal conferences with senior counsels, drafting of replies, suits, writs etc. The narration on the bills is self-explanatory, however, copies of various judgments/orders, Writs, e-mail correspondence, opinions, reports etc are appended herewith for ready reference. In addition, their professional services were extensively used on day to day basis on diverse legal issues, such as, vetting and finalisation of employment/service contracts, film production agreements, copyright acquisition agreements, licensing agreements, vetting of termination notices, - including drafting and vetting of related agreements and contracts, seeking advice on various fiscal enactments, FEMA regulations, etc; seeking general legal advice on pending and prospective arbitration disputes and litigations pending and envisaged in courts and other legal forams etc.
9.6
The Ld Counsel also stated that appellant also placed reliance on the order dated 27.01.2022 passed by CIT(A)-23, Delhi for A.Y. 2012-13 (Copy enclosed at Page 129 to 160 of P/B Vol. II) for AY 2012-13 in appellant’s own case wherein the disallowance of legal & professional expenses of Rohit Tandon was deleted by CIT(A) 23 vide order dated 27.01.2022 by holding the same to be genuine and driven by business expediency on similar facts. The Ld. counsel also drew our attention to the fact that Rohit Tandon, Rohit Tandon & Co and T&T
Law Firm have furnished certificate certifying that their assessments were finalised in scrutiny assessment proceedings by DCIT, Central Circle-2, Delhi for 75
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

75 | P a g e the assessment years under consideration and that no adverse inferences have been drawn by the assessing authorities in respect of such transactions with SCIPL and the same was furnished before the Ld. CIT(A) along with the assessment order for Assessment Year 2014-15. 9.7
Further the Ld. Counsel of the assessee submitted that Sh. Rohit Tandon in his statement, admitted the fact that services were provided to T series group.
Once the rendition of services provided has been established, the amount of fees charged cannot be disputed and the claim of the Ld. AO that exorbitant amount has been charged has no basis and there is nothing on record to establish that cash was received back by the appellant.

76 | P a g e

Companies which are briefly numerated as under were submitted by the appellant during assessment proceedings:
A. Copies of legal opinions taken.
B. Copy of Emails between SCIPL and T&T Law Firm in respect of Case before Competition Commission of India having case No. 40-2011, Legal case laws references.
C. Copy of compilation of case laws file before CCI by Rohit Tandon group of companies.
D. Copy of royalty orders passed by CCI Hyderabad.
E. Copy of writ petition filed by Rohit Tandon group of companies on behalf of SCIPL.
Copy of final order passed by CCI against complaint of HT Media Ltd.

F. Copy of compilation of various decisions regarding requirement of separate licensing for broadcasting songs.
G. Copy of Writ filed before Delhi High Court challenging the provisions of copyright act being ultravires of constitution of India.
H. Copy of reply filed in family settlement dispute of promoters.
9.10 We find that the above-mentioned list of documents submitted during the assessment proceedings were not considered by the Ld. AO in the assessment order and disallowance was made on the basis of presumptions, surmises and conjectures
9.11 Further Ld. Counsel for the assessee contended that in the statement recorded during the search on Rohit Tandon Group of companies, Rohit Tandon himself admitted provision of services to SCIPL which is not contradicted by the DR. The Ld. AR submitted thatcharging of exorbitant amounts cannot be a criteria to term legal expenditure as bogus overlooking the elaborate material

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77 | P a g e evidences filed at the assessment stage in substantiation of actual rendition of legal services. It is also evident that there is no evidence or material on record to allege or suggest that the amounts have come back to the appellant in form of cash.
9.12 Regarding AO observation that professional invoices were issued on a single date for the entire year, Ld. Counsel for the assessee submitted that the professional services were rendered by advocates periodically as per the requirements of the case. The issuance of multiple invoices for various professional services on a single date, as a matter of mutual convenience, does not constitute a material factor in assessing the genuineness or business expediency of the expenditure. What is pertinent and determinative is the actual rendition of services and their utilization in furtherance of the appellant’s business activities.
9.13 Before the CIT(A) and AO detailed annexures of services provided by Rohit Tandon Group to SCIPL running into 1476 pages (3 Volumes) were furnished. The AO has not pointed out any defect / discrepancy in the same and the Ld. CIT(A) duly appreciated the detailed annexures of service provided /
furnished in reaching the conclusion that actual service were provided by Rohit
Tandon Group to the appellant company and the same cannot be doubted and this fact was not addressed by the Ld. AO in the assessment order.

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78 | P a g e

79 | P a g e advertisement expense from Sadhna Group considering them as bogus expense in order to avoid payment of taxes in India, which is present in appeals for Assessment Years 2016-17, 2017-18, 2018-19 and AY 2019-20 (ITA Nos.
2714/DEL/2023, 7/DEL/2024, 51/DEL/2024 and 271/DEL/2024) for the assessee and Assessment Year 2014-15 and 2015-16 (2512/DEL/2023 and 2702/DEL/2023) for the department. The decision for the department appeals for Assessment Years 2014-15, will be applicable for AY 2015-16 as the same are dealt with on legality basis and the decision for the assessee appeal in AY 2016-
17 will be applicable for AY 2017-18, 2018-19 and 2019-20 as the issues are identical and no new circumstances exist.
10.1 The brief facts in regard to the issue are that SCIPL is engaged in the activity of procuring and selling music and also engaged in production of films.
In order to promote a particular audio song or album it is required to popularise the said sound recording. One of the means of promoting the song is to run paid promotions of the song on satellite TV channels. Similarly, in the case of films paid promotions containing teaser/trailer of the film are telecast of satellite TV channels for promoting the film. It is in this context and background that promotion and advertisement expenses were incurred through Sadhna Group of satellite TV channels. SCIPL made payments to various companies of Sadhna
Group in this regard i.e. Sadhna Media Pvt. Ltd., Ishwar Broadcasting Pvt. Ltd.,

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80 | P a g e

Naman Broadcasting Pvt. Ltd., Sharp Eye Advertising Pvt. Ltd., Varun Media
Pvt. Ltd., Sadhna Broadcast Ltd., Chirau Broadcast Network Ltd.
10.2 During the course of assessment proceedings the AO recorded statements u/s 131(1A) of Sh. Gaurav Gupta (Director in Sadhna Group Company) who is son of Sh. Rakesh Gupta (owner and MD of Sadhna Group). In his statement Sh.
Gaurav Gupta stated that there are no written agreements with SCIPL regarding services provided by Sadhna Group of Companies.
10.3 Further in response to question as to how the content was delivered and the proof of running the content he replied that the content is received on pen drive or CD and hard disks and the same is shown on TV Channels of Sadhna Group and is kept in Temporary memory of the logger/server for approx. 3 months and then it is overwritten by new content. Hence, they did not have any proof of content on their TV Channels.
10.4 The AO has mentioned that summons were issued to various entities and officers of Sadhna Group on 13.02.2021 to record their statement but no compliance has been made till July 2021. Further summons were issued on 20.07.2021 but without any result.
10.5 The AO further observed that in the case of Naman Broadcasting and Telecommunications Pvt Ltd, Sadhna Media Pvt Ltd and Ishwar Broadcasting Pvt
Ltd instead of attending the office a request was received to record the statement

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81 | P a g e virtually due to Covid 19 situation in Delhi and it was mentioned that the desired documents will be furnished. However, this was denied, and another summons was issued asking them to attend physically. In response to the same Sh. Arpan
Gupta, one of the Directors appeared. However, he was not able to answer the questions properly and after some time sought a further 15 days as he was unprepared and left.
10.6 The AO contended that during search it was found that SCIPL does not maintain detailed bills and vouchers, any work order or any agreement for the huge payments being made under the garb to Sadhna Group of Companies.
SCIPL were not able to produce business agreement, email correspondence etc.
Further, the statements recorded u/s 132(4) of the directors and accountants of the company at the time of search proved that the bills raised were bogus.
10.7 A table has been reproduced in the Assessment order and it has been mentioned that the table shows films in which bogus publicity expenses have been booked and only bogus bills with minimal specification of the content were found in the name of group entities.
10.8 The Ld. AO Further stated that multiple summons were issued to the Director Sh. Gaurav Gupta, Sh. Rakesh Gupta and Principal Officers of Sadhna
Group for recording their statement in respect of expenses incurred by SCIPL through Sadhna Group but none of them appeared.

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82 | P a g e

83
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83 | P a g e

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84 | P a g e under appeal is a completed assessment. From the examination of the assessment order, it is apparent that no incriminating material was found during the course of search action on 29.11.2018 on the appellant qua the aforesaid disallowance. The disallowance is primarily based on the argument that appellant failed to furnish any material/evidence in support of claim of advertisement expenditure incurred through Sadhna Group of Companies. The appellant has placed reliance on the ratio of the decision of Hon'ble Delhi High Court in the case of Pr.CIT Vs. Kabul Chawla 61
Taxmann.com 421. This decision of Hon'ble Delhi High Court came up for consideration of the Hon'ble Supreme Court in the case of Pr.CIT VS.
Abhisar Buildwell Pvt. Ltd. in Civil Appeal No. 6580 of 2021 and other connected appeals. The apex court vide its order dated 24.04.2022 has upheld the above referred order of Delhi High Court. The relevant portion of the order of the Hon'ble Supreme Court has been reproduced in detail while adjudicating Ground No. 3 of the present appeal. The ratio laid down by the apex court is reproduced below:-

85 | P a g e requisition under Section 132A of the Act, 1961. However, the completed/unabated assessments can be re-opened by the AO in exercise of powers under Section 147/148 of the Act,subject to fulfilment of the condition we envisaged/mentioned under sections 147/148 of the Act and those powers are saved.
245. Further, a letter dated 16.05. 2023 was addressed to the Assessing
Officer (DCIT, Central Circle-3, New Delhi) requiring to bring to the notice incriminating evidence, if any, found during search action on SCTPL. In response to the same, the Assessing Officer has sent a letter dated 13.06 2023. Ongoing through the contents of the said letter the observations made therein are summarised as under i.
Books of accounts were seized from the premises of SCIPL and these become incriminating in nature when seen in the light of statements recorded during search and other findings during post search investigations.
ii.
During the search it was found that SCIPL does not maintain detailed bills and vouchers, work order, e-mail correspondence or any agreement for advertisement expenses paid to Sadhna Group of companies. These aspects have been covered in the statements recorded u/s 132(4) of the directors and accountants of the company.
iii.
During Post search investigation statement were recorded u/s 131(1A) of the Act of Shri Gaurav Gupta (Director in Sadhna
Group) s/o Shri Rakesh Gupta (Owner and Managing Director of Sadhna Group). While explaining the modus operandi and business model of Sadhna Group, it was explained by him that clients give orders through e-mails or release orders (RO) and advertisement is telecast on TV channels after appropriate price negotiation. He further stated that usually written agreements or release orders are sent by clients elaborating terms and conditions and also submitted a sample RO between Sadhana Media Pvt. Ltd. and M/s Dharmpal
Satyapal Group.
iv.
The requisite incriminating evidences in the form of statement of Shri Gaurav Gupta. Sample invoices/bills, ledger account and sample release orders have been attached to the above referred letter of the Assessing Officer.

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86 | P a g e

"In view of the above, we are of the considered view that the regular books of accounts maintained by the assessee in tally software, now being referred by the revenue, to justify the addition did not constitute incriminating material unearthed during the search."

"We have considered the aforesaid contentions and are of the view that no substantial question of law arises, as the matter is 87
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87 | P a g e squarely covered by Kabul Chawla supra, which has been correctly applied to the facts of the case by the ITAT. The ITAT, in the impugned order has held that in the audited report filed by the assessee along with the report, cash book, ledger, bank book etc. were mentioned; that the respondent assessee was maintaining books on TALLY Accounting Software which was seized during the search and was being treated as incriminating material; however, regular books of account of the assessee, by no stretch of imagination, could be treated as incriminating material to form basis of framing assessment under Section 153A read with Section 143(3) of the Act."

Para 7- No addition can be made or sustained simply on the basis of statement recorded at the time of search, for which no corroborative material is found. In order to make a genuine and legally sustainable addition on the basis of surrender during search, it is sine qua non that some incriminating material must have been found to correlate the undisclosed income with such statement. Thus, where surrender made by the assessee's elder brother on his behalf on account of commission income was not backed by any material/evidence indicating the involvement of the assessee in the agency business, no addition could be made to the assessee's income on basis of such surrender.

88 | P a g e verifiable from records and books of account and Assessing Officer did not accept explanation and added said amount in income as unexplained cash credit, impugned addition was not justified

89 | P a g e evident from the summarized content and the assessment order, no incriminating material was found during the search to justify this addition.
10.14 This fact is further corroborated by the AO’s letter dated 13.06.2023, issued in response to the assessee’s request vide letter dated 16.05.2023, which sought details of any incriminating documents unearthed during the search. As per the reply of the Ld. AO the statement of Shri Gaurav Gupta of Sadhna Group,
Sample invoices/bills, ledger account and sample release orders were considered as incriminating by the AO while making this addition
10.15 From the above it is clearly evident that no incriminating material was found relating to this addition made. As per the Ld. AO sample invoices/bills ledger account and sample release orders were considered as incriminating. All these as are part of regular books of accounts cannot be considered as incriminating. Further the statement of Gaurav Gupta of Sadhna Group was considered as incriminating. We find that the statement was recorded during the course of assessment proceedings of the assessee and hence on this score alone the same cannot be considered as incriminating. Further the extract of statement reproduced in the assessment order on a plain reading of the same does not suggest at all to be considered as incriminating, since nothing has been stated in the statement indicating the expenses having being not genuine.

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90 | P a g e

91 | P a g e under:
1. The business expediency of the advertisement expenditure is not in dispute since the appellant company is engaged in business of selling and distribution of music and production of films. In order to promote a particular audio song or album or a film it is important to popularize the content by running paid promotion of the content on various channels. The paid promotion is not restricted to Sadhna Group Channels but also on various other satellite TV channels such as Star Network, Sony India, Zee
Network MTV etc. The nature of advertisement expenditure is such that it is an essential part of the business operations of the appellant company.
The controversy under this ground is limited to the genuineness of the expenditure and not the business expediency of the expenditure.

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92 | P a g e e)
It is not believable that the advertisement for trailer of a commercial film is being run on a devotional channel.
3. The assessee in order to justify the impugned advertisement expenditure has filed copies of invoices and copies of log sheets giving particulars about date and time of telecast of advertisement slots run on the satellite TV Channels through Sadhna Group of Companies. However, existence of bills and payment by way of cheque is not sufficient to prove the genuineness of the expenditure. The assessee has not been able to prove that the alleged services were rendered by Sadhna Group to the appellant and the Sadhna Group has not been able to prove that services were rendered by them to appellant.
4. During course of search statements of various persons were taken and no one could establish that there was any rendition of services and during post search enquiries also it could not be established.
5. During the year the assessee has given Rs. 39 Crore to the Sadhna
Group for alleged advertisement and had it been a genuine transaction the assessee would have taken all the details like channel, time slot etc for actual rendition of services and the same would have been maintained.
6. The advertisement expenditure is charged on the basis of timing
(morning, day time, night time, prime time, evening and late night etc) when the advertisement is aired on channel. However, in this case there is no details about timing. It is also general practice that the rates for different time slots are different. The rates for different slots are different and the two parties generally discuss and then reach an agreement about rates charged.
7. The advertisement aired is measured in terms of 1/100th of a second.
The bill raised is on the basis of exact number of micro seconds details whereof are available.

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93 | P a g e

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94 | P a g e is engaged in the business of selling and distribution of music and production of films. In order to promote a particular audio song or album or a film it is important to popularise the content by running paid promotions of the content on various satellite TV channels. It is also noted that the paid promotion through satellite TV channels is not restricted to Sadhna Group of companies alone but is telecast on various satellite TV channels such as Star Network, Sony India, Zee Network, MTV etc. The nature of advertisement expenses is such that it is an essential part of the business operations of the appellant company. In fact, the total quantum of advertisement expenses claimed in the P&L Account are much more than the disallowance made in the assessment order.
221. However, in the present case the advertisement expenses incurred through Sadhna Group of companies have been questioned by the Assessing Officer by contending that these expenses are of bogus nature.
Therefore, the controversy under this ground of appeal is limited to the genuineness of expenditure and not the business expediency of the expenditure.
222. Regarding the genuineness of the expenditure I am in agreement with the findings discussed in the assessment order. The appellant has been unable to comprehensively establish the genuineness of the advertisement expenditure incurred through Sadhna Group entities in view of the following :- i) M/s SCIPL was not able to furnish any work order, written agreement, email correspondence in support of the advertisement expenses being claimed; ii) Shri Gaurav Gupta (Director in Sadhna Group of companies) stated in his statement that usually written agreements or release orders are sent by other clients elaborating the terms and conditions. Whereas no such written agreement or release orders are available in the case of SCIPL. A sample release order dated 05.10.2014 issued by M/s
Dharampal Satyapal to Sadhna Media Pvt. Ltd. has been reproduced in the assessment order.
iii) A film-wise detail has been tabulated in the assessment order listing out the total publicity expenses for a particular film vis-à-vis advertisement expenses incurred through Sadhna Group of Companies

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95 | P a g e and a conclusion has been drawn that such high expenditure of advertisement for certain films is in the nature of bogus expenses.
iv) Non-compliance to summons issued to various individuals and entities of Sadhna Group of entities.
v) It is also not believable that the advertisement for trailer of commercial feature film is being run on devotional satellite channels.

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96 | P a g e and then reach an agreement about the rates charged. In the instant case, there are no such evidences available either the Sadhna Group or with the appellant.
227. The advertisement aired is measured in terms of 1/100th of second.
The bill raised is on the basis of exact number of micro seconds. In the case of the appellant, there are no such details.
228. All the above facts clearly establish that actually there was no rendition of service and the appellant took accommodation entry from Sadhna Group of companies.
229. In the absence of any evidence and in light of the decision of the Hon'ble Supreme Court in the case of CIT vs. Calcutta Agency Ltd. 19 ITR
191 wherein it was held that the onus of proving necessary facts in order to avail the deduction u/s.37(1) is on the assessee, If the assessee fails to establish the facts necessary to support his claim for deduction, the claim for deduction is not admissible. Onus lies on the assessee to prove the veracity of the expenses claimed by it. Reliance is also placed on the decision of Andhra Pradesh High Court in the case of CIT vs Transport
230. Upon evaluating the findings discussed in the assessment order and the submissions of the appellant I am inclined to agree with the assessing officer that there is lack of enough material on record to justify the advertisement expenses of Rs. 39,00,00,000/- incurred by the appellant through Sadhna Group of entities. Thus, the appellant has no case for claim of expenditure. Hence, the disallowance of Rs. 39,00,00,000/- pertaining to advertisement expenses is upheld and this ground of appeal is dismissed. Ground no. 7 is dismissed.”

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97 | P a g e promotions of the song on satellite TV channels. Similarly, in the case of films paid promotions containing teaser/trailer of the film are telecast of satellite TV channels for promoting the film. It is in this context and background that promotion and advertisement expenses were incurred through Sadhna Group of satellite TV channels. SCIPL made payments to various companies of Sadhna
Group in this regard viz. Sadhna Media Pvt. Ltd., Ishwar Broadcasting Pvt. Ltd.,
Naman Broadcasting Pvt. Ltd., Sharp Eye Advertising Pvt. Ltd., Varun Media
Pvt. Ltd., Sadhna Broadcast Ltd., Chirau Broadcast Network Ltd.
10.21 The Ld. Counsel of the assessee submitted that the advertisement and promotion department of the assessee was at that time handled by Sh. Vinod
Bhanushali and his team. This department finalises the amount of promotion and publicity of a song or a film to be done and through which channels. Once these logistics are finalised, the team of the assessee used to get in touch with Sh.
Arpan Gupta and his team in Sadhna Group for actual telecast of advertisements.
In view of past relations and good rapport between the two teams release orders for telecast of advertisements was done orally though phone. After the telecast of advertisement, the log sheets showing date and time of telecast and the particulars of satellite TV channel were submitted by Sadhna Group alongwith invoice and in turn payment was released by SCIPL.
10.22 As regards the observation made in the assessment order and relied upon by the CIT (A) about the statement of Shri Guarav Gupta, Director in one of the 98
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98 | P a g e

Sadhna Group of Companies, the Ld. Counsel of the assessee submitted that the same is of innocuous nature as nowhere in the statement he has admitted that transaction with SCIPL are bogus. On the contrary, he has confirmed that the transactions with SCIPL are genuine. It is merely elaborated in his statement that regarding the transactions with SCIPL there are no written agreements. Regarding the proof of telecast he has specified in the statement that “advertisement content” is received in pen-drive, CDs and hard disk. The content so received is kept in temporary memory of the server for approx. three months and then it is overwritten by new content. The Ld. Counsel of the assessee draws our attention towards the provisions of Cable Television Networks (Regulation) Act, 1995 read with Rule 21(3) of Cable Television Networks Amendment Rules, 2021 where it is a mandatory requirement for broadcasters and advertisers in India to retain content, including advertisements, for a period of 90 days from the date of transmission This record must be maintained in a manner that allows for easy access and inspection by the authorized officers of the Ministry of Information and Broadcasting (MIB) to ensure compliance with the Programme Code and Advertising Code prescribed under the Act. Hence as per the directive of the MIB and provisions of Cable Television Networks (Regulation) Act, 1995 read with Rule 7(11) of Cable Television Networks Rules, 1994, it is only mandatory to retain content including advertisements for a period of 90 days from the date of transmission and looking at the quantum of data and cost involved in storage of 99
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99 | P a g e data beyond 90 days Sh. Gaurav Gupta had replied that the data was kept in temporary memory for 90 days form the date of transmission only. Hence, the ground that the proof of running the advertisement was not furnished the reasons for the same have been explained above and the AO was not justified in making disallowance on this ground.
10.23 The Ld. Counsel of the assessee submitted that SCIPL commenced its operations as a producer of devotional music under the brand name T-Series.
Similarly, Sadhna was established in 2003 as a dedicated devotional television channel and both share a congruent ethos of promoting spiritual and devotional content. The business relationship between SCIPL and Sadhna has been in existence since 2003, characterized by a continuous and consistent course of dealings. Over the years, the terms and conditions governing the broadcast of SCIPL’s content on Sadhna’s platform have been mutually agreed upon through established business practices and verbal understandings, reflecting the trust and mutual reliance inherent in their long-standing association.
10.24 The Ld. Counsel of the assessee further argued that inspite of making a written request the Assessing Officer did not provide a copy of statement of Shri
Gaurav Gupta, relied upon in the assessment order. It is a well settled proposition of law that not allowing the assessee an opportunity to cross-examine the statement of witness, which were made the basis for assessment, is a serious flow which makes the impugned order a nullity, as it amounts to violation of principle

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100 | P a g e of natural justice. Reliance is placed upon the order of Supreme Court in the case of Andaman Timber Industries vs. CCE (SC) 62 Taxmann.com 3/52 GST 355
(SC).
10.25 Regarding the observation made in the assessment order and by CIT (A) that there is no credible evidence in support of advertisement expenses and the assessee does not maintain details, bills and vouchers, the Ld. Counsel of the assessee submitted that the assessee has furnished the copies of every invoice and the log sheets/telecast certificates forming part of the invoice before the AO and the CIT (A) and the same established the rendition of services. The log sheets/telecast certificates give the details of date and time at which the advertisement of the assessee was run on the channel and also gives the duration of advdertisement.
10.26 Regarding non-compliance of summons issued to the entities belonging to Sadhna Group of companies, it is clarified by the Ld. Counsel of the assessee the assessee company has no control over third parties and hence no adverse inferences can be drawn against the assessee company based on such non- compliance of third parties. Further the Counsel of the assessee submitted that the Assessing Officer, in the assessment order, explicitly acknowledged that Mr.
Arpan Gupta, a director of M/s Naman Broadcasting & Telecommunications Pvt.
Ltd., M/s Sadhna Media Pvt. Ltd., and M/s Ishwar Broadcasting Pvt. Ltd., appeared before the Assessing Officer on July 27, 2021, to provide his statement.

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101 | P a g e

During this appearance, Mr. Gupta furnished his official email ID and password, thereby cooperating with the proceedings. Furthermore, Mr. Gupta responded to several questions posed by the Assessing Officer during the recording of his statement and provided the login credentials for his email account. Neither a copy of the said statement was provided nor the said statement was confronted with M/s SCIPL for verification or response. Instead, the assessment order selectively reproduces only the concluding paragraph of Mr. Gupta’s statement, wherein he sought an adjournment of 15 days for the next hearing. The Assessing Officer has characterized this request for adjournment as a deliberate tactic to willfully evade compliance with the summons issued, which is an unsubstantiated and erroneous inference that fails to consider the extent of cooperation extended by Mr. Gupta during the proceedings.
10.27 Regarding the observations made in the assessment order that analysis of certain log sheets on sample basis revealed that the frequency of running the advertisement is within a very short gap of time, it is submitted and clarified by the Ld. Counsel of assessee that these are merely inferences being drawn. It needs to be appreciated that in order to popularise a content the advertisements have to be run frequently with very less gap of time so as to put it in public memory.
Similarly, the observations made that the trailer of commercial feature films are being telecast on satellite channels is also without any basis as the audience for 102
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102 | P a g e satellite TV channels is very vast and people watching devotional channels do go out to theatre to watch feature films.
10.28 Regarding the observation made in the assessment order and by CIT(A) that in respect of certain feature films for which advertisement expenses has been claimed through Sadhna Group of companies, quantum of expenditure is very high, it is submitted by the Ld. Counsel of assessee that the same is without any meaningful basis as the quantum of advertisement expenditure for a film depends on various factors such as the budget and scale of the film, star cast, other films releasing on the same date, chances of the success of the film at box office. All such factors must be considered to evaluate the advertisement expenditure incurred for the promotion of a film rather than only comparing the cost incurred on advertisement through satellite TV channels belonging to the Sadhna Group of companies vis-à-vis other satellite channels.
10.29 Further the Ld. Counsel drew the attention of the bench to the assessment order of Sadhna Media Pvt Ltd for the assessment years 2014-15, 2016-17 and 2017-18 which were finalised under section 153A by Central Circle 32 Delhi pursuant to search action on Sadhna Group on 15.02.2017. From the perusal of the Assessment Order for these years the AO in the order has reproduced the order sheet noting of hearing on 24.12.2018 at Page No. 51 of the order in which he had asked Ld.Counsel for the assessee regarding certain cash expenses and Ld.Counsel for the assessee of Sadhna Group replied that “regarding T-series

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Super Cassettes Industries Pvt. Ltd.

103 | P a g e payment he told that these are expenses incurred in respect of advertisement of T- series. (a) T -Series cassettes were distributed. (b) All expenses related to advertisement of T-Series and T-Series is not aware of these expenses. (v) assessee is receiving money from T-Series & DS etc. Assessee has received cash from other clients. A part of this cash was spent for T-Series cassettes etc. so that T-Series will be impressed that due to advertisement on the channels of assessee, sales of T-Series items has increased. It may be noted that assessee has taken the entire advertising income from T-Series and DS Group by way of cheque and which are duly recorded in the audited books of accounts of Sadhna Group”. The AO of Sadhna Group had then come to conclusion at Para 4.3 page 53 of the assessment order that the Sadhna Group company got business of 93.46 Crore from DS and 12.90 Crore from T-Series which is duly recorded in the books of accounts. Further out of unaccounted cash generated the Sadhna Group has spent
Rs. 10.83 Crore for DS and Rs. 1.95 Crore for T-Series for their advertisement in various functions which expenses have not been recorded in their books of accounts. The Ld. Counsel of the assessee based on the same argues that from the assessment order of Sadhna Media Pvt Ltd it is clearly establish that the advertisement expenses incurred by SCIPL through Sadhna Group were genuine as the AO of Sadhna Group has held that the income of Sadhna Group from T-
Series was genuine and in order to gain more business from T-Series the Sadhna
Group had incurred unaccounted expenses like purchasing of cassettes, CDs of T-

104
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104 | P a g e

Series so that the Sadhna Group can get more revenue from T-Series Group.
These finding were recorded by the AO of Sadhna Group pursuant to search and after examining all the material found during search.
10.30 It is also submitted by the Ld. Counsel of assessee that similar disallowance was made in the case of Dharampal Satyapal Ltd for assessment year 2016-17 in respect of advertisement expenses incurred relating to Sadhna
Media P Ltd, Kamdhenu Media Pvt Ltd and Prabhatam Advertisement Pvt Ltd which are Sadhna Group Entities by treating the same as bogus and in this case part relief was allowed by the CIT (A) and part disallowance was confirmed. In this matter the Coordinate bench of ITAT Delhi vide order dated 17.01.2025 in ITA Nos 3071/D/2022 and 246/D/2023 has granted full relief to Dharampal
Satyapal Ltd by deleting addition confirmed by CIT (A) and dismissing the appeal of the department against the relief allowed by CIT (A) .Since on similar facts the advertisement expenses of Dharampal Satyapal ltd for AY 2016-17 has been treated as genuine, the expenses incurred by SCIPL are also genuine and to be allowed.
10.31 Further it is highlighted by the Ld. Counsel of assessee that in case of search conducted on Sadhna Group and the assessee, no material was found to indicate that the impugned expenses were not genuine, and cash was paid by Sadhna Group to the assessee. The AO has alleged that the assessee has taken cash from Sadhna Group against these expenses for the last 6 years then in case

105
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

105 | P a g e of search which has an element of surprise some material must have been unearthed both with Sadhna Group and the assessee company to indicate that cash was paid in lieu of these expenses. But in both the searches no such material was found. Further various statements were recorded during both the searches and no person during both the searches has given any statement to indicate that cash was paid in lieu of these expenses.
10.32 Thus as per the Ld. Counsel of the assessee the disallowance was made purely on surmises and conjectures. As discussed above in the case of Sadhna
Media Pvt Ltd on of the Sadhna Group entities the AO in Order U/s 153A has held that the income earned by Sadhna Media from SCIPL in respect of Advertising was genuine and not bogus. Then drawing corollary from the same the same cannot be held as bogus in the hands of the assessee company.
10.33 We have heard the respective submissions made by the parties; we have also perused the relevant materials available on record. It appears from the records that that the Ld. AO has disallowed the impugned amount and added to the total income of the assessee for AY 2016-17 alleging that advertisement expenses claimed from Sadhna Group of companies are bogus in nature premised on the observation that SCIPL does not maintain detailed bills and vouchers, work order, e-mail correspondence or any agreement for advertisement expenses paid to Sadhna Group of companies and on unsatisfactory reply received from 106
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Super Cassettes Industries Pvt. Ltd.

106 | P a g e statement recorded of Shri Gaurav Gupta (Director in Sadhna Group) s/o Shri
Rakesh Gupta (Owner and Managing Director of Sadhna Group).
10.34 At the outset it is seen that this disallowance has been made by the AO on the presumption that no services were provided by Sadhna Group and they had raised bogus bills on the assessee and the assessee received back the bill amount in cash. To verify the genuineness of the expenses claimed the following ingredients are to be satisfied:
1. Business Expediency
2. Proof of the service provided
3. Payment made against service provided.
4. Compliance with statutory requirements.

107 | P a g e expenditure beyond doubt. As regards the proof of services provided, the assessee has furnished the complete bills, log sheets and telecast certificates for all the six years in support of the proof of services. The assessee had made the entire payment through Banking channels after deduction of Tax as applicable.
10.36 Now looking at the factual matrix of the case The AO and CIT(A) disallowed the advertisement expenses incurred by the assessee through Sadhna
Group entities, namely Sadhna Media Pvt. Ltd., Ishwar Broadcasting Pvt. Ltd.,
Naman Broadcasting Pvt. Ltd., Sharp Eye Advertising Pvt. Ltd., Varun Media
Pvt. Ltd., Sadhna Broadcast Ltd., and Chirau Broadcast Network Ltd., on the grounds that the transactions were not supported by written agreements, lacked credible evidence, and were allegedly bogus based on the statement of Shri
Gaurav Gupta, Director of one of the Sadhna Group companies. We find the AO’s observation to be factually incorrect and legally unsustainable. The assessee has submitted that its advertisement and promotion department, headed by Shri Vinod Bhanushali, finalized the logistics for telecasting advertisements, and release orders were communicated orally to Shri Arpan Gupta of the Sadhna
Group due to established business relations. Post-telecast, the Sadhna Group provided log sheets and invoices, which were duly acted upon by the assessee for releasing payments. In support of the same the assessee had provided all the invoices and log sheets / telecast certificates before the AO and CIT(A). The AO has observed in the order that the assessee does not maintain detailed bills and 108
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108 | P a g e vouchers. However, it has been argued that the entire bills log sheets/telecast certifcate for the entire expenditure of all the six years (AY 2014-15 till 2019-
20) were furnished before the AO. In view of this fact it emerges that the AO during the course of assessment proceedings has not considered the evidence produced by the assessee and made a statement in the order that detailed bills and vouchers are not maintained which is without any basis.
10.37 The absence of written agreements does not ipso facto render the transactions invalid, as business practices often rely on trust and oral arrangements, particularly in long-standing relationships. It is observed that Super Cassettes Industries Private Limited (SCIPL), operating under the brand T-
Series, began primarily as a producer of devotional music. Similarly, Sadhna, launched in 2003 as a dedicated devotional television channel, shares aligned ethos of promoting spiritual and devotional content. The business relationship between SCIPL and Sadhna, established in 2003, has been marked by a consistent and continuous course of dealings. The terms governing the broadcast of SCIPL’s content on Sadhna’s platform have been mutually agreed upon through established business practices and verbal understandings, demonstrating the trust and mutual reliance inherent in their long-standing association. It is not trite law that a written agreement is a must in every case. Lastly the assessee has furnished copies of invoices and log sheets/telecast certificates, which sufficiently establish

109
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109 | P a g e the rendition of services. The AO’s reliance on the absence of written agreements is, therefore, misplaced and does not negate the genuineness of the transactions.
10.38 The AO and CIT (A) relied on the statement of Shri Gaurav Gupta to allege that the transactions were bogus. It was further noted that no records of SCIPL’s advertisement content were available with the Sadhna
Group.
We find the reliance on Shri Gaurav Gupta’s statement to be misconceived. The assessee has rightly pointed out that Shri Gaurav Gupta, in his statement, confirmed the genuineness of transactions with SCIPL and clarified that advertisement content was received via pen drives, CDs, or hard disks, stored temporarily for approximately three months, and then overwritten as per industry practice. This is consistent with the provisions of the Cable Television Networks
(Regulation) Act, 1995 read with Rule 21(3) of the Cable Television Networks
Amendment Rules, 2021, which mandate retention of advertisement content for only 90 days. The AO’s expectation of perpetual retention of such content is unreasonable and contrary to statutory requirements. Furthermore, the AO’s failure to provide the assessee with a copy of Shri Gaurav Gupta’s statement or an opportunity for cross-examination constitutes a serious violation of the principles of natural justice, as held by the Hon’ble Supreme Court in Andaman Timber
Industries vs. CCE [62 Taxmann.com 3]. Consequently, the statement cannot be used to discredit the assessee’s claim.

110
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Super Cassettes Industries Pvt. Ltd.

110 | P a g e

111
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

111 | P a g e

112
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

112 | P a g e

113 | P a g e

246/D/2023, dated 17.01.2025], where similar advertisement expenses incurred through Sadhna Group entities for AY 2016-17 were held to be genuine, and the disallowance was deleted. We find that the facts of the present case are pari materia with those in Dharampal Satyapal Ltd. This decision to allow the advertisement expenses as genuine applies squarely to the present assessee’s case.
10.44 The AO alleged that the assessee received cash from the Sadhna Group against these expenses, rendering them bogus. We note that no incriminating material was found during searches conducted on both the assessee and the Sadhna Group to suggest that cash was paid or received in lieu of these expenses.
In fact the Ld Counsel has argued that in case of search conducted in the case of Sadhna Group and the assessee no material was found to indicate that the impugned expenses were not genuine, and cash was paid by Sadhna Group to the assessee. As per the argument of the Ld Counsel the AO has alleged that the assessee has taken cash from Sadhna Group against these expenses for the last 6
years then in case of search which has an element of surprise some material must have been unearthed both in case of Sadhna Group search and the assessee to indicate that cash was paid in lieu of these expenses. But in both the searches no such material was found. Further various statements were recorded during both the searches and no person during both the searches has given any statement to indicate that cash was paid in lieu of these expenses. The absence of any corroborative evidence, coupled with the lack of statements indicating such 114
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114 | P a g e transactions, renders the AO’s allegation baseless and speculative. The Search on Sadhna Group was in the year 2017 and after the search also the assessee continued to make advertisement on Sadhna Channels, this itself points to the fact that it was a genuine expenditure based on business expediency. The disallowance, being based on surmises and conjectures, cannot be sustained.
10.45 The CIT (A) relied on the decisions in CIT vs. Calcutta Agency Ltd. [19
ITR 191], CIT vs. Transport Corporation of India [256 ITR 701], and CIT vs.
Imperial Chemical Industries (I) Pvt. Ltd. [74 ITR 17] to uphold the disallowance.
We find these case laws to be distinguishable and inapplicable. In Calcutta
Agency Ltd., the disallowance was upheld due to the failure to establish business expediency, whereas in the present case, the CIT(A) has not disputed the business expediency of the expenses. In Transport Corporation of India, the disallowance was based on the assessee’s failure to disclose details of secret commissions, whereas the assessee here has furnished invoices, log sheets, and telecast certificates, establishing the identity and genuineness of the expenses. Similarly, in Imperial Chemical Industries, the issue was business expediency, which is not contested in this case. Thus, the reliance on these precedents is misplaced.
10.46 In view of the above findings, we hold that the disallowance of advertisement and promotion expenses incurred by the assessee through Sadhna
Group and sustained by CIT(A) entities is without any basis. The assessee has 115
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115 | P a g e discharged its onus by providing sufficient documentary evidence, including invoices and log sheets, to substantiate the genuineness of the expenses. The AO’s observations are based on assumptions, lack of corroborative evidence, and procedural lapses, such as denial of cross-examination, which violate natural justice. The findings in the assessment order of Sadhna Media Pvt. Ltd. and the Tribunal’s decision in Dharampal Satyapal Ltd. further reinforce the genuineness of the transactions. Accordingly, the addition confirmed by the CIT (A) for AY
2016-17 to AY 2019-20 are deleted, and the assessee’s appeal is allowed for AY
2016-17 to AY 2019-20 and the disallowance made on this count deleted.
11. Under this ground of appeal the action of assessing officer in making addition on account of disallowance of Commission expense paid to Sanjay
Singhal and M/s Balaji Agencies is challenged by the assessee company. The details of the additions made are tabulated as under:

Assessment Year
Amount of addition
2016-17
3,79,37,675
2017-18
1,63,50,000

116 | P a g e

272/DEL/2024). The decision for the assessee’s appeals for Assessment Years
2016-17 will be applicable for AY 2017-18 as the issues are identical and no new circumstances exist.
11.2 Brief facts of the case are that during search proceedings, bills were found at M/s SCIPL's premises indicating payments to Sanjay Singhal as commission, claimed as expenses by SCIPL. The AO observed that Sanjay Singhal claim of facilitation of better copyright prices for SCIPL, earning Rs. 4.80 Crores in commission for AY 2016-17 and 2017-18, is incorrect due to his vague and evasive responses in his statements recorded under oath. He failed to provide details of a "close friend" who connected him to TV channels, no proof of negotiations, or a written agreement for the 5% commission from SCIPL were provided.
11.3 Further the AO made another observation that No credible evidence supports the Rs. 5,42,87,675/- commission received by Singhal and his firm, M/s
Balaji Agencies, for alleged services to SCIPL. Based on this observation the AO draws the observation that Sanjay Singhal Group allegedly manipulates unaccounted income through accommodation entries, such as bogus commission income, inflated movie rights sales, and fictitious share profits.
11.4 The CIT(A) confirm the addition made in the appeal order after relying on the observations made in the assessment order. The conclusive findings of the CIT(A) deserves to be reproduced herein below for further analysis and 117
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Super Cassettes Industries Pvt. Ltd.

117 | P a g e determination of the grounds:
“241. I have carefully considered the contents of the assessment order and the submissions of the Appellant. The dispute in this ground of appeal is with regard to the disallowance of Rs. 3,79,37,675/- pertaining to the commission paid to Shri Sanjay Singhal and M/s Balaji Agencies. The assessing officer has treated the said claim of expenditure as bogus which is challenged by the Appellant.
242. The appellant during the course of appellate proceedings has tried to establish that because of efforts of Shri Sanjay Singhal, there was marginal increase in the revenue of the appellant. The appellant also relied upon the bills issued for commission and stated that the payments were made through the banking channels and therefore, the expenses were genuine.
However, the appellant has not been able to furnish any evidence of any services having been rendered by Shri Sanjay Singhal or his partnership firm.
243. Commission is paid for introducing new parties and bringing new businesses. In this case the parties with whom the appellant has entered into agreement and for which alleged commission has been paid are those parties with whom the appellant already has agreements. Therefore, prima facie, payment of commission is not genuine.
244. If someone demands 5% as commission on the deal value/total value of contract, in that case, there would be written agreement. However, in this case there is no written agreement.
245. If someone demands 5% of commission, in that case, the liability to ensure payment lies with the commission agent. However, in this case, there is no such liability on Shri Sanjay Singhal or his firm ensuring that there are no bad debts. There is no reason why a hefty commission of 5% of total deal value would be paid without any credit gurantee.
246. During the course of search, statements of various persons were taken. No one could establish in any manner whatsoever that there was any rendition of services as claimed. During the post search enquiries and during the course of assessment proceedings also, the appellant could not establish that services were rendered. The relevant portion of statement of 118
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118 | P a g e

Shri Sanjay Singhal is reproduced in the foregoing paragraphs. If someone has actually rendered services, then he would know the persons with whom he had dealt and negotiated the deal. In the instant case, as it evident from the statement of Shri Sanjay Singhal that he does not even remember the persons with whom negotiations were made. In fact, Shri Sanjay Singhal could not establish in any manner whatsoever that he had rendered any services to the appellant.
247. Apparently, there is no formal communication or its evidence to show that there was any rendition of service by the alleged commission agent.
248. Commission is paid to someone who is an established player in the market in the given sector. In this case, while the appellant himself is an established player in TV cinema and media line, the alleged commission agent is in Ghutka and Tobacco products business. The alleged commission agent has no domain knowledge about the media and TV business. In his statement he clearly stated that he knew some TV channel through one of his friends but could not even give the name of such person. Shri Sanjay
Singhal and his partnership firm were not capable of rendering the services has claimed by the appellant.
249. All the above facts clearly establish that actually there was no rendition of service and the appellant took accommodation entry from Shri
Sanjay Singhal and his firm.
250. In the absence of any evidence and in light of the decision of the Hon'ble Supreme Court in the case of CIT vs. Calcutta Agency Ltd. 19 ITR
191 wherein it was held that the onus of proving necessary facts in order to avail the deduction u/s.37(1) is on the assessee, If the assessee fails to establish the facts necessary to support his claim for deduction, the claim for deduction is not admissible. Onus lies on the assessee to prove the veracity of the expenses claimed by it. Reliance is also placed on the decision of Andhra Pradesh High Court in the case of CIT vs Transport
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

119 | P a g e consideration but was accommodation entry taken to reduce the tax liability. Hence, the disallowance of Rs. 3,79,37,675/- is upheld and this ground of appeal is dismissed. Ground No.8 is dismissed.”
11.5 The Ld. Counsel of the assessee argued that for AY 2016-17, appellant paid business advisory charges totalling Rs. 3,79,37,675 to Sh. Sanjay Singhal/Balaji
Agencies for securing favorable licensing deals with satellite TV channels, resulting in incremental revenue of Rs. 11,84,31,000/-. The payments were substantiated by invoices and licensing agreements (enclosed in Paper Book Vol.
I & II) with entities like Zee Entertainment, Multi Screen Media, Viacom 18
Media, GenX Entertainment, and Bennet Coleman & Co. These agreements show increased license fees and, in some cases, reduced licensed content, demonstrating the commercial benefits of Singhal’s services.
11.6 Further the Ld. Counsel of assessee submitted that Sh. Sanjay Singhal leveraged his industry contacts to negotiate better terms and higher license fees for SCIPL, as evidenced by the agreements. The incremental revenue (e.g., Rs.
1.54 crores from Zee, Rs. 3.37 crores from Viacom, Rs. 6.66 crores from GenX and Bennet Coleman) justifies the payments made to him. His connections and expertise, confirmed in his post-search statement, facilitated these favorable deals, distinguishing them from other agreements where his services were not utilized.

120
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Super Cassettes Industries Pvt. Ltd.

120 | P a g e

121
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
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121 | P a g e routing, do not inherently prove the underlying business necessity or reality of the services, aligning with established precedents that mere payment proof is insufficient without service corroboration.
11.10 The valid skepticism arising from the fact that the commissions were ostensibly for facilitating deals with pre-existing parties rather than procuring new business, which undermines the rationale for such payouts and suggests they may not be integral to revenue generation. The absence of a formal written agreement for the unusually high 5% commission rate is highlighted as a red flag, as commercial prudence typically demands documented terms for significant expenditures, especially in arm's-length dealings. Compounding this, Singhal bore no liability for ensuring timely payments from parties or mitigating bad debts, which questions the economic substance of his role and casts further doubt on the commission's legitimacy as a bona fide business expense. The tribunal places significant weight on the sworn statements recorded during the search operations and subsequent proceedings, wherein Sanjay Singhal failed to provide specifics on negotiations, key contacts, or any tangible contributions, exhibiting a lack of recall that erodes credibility and supports an inference of non- genuineness.
11.11 We observed that Sanjay Singhal's primary involvement in the gutkha and tobacco sector, devoid of any demonstrated expertise in the media or entertainment industry relevant to SCIPL's operations, fundamentally weakens

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122 | P a g e the appellant's narrative of it acting as a competent commission agent. This mismatch in domain knowledge suggests his involvement was implausible for rendering value-adding services, reinforcing suspicions of contrived arrangements. The complete dearth of supporting documentation such as correspondence, meeting records, or performance metrics leads us, to conclude that the payments represent accommodation entries designed to artificially deflate taxable income and evade liabilities. We underscores that the onus under Section 37(1) squarely rests on the assessee to establish the expense's authenticity, necessity, and business linkage through preponderant evidence. Resultantly the appellant ground of appeal is dismissed.
12. Under this ground of appeal the addition made on the basis of Whatsapp
Chat of Sh. Bhushan Kumar, Ms Sonal and others including Shiv Chanana and Beer Singh has been challenged by the department and assessee company. Details of additions made are tabulated as under:
Assessment Year
Amount of addition
2016-17
10,00,000 (Assessee Appeal)
2017-18
84,09,000 (Assessee Appeal)
And 28,00,000 (Department Appeal)
2018-19
34,80,000 (Assessee Appeal)
2019-20
8,80,000 (Assessee Appeal)
And 10,00,000 (Department Appeal)

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123 | P a g e

S.
No Date
Particulars
A.Y.
2016-17
A.Y. 2017-18 A.Y. 2018-19
A.Y. 2019-
20
1. 28.10.2015
Receipt of cash from Shri Kumar
Mangat
1,000,000

124
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

124 | P a g e and others
9. 06.06.2017
Receipt of cash from Neha
Kakkar

980,000

880,000
13. 06.10.2018
Receipt of cash
Shri Raju

1,000,000

Total
1,000,000
1,04,09,000
3,780,000
1,880,000

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Super Cassettes Industries Pvt. Ltd.

125 | P a g e copy of ledger account of Panorama Studios Pvt. Ltd. in its books of accounts.

2017-18
21.11 The contents of the assessment order and the submissions of the appellant have been carefully considered. Coming to the merits of the case and Ground No. 12, the appellant has contended that the A.O was not justified in making an addition of Rs. 10,40,900/-on account of alleged unaccounted cash income received from singers/others on the basis of WhatsApp messages, in the absence of any inquiries conducted from corresponding parties and lack of corroborating material.

The issue to be decided in the present ground is whether a presumption can be drawn only on the basis of chats containing numerical figures without any corroborating material to reach a conclusion that unaccounted cash
Income was earned by the appellant from singers.

126 | P a g e basis of any addition. However, such a contention of the appellant is baseless because the chat has been found from the phone of Shri Bhushan
Kumar, the director the appellant company and Ms. Sonal, Artist Manager of the appellant company. Further, the contents of the chat has not been proved to be incorrect at any point of time by the appellant. It is also a matter of fact and record that neither of the two persons have stated that the transactions referred in the chat is incorrect or have not taken place. It is also to be noted that the chat is in respect of receipt of money by the appellant company. Therefore, the contents of the chat is considered as a valid evidence based on which addition can be made.

A. Receipt of Cash from Tony and given to Shivam

The conversation dated 05.04.2016 between Sonal & Bhushan
Kumar shows that sonal has mentioned that 11 was received from Tony and Given to Shivam and Mr. Bhushan has replied with ok.
Hence this clearly establishes that 11 here means 11 lacs and the same was received from Tony and given top Shivam. The appellant has not furnished any evidence to show that this amount was received in cheque or accounted for in books of accounts. In the chat it has been clearly stated that this amount has been received from Tony. Therefore, the addition of Rs 11 lac received from Tony in cash hereby is sustained.

B. Receipt of cash on behalf of Vinod Bhanushali

This addition is related to chat sent by Mr. Beer Singh on 12/04/2016
to Mr. Bhushan Kumar wherein he has mentioned that 8.58 lacs was received on behalf of Mr. Vinod Bhanushali, to which Mr. Bhushan
Kumar has replied that the same should be given to mummy. The appellant has argued that this amount has been received on behalf of 127
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
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127 | P a g e

Mr. Vinod Bhanushali employee of the appellant company and the same cannot be added in the hand of the appellant company. Further from the chat it is not clear regarding the nature of this amount and who has given it. Therefore, in the absence of the same it cannot be added. In the chat it has been clearly mentioned that cash of Rs. 8.58
Lacs was received on behalf of Mr. Vinod Bhanushall and Mr.
Bhushan instructed Mr. Beer Singh to give the same to his mummy.
Once it has been established that cash amount has been received than the onus is on the appellant to explain and justify the same and the appellant has tried to discharge its onus by simply stating that name of the person giving the cash has not been found out by the AO. This argument put forth by the appellant will not hold good since the onus was on the appellant to prove that the cash received was not its Income and accounted for in the books of accounts.
Further even if the same is received on behalf of an employee but the same was passed on to the mother of Mr. Bhushan Kumar and hence belonged to the company. Therefore the addition of Rs. 8,58,000/- made by the AO Is sustained.

C. Receipt of cash from Rahul (can be Rahul Vaidya singer) (INR 5
lakhs)

In this chat dated 19/06/2016 Sonal has informed Mr. Bhushan
Kumar that 5 cash came of Rahul for feb and mar. When Mr.
Bhushan asked where it is sonal Informed that it was with Mr.
Shivam. IN this case cash of Rs. 5 lacs has been received from Rahul and the same has not been accounted for in the books of accounts.
Therefore the addition of Rs. 5 lacs made by the AO Is sustained.

D. Receipt of cash from Meet Brothers and Neha (INR 8,21,000/-):

In this chat on 05/08/2016 Sonal Has written to Mr. Bhushan that Meet Bros money came total Rs. 1008000 out of which cheque was Rs. 187000 and cash was 821000 which was given to Susheel Ji. The AO in the order has reproduced ledger account of Meet Bros which shows receipt of 187000 on 24/08/2016. Hence based on this the AO concluded that the cash amount of Rs. 821000 has not been accounted for in the books of accounts and made addition of Rs.
821000. The appellant during appellate proceedings has not been able to substantiate that Rs. 821000 received in cash has been accounted for in the books of accounts. Hence the addition of Rs.
821000 made is sustained.

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128 | P a g e

E. Receipt of cash from Meet Brothers and Neha (INR 20,00,000/-):

In this conversation Sonal has written to Mr. Bhushan on 09/11/2016
stating that Neha Kakkar amt 12L and Meet Bros amt 8L till October
Month. Since the appellant is receiving artist management fees from singers the AO had made addition of Rs. 20 Lacs on the basis that Neha Kakkar and Meet Bros had given 12lacs and 8 lacs respectively to appellant company and the same has not been accounted for in books of accounts. The appellant has argued that the amounts mentioned cannot be presumed to have been received since it is not mentioned in the chat that these amounts have been received. It is seen from the chat that Sonal music manager has clearly mentioned that Neha 12 and Meet Bros 8 Lacs amount till
October. This is the amount of artist management fees till October.

A. Receipt of cash from Shri Shrey (person in Zee group) (INR 40 lakhs)

In this chat on 19/08/2016 Sonal stated that Shrey will be giving 40 in cash. After that there is no reply against this message from Mr. Bhushan.
Then Sonal on 02/10/2016 has written to Mr. Bhushan that 20 Lakh from Shrey to which Mr. Bhushan replied when and Sonal replied that Mon
(Monday). The appellant has argued that firstly the AO has assumed that Shrey is someone from Zee even though nothing has been mentioned in the chat that Shrey is from Zee. The appellant has argued that the chat mentions only that shrey will be giving 40 and the same is in chat dated
19/08/2016 after that there is no chat regarding the same. Then there is one

129
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

129 | P a g e chat on 02/10/2016 that 20 lakhs from shrey on Monday. This chat has taken place on 02/10/2016 which was Sunday. The argument of the appellant is that as per the chat 20 lakhs will come on Monday. However, there is no further chat confirming as to whether this 20 Lakhs was received or not. Since there is no confirmation regarding actual receipt of any amount no addition is required.

Cash Income received from Amaal Arman and others (11.30 lakhs)

In this chat on 19/08/2016 sonal has stated that 2.55 lacs in cheque and 3.30 lacs in cash came for august. Further it has been mentioned that Dubai commission will be received post show and it will be 5 lakhs of amaalarmaan plus 3 lacs of sukupuku. Based on the above the AO made addition of 11.30 lacs as per following detalls

Received in cash

130
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

130 | P a g e

Total

131
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

131 | P a g e

2018-19
15.15 The contents of the assessment order and the submissions of the appellant have been carefully considered. Coming to the merits of the case and Ground Nos. 6 and 7, the appellant has contended that the A.O was not justified in making an addition of Rs. 34,80,000/- and Rs. 3,00,000/- on account of alleged unaccounted cash income and cash expenditure received/paid from/to singers/ others on the basis of WhatsApp messages.

132
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

132 | P a g e

Receipt of cash of Rs.9,80,000/- from Neha Kakkar

Receipt of cash by Vinod Bhanushali for Ranchi Diaries

133
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

133 | P a g e account. As part (cheque component) of the transaction referred to in chat is established to be correct, therefore, the other part (cash component) is also correct. Therefore, it is held that the cash was also received by the appellant and the same is not reflected in the accounts of the appellant.
Therefore, the addition of Rs.25,00,000/- is confirmed.

Addition of Rs.3,00,000/- u/s 69C on account of chat with Shri Shiv
Chanana

2019-20
14.15 The contents of the assessment order and the submissions of the appellant have been carefully considered. Coming to the merits of the case and Ground Nos. 5, the appellant has contended that the A.O was not justified in making an addition of Rs. 18,80,000/- on account of alleged unaccounted cash income received from singers/others on the basis of WhatsApp messages.

134
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

134 | P a g e the real income of the appellant from singers i.e. income from artist management. The AO refers the WhatsApp chat on various dates which are reproduced above.

Receipt of cash of Rs.8,80,000/- from Neha Kakkar

135 | P a g e justify the same and the appellant has tried to discharge its onus by simply stating that the same was never received. This argument put forth by the appellant will not hold good since the onus was on the appellant to prove that the cash received was not its income and accounted for in the books of accounts. Further as per the Chat dated 02.11.2018, the amount mentioned against term "Chq" is corroborated with the bank statement of the appellant company. Therefore the addition of Rs. 8,80,000/- made by the AO is sustained.

Receipt of cash from Shri Raju.

136
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

136 | P a g e

137
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

137 | P a g e communications, have evidentiary value subject to proof at trial and cannot be treated as “dumb documents.”
12.8 The contention of the assessee that these chats are not supported any corroborative material is not correct in view of the fact that in some chats the amount received vide cheque has also been mentioned and the cheque figure as per the chat has been received by the assessee and reflected in the books of accounts. In this regard certain chats are reproduced below wherein the amount has been reflected in the books of accounts.
Chat pertaining to AY 17-18

Chats dated 19.08.2016 and 02.10.2016 mentioned Rs. 40 lacs and Rs. 20
lacs from Shrey, respectively ou to which Rs. 20 lacs was found in the books of accounts.

Chat pertaining to AY 18-19

chat dated 26.09.2017 between Bhushan Kumar and Vinod Bhanushali
(president sales) mentioned Rs. 50,00,000 for the music video “Ranchi
Diaries,” with Rs. 25,00,000 by cheque (recorded on 05.10.2017 in books) and Rs. 25,00,000 in cash.

138 | P a g e seized WhatsApp chats. The AR explained that SCIPL is one of the top music production company in India. It gives artists huge platforms to grow their careers.
In fact, SCIPL has helped launch many stars. To support this, SCIPL signs contracts with artists under which artists must share a part of their extra third party earnings like money from live shows, concerts, events, or award functions—with SCIPL for a certain period defined in the contract. The split is usually 80:20 (artist keeps 80%, SCIPL gets 20% of the gross amount, after taxes).
12.10 We agree with the AO's interpretation of the WhatsApp chats seized mentioning both cheque payments (which match bank records) and cash parts.
Since the cheque payments matched with the books of accounts, it's fair to say that cash was also received by artists and handed over to SCIPL as per the contract.These chats are reliable evidence because they match the real business setup. Under the "real income rule", if money actually comes in and benefits the company even if not recorded in books it counts as taxable income.So, we confirm the AO's addition of the cash amounts from the chats as real, taxable income for SCIPL.
12.11 Consequently, the contention advanced by the Learned Counsel for the appellant, asserting that the aforementioned chats lack corroboration with the books of accounts, is found to be untenable and devoid of merit. In light of this finding, the department ground of appeal, based on the incriminating evidence

139
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Super Cassettes Industries Pvt. Ltd.

139 | P a g e extracted from the WhatsApp chats for the AY 2016-17 to AY 2019-20, is hereby upheld and confirmed. Accordingly, the appeals filed by the assessee for Assessment Years 2017-18 to 2019-20 are dismissed and the appeals of the revenue for Assessment Tear 2017-18 and 2019-20 are allowed.
13. Under this ground of appeal, addition on account of cash income &
expenditure noted in Diary of Sudesh Kumari seized during search proceedings is challenged by the department and assessee company. Details of additions made over the years are tabulated as under:

Assessment Year
Assessee Appeal
Department Appeal
2018-19
51,00,000
99,00,000
2019-20
1,50,00,000
Nil

140
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140 | P a g e

Ved Prakash Chanana, with cheque payments marked "Chec" and cash payments marked "C." Smt. Sudesh Dua was asked via notice u/s 142(1) dated 15.02.2021
to explain payments to Sh. Ved Prakash Chanana and provide evidence. Sh. Ved
Prakash Chanana was similarly questioned on 15.02.2021 about payments received and their accounting.
13.3
Further, summons were also issued to Sudesh Dua and Ved Prakash
Chanana for appearance on 22.03.2021, but they failed to appear. Submission was filed by Smt. Sudesh Dua in which she claimed that entries shown on page 12
were related to purchase of ghee for charitable purposes in Haridwar, but provided no evidence. No documentary evidence, like ghee purchase bills, supported Smt.
Sudesh Dua’s claim. Smt. Sudesh Dua argued transactions belong to SCIPL, not her, but AO rejected this submission.
13.4 The AO observed that certain entries in the diary marked as “Chec” are reconciled with the corresponding credit entries in Bank Account of Sh. Ved
Chanana which corroborates that the other entries made in cash are also true and made. Therefore, this proves that it is not a dumb document and it carries evidentiary value as when banking transaction recorded has taken place exactly the way mentioned in incriminating documents then this can be presumed that cash transactions must have happened which were not recorded but they have happened exactly the way it is mentioned in the diary. The diary qualifies as “books of account” under Section 2(12A), and Smt. Sudesh Dua failed to 141
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

141 | P a g e explain entries satisfactorily. In view of the above observations, the AO added cash payments of Rs. 150 lakhs each in F.Y. 2017-18 and 2018-19 as unaccounted expenditure of appellant company.
13.5 As per the the amount mentioned in the diary was in Lacs and the AO interpreted 50 as 50 Lacs. However, in one instance the AO interpreted 1 as 1
Crore (100 Lacs) and not 1 Lacs. The CIT (A) coccured with the AO but provided part relief to the appellant company by stating that the AO’s treatment of “1” as Rs. 1 crore is inconsistent with his observations made in the assessment order, it should be Rs. 1 lakh, as “100” would denote Rs. 1 crore and accordingly gave relief of 99 Lacs to the assessee for Assessment Year 2018-19 but confirmed the addition of 51 Lacs for Assessment Year 2018-19 and the entire addition of 150 Lacs for Assessment Year 2019-20. The conclusive findings of the CIT (A) for Assessment Year 2018-19 deserves to be reproduced herein below for further analysis and determination of the grounds:
“17.23 I have carefully considered the assessment order and the written submission of the appellant. The entire dispute in these Grounds of Appeal is about the interpretation of figures mentioned at Page No. 12 and Page
No. 15 of the seized annexure A10. The AD in the assessment order has interpreted the figures mentioned at Page No. 12 and Page 15 as figures mentioned in lakhs and made the following additions:

Addition
AY 2018-19
AY 2019-20
Cash payment made to Director Ved
Prakash Chanana. (Page 12 of Annexure
A10)
1,50,00,000

1,50,00,000

142
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142 | P a g e

Cash payment for Bombay Office (Page
15 of Annexure A10)
1,47,98,000

I
The assessee was given ample opportunity to explain the contents of rough jottings but the assessee avoiding the notice as well as not supporting any satisfactory evidence in support of the claim made.

II
Notices issued to Shri Ved Prakash Chanana remain non complied and the reply received from Smt Sudesh Dua were not supported by any evidence such as invoices etc. Further it was submitted by Smt Sudesh Dua that the same may be III
The AO draws an observation that on perusal of Page 12 where it is written that "50 chee" on various instances have been verified from the bank account of Shri Ved Prakash Chanana as 50 lacs and therefore the amounts mentioned at Page 12 and Page 15 are in lacs and not in thousands. Based on the above observations additions of Rs. 1,50,00,000
was made for AY 2018-19 and AY 2019-20. 17.26 There is another addition of Rs.1.50 Crores u/s 69C of the Act. The addition is based upon page 12 of Annexure A-10. In the said document, there is mention of payments to one Shri Ved in cash and cheque. The contents of page 12 are stated as under:-

"Complete ved 01.05.2017
C[50+[50chee
26.10.2017 [1C (50chee +30+20)-24.05.2018
21.07.2018 (50 chee+23.07.2018-(50C)

143
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143 | P a g e

S.
No.
Date
Cheque paid (In Lakhs)
Cash paid (in Lakhs)
1. 01.05.2017
50
50
2. 26.10.2017
Nil
100
3. 24.05.2018
50
50
4. 21.07.2018
50
Nil
5. 23.07.2018
Nil
50
6. 02.08.2018
Nil
50

Total
150
300

144 | P a g e source of such money. Whether the amount by way of cash paid to Shri Ved
Chanana was loan or expenditure is immaterial in deciding the availability of cash in the hands of the appellant. Therefore, the Assessing Officer was justified in making addition u/s 69C of the Act.
17.31 From the bank accounts of Shri Ved Prakash Chanana, it is seen that on 03.08.2017, he has received an amount of Rs.50,00,000/- from the appellant company in his Canara Bank account no.2009132000060. Therefore, It is established that 50 written in the document is actually
Rs.50 lakhs. It is also evident that the sign "C [" represents cash and the sign "[chee" represents cheque.
17.32 The amount is written in lacs in the impugned document. If 50 Lakhs is paid in cheque, then 50 is written. Therefore, the same treatment has to be for the cash amount also. In the same document where 20 is written, the Assessing Officer has treated it as 20 Lakhs and so on. However, in respect of amount written as [1, the Assessing Officer has trated it as 1 crore.
Clearly, there is contradiction. If the author of the document wanted to write 1 crore, in that case in the document, [100 would have been written instead of [1. Therefore, it is held that an amount of Rs. 51,00,000 was paid in cash and not Rs.1,50,00,000/- as held by the Assessing Officer.
17.33 During the year under consideration, the amount of Rs.50,00,000/- is reflected in the bank statement. The transaction amounting to Rs.51 lakhs is not reflected in the accounts of Shri Ved-Prakash Chanana. As a part of the document (relating to cheque) is found to be reflected, therefore, the other part (relating to cash) is also held to be undertaken. Therefore, the Assessing Officer was justified in making addition of in the hands of the appellant u/s 69 C of the Act. However, instead of amount of Rs.1,50,00,000/-, the addition to the extent of Rs.51,00,000/- Is only sustained.
17.34 In view of the findings discussed above out of addition of Rs.
1,50,00,000/-, addition to the extent of Rs. 51,00,000/- (in ground no. 9) is sustained.”
13.6 The Ld. Counsel of the assessee submitted that addition has been made based on Diary Seized (Annexure A-10) seized from company’s NOIDA Office

145
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145 | P a g e page 12. The AO has treated the figure as mentioned in lakhs and made this addition as unexplained expenditure being salary paid outside books to Sh. Ved
Chanana. The total addition made by AO is Rs. 1.5 Crore in Assessment Year
2018-19 and Rs. 1.5 Crore in Assessment Year 2019-20. The CIT(A) deleted addition of Rs. 99 Lacs in Assessment Year 2018-19 and confirmed addition of Rs. 51 Lacs in Assessment Year 2018-19. The addition of Rs. 99 Lacs was deleted since the AO had treated the amount of 1 written as 100 lacs (1 Crore) and the CIT deleted 99 Lacs by observing that since as per the AO all the amounts are in lakhs and then he cannot treat one single amount in crores, based on this observation the CIT(A) restricted the addition of 100 Lacs made against figure of 1 to Rs. 1 Lacs and gave relief of Rs. 99 Lacs.
13.7 Further the Ld. Counsel of assessee submitted that the jottings on Page 12, written by Mrs. Sudesh Dua, relate to charitable activities (e.g., feeding the poor and religious sages in Haridwar using pure ghee for halwa), not unaccounted transactions. Instructions were given to Sh. Ved Prakash Chanana for these arrangements. The Ld. Counsel of assessee submitted that Ledger accounts and statements of affairs confirm the loan given to Ved Chanana by Bhushan Dua in which only one entry matching out of 3 entries is coincidental, and since it’s a loan, not salary/expenditure, the AO’s claim of unexplained cash payments lacks basis.

146
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

146 | P a g e

147
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

147 | P a g e without documentary backing cannot override seized material interpretations.
This reinforces the principle that burden of proof shifts to the assessee under Section 69C to explain sources satisfactorily.
13.11 We concurs that the distinction between loans and expenditures is immaterial. The unexplained source of cash payments warrants addition regardless. Bank records substantiate a Rs. 50,00,000 cheque receipt by Chanana on 03.08.2017, validating “50” as Rs. 50 lakhs and “C” as cash. However, the AR submission of an inconsistency in the AO's scaling treating “1” as Rs. 1
crore and suggests “1” should be equates to Rs. 1 lakh are already considered.
This recalibration reduces the impugned cash component to Rs. 51,00,000, not the AO's Rs. 1,50,00,000, demonstrating corrective role by adjudicating authorities and we emphasis on proportionate and evidence-based additions.
13.12 We upholds core finding that the "Page 12" entries represent unexplained expenditures under Section 69C, justified by bank corroboration and the assessee's failure to provide credible alternatives. Nonetheless, we affirm the relief of Rs. 51,00,000 allowed by the CIT(A) and restricting the disallowance to Rs. 99 Lacs for Assessment Year 2018-19 since a concistency has to be maintained in interpretation of a document and by treating 1 as 100 Lacs instead of 1 lacs the AO was not factually correct. In view of the the assessee’s ground of appeal for Assessment Year 2018-19 and 2019-20 are dismissed and revenue grounds of appeal for Assessment Year 2018-19 is also dismissed.

148
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

148 | P a g e

149
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

149 | P a g e

150
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

150 | P a g e

“57. I have carefully considered the assessment order and the written submissions of the appellant alongwith material filed in the Paper Books.
The entire dispute in this Ground of appeal is with regard to the income
(earned outside India) of the foreign entity BD FZE which has been taxed the hands of the appellant company (SCIPL) on the ground that income of SCIPL has been diverted into the hands of foreign entity namely BD FZE to a tax free juri iction for evading taxes and BD FZE it was not an independent entity, it only existed on paper and its control and management was being done from India. Accordingly, the AO treated the entire amount of revenue as per the D & L account for FY 2015 16the U 675276 (equivalent to Rs.4,47,30,282/- taking 1U equal to 66.24 INR as on 31.03.2016).

(i) Audited Balance Sheet showing revenue and expenditure
(ii) Presence of employee on whom salary expenditure was incurred.
(iii)
Copy of lease agreement for registered office and invoices for admn.
office.
(iv)
Copies of invoices for legal expenses, audit fees.
(v)
Details furnishing physical presence of Bhushan Dua in UAE for taking management decisions.

151
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151 | P a g e

(vi)
Auditors certificate giving classification of revenue earned by BD
FZE during AY 2016-17 and 2017-18. 60. The above evidences and material cannot be overlooked by the assessing officer making a simple statement that reply of the assessee is not acceptable. Thus, I find that the AO has not been able to meet the material and evidence brought on record by the Appellant to evidence the independent functioning of BD FZE. The evidence/material which was filed during assessment in support of the claim that BD FZE was an independent entity functioning from UAE has been examined during the present appellate proceedings. The audited Balance Sheet of BD FZE as on 31.03.2017 has been reproduced in the assessment order itself. Thus, the Balance Sheet in which audit report is signed by an Independent Auditor cannot be simply dismissed as not acceptable.

152
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

152 | P a g e

Further for is administrative office located at premises bearing No. 2604,
The Prism Tower, Business Bay, P.O.Box 34724, Dubai, UAE the appellant has filed copies of lease invoices and expenditure on rent has been recorded in the P&L account of BD FZE. The fully furnished premises has been taken on rent on all inclusive basis including electricity, water, maintenance and secretarial assistance. Also an amount of U 9544.96
was paid to Magus Consultancy for renewal of license fee of BDFZE, an amount of U 1634.88 was paid to the Auditors towards audit fee. Copy of relevant ledger accounts and substantiating invoices have been filed.
Therefore, it has been incorrectly presumed in the assessment order that these expenses appear to be bogus. Further, the Appellant has filed copies of License Certificate having License No. 12462 and License No. 17502 for the relevant period issued by SAIF Zone Authority permitting General
Trading and permitting social media applications development and management as activities (i.e. creating and distribution of copyrighted content and its derivatives on mobile phones) for BDFZE for the relevant period. All these evidences/materials are in the nature of transactions of BD FZE with non-related third party and therefore cannot be over looked.
The material and evidence brought on record by the appellant supports the submission that during the relevant assessment year the entity BD FZE existed and functioned from Dubai.

FOR A.Y 2015-16
S.NO Particular
Date of presence in UAE
1. Bhushan Dua
01.08.2015 to 02.08.2015
2. Bhushan Dua
17.10.2015 to 18.10.2015
3. Bhushan Dua
19.01.2016 to 20.01.2016
4
Bhushan Dua
02.03.2016 to 03.03.2016
5. Bhushan Dua
12.03.2016 to 13.03.2016

FOR A.Y 2016-17
S.NO Particular
Date of presence in UAE
1. Bhushan Dua
05.04.2016 to 06.04.2016

153
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Super Cassettes Industries Pvt. Ltd.

153 | P a g e

154 | P a g e as formation of subsidiaries and authorising Ms. Neha Mukesh Shinde as the authorised person to operate the bank accounts etc are being taken from India only and agreements are being signed in India and sent through the email.

155
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

155 | P a g e

156 | P a g e against the principles of corporate formation and management. In the case of BD FZE the status of the entity is that of a Free Zone Enterprise. It is primarily managed and controlled by its manager namely Neha Shinde who is a resident of UAE.

157 | P a g e this argument the assessing officer has not been able to bring on record anything material or substance except for alleging that BD FZE is not an independent entity and was being controlled and managed from India. The term “diversion of income”, would mean a process by which income is diverted before it is earned by the assessee.

158
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

158 | P a g e

“Thus, whether a transaction is used principally as a colourable device for the distribution of earnings, profits and gains, is determined by a review of all the facts and circumstances surrounding the transaction. It is in the above cases that the principle of lifting the corporate veil or the doctrine of substance over form or the concept of beneficial ownership or the concept of alter ego arises. There are many circumstances, apart from the one given above, where separate existence of different companies, that are part of the same group, will be totally or partly ignored as a device or a conduit (in the pejorative sense). [Para 67]”

“Applying the above tests, it can be said that every strategic foreign direct investment coming to India, as an investment destination, should be seen in a holistic manner. While doing so, the Revenue/Courts should keep in mind the following factors: the concept of participation in investment, the duration of time during which the Holding Structure exists; the period of business operations in India; the generation of taxable revenues in India; the timing of the exit; the continuity of business on such exit. In short, the onus will be on the Revenue to identify the scheme and its dominant purpose. The corporate business purpose of a transaction is evidence of the fact that the impugned transaction is not undertaken as a colourable or artificial device. The stronger the evidence of a device, the stronger the corporate business purpose must exist to overcome the evidence of a device. [Para 68]”

159
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Super Cassettes Industries Pvt. Ltd.

159 | P a g e

“Parent entities own equity stakes in their subsidiaries.
Consequently, on many occasions, the parent suffers a loss whenever the rest of the group experiences a downturn. Such grouping is based on the principle of internal correlation. Courts have evolved doctrines like piercing the corporate veil, substance over form etc.
enabling taxation of underlying assets in cases of fraud, sham, tax avoidant, etc. However, genuine strategic tax planning is not ruled out. [Para 79]”

Justice K.S. Radhakrishnan who was also part of the Bench gave a concurring view through a separate order. The relevant portion of his judgement is as under:-

“Lifting the Corporate veil doctrine is readily applied in the cases coming within the Company Law, Law of Contract, Law of Taxation.
Once the transaction is shown to be fraudulent, sham, circuitous or a device designed to defeat the interests of the shareholders, investors, parties to the contract and also for tax evasion, the Court can always lift the corporate and examine the substance of the transaction. [Para 75]”

“Lifting the Corporate veil doctrine can, therefore, be applied in tax matters even in the absence of any statutory authorisation to that effect. Principle is also being applied in cases of holding company - subsidiary relationship - wherein spite of being separate legal personalities, if the facts reveal that they indulge in dubious methods for tax evasion. [Para 76]”
80. Thus, on the basis of above legal discussion the judicial view which emerges is that though a company is a separate legal entity different from its shareholders, however, at times the corporate veil can be pierced by the taxing authorities if it is found that the transactions are sham or bogus or of it is a case of shell company. In this background if the facts of the present case

(i)
There is ample material brought on record by the appellant to establish the existence and functioning of the BD FZE as discussed in earlier part of this order. It is established that BD FZE is engaged in business activities in UAE for earning income. It had infrastructure for carrying out its activities. The AO has been unable to dislodge any 160
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

160 | P a g e evidence/material furnished by the appellant during assessment proceedings and instead of examining the material has simply overlooked the same by making a generalized statement that the reply of the assessee is not acceptable.

(ii)
The revenue earned by BD FZE is in the nature of consultancy income, commission income and interest income from independent sources and a little bit of license income (which was assigned in its favor by BDML). Thus, there is no correlation between the business activities of BD
FZE and SCIPL.

(iii) Further, the search action did not detect any worthwhile evidence to indicate that BD FZE is a shell company or it only existed on paper.
Similarly, if BD FZE was a mere paper entity its entire records such as books of accounts, original license agreements, title deeds of immovable properties, original bank statements, original invoices and vouchers would have been based out of SCIPL’s office and would have been detected in the search action.

161
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Super Cassettes Industries Pvt. Ltd.

161 | P a g e

b.
The AO alleges BD FZE’s control lies in India due to Bhushan
Kumar’s involvement however, “control and management” refers to where key policy decisions are made, not day-to-day operations.

162
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Super Cassettes Industries Pvt. Ltd.

162 | P a g e media), and earned consultancy, commission, and interest income
(U 96,000 to employees, U 9,544.96 to consultants, U 1,634.88 to auditors). Audited balance sheets, licenses, and invoices
(pp. 316–340, Vol. II) confirm its operations.
6. Bhushan Dua visited Dubai multiple times in AY 2016-17 (e.g.,
01.08.2015–02.08.2015) and AY 2017-18 (e.g., 05.04.2016–
06.04.2016) for management decisions, supporting Dubai-based control.
7. During search on SCIPL premises on 29.11.2018, no documents of BD FZE records (e.g., books, bank statements, agreements), disproving claims of Indian control were found.
8. The London flat purchase (U 580,060, per 31.03.2017 balance sheet) was funded by BD FZE’s retained earnings, not SCIPL, and is not incriminating.

163
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Super Cassettes Industries Pvt. Ltd.

163 | P a g e independent operations and lack of search evidence (no shell company records) refute sham claims.
14.9 Lastly the Ld. Counsel of the assessee relied on the judgement of Vodafone
International Holdings (SC), in which it was held that lifting the veil requires proof of a fraudulent “device.” The AO failed to provide such evidence, and BD
FZE’s legitimate business purpose (revenue from independent sources) prevails.
14.10 Legally, “control and management” refers to the situs of the board of directors’ decision-making, not day-to-day operations, and BD FZE, a Free Zone
Enterprise, was primarily managed by Neha Shinde in the UAE.
14.11 Bhushan Dua’s physical presence in the UAE for key decisions further supports this. No original BD FZE records were found during the search, undermining claims of Indian control. Even if BD FZE were deemed India- controlled, its income cannot be taxed in SCIPL’s hands, as it is a separate legal entity.
14.12 The AO’s claim of income diversion to a tax-free juri iction lacks evidence, as BD FZE’s revenue from consultancy, commission, interest, and minimal license income (assigned by BDML) is unrelated to SCIPL’s copyrighted content licensing.
14.13 The AO’s attempt to lift the corporate veil, alleging BD FZE as a tax evasion device, is unsupported, as BD FZE is owned by JMD Investments Pvt.

164
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164 | P a g e

Ltd., not SCIPL, and no evidence suggests it is a shell company. The Supreme
Court’s Vodafone ruling emphasizes that lifting the corporate veil requires proof of sham transactions, which the AO failed to provide, as BD FZE’s independent operations, infrastructure, and revenue sources are well-documented.
14.14 We have heard the rival submissions made by the respective parties and we have pursued the material available on record. The addition made was premised on the AO finding in the assessment order that control management and operations of Bollywood Digital FZE were with Bhushan Dua and his close associates based on certain information, documents, Whatsapp Chats seized during the search proceedings.
14.15 Ld. Counsel for the assessee draws the attention of the bench towards the evidences including audited balance sheets, employee salary records, lease agreements, invoices for legal and audit expenses, and details of Bhushan Dua’s physical presence in the UAE for management decisions (Copy of passport stamps and immigration data), which demonstrates that BD FZE’s is an independent entity functioning in Dubai.
14.16 We observed that submission of audited financials including audited balance sheet signed by an independent auditor, cannot be summarily dismissed.

Further in the financial details extracted from the balance sheets of Bollywood Digital FZE submitted during the assessment and appellate proceedings the CIT (A) reveals legitimate revenue streams, including interest

165
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Super Cassettes Industries Pvt. Ltd.

165 | P a g e income ($0.1454 million), commission income ($0.217 million), and license fees
($0.312 million), with expenses of $0.151 million (including salary, rent, legal, and other costs), resulting in a net profit of $0.523 million. These figures refute the Assessing Officer’s (AO) claim that BD FZE was used to divert SCIPL’s income to a tax-free juri iction, as no superfluous income was booked.
14.17 We observe that documents available on record including tenancy agreement with the Government of Sharjah for BD FZE’s registered office, lease invoices for its Dubai administrative office, and audit fee payments ($1,634.88), proves the legitimacy of expenses.
14.18 We further observed that AO assertion that BD FZE had no employees is factually incorrect and unsupported by the evidence on record. It is established that Jainulabdeen Anwar Batcha, a former employee of BDML, was employed and remunerated by BD FZE, thereby confirming the entity’s operational structure in the UAE. Furthermore, copies of license certificates (Nos. 12462
and 17502) issued by the SAIF Zone Authority substantiate that BD FZE was duly authorized to undertake activities in general trading and social media applications. The evidence further demonstrates that key management decisions were made in the UAE by Bhushan Dua, Neha Shinde, and Jainulabdeen Anwar
Batcha. The physical presence of Bhushan Dua in the UAE during the Assessment Years (A.Y.) 2016-17 and 2017-18, as corroborated by travel records, reinforces the independent operational status of BD FZE in Dubai.

166
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Super Cassettes Industries Pvt. Ltd.

166 | P a g e

These third-party transactions and documentary evidence unequivocally establish BD FZE’s legitimate existence and functioning as an independent entity in the UAE, thereby contradicting the AO’s conclusion that it was a sham entity or controlled from India.
14.19 We observed that CIT (A)’s point-wise observation made in the appeal order based on whatsapp chat seized are cogent and supported by evidence.
Chat-wise explanation is furnished as under:
1. Operation of BD FZE’s Bank Account: The AO’s contention that Bhushan
Dua’s operation of BD FZE’s bank account, including the placement of surplus funds in fixed deposits, indicates control and management from India is misconceived. The evidence clearly establishes that Neha Shinde, a resident of Dubai and an authorized signatory, also managed the bank account, thereby demonstrating that operational control was exercised within the UAE. The involvement of a Dubai-based signatory undermines the AO’s claim of Indian control.

167
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167 | P a g e does not support the AO’s inference of control from India. We finds that the statement was not intended to cause harm and lacks any material connection to establishing Indian control over BD FZE’s operations. The funding of the property through BD FZE’s legitimate earnings further corroborates its operational independence in the UAE.

168 | P a g e unsupported by evidence. The record clearly demonstrates that Neha Shinde, a resident of Dubai and an authorized signatory, also actively managed the bank account. This establishes that operational control was exercised within the UAE, thereby negating the AO’s claim of control from India. Further shareholder resolution dated 07.01.2017, executed by Bhushan Dua, pertains to the establishment of a subsidiary in Dubai in which Neha Shinde and Jainulabdeen
Anwar Batcha Dubai based persons were appointed to manage the operations, reinforcing the fact that management and control of BD FZE were vested with UAE-based personnel. This resolution unequivocally supports the finding that BD FZE’s operations were independently conducted in the UAE, independent of any control from India. Lastly the AO’s reliance on the landlord’s statement concerning a flat in London, valued at £425,000 and funded by BD FZE’s earnings, to infer control from India is misplaced as the statement lacks any material nexus to establishing control over BD FZE’s operations from India and was not intended to cause prejudice. Furthermore, the funding of the property through BD FZE’s legitimate earnings corroborates the independent operational status of BD FZE in the UAE.
14.23 It has been held in ITA Nos 214, 215, 216, 1290, 1291, 1292 for Assessment Year 2007-08 till 2012-13 by the coordinate bench in the case of appellant company that BDML is a separate and distinct company and not a sham entity. We further observe that the AO has not mentioned that how the 169
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Super Cassettes Industries Pvt. Ltd.

169 | P a g e income of Bollywood Digital FZE can be taxed in the hands of the assessee as the assessee is not a shareholder of Bollywood Digital FZE. The AO even has not mentioned under which provisions of under which provisions of Income Tax
Act this income has been assessed in the hands of the appellant. Therefore the profit of Bollywood Digital FZE cannot be added in the total income assessee company
14.24 Consequently, the grounds of appeal raised by the Revenue, premised on the erroneous assumption of Indian control over BD FZE, are unsustainable in law and fact. Accordingly, the Revenue’s grounds of appeal for AY 2016-17 and 2017-18 are hereby dismissed.
15. Under this ground of appeal, addition on account of retention of income in Dubai through M/s Highpath Limited is challenged by the department. Details of additions made over the years are tabulated as under:
Assessment Year
Amount
2017-18
63,11,784
2018-19
89,29,050
2019-20
1,24,42,299

170
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

170 | P a g e be applicable for AY 2018-19 and 2019-20 as the issues are identical and no new circumstances exist.
15.2 Brief facts of the case are that the during the search proceedings on appellant premises signed agreement was found between Highpath Ltd and SCIPL for sharing of revenue in the territories of Pakistan. Further, M/s HighPath
Limited had another agreement with M/s Media Master Pakistan for distribution of music rights in Pakistan. Further the AO the funds received from Media Master
Pakistan.
15.3 The additions so made were deleted by the CIT(A) by appreciating the facts and circumstances and concluding that there was sufficient explanation or the reason for which BDML was incorporated in Dubai and further Highpath Limited and Bollywood Digital FZE existed and functioned independently in Dubai and the conclusive findings of the CIT(A) deserves to be reproduced herein below for further analysis and determination of the grounds:
“12.15 I have carefully considered the assessment order and the written submission of the appellant. The entire dispute in this Ground of Appeal is about the income (earned outside India) of the foreign entity Bollywood
Digital FZE (BD FZE) from another foreign entity Highpath Limited and the same has been taxed in the hands of appellant company (SCIPL) on the ground that income of SCIPL has been diverted into the hands of foreign entity Bollywood Digital FZE through Higpath Limited.

171 | P a g e exploitation of rights of music videos, film etc copyrights belonging to M/s
SCIPL in the territories of Pakistan.

a) Signed agreement was there between Highpath Ltd and SCIPL for sharing of revenue in the territories of Pakistan. Further, M/s
HighPath Limited had another agreement with M/s Media Master
Pakistan for distribution of music rights in Pakistan. The funds received from Media Master Pakistan have been retained in Dubai whereas these funds should have been offered to tax in India.

b) Instructions have been given by employees of Sh. Bhushan Kumar to transfer the amount received in Highpath Ltd to BDML after deduction of 5%.

c) On account of detailed reasoning given in assessment order for AY 2013-14 and 2014-15 regarding de facto control of the affairs of BDML by employees of SCIPL to prove that BDML Itself has been established for diverting Income of SCIPL, the Income diverted to Bollywood Digital FZE a nominee of BDML is to be added to the total income of the assessee.

d) With these remarks the AO concluded that total U 414594
retained in Dubai through Highpath Ltd is to be added for Assessment Years 2017-18, 2018-19 and 2019-20. The addition of AY2018-19 is 1,37,370 U equivalent to Rs. 89,29,050/-.

172 | P a g e

AED 3,37,820 on 17/06/2017 and this amount is almost equal to amount after 5% deduction of commission from AED 3,57,252 credited in the bank account of Highpath Ltd from Media Master Pakistan. Hence relying on this argument, the assessing officer observed that income received in Highpath Ltd have been retained in Dubai through Bollywood Digital FZE an entity owned and controlled by Mr. Bhushan Kumar. However, the Assessing Officer has not referred to any document to support this contention.

(i)
Audited Balance Sheet showing revenue and expenditure
(ii)
Presence of employee on whom salary expenditure was incurred.
(iii) Copy of lease agreement for registered office and invoices for admn office.
(iv)
Copies of Invoices for legal expenses, audit fees.
(v)
Details furnishing physical presence of Bhushan Dua in UAE for taking management decisions.
(vi) Auditors certificate giving classification of revenue earned by BD FZE during AY 2016-17 and 2017-18. 173
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

173 | P a g e

174
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

174 | P a g e period. All these evidences/materials are in the nature of transactions of BD FZE with non-related third party and therefore cannot be over looked.
The material and evidence brought on record by the appellant supports the submission that during the relevant assessment year the entity BD FZE existed and functioned from Dubai.
12.24 It is also noted that all the key management decisions were taken by Sh. Bhushan Dua Director, Ms. Neha Shinde, Manager and Mr.
Jainalubdeen Anwar Batcha, employee in UAE. Ms. Neha Shinde and Mr.
Jainalubdeen Anwar Batcha were residents of UAE and Shri Bhushan Dua physically visited UAE for taking these management and policy decisions.
The dates of his visits in UAE during AY 2016-17, 2017-18 AY 2018-19 are tabulated below :-
For A.Y 2016-17
S. No.
Particulars
Date of presence in UAE
1. Bhushan Dua
01.08.2015 to 02.08.2015

FOR A.Y 2017-18
S. No.
Particulars
Date of presence in UAE
1. Bhushan Dua
05.04.2016 to 06.04.2016
2. Bhushan Dua
06.10.2016 to 07.10.2016
3. Bhushan Dua
28.10.2016 to 02.11.2016
4. Bhushan Dua
03.02.2016 to 05.12.2016
5. Bhushan Dua
22.02.2017 to 23.02.2017

FOR A.Y 2018-19
S. No.
Particulars
Date of presence in UAE
1. Bhushan Dua
09.04.2017 to 11.04.2017
2. Bhushan Dua
19.05.2017 to 23.05.2017
3. Bhushan Dua
14.09.2017 to 15.09.2017
4. Bhushan Dua
05.12.2017 to 05.12.2017
5. Bhushan Dua
23.12.2017 to 01.01.2018

175
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Super Cassettes Industries Pvt. Ltd.

175 | P a g e

176 | P a g e the control and management of M/s Highpath Limited during assessment year under appeal was in UAE only.

177
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177 | P a g e

89,29,050/- is deleted and this ground of appeal is allowed. Ground No. 3
is allowed”

178
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Super Cassettes Industries Pvt. Ltd.

178 | P a g e that the AO's case hinges on unsubstantiated assumptions (e.g., transaction approximations without docs). Appellant counters with concrete, third-party verified evidence (audits, govt. leases, licenses), which AO ignored during assessment.
15.7 In reply the appellant submitted evidence (audited balance sheets, employee records, lease agreements, expense invoices, and Bhushan Dua's UAE visit proofs via passport stamps/immigration data) in substantiation of the fact that BD FZE's was an independent entity in UAE. Critically, AO's failure is highlighted to rebut or even address this material, including the independent auditor-signed balance sheet, which carries presumptive validity under auditing standards. This omission by AO amounts to a procedural infirmity, rendering the assessment order flawed and unsustainable, as per precedents on fair inquiry.
15.8 We observe that BD FZE's financial figures including revenue U 2.059
million, expenses of U 0.207 million (broken down into salaries, rent, legal/professional fees, etc.), yielding a net profit of U 1.851 million debunks
AO's allegation of income diversion from SCIPL to a tax-free heaven, as no inflated or fictitious income is evident. We view this as evidence of arm's-length operations, aligning with Section 92 of the Act on transfer pricing, and underscore that mere routing suspicions without proof cannot justify additions.

179
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

179 | P a g e

180
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

180 | P a g e border taxation, emphasizing substance over form and separate entity principles.
Since no diversion of SCIPL's income is proven, the department’s ground of appeal for AY 2017-8 to AY 2019-20 is dismissed.
16. The addition made in the assessment order based on WhatsApp Chat
Extracted from the digital data seized using codewords Tapes has been challenged by the department. Details of additions made over the years are tabulated as under:

Assessment Year
2018-19
2019-20
Unaccounted Cash Receipts
50,00,000
75,00,000
Unaccounted Cash Payments
5,00,000
Nil

181
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Super Cassettes Industries Pvt. Ltd.

181 | P a g e

Kumar’s claim to the Investigation Wing that these were actual tapes, the AO draws the observation that evidence suggests the 5 tapes represent unaccounted expenditure of Rs. 5 Lakhs in cash for the office construction.
16.3 The appellant’s primary contention is that WhatsApp chats lack evidentiary value under Section 65B unless certified, and this issue is addressed first. Relying on the Supreme Court’s ruling in Ambalal Sarabhai Enterprises v. KS Infra space
LLP, WhatsApp chats are virtual verbal communications with evidentiary value, subject to proof during trial, and are not “dumb documents.”
16.4 Based on the details extracted from the WhatsApp communications, a year- wise bifurcation of cash transactions allegedly conducted by Super Cassettes
Industries Private Limited (SCIPL), using the codeword “Tape,” has been tabulated by the Assessing Officer (AO). The AO determined that the appellant company received cash payments amounting to Rs. 50,00,000/- during the Assessment Year (A.Y.) 2018-19 and Rs. 75,00,000/- during A.Y. 2019-20. Additionally, an expenditure of Rs. 5,00,000/- was incurred in cash during A.Y.
2018-19. Consequently, these amounts, were added to the total income of the appellant company for the respective assessment years, as unexplained income and unexplained expenditure.
16.5
The additions so made were deleted by the CIT(A) by appreciating the facts and circumstances and concluding that no corroborative material

182
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Super Cassettes Industries Pvt. Ltd.

182 | P a g e was found during the search under Section 132(4) of the Income Tax Act. The relevant paras of AY 2018-19 are reproduced below:-
“18.7 The contents of the assessment order and the submissions of the appellant have been carefully considered. Coming to the merits of the case and Ground Nos. 11 and 12, the appellant has contended that the A.O was not justified in making an addition of Rs. 50,00,000/- and Rs. 5,00,000/- during AY 2018-19 on account of un accounted income on account of alleged unaccounted cash income received /paid.

From: 919920533221@s.whatsapp.net Shivam
Timestamp: 04-07-2018 15:11:47(UTC+0)
Source App WhatsApp
Body:
75 tapes revived
From: From: 919821444221@s.whatsapp.net Bhushan Kumar
Timestamp: 04-07-2016 15:12:16(UTC+0)
Source App: WhatsApp
Body:
From: 919920533221@s.whatsapp.net Shivam
Timestamp: 30-11-2017 11:08:00 (UTC+0)
Source App: WhatsApp
Body:
Got 25 tapes
From: From: 919821444221@s.whatsapp.net Bhushan Kumar
Timestamp: 30-11-2017 11:09:53(UTC+0)
Source App: WhatsApp
Body:
Total 50 right
From: From: 919821444221@s.whatsapp.net Bhushan Kumar
Timestamp: 30-11-2017 11:10:01(UTC+0)
Source App: WhatsApp
Body:
Yesterday and today
From: 919920533221@s.whatsapp.net Shivam

183
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

183 | P a g e

Timestamp: 30-11-2017 11:10:12(UTC+0)
Source App: WhatsApp
Body:
Yes sir
From: 919920533221@s.whatsapp.net Shivam
Timestamp: 22-04-2017 06:52:22 (UTC+0)
Source App: WhatsApp
Body:
Given 5 tapes to susheelji
From: 919920533221@s.whatsapp.net Shivam
Timestamp: 22-04-2017 06:52:27(UTC+0)
Source App: WhatsApp
Body:
For POP
From: From: 919821444221@s.whatsapp.net Bhushan Kumar
Timestamp: 22-04-2017 06:52:37 (UTC+0)
Source App: WhatsApp
Body:
Ok

184 | P a g e respect of Q 103 that the Chat is in respect of Tapes which were asked from Shri Shivam, the details of which could not be remembered by him at the time of statement.

185
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

185 | P a g e

186
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

186 | P a g e statement also affirmed that the amount mentioned in chat are tapes. Therefore, the allegations of AO are meaningless and without any base. The Ld Counsel further argued that in the chat no name has been mentioned and it is only mentioned that tapes revived or tapes got. As per the Ld Counsel if the argument of the Ld. AO that tapes means cash is accepted then also no names have been mentioned in the chats as to from whom the cash was received and for what.
Hence the presumption of the AO that tapes is cash is not correct and without any basis.
16.9 The AO alleged that 5 tapes given to Susheel ji (another employee of appellant company) for POP meant that amount of 5 lacs was spent on construction of Bombay office without establishing a link between the two. In this regard the The Ld. Counsel of the assessee submitted that there is no corroborating material highlighted in the order which proves that 5 tapes handed over to Susheel ji were 5 lacs spent on building of Bombay Office. There is no link between tapes given to Susheel ji and construction of Bombay Building.
Further “POP” used in the chat here means POP music tapes and not Plaster of Paris. Be that as it may, there is no proof or evidence of the receipt of cash of Rs.
75 lacs during AY 2019-20, 50 lacs and 5 lacs during AY 2018-19 as is being alleged. It is also not clear that such cash income is emanating on what account and from whom. There are no particulars specified in the SCN regarding the 187
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

187 | P a g e alleged person making the payment of cash income to SCIPL. Thus, the whatsapp chat remains a dumb document.
16.10 Lastly the Ld. Counsel of the assessee highlighted that the well settled legal position is that a non-speaking document without any corroborative material, evidence on record and finding that such document has materialized into transactions giving rise to income of the assessee which had not been disclosed in regular books of account by such assessee, has to be disregarded for the purposes of assessments to be framed pursuant to search and seizure action. From the search and seizure perspective, such nonspeaking seized documents are referred to as ”Dumb Documents”.
16.11 We have heard the rival submissions made by the respective parties and we have pursued the material available on record.The AO’s determination is premised on interpretation of WhatsApp Chats extracted from the digital data seized from SCIPL premises during search proceedings. The AO interpreted the words used as “Tapes” as cash and the figure mentioned in lakhs and added Rs. 50
lakhs and Rs. 75 Lakhs as unexplained income in AY 2018-19 and AY 2019-20
and Rs. 5 lakhs as unexplained expenditure in AY 2018-19. 16.12 The primary issue before us is whether numerical figures contained in WhatsApp chats, in the absence of corroborative evidence, can form the basis for presuming unaccounted cash income or expenses incurred by the appellant company. The Assessing Officer (AO) made additions to the appellant’s income,

188
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Super Cassettes Industries Pvt. Ltd.

188 | P a g e presuming that the numerical figures mentioned in WhatsApp chats represented unaccounted cash transactions related to construction work in Bombay, with the term “tapes” interpreted as a codeword for cash and the figures assumed to be amounts in lakhs. These additions were solely based on the WhatsApp chats, without any corroborative evidence recovered during the search conducted under Section 132(4) of the Income Tax Act, 1961. 16.13 The AO failed to conduct any further investigation to substantiate the presumption that the term “tapes” referred to cash. A statement recorded from Shri
Bhushan Dua on 02.09.2019 clarified that the chats pertained to musical tapes requested from Shri Shivam, though specific details were not recalled. The absence of any inquiry or corroborative material renders the AO’s presumption speculative and unsupported by evidence.
16.14 The appellant has consistently maintained, during the search, post-search inquiries, and assessment proceedings, that the term “tapes” referred to musical tapes related to a music album, not cash. We find that this explanation is consistent and cannot be dismissed as an afterthought. The record reveals no evidence to suggest that “tapes” was a codeword for cash or money. Notably, the term “tapes” appears only in the impugned WhatsApp chat, while other communications by Shri Bhushan Kumar do not employ acronyms to denote cash.
Given the appellant’s business in the film and music industry, the term “tapes” is more likely to refer to film or music tapes, particularly for revival purposes. The 189
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

189 | P a g e use of the word “revived” in the chat further supports the interpretation that the reference was to old music or film tapes, not cash transactions. Had the chats referred to cash, terms such as “received” or “paid” would likely have been used.
Further there are no names mentioned in the WhatsApp chat from whom the alleged unaccounted receipts were made. The AO’s interpretation of “tapes” as cash lacks evidential foundation and is unsustainable. Further no name has been mentioned in the chats relied upon by the AO and even if the presumption drawn by AO is taken as correct then also in the absence of any names it cannot be held that the assessee had received cash. The absence of corroborative material renders the AO’s reliance on the WhatsApp chat legally untenable.

190 | P a g e appeal for Assessment Years 2018-19 and 2019-20 are dismissed.

Assessment
Year
Particulars
Amount
2015-16
Enhancement done on account of Roy
Movie Expenses
17,52,50,000
2018-19
Enhancement done on account of Raabta Movie Expenses
8,73,51,431

191
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

191 | P a g e made a disallowance of Rs. 26,81,39,398/- in the Assessment Year 2016-17 by disallowing part of the expenses incurred on foreign shooting of the film “Roy”.
In the First Appellate proceedings for the Assessment Year 2016-17 the assessee argued before the CIT(A) that the disallowance of Rs. 26,81,39,398/- for the Assessment Year 2016-17 is not sustainable since these expenses were never debited and claimed in the Assessment Year 2016-17. The CIT(A) after considering the submission of the assessee deleted the disallowance made in the Assessment Year 2016-17 and issued a notice for enhancement for the Assessment Year 2015-16 since the appellate proceedings for Assessment Year
2015-16 were pending before the CIT(A). The assessee filed response before the CIT(A) in respect of notice for enhancement issued for Assessment Year 2015-
16. The CIT(A) upon considering the response of the Assessee made enhancement of Rs. 17,52,50,000/- as against initial disallowance of Rs.
26,81,39,398/- made by the AO for Assessment Year 2016-17 on account inflated expenses claimed in respect of Roy Movie for Assessment Year 2015-16

192
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Super Cassettes Industries Pvt. Ltd.

192 | P a g e

Account for the year ended 31.03.2017 but were incurred during AY 2018-19
and debited in the Profit & Loss Account for the Assessment Year 2018-19. The CIT(A) after considering the submission of the assessee deleted the disallowance made in the Assessment Year 2017-18 and issued a notice for enhancement for the Assessment Year 2018-19 since the appellate proceedings for Assessment
Year 2018-19 were pending before the CIT(A). The assessee filed response before the CIT(A) in respect of notice for enhancement issued for Assessment
Year 2018-19. The CIT(A) upon considering the response of the Assessee made enhancement of Rs. 8,73,51,431/- by disallowing expenses incurred for the movie Raabta.

193
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Super Cassettes Industries Pvt. Ltd.

193 | P a g e

194 | P a g e that the reiteration of judicial restraint on enhancement powers highlights that although CIT(A) has wide powers, they are not absolute. The Supreme Court in Rai Bahadur Hardutroy Motilal Chamaria 66 ITR 443 (SC) reaffirmed that the appellate authority can exercise enhancement power only in respect of issues that were the subject of the AO's inquiry. In Shapoorji Pallonji Mistry 44 ITR 891
(SC), the Court emphasized that the enhancement power is circumscribed by what was already processed in assessment. The CIT(A) cannot act as an alternate assessing authority or initiate proceedings on new income sources. In the present case the issues on which enhancement was made were never the subject matter
AO’s enquiry for the Assessment Year in which enhancement was made and the Ld Counsel stressed that CIT(A) does not have the power to act as alternate assessing authority. The Ld Counsel also submitted that the CIT(A) could issue notice for enhancement only due to the fact that the appeals for Assessment Year
2015-16 and 2018-19 were pending before the CIT(A), however if these appeals were not pending then the recourse before CIT(A) would have been to instruct the AO to initiate 148 or 263 proceedings. The CIT(A) by issuing notice for enhancement has exceeded its powers by making enhancement on a completely new source of income which was not at all the subject matter of the Assessment order for the year in which enhancement was made.

195
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195 | P a g e have also perused the relevant materials available on record. It appears from the records that that the Ld. AO has disallowed the impugned amount of Rs.
26,81,39,398/- as inflated production expenses for the film Roy in Assessment
Year (A.Y.) 2016-17 and Rs. 8,73,51,431/- for the film Raabta in A.Y. 2017-18, on the grounds that these expenses were not genuine. During the course of appellate proceedings the CIT(A) found that these expenses were never claimed in the year in which these were disallowed. These expenses were claimed in the Assessment Years 2015-16 and 2018-19 respectively. Accordingly, the CIT(A) deleted these disallowances made in Assessment Year 2016-17 and 2017-18
respectively and further issued enhancement notices on these disallowances for Assessment Years 2015-16 and 2018-19. After considering the reply of the assessee the CIT(A) made enhancement of income of Rs. 17,52,50,000/- for Assessment Year 2015-16 by disallowing inflated expenditure on production of film Roy and Rs. 8,73,51,431/- by disallowing inflated expenditure on production of film Raabta. The assesse has challenged the power of the CIT(A) to make enhancement of income on a completely new source of income.
17.8 We have meticulously examined the record and the submissions made by the parties. The Ld. AR of the assessee, submitted before the commissioner of Income Tax (Appeals) [CIT (A)] and us that the disallowed expenses were not claimed in the Profit and Loss Account for the Financial Years ending
31.03.2016 (A.Y. 2016-17) and 31.03.2017 (A.Y. 2017-18). Instead, the 196
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196 | P a g e expenses for Roy were incurred in A.Y. 2015-16 (relevant to Financial Year
2014-15), and those for Raabta were incurred in A.Y. 2018-19 (relevant to Financial Year 2017-18). In response to these submissions, the CIT (A) issued enhancement notices and added these expenses to their respective assessment years i.e. AY 2015-16 and AY 2018-19 for Roy and Raabta movies.
17.9 The CIT(A) enhanced the appellant’s income by Rs. 17,52,50,000/- for A.Y. 2015-16 and Rs. 8,73,51,431/- for A.Y. 2018-19, corresponding to the expenses for Roy and Raabta, respectively. The CIT (A) provided relief for A.Y.
2016-17 and A.Y. 2017-18 by deleting the AO’s erroneous additions for those years.
17.10 Ld. Counsel for the assessee Mr. Nirbhay Mehta has vehemently argued that the CIT (A) lacked juri iction to enhance the income for A.Y. 2015-16 and A.Y. 2018-19, as these disallowances constituted new sources of income not considered in the AO’s assessment orders for those years. The Ld counsel in support of the argument has relied on various judicial pronouncement of the Supreme Court juri ictional High Court and Delhi Income Tax Tribunal.
17.11 On examination of the facts the contention of the Ld Counsel that the enhancement made by the CIT(A) was on a completely new source of income which was not a subject matter of the Assessment proceedings for that Assessment Year. It is a settled principle that each Assessment Year is a separate year and there are separate proceedings for each Assessment Year. In the present

197
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
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197 | P a g e case the enhancement was made in the Assessment Year 2015-16 and 2018-19
and it is quite apparent that the issue on which enhancement was made were neither the part of the Assessment order for those years nor there was any enquiry by the AO made on the issue on which enhancement was done by CIT(A).
17.12 Coming to the issue of powers of enhancements by the ld CIT (A), Powers of Ld CIT (A) enshrined u/s 251 of the Act is as under:—
"251. POWERS OF THE(...)COMMISSIONER (APPEALS).
(1) In disposing of an appeal, the Commissioner (Appeals) shall have the following powers--
(a) in an appeal against an order of assessment, he may confirm, reduce, enhance or annul the assessment;
(aa) in an appeal against the order of assessment in respect of which the proceeding before the Settlement Commission abates under section 245HA, he may, after taking into consideration all the material and other information produced by the assessee before, or the results of the inquiry held or evidence recorded by, the Settlement Commission, in the course of the proceeding before it and such other material as may be brought on his record, confirm, reduce, enhance or annul the assessment;
(b) in an appeal against an order imposing a penalty, he may confirm or cancel such order or vary it so as either to enhance or to reduce the penalty;
(c) in any other case, he may pass such orders in the appeal as he thinks fit.
(2) The Commissioner (Appeals) shall not enhance an assessment or a penalty or reduce the amount of refund unless the appellant has had a 198
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
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198 | P a g e reasonable opportunity of showing cause against such enhancement or reduction.
Explanation In disposing of an appeal, the Commissioner (Appeals) may consider and decide any matter arising out of the proceedings in which the order appealed against was passed, notwithstanding that such matter was not raised before the Commissioner (Appeals) by the appellant."
17.13 A careful reading of the Section 251 which lays down the powers of CIT(A) the explanation to Section 251 clearly lays down that in disposing of an appeal the CIT(A) may consider any matter arising out of the proceedings in which the order appeal against was passed whether or not such matter was raised before the CIT(A) or not. In the present case the enhancement has been done by the CIT(A) on the issue which was not at all arising out of the proceedings in which the order appealed against was passed. The assessee was in appeal before the CIT(A) for Assessment Years 2015-16 and 2018-19. However, it is an undisputed fact that the disallowance of expenses of Roy Movie for Assessment
Year 2015-16 and expenses of Movie Raabta for Assessment Year 2018-19 were never a subject matter of assessment proceedings before the Ld. AO for those years. Therefore, the enhancement done by the CIT(A) for the two years is in violation of the provisions of section 251 since these issues were never the part proceedings before the AO in assessment years 2015-16 and 2018-19. 17.14 Hon’ble Delhi High Court in [2013] 213 Taxman 33 (Mag.)/[2012] 18
taxmann.com 176/348 ITR 170, Gurinder Mohan Singh Nindrajog v. CIT has discussed in paragraph nos. 19 and 20 laying down the guidance as to when the 199
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

199 | P a g e powers of enhancement by the ld CIT (A) are validly invoked. The Hon’ble
High Court held the following:
"19. We have considered the submissions of both the parties. There is no doubt about the fact that while framing the assessment even under section 143(3) of the Act, the Assessing Officer may omit to make certain additions of income or omit to disallow certain claims which are not admissible under the provisions of the Act thereby leading to escapement of income. The Income- tax Act provides for remedial measures which can be taken under these circumstances. While framing an assessment under section 143(3) of the Act, any of the following situations may occur:
(a) the Assessing Officer may accept the return of income without making any addition or disallowance; or (b) the assessment is framed and the Assessing Officer makes certain addition or disallowance and in making such additions or disallowances, he deals with such item or items of income in the body of order of assessment but he under assessed such sums; or (c) he makes no addition in respect of some of the items, though in the course of hearing before him holds a discussion of such items of income;
(d) yet, there can be another situation where the Assessing Officer inadvertently omits to tax an amount which ought to have been taxed and in respect of which he does not make any enquiry;
(e) further another situation may arise, where an item or items of income or expenditure, incurred and claimed is not at all considered and an assessment is framed, as a result thereof, a prejudice is caused to the Revenue, or (f) where an item of income which ought to have been taxed remained untaxed, and there is an escapement of income, as a result of the assessee's failure to disclose fully and truly all material facts necessary for computation of income.

200
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200 | P a g e

201 | P a g e order of assessment but he under assessed such sums. This is not the fact in the present case. The issue before us is that the issue of enhancement was never discussed by the AO during the course of assessment proceedings of the year in which enhancement was made i.e. AY 2015-16 and 2018-19. The AO never made any enquiry on this issue during AY 2015-16 and 2018-19. This being the case the correct recourse would have been section 147/148 or section 263 but the CIT(A) exceeded its juri iction by making enhancement under section 251 of the Income Tax Act
13.13
The Division Bench of Delhi High court in CIT v. Union Tyres
[1999] 240 ITR 556 (Delhi) reiterated that the first appellate authority cannot consider new scope of income under section 251(1) of the Act.
"Section 251 of the Act prescribes the power of the Appellate Assistant
Commissioner, now the Commissioner (Appeals). Section 251(1)(a) of the Act empowers the Appellate Assistant Commissioner in disposing of an appeal by the assessee against an order of assessment to confirm, reduce, enhance or annul the assessment or to set aside and refer the case back to the Income-tax
Officer for making fresh assessment in accordance with the directions given by the Appellate Assistant Commissioner. The Explanation to section 251
provides that the Appellate Assistant Commissioner may hear and decide any matter arising out of the proceedings in which the order appealed against was passed notwithstanding that such a matter was not raised before the Appellate Assistant Commissioner by the appellant. (Para 8)
The issue with regard to the scope of powers of the first appellate authority in disposing of an appeal has come up before the courts umpteen times but we do not propose to burden the judgment by making reference to all the decisions on the point. We will notice a few decisions which we consider are relevant to answer the question referred. In CIT v. Shapoorji Pallonji Mistry
[1962] 44 ITR 891 (SC), while construing the corresponding provisions of the Indian Income- tax Act, 1922, relating to the juri iction of the Appellate
Assistant Commissioner in such an appeal, the Supreme Court held that, in an appeal filed by the assessee, the Appellate Assistant Commissioner has no power to enhance the assessment by discovering a new source of income, not considered by the Income-tax Officer in the order appealed against. Similar views were expressed by the apex court in CIT v. Rai Bahadur Hardutroy
Motilal Chamaria [1967] 66 ITR 443 (SC). It was held that the power of 202
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
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202 | P a g e enhancement under section 31(3) of the 1922 Act was restricted to the subject-matter of the assessment or the source of income which had been considered expressly or by clear implication by the Income-tax Officer from the point of view of taxability and that the Appellate Assistant Commissioner had no power to assess a source of income which had not been processed by the Assessing Officer." (Para 9)

203 | P a g e given to sexercise under Section 147/148 or 263. 17.17 The AR’s reliance on the Delhi ITAT decision in Hari Mohan Sharma v.
Assistant Commissioner of Income-tax [2019] 110 taxmann.com 119 (Delhi -
Trib.) is opposite, wherein it was observed:

“The principle emerging from various pronouncements of the Supreme
Court, Union Tyres observes, is that the first appellate authority is invested with very wide powers under section 251(1)(a) of the Act and once an assessment order is brought before the authority, his competence is not restricted to examining only those aspects of the assessment about which the assessee makes a grievance and ranges over the whole assessment to correct the Assessing Officer not only regarding a matter raised by the assessee in appeal but also regarding any other matter considered by the Assessing Officer and determined in assessment. (Para
18 (48))

204 | P a g e fulfilled. It is inconceivable, according to Sardari Lal, that in the presence of such specific provisions, a similar power is available to the first appellate authority. Eventually, Sardari Lal upheld the decision in Union
Tyres. (Para 18 (50))

“Undeniably, the precedential position on the powers of the first appellate authority under section 251 undulates. There are seeming contradictions.
But, as held by Union Tyres, and as affirmed on reference by Sardari Lal, there is a consistent judicial assertion that the powers under section 251
are, indeed, very wide; but, wide as they are, they do not go to the extent of displacing powers under, say, sections 147, 148, and 263 of the Act.”
(Para 18 (51))

“The principle culled out from the above judicial precedents clearly shows that words ‘enhance the assessment’ are confined to the assessment reached through a particular process. It cannot be extended to the amount which ought to have been computed.” (Para 19)

205 | P a g e

Shapoorji and Chamaria still holds the field. The Supreme Court in Rai Bahadur
Hardutroy Motilal Chamaria [1967] 66 ITR 443 (SC) and Shapoorji Pallonji
Mistry [1962] 44 ITR 891 (SC) clarified that enhancements are limited to issues already processed by the AO, and the CIT(A) cannot act as an alternate assessing authority by introducing new sources of income.
17.19 Further the Coordinate Bench in the case of Prashant Pitti in ITA No.
3032/Del/2022 held that first appellate authority has no power to take into account a new source of income that came up for consideration in appellate proceedings. The Coordinate Bench deciding the appeal in favour of appellant held as under:
“20. The issue whether the Ld.CIT(A) has power to enhanced the income from a source which was not before him in appeal is shrouded in controversy. In CIT vs. Union Tyres (1999) 240 ITR 556 (Del), the Hon'ble
Delhi High Court considered the relevant decisions including the decision of Hon'ble Supreme Court in CIT vs. Nirbheram Daluram (1997) 224 ITR
610 (SC) where the Hon'ble Supreme Court reiterated the powers of Ld.
CIT(A) "co-terminus with ITA No.- 3032/Del/2022 Prashant Pitti that that of the Ld. AO" so that "the Ld. CIT(A) can do what the Ld. AO can do and can also direct him to do what he failed to do", a proposition laid down by the Hon'ble
Supreme
Court in the case of Kanpur
Coal
Syndicate (supra) which was followed in Jute Corporation of India Ltd. vs.
CIT (1991) 187 ITR 688 (SC) and applied the principles of Law laid down by the Hon'ble Supreme Court in their earlier decisions in CIT vs.
Hardutroy Motilal Chamaria (1967) 66 ITR 443 (SC) that there is a solitary but significant limitation to the power of Ld. CIT(A) u/s 251 of the Act, namely that it is not open to him to introduce in the assessment a new source of income and the assessment has to be confined to those items of income which were the subject of matter of original assessment.

206
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

206 | P a g e

207
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

207 | P a g e the addition made by the AO and upheld by the CIT(A) on different grounds is deemed invalid, and the assessee’s grounds of appeal are allowed, leading to the deletion of the addition. Relevant Paras are as under:

“5. The Ld. CIT(A) observed that the expenditure of Rs.30,753/- has been paid from the bank statement of M/s Spring Travels Pvt. Ltd. and the same pertains to M/s Spring Travels Pvt. Ltd. However, he concluded that the same would be treated as prerequisite as it is a payment made on behalf of its Director u/s 17(2) instead of section 69C of the Act.
6. From the above narration of facts which are undisputed, it could be seen that the lower authorities had categorically agreed that a sum of Rs.30,753/- paid to HDFC by M/s Spring Travels Pvt. Ltd. by regular banking channels and the same was claimed as ITA No.3069 &
3070/Del/2022 Mandeep Singh Anand vs. ACIT business promotion expenses by M/s Spring Travels Pvt Ltd. The same was treated as an unexplained expenditure in the hands of the assessee by the Ld. AO. Once it is proved that the said expenditure is reflected in the books of Spring
Travels Pvt. Ltd. and sourced out of regular banking channels from the funds of the said company, the same cannot be added an unexplained expenditure in the hands of the assessee u/s 69C of the Act. But what has been done by the Ld. CIT(A) is treating the very same sum as perquisite in the hands of the assessee on the premise that the said expenditure has been incurred by M/s Spring Travels Pvt. Ltd. on behalf of its director u/s 17(2) of the Act. This in our considered opinion, becomes a new source of income which CIT(A) is not entitled to add/enhance under the powers provided to him under the statute. In any event, the Ld.CIT(A) had also not given any enhancement notice to the assessee proposing to shift the addition from unexplained expenditure u/s 69C of the Act to perquisite u/s 17(2) of the Act, thereby violating the requirements of provisions of section 251(2) of Act. Hence, in any case, the addition made by the Ld. AO and sustained by the Ld. CIT(A) are on different count and ITA No.3069 &
3070/Del/2022 Mandeep Singh Anand vs. ACIT deserves to be deleted.
Accordingly, the grounds raised by the assessee are allowed.”

208
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208 | P a g e

209
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
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209 | P a g e

Now coming to grounds which are not common over the year and therefore the same are addressed yearwise as under:

Un-Common Grounds for AY 2014-15

210
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Super Cassettes Industries Pvt. Ltd.

210 | P a g e

211
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

211 | P a g e

212
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

212 | P a g e v) that in case of search under Section 132 or requisition under Section 132A, the AO assumes the juri iction for block assessment under section 153A; vi)
All pending assessments/reassessments shall stand abated; vii) in case any incriminating material is found/unearthed, even, in case of unabated/completed assessments, the AO would assume the juri iction to assess or reassess the 'total income taking into consideration the incriminating material unearthed during the search and the other material available with the AO including the income declared in the returns; and viii) in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments.
Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under Section 132 or requisition under Section 132A of the Act, 1961. However, the completed/unabated assessments can be re-opened by the AO in exercise of powers under Section 147/148 of the Act, subject to fulfilment of the conditions as envisaged/mentioned under sections
147/148 of the Act and those powers are saved.

213
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

213 | P a g e ii.
Sample invoices/bills, ledger account and sample release orders have been attached to the above referred letter of the Assessing Officer.

"In view of the above, we are of the considered view that the regular books of accounts maintained by the assessee in tally software, now being referred by the revenue, to justify the addition did not constitute incriminating material unearthed during the search."

"We have considered the aforesaid contentions and are of the view that no substantial question of law arises, as the matter is squarely covered by Kabul Chawla supra, which has been correctly applied to the facts of the case by the ITAT. The ITAT, in the impugned order has held that in the audited report filed by the assessee along with the report, cash book, ledger, bank book etc. were mentioned; that 214
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

214 | P a g e the respondent assessee was maintaining books on TALLY
Accounting Software which was seized during the search and was being treated as incriminating material; however, regular books of account of the assessee, by no stretch of imagination, could be treated as incriminating material to form basis of framing assessment under Section 153A read with Section 143(3) of the Act.

215 | P a g e

216 | P a g e

217
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

217 | P a g e

Furthermore, the additions pertain to unabated assessment year, as the original assessment under Section 143(3) of the Income Tax Act, 1961, was completed prior to the date of the search, i.e., 28th November 2018. 18.8 Since no incriminating material was found during course of search, the addition was correctly deleted by the CIT(A) reling on the judgement of Hon’ble
Buildwell Pvt Ltd vide order dated 24.04.2022. Accordingly the finding of the CIT(A) is upheld and this ground raised by the department for AY 2014-15 is dismissed.
AY 2015-16

218
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

218 | P a g e

AY 2017-18
20. The addition of Rs. 5,24,00,000/- on account of disallowance of expenses of production of film TUM BIN-2 considering them as bogus expense is challenged for AY 2017-18 by the assessee company.
20.1 Brief facts of the case are that the SCIPL routed funds through overseas subsidiaries, including T-Series (UK) Films Ltd., to Dubai-based entities such as Magus Consultancy DMCC, NM Worldwide Ltd., and Al Mohazab General
Trading LLC, controlled indirectly by SCIPL’s employees, in order to inflate movie production expenses and park funds abroad. For the filmTum Bin 2, SCIPL transferred Rs. 18.16 crores to T-Series (UK) Films Ltd., which in turn remitted around Rs. 7 crores to Magus Consultancy DMCC under the guise of director and writer fees for Shri Anubhav Sinha. However, evidence showed that Shri
Anubhav Sinha actually received only Rs. 1.5 crores, leaving Rs. 5.5 crores retained in Dubai as bogus expenses. Agreements produced by SCIPL to justify these transactions were found inconsistent and considered afterthoughts. Despite repeated notices, SCIPL failed to provide satisfactory evidence or compliance, leading the Assessing Officer to conclude that the inflated payments represented sham transactions and the same were intended to claim false deductions, warranting disallowance of Rs. 5.5 crores from the company’s books for A.Y.
2017–18. 219
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

219 | P a g e

220 | P a g e assessee is in appeal before us for the addition of Rs. 5,24,00,000/- confirmed by the CIT(A), the department had not filed appeal on the deletion of Rs.
24,00,000/- by the CIT(A). The relevant paras from the order of CIT(A) are reproduced below:-
“14.12
The Assessing Officer has made addition of Rs. 5.50 crores on the assumption that the appellant transferred an amount of Rs.7 crores to M/s Magus through T-series UK Limited. There appears to be a clerical mistake in computing the amount of disallowance which will be dealt in the end.

221
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

221 | P a g e

DMCC as bogus expenses and the agreement submitted by the assessee between T-Series (UK) Films Limited and Magus Consultancy DMCC is an after-thought to justify the retention of Rs.5.50 Crore in Dubai against bogus expenses.

222
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

222 | P a g e part of shooting then the said agreement was between two parties and as far as SCIPL is concerned the entire cost Incurred and claimed was backed by a valid and subsisting commercial agreement. The appellate has argued that there is no evidence to suggest that the amount transferred to Magus was received back y SCIPL in any manner. Further the reference made in the assessment order of the amount transferred to Bollywood Digital FZE does not conclusively prove that these are the same funds which were received from T Series UK by Magus. As regards the inquiry from Anubhav
Sinha if the director has been paid a lesser amount as compared to amount charged from T Series UK by Magus the it would not lead to an inference that expense have been Inflated it can be due to higher margin retained by Magus. The appellant has drawn attention to clause 2.1 of the film commissioning agreement wherein the entire cost of foreign shooting was to be incurred by T Series UK and same was to be reimbursed by SCIPL.
As per the budget forming part of the film commissioning agreement it includes expenditure of 7,13,000/- pounds (Approx 7 Crore) as directors fee and hence the amount contemplated in the budget matches with the amount claimed by T Series UK on account of Directors Fees.

223
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

223 | P a g e

224
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

224 | P a g e transferred to Magus by T Series UK and Rs. 1.5 Crore which is the actual payment made to Sh. Anubhav Sinha which comes to 5.24 Crores.

225
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

225 | P a g e called the Film Commissioning Agreement dated 22.01.2016 was executed between SCIPL and T-Series (UK) Films Ltd. for the shooting of the film in UK.

226 | P a g e regards inquiry done from Sh. Anubhav Sinha, director, it may be noted that if the director has been paid lesser amount as compared to the amount charged from T-
Series (UK) Films Ltd. by Magus Consultancy DMCC then it would not automatically lead to an inference that the expenses have been inflated. The same can at the highest be attributed as extra margin retained by Magus Consultancy which the appellant has nothing to do with.

227
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

227 | P a g e

228 | P a g e tenable since clearly the expenditure booked as per the Books of Accounts is inflated and there is no proper justification for the same.

229
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

229 | P a g e from Sh. Sanjay Singhal is to be reduced from Rs. 2,64,00,000/- for the purpose of determining the disallowance. The CIT(A) therefore confirmed addition of Rs. 2,39,60,000/- (Rs. 2,64,00,000/- minus Rs. 25,00,000/-)The relevant paras from the order of CIT(A) are reproduced below:-
“15.6 The appellant company had produced film named 'TUM BIN'.
Subsequently, he planned to produce 'TUM BIN-2'. The appellant had right over 'TUM BIN'. Any right over production of Film TUM BIN-2, therefore, existed with the appellant.
15.7 Subsequently, vide film commissioning agreement dated 22.01.2016, between the appellant and M/s T-series (UK) Films Limited (T-series UK), the M/s T-series (UK) Films Limited was commissioned as producer for the film 'TUM BIN-2'. In this agreement, the appellant company appointed T- series UK for producing the film. In this agreement, the budget for making of the film was also agreed upon for 3033992 pound sterling. In the same agreement, the estimate for story and script was decided at 300000 pound sterling.
15.8 In April, 2016, the appellant claims to have sold the story of film of TUM BIN-2 to Shri Sanjay Singhal for a consideration of Rs.25 lakhs.
Later on, M/s T-Series UK purchased the same story from Shri Sanjay
Singhal for 300000 pound sterling equivalent to Rs.2,64,60,000/-.
Apparently, the impugned transaction with Shri Sanjay Singhal was a concocted deal wherein profits were artificially transferred to him by way of a sham transaction.
15.9 The Assessing Officer made addition of Rs.2,64,60,000/- by treating the same as bogus expenses on account of the following:
a. The story rights purchased by Shri Sanjay Singhal from the appellant in April, 2016 for Rs.25,00,000/- and later sold to T-series UK for Rs.2,64,60,000/-. No plausible explanation for this huge increase in price of purchase of story rights have been furnished and Shri Sanjay Singhal in his statement recorded has given an evasive reply in his statement that he does not remember the reason for such huge increase in the price of re- make rights.

230
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

230 | P a g e b. Shri Sanjay Singhal in his ITR filed for the assessment year 2017-18 has not shown any foreign income.
15.10 The appellant has argued as under:- a. Shri Sanjay Singhal had shown interest in the remake rights of the movie and therefore, Shri Bhushan Kumar had sold rights to him for Rs.25,00,000/-However, later on, the potential commercial benefit for independtly producing the film TUM BIN-2 were recognized and therefore, after hard negotiation with Shri Sanjay Singhal the buyback price was agreed that Rs.2,64,60,000/-. Hence, this was purely business transaction.
b. The expenditure for purchase of remake rights was incurred by T-series
UK and the same has not been debited in the books of the appellant.
c. The Assessing Officer has failed to record and evidence which suggest that amount which was paid to Shri Sanjay Singhal by Tseries UK was routed back to SCIPL in any manner.
d. The assessment of Shri Sanjay Singhal for assessment year 2017-18 was completed under section 153A and no adverse Inference was drawn in respect of this transaction relating to procurement of remake rights of TUM BIN-2. e. Shri Sanjay Singhal in his statement has not denled this transaction but rather confirmed the transaction and its genuineness.
f. The appellant has also taken an alternative argument that in case any adverse inference is likely to be drawn on this issue then the benefit of Rs.25,00,000/-on account of income declared from sale of remake rights may kindly be given.

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Super Cassettes Industries Pvt. Ltd.

231 | P a g e

232 | P a g e executed with T series (UK) Films Ltd these remake rights were directly purchased by the UK company.
21.5 Further the Counsel submitted that the rights were purchased by Sh Sanjay
Singhal from SCIPL for 25 lacs which was later on sold for Rs 2.64 Cr to T series
(UK) Films Ltd. Regarding the hike in the prices of the remake rights it is submitted that Sh Sanjay Sinhgal has shown the interest in the remake rights of the movie and therefore Sh Bhushan Kumar has sold the rights to Sh Sanjay
Singhal for 25 lakhs. However, later on SCIPL recognized the potential for commercial benefit in independently producing the film 'Tum Bin 2. Therefore,
SCIPL approached to Sh Sanjay Singhal approximately after 2 month and after a hard negotiation buy back prices were agreed at Rs 2,64,60,000/-. This sequence of events highlights that the initial sale of rights to Sh. Sanjay Singhal was primarily a business transaction. The subsequent decision by SCIPL to reclaim the rights was rooted in their assessment of the favourable prospects of self- production, rendering it a well-considered business move. The Ld Counsel also submitted that Tum Bon was the first film produced by Sh. Bhushan Kumar and and hence was very close to his heart. In light of these circumstances, it is reasonable to view the buyback of rights by the assessee company from Sh
Sanjay Singhal at a higher price is nothing more than an innocuous business transaction.

233
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Super Cassettes Industries Pvt. Ltd.

233 | P a g e

234 | P a g e

235
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

235 | P a g e

236
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

236 | P a g e in January 2016 sell the rights of this film to Sanjay Singhal in April 2016 who has no experience in Film production Line and then buy it back from him at 10
times the price at which they were sold to SH. Sanjay Singhal. Therefore, the transaction with Shri Sanjay Singhal was a sham transaction and expenses claimed on account of such impugned transaction is not allowable deduction.
21.13 We uphold the order of CIT(A) of confirming disallowance of Rs.
2,39,60,000 (Rs. 2,64,60,000 minus Rs. 25,00,000). Therefore, this ground of the assessee is dismissed.
21.14 So far as the addition to the tune of Rs. 3,00,000/- under Section 69 of the Act as unacounted expenditure incurred in respect of whatsapp chat with Shiv
Channa is concerned, we have already discussed this particular ground in A.Y.
2018-19 in the forgoing paragraph in assessee’s own appeal whereby and whereunder this addition made in the hands of the assessee has already been upheld.
Un-Common Grounds for AY 2018-19

237 | P a g e technicians to NM Worldwide Ltd in Dubai. The Assessing Officer (AO) noted
SCIPL transferred Rs. 19,56,92,500 to Super T Films (UK) Ltd for foreign shooting, of which 874,626 GBP (approx. Rs. 7.50 crores) was sent to NM
Worldwide Ltd (line producer) for payments to the Director, Dialogue Writer, and Screenplay Writer. On Investigation by the Investigation Wing it was found that out of Rs. 7.50 crores remitted to NM Worldwide Limited, an amount of Rs.
1,28,85,229/- was actually paid by NM Worldwide to cast, crew, and technicians, etc. and resultantly Rs. 6,21,14,771/- being Rs. 7.50 crores transferred to NM
Worldwide less Rs. 1,28,85,229 actually paid by NM Worldwideis added to the total income of appellant company being bogus expenses claimed on account of production of movie “Hate Story 4”.
22.2 The additions so made by the AO in AY 2018-19 were upheld by the CIT(A) by stating that the appellant inflated its expenditure for production of Film Hate Story-4. The relevant paras are reproduced below:-
“13.28 The appellant company produced a film titled "Hate Story 4" which was released on 09.03.2018. The main cast of the said film included Karan
Wahi and Ihana Dhillon and it was directed by Vishal Pandya. A major portion of this film was shot in United Kingdom (UK) for which a separate line producer was engaged for carrying out the shooting of the film in London, United Kingdom. The production of the film in UK was carried out through Super T Films (UK) Ltd. The local line producer in London
(UK) i.e. Super T Films (UK) Ltd in turn outsourced part of the activities related to the production of the film to a Dubai based entity namely NM
Worldwide Ltd for making payments to certain cast crew and technicians of the film. The entire funds required to produce the film were transferred from the bank account of SCIPL in India to the bank account of Super T

238
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238 | P a g e

Films (UK). Certain expenses towards the shooting of the film and payment to cast, crew and technician was incurred through bank account of Super T
Films (UK). Certain amount was further transferred from the bank account of Super T Films (UK) to the bank account of NM Worldwide Ltd in Dubai.
13.29 It was observed by the assessing officer SCIPL had transferred
19,56,92,500/- to Super T Films (UK) Ltd towards cost of foreign shooting and out of this 874626 GBP equivalent to 7.50 crores were transferred to NM Worldwide Ltd in Dubai for the making payments the Director,
Dialogue Writer, Screenplay Writer. The payments claimed to be made to these persons as under:

S.NO Nature of Expense
Name of Individual
Amount
1
Director Loan Out
Vishal Pandya
3,50,00,000/-
2
Dialogue Writer Loan Out
Milap Milan Zaveri
1,50,00,000/-
3
Assignment of Story Rights
Sameer Brijmohan
Arora
1,00,00,000/-
4
Screenplay Writer Loan Out
Sameer Brijmohan
Arora
50,00,000/-
5
Director of Photography (DOP)
Loan Out
Sunita Radia
1,00,00,000/-

TOTAL
7,50,00,000/-

S.No Name
Amount received
From NM Worldwide
Limited
Value of Agreement
Entered with NM
Worldwide Limited
1. Vishal Pandya(Director)
89,14,997/-
91,00,000/-
2. Milap Milan Zaveri
14,83,894/-
15,00,000/-

239
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239 | P a g e

(Dialogue Writer)
3. Sunita Radia(DOP)
24,86,338/-
25,00,000/-
4. Sameer Brijmohan Arora
(Screenplay Writer)
Not submitted
Not Submitted

Total
1,28,85,229/-

240
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Super Cassettes Industries Pvt. Ltd.

240 | P a g e

Total
1,28,85,229/-

241
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241 | P a g e

(UK) Ltd over and above what was paid to Director, Dialogue Writer,
Screenplay Writer is to be disallowed.
13.37 In view of the above discussion, it is held that the appellant inflated its expenditure for production of Film Hate Story 4 to the extent of Rs.6,21,14,771/- and accordingly addition to the extent of Rs. 6,21,14,771/- is confirmed.
22.3 The Commissioner of Income Tax (Appeals) [CIT(A)] upheld the addition made in the assessment order, rejecting SCIPL's contention that all payments were governed by valid commercial agreements. The CIT(A) found that SCIPL transferred Rs. 19,56,92,500 to Super T Films for production expenses, out of which 874,626 GBP (approximately Rs. 7,50,00,000) was further transferred to NM Worldwide for payments to the Director, Dialogue Writer, and Screenplay
Writer. However, upon investigation, it was determined that NM Worldwide disbursed only Rs. 1,28,85,229 to the Director, Dialogue Writer, and Screenplay
Writer, thereby justifying the disallowance of the excess amount.
22.4 We have heard the respective submissions made by the parties; we have also perused the relevant materials available on record. It appears from the records that SCIPL transferred Rs. 19,56,92,500 to Super T Films (UK) Ltd. for foreign shooting, of which 874,626 GBP (approx. Rs. 7.5 crore) was transferred to NM Worldwide Ltd. in Dubai for payments to the Director (Vishal Pandya),
Dialogue Writer (Milap Milan Zaveri), Screenplay Writer (Sameer Brijmohan
Arora), and Director of Photography (Sunita Radia). Investigation under section 131(1A) revealed that only Rs. 1,28,85,229 was paid to these individuals. SCIPL

242
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Super Cassettes Industries Pvt. Ltd.

242 | P a g e argument that payments were as per valid commercial agreements and there is no evidence on record to show that funds were returned to SCIPL, attributing the shortfall to NM Worldwide’s profit margins is rejected as the investigation reveals that finances and operations of NM Worldwide are operated and managed by Bhushan Dua and his employees.
22.5 It is seen that the AO has disallowed Rs. 6,21,14,771 as bogus expenditure.
This disallowance is based upon transfer of Rs. 7.5 crore by Super T Films (UK)
Ltd to NM Worldwide Dubai for for the making payments the Director, Dialogue
Writer, Screenplay Writer and out of the same only Rs. 1,28,85,229 was paid. On perusal of the assessment order and contentions of the appellant, it is undisputed fact that the appellant transferred an amount of Rs.19.57 Crores to Super T Films
(UK) Ltd. The same has been claimed as expenditure in the books of accounts of the appellant company for the F.Y 2017-18. It is also an undisputed fact that out of Rs.19.57 Crores, an amount of 874626 GBP (approx. Rs. 7.5 crore) was transferred by Super T Films (UK) Ltd to Dubai based entity named NM
Worldwide.
22.6 The transfer of GBP 874626 was for payments to the Director, Dialogue
Writer, Screenplay Writer and the assessee has claimed the same to be paid to various persons. However, in the response to summons u/s 131(1A) the various persons to whom payments were made have confirmed the receipt of following payments.

243
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Super Cassettes Industries Pvt. Ltd.

243 | P a g e

S.No Name
Amount received
From NM Worldwide
Limited
Value of Agreement
Entered with NM
Worldwide Limited
1. Vishal Pandya(Director)
89,14,997/-
91,00,000/-
2. Milap
Milan
Zaveri
(Dialogue Writer)
14,83,894/-
15,00,000/-
3. Sunita Radia(DOP)
24,86,338/-
25,00,000/-
4. Sameer
Brijmohan
Arora
(Screenplay
Writer)
Not submitted
Not Submitted

Total
1,28,85,229/-

244
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

244 | P a g e

245
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

245 | P a g e figures without any corroborating material to reach a conclusion that unaccounted cash Income was earned by the appellant from singers.

246
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Super Cassettes Industries Pvt. Ltd.

246 | P a g e

247 | P a g e the SCN does not specify that any amount in cash has been received. What is mentioned in the chat is the finalised proposal only and not the actual transaction.
The material is in the nature of a mere whatsapp Chat containing certain information is not sufficient to derive an inference about undisclosed receipts in cash in the absence of any cogent and corroborating material/evidence and particularly lack of any enquiry from the alleged third party from whom such cash payments have been received. Since the corroborating material/evidence in the present case is completely missing, the impugned addition is required to be deleted.
23.5 We have heard the respective submissions made by the parties; we have also perused the relevant materials available on record. The Assessing Officer’s
(AO) addition of Rs. 8,00,000 as unaccounted cash income is premised on Whatsapp Chat extracted from digital data seized between Bhushan Dua and his employee SCIPL, Rajendra Ankulafor production of a music video for the company M/s Radico Khaitan Ltd. for promotion of brand Magic Moments vodka. The WhatsApp chat stipulated a total consideration of Rs. 18,00,000, with Rs. 10,00,000 to be paid by cheque and Rs. 8,00,000 in cash. The chats was retrieved from the phone of SCIPL’s Managing director, Shri Bhushan Kumar, and Shri Rajinder Ankula. The AO relied on these chats to conclude that the Rs.
8,00,000 cash payment was unaccounted income not recorded in SCIPL’s books as Rs. 10,00,000/- mentioned in the chat corroborated with the books of accounts.

248
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Super Cassettes Industries Pvt. Ltd.

248 | P a g e

249
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

249 | P a g e clearly supported the AO’s findings. The absence of inquiries with Radico
Khaitan was deemed immaterial, as the chats were corroborated by cheque entry of Rs. 10,00,000/- and sufficient to establish the receipt of unaccounted cash.
Consequently, we upheld the order of CIT(A) confirmingaddition of Rs. 8,00,000
as undisclosed income, therefore assessee of appeal is dismissed.
24. In the appeal for Assessment Year (AY) 2018-19, both the Revenue and the assessee (SCIPL) have raised grounds concerning an addition aggregating to Rs. 1,47,980/- (Assessee Appeal) and Rs. 1,46,50,020/- (Department Appeal) based on alleged cash income and expenditure recorded in a diary belonging to Sudesh Kumari, seized during a search operation.
24.1 Page 15 of the annexure A 10 seized during search proceedings shows some figures which were confronted with Smt. Sudesh Dua in respect of which it was submitted that there is cash expenditure of 35,980/- + 40,000/- + 50,000/- +
22,000/- totalling Rs. 1,47,980/- spent on repair of furniture in Bombay. Based on Page 12 of Annexure A10 seized during search proceedings in which the payment reflecting against the word “Chec” is corroborated with the bank statement, the AO has drawn conclusion that Page 15 is not a Dumb Document and the figures mentioned on Page 15 are also in lakhs and therefore total payment made is Rs.
1,47,98,000 and not 1,47,980/-. Further the AO draws the observation that diary qualifies as “books of account” under Section 2(12A), and Smt. Sudesh Dua failed to explain entries satisfactorily. Resultantly addition of Rs. 1,47,98,000/-

250
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Super Cassettes Industries Pvt. Ltd.

250 | P a g e was made as unaccounted expenditure in the total income of SCIPL for AY 2018-
19. 24.2 The CIT(A) provided partial relief to the assessee company by holding both the pages and the matter written in them are completely different having no relation with each other. Therefore, no corroborative evidence is available on record in substantiation of figures mentioned at Page No. 15 as figures mentioned in lacs. The CIT(A) on this basis held that the amount written are not in Lakhs and on this basis confirmed the addition of Rs. 1,47,980/- and deleted the addition of Rs. 1,46,50,020/- The relevant paras from the order of CIT(A) are reproduced below:-
“17.23 I have carefully considered the assessment order and the written submission of the appellant. The entire dispute in these Grounds of Appeal is about the interpretation of figures mentioned at Page No. 12 and Page
No. 15 of the seized annexure A10. The AO in the assessment order has interpreted the figures mentioned at Page No. 12 and Page 15 as figures mentioned in lakhs and made the following additions:

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251 | P a g e

III In case of Contents mentioned at Page No. 15 of Annexure A 10, assessee himself admitted that cash payment of Rs. 1,47,980/- was made for repair of furniture in Bombay in cash. Further question was whether the amount admitted by the assessee were in thousand or lacs.

IV The AO draws an observation that on perusal of Page 12 where it is written that "50 chee" on various instances have been verified from the bank account of Shri Ved Prakash Chanana as 50 lacs and therefore the amounts mentioned at Page 12 and Page 15 are in lacs and not in thousands. Based on the above observations additions of Rs. 1,50,00,000
was made for AY 2018-19 and AY 2019-20 and another addition of Rs.
1,47,98,000 for AY 2018-19. V In Annexure A-15, there is mention of Bombay furniture with date and amount written as 35.98, 40, 50, 22. The Assessing Officer presumed that the amounts are in lakhs and therefore, computed unaccounted expenditure at Rs.14798000/-. In respect of addition of Rs.14798000/-, the appellant during the course of assessment proceedings had stated that an amount of Rs.147980/- was unaccounted expenditure incurred for purchase of furniture at his Bombay office. However, the Assessing Officer made addition on the ground that the figures are in lakhs and consequently made addition of Rs.14798000/-. The Assessing Officer had no evidence contrary to the claim of the appellant that the figures are in lakhs and not in thousands.

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252 | P a g e

VI When In respect of amounts mentioned at Page No. 15 of the seized annexure, the appellant himself admitted that the amounts mentioned are in thousands and the said figures are expenses incurred in respect of Furniture at Bombay Office, there is no basis for the Assessing Officer to arrive at different conclusion.

VII Moreover, the fact that addition has been made based upon jottings at Page 15 of the Diary and to decipher that the figure is in Lacs the AO had used the jottings made on Page 12 of the diary as reference and assumed that since the figures mentioned on page 12 are in Lacs then the same must be the case for figures on Page 15 is not justified as both the pages and the matter written in them are completely different having no relation with each other. Therefore no corroborative evidence is available on record in substantiation of figures mentioned at Page No. 15 as figures mentioned in lacs.

VIII It can be assumed that there may be unaccounted purchase of furniture to the extent of Rs.147980/- in cash. However, it cannot be assumed that someone will sell the furniture of Rs.14798000/- in cash to one party. On furniture, the appellant is eligible to claim depreciation
@10%. Apparently, the appellant company is a cash rich company. In such a case, it is very unlikely that furniture worth 1.48 Crores would be purchased in cash and the appellant foregoes his claim of depreciation. On the ground of preponderance of probability, it is highly unlikely that the appellant may have purchase furniture of Rs.1.48 Crores in cash.

IX Resultantly, addition of Rs. 1,47,98,000/- made in respect of rough jottings at Page No. 15 of the seized annexure A 10 is restricted to Rs.
1,47,980/-Therefore, the appellant gets relief of Rs.14650020/- and addition of Rs.147980/-u/s 69 C of the Act is confirmed.

253 | P a g e unaccounted expenditure totaling Rs. 1,47,98,000 for furniture purchased for SCIPL’s Bombay office.
24.4 We have evaluated the arguments, evidence, and legal merits to determine the validity of the addition. The AO’s addition was based on the assumption that the figures (35.98, 40, 50, 22) in the diary were in lakhs, relying on a reference to page 12 of the same diary where figures were noted in lakhs. The AO concluded that the same explanation applied to page 15, leading to the computation of Rs.
1,47,98,000 as unaccounted expenditure. However, it is found that the AO lacked corroborative evidence to substantiate this presumption. The entries on page 12
were unrelated to those on page 15, as they pertained to different matters, rendering the AO’s assumption speculative and unsupported. No additional evidence was presented by the AO to contradict SCIPL’s claim that the amounts were in thousands.
24.5 We found merit in SCIPL’s arguments as the AO’s presumption that the diary figures were in lakhs was not supported by any corroborative evidence, and the reliance on unrelated entries on page 12 was unjustified. It is noted that SCIPL’s admission of Rs. 1,47,980 as unaccounted expenditure was consistent with the diary entries when interpreted as thousands, and the AO failed to provide contrary evidence to challenge this claim. Furthermore, it is agreed that a cash purchase of furniture worth Rs. 1.48 crores was implausible for a company like
SCIPL, which would likely prioritize recorded transactions to claim depreciation.

254
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254 | P a g e

The principle of preponderance of probability supported the assessee’s position that such a large cash transaction was unlikely. Therefore, the relief provided by CIT(A) is upheld and addition of Rs. 1,47,980/- confirmed by the CIT(A) is upheld and the deletion of addition of Rs. 1,46,50,020/- by CIT(A) is also upheld and both the assessee’s and revenue’s ground of appeal for AY 2018-19 are dismissed.
25. The addition of Rs. 75,00,000/- on account of cash transaction conducted using the Codewords Sweet/Kg is challenged for AY 2018-19. 25.1 Brief facts of the case are that the WhatsApp chats between Shri Shiv
Chanana, Shri Bhushan Kumar, and Ms. Shilpa (CFO, Viiking) revealed that M/s
SCIPL received cash, coded as “Kg,” for bogus expenses through agencies like
Viiking. One chat dated 15.06.2017 records Shiv Chanana acknowledging receipt of Rs. 25 lakhs from Sachin Joshi (Viiking Beverages). The discussions detail deliveries of 25 “Kg” (Rs. 25 lakhs) on 15th June, 29th June, and 30th November, along with Rs. 25 lakhs by cheque, forming a total deal of Rs. 1 crore with Viiking. “Kg” was used as a code for ₹1 lakh in cash. SCIPL’s Tally ledger for Viiking Beverages reflected only Rs. 25 lakhs on 23.11.2017 under Advertisement and Publicity. The ledger corroborates the chats, confirming a Rs.
1 crore arrangement, of which Rs. 75 lakhs was received in unaccounted cash and Rs. 25 lakhs through cheque (recorded). The cheque acted as security, with Shilpa requesting confirmation of cash delivery to adjust it. As WhatsApp chats are 255
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

255 | P a g e admissible electronic evidence, they cannot be dismissed as “dumb documents.”
The ledger entry further validates their authenticity. Accordingly, Rs. 75 lakhs of unrecorded cash receipts were added to SCIPL’s income for A.Y. 2018–19. 25.2 The additions so made by the AO in AY 2018-19 were upheld by the CIT(A) by stating that WhatsApp chat between Shri Shiv Chanana and Mrs
Shilpa is corroborated with the books of accounts and the figures mentioned in the chat are in lakhs as per the books of accounts, the other 3 figures are also treated as amount mentioned in lakhs. The total transaction as per WhatsApp chat was for 100KG i.e. 100 Lacs out of which only 25 lacs was found in the books and therefore, the balance amount of Rs. 75 lacs is treated as un accounted income of the appellant company. The relevant paras from the order of CIT(A) are reproduced below:-
“19.16 The contents of the assessment order and the submissions of the appellant have been carefully considered. Coming to the merits of the case and Ground Nos. 13, the appellant has contended that the A.O was not justified in making an addition of Rs. 75,00,000/- on account of alleged unaccounted cash income, in the absence of any inquiries conducted from corresponding parties and lack of corroborating material.

256 | P a g e whatsapp message represent the amount received from M/s Viiking
Beverages Pvt Ltd as unaccounted income of appellant company.

257
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

257 | P a g e

258
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

258 | P a g e

WhatsApp chat was for 100KG i.e. 100 Lacs out of which only 25 lacs was found in the books and therefore the balance amount of Rs. 75 lacs is treated as un accounted income of the appellant company.

259 | P a g e not been disclosed in regular books of account by the assessee, as argued by the Ld. AR.
25.6 The well settled legal position is that a non-speaking document referred to as a “Dumb Document” without any corroborative material, evidence on record and finding that such document has materialized into transactions giving rise to income of the assessee which had not been disclosed in regular books of account by such assessee, has to disregarded for the purposes of assessments to be framed u/s 153A and 153C of the Act, as further argued by the Ld. AR.
25.7 We have heard the respective submissions made by the parties; we have also perused the relevant materials available on record. We have reviewed the assessment order and the appellant’s submissions, where the appellant challenged the AO addition of Rs. 75,00,000/- as unaccounted cash income from M/s Viiking
Beverages Pvt. Ltd. The AO’s addition was based on WhatsApp chats between
Shri Shiv Chanana and Mrs. Shilpa (CFO, Viiking Beverages) and Shri Bhushan
Kumar, interpreting “kg” as a code for cash, with 1 kg equating to Rs. 1 lakh. A chat dated 02.12.2017 indicated a transaction of 100 kg (Rs. 100 lakhs), with 25
kg (Rs. 25 lakhs) paid via cheque and recorded in the seized ledger on 23.11.2017
under “Advertisement and Publicity,” while the remaining 75 kg (Rs. 75 lakhs) was treated as unaccounted income. Another chat dated 15.06.2017 confirmed receipt of Rs. 25 lakhs from Sachin Joshi of Viiking Beverages.

260
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260 | P a g e

261 | P a g e in lakhs as per the books of accounts, the other 3 figures is also treated as amount mentioned in lakhs. The total transaction as per WhatsApp chat was for 100KG i.e. 100 Lacs out of which only 25 lacs was found in the books and therefore the balance amount of Rs. 75 lacs is to be treated as unaccounted income of the assessee company.
25.10
Further the contention of the appellant that the chats lacked evidentiary value under Section 65B of the Indian Evidence Act, 1872, due to the absence of a certificate authenticating the electronic records and non-provision of chat copies during proceedings is also rejected in view of the Supreme Court’s ruling in Ambalal Sarabhai Enterprises v. KS Infraspace LLP Limited, in which held that WhatsApp chats are not “dumb documents” and can be admissible, subject to proving their contents through evidence.
25.11 As a result the addition of Rs. 75,00,000/- confirmed by the CIT(A) upheld. Consequently, this ground of appeal of the assessee is dismissed.
Un-Common Grounds for AY 2019-20

262
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Super Cassettes Industries Pvt. Ltd.

262 | P a g e with Priya Gupta reflected a similar request for Rs. 2,57,000. Based on these chats, a total of Rs. 4,97,000 was added to SCIPL’s income. The assessee argued that WhatsApp chats lack evidentiary value under Section 65B without certification. However, relying on the Supreme Court’s decision in Ambalal
Sarabhai Enterprises v. KS Infraspace LLP, it was held that WhatsApp chats, being virtual verbal communications, have evidentiary value subject to proof at trial and cannot be treated as “dumb documents.”
26.1
The additions so made by the AO in AY 2019-20 were upheld by the CIT(A) by stating that the addition made based on whatsapp chat with Ms Sonal and Ms Priya for their alleged cash component of salary amounting to Rs.
4,97,000/- during AY 2019-20. The relevant paras are reproduced below:-
“17.7 The contents of the assessment order and the submissions of the appellant have been carefully considered. Coming to the merits of the case and Ground No. 8, the appellant has contended that the A.O was not justified in making an addition of Rs. 4,97,000/- during AY 2019-20 on account of unaccounted income on account of alleged unaccounted cash income received/paid.
17.8 For the assessment year under consideration, the assessing officer has referred various chats on different dates which are re produced as under:
From: 919820151838@s.whatsapp.net Sonal Music Manager
Timestamp: 01-11-2018 17:02:59(UTC+0)
Source App: WhatsApp
Body:
Sir can I take my cash salary from u tomw? Need for diwali.
March- october.
30k X 8 months = 2.40

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263 | P a g e

Last time 5k was extra. So minus tht.

From: 919820219359@s.whatsapp.net Priya Gupta Tseries
Timestamp: 28-05-2018 04:20:54(UTC+0)
Source App: WhatsApp
Body:

Hi Bhushanji. How are u? I was away to Kedarnathji & Badrinathji past week & then I fell sick due to the tough Yatra. Wanted to check with you when I could come and meet u. My cash component of 17 days Rs 2.57
Lakhs is due. Bhushanji I had accepted cash only as u wanted it. For me it was always a part of salary. I hope and I know you will be fair to me for not withholding this money that is fairly due to me. Also I have been following up with Samir past 3 months much before I left on my car reimbursement payment but he just tells me it's coming today but it never comes. This is the last two sums due for my final settlement. Request you to please tell him to clear my dues. Thank you.

From: From: 919821444221@s.whatsapp.net Bhushan Kumar
Timestamp: 28-05-2018 04:41:09(UTC+0)
Source App: WhatsApp
Body:
I will tell him

264 | P a g e statement of any person involved in the chat with Director Sh. Bhushan
Kumar (Managing Director) have been recorded at the time of search u/s 132(4) of the Act or during post search enquiries. It is also found that apart from relying on the whatsapp chat, the AO failed to make any enquiry on the impugned issue during the course of assessment proceedings.
17.11 The appellant submission that whatsapp chat of Sonal making request for cash salary of Rs. 2,40,000/- on 01.11.2018 was never replied by Shri Bhushan ji. There is no corroborated response on record to prove that the cash salary of Rs. 2,40,000/- was paid to Ms Sonal. From the chat, it is evident that Ms. Sonal was promised a cash salary of Rs.30,000/- per month apart from the salary paid by way of cheque. Ms. Sonal is continuing in the appellant company till date. If the salary in cash was not paid, in that case there was no reason for her to continue in the organization. Because Ms. Sonal is continuing in the appellant organization till date, therefore, it is presumed that the transaction referred to in the chat was fulfilled and completed.

265 | P a g e

Assessing Officer’s (AO) addition of Rs. 4,97,000 as unaccounted cash expenditure for Assessment Year (AY) 2019-20, based on WhatsApp chats involving SCIPL’s Managing Director, Shri Bhushan Kumar, with Sonal (Music
Manager) and Priya Gupta. The chats, dated 01.11.2018 and 28.05.2018, referenced cash salary payments of Rs. 2,40,000 (Sonal, for eight months at Rs.
30,000/month) and Rs. 2,57,000 (Priya Gupta, for 17 days), respectively. The AO inferred these as unaccounted expenses, as they were not recorded in SCIPL’s books. SCIPL argued that the chats, as “dumb documents,” lacked corroborative evidence under Section 65B of the Indian Evidence Act, 1872, and no payment was confirmed, as Bhushan Kumar did not respond to Sonal’s request, and no further inquiry was conducted.
26.3 The submission of Ld Counsel is that whatsapp chat of Sonal making request for cash salary of Rs. 2,40,000/- on 01.11.2018 was never replied by Shri
Bhushan ji. There is no corroborated response on record to prove that the cash salary of Rs. 2,40,000/- was paid to Ms Sonal. From the chat, it is evident that Ms. Sonal was promised a cash salary of Rs.30,000/- per month apart from the salary paid by way of cheque. Ms. Sonal is continued to be employed in the assessee company till date. If the salary promised in cash was not paid, in that case she would have left the job. Because Ms. Sonal is continuing in the assessee company till date, therefore, the transaction referred to in the chat was fulfilled

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266 | P a g e and completed and she was paid cash salary of Rs. 2,40,000/- which has not been recorded in the books of accounts.
26.4 Further, in case of Priya Gupta from the chat she was asking Mr. Bhushan
Kumar about her pending cash component of the salary amounting to Rs.2.57
lakhs. In response, Shri Bhushan Kumar did not say no to her request but told that he will tell Mг. Sameer about her pending cash component of salary. From the chat it is clear that Mr. Bhushan Kumar has not out rightly denied claim of Ms
Priya Gupta in respect of cash salary of Rs. 2.75 lakhs and that he informed the HR head about the same. Which clearly means that cash amount of Rs. 2.75
Lakhs was paid to her. Therefore, it is held that the transaction referred to in the chat was fulfilled and completed.
26.5 Therefore, in view of the above discussion the addition of Rs. 4,97,000/- confirmed by the CIT(A) is upheld. Consequently, this ground of appeal of assessee is dismissed.
Un-Common Grounds for AY 2019-20

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18,00,000/- belonged to promoter Shri Krishan Kumar, but no supporting documents in substantiation of this claim, such as a written agreement, were provided during the post search proceedings. This claim was held untenable under Sections 292C and 132(4A). SCIPL further stated that Rs. 16,47,000/- came from scrap sales, but no bills or vouchers were produced. Consequently, the entire seized sum of Rs. 34,67,000/- was treated as unexplained money under Section 69A and added to SCIPL’s total income, taxable under Section 115BBE.
27.1
The additions so made by the AO in AY 2019-20 was upheld by the CIT(A) by stating that the scrap sales or submission of appellant that money belong to SH. Krishan Kumar was unsupported by evidence with no proof of cash movement or scrap transactions. The relevant paras are reproduced below:-
“19.6 The contents of the assessment order and the submissions of the appellant have been carefully considered. Coming to the merits of the case and Ground No. 10, the appellant has contended that the A.O was not justified in making an addition of Rs. 34,67,000/- during AY 2019-20 on account of un accounted cash found during the search proceedings from the premises of appellant company.

268
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268 | P a g e

269
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269 | P a g e families, there was no paper agreement made for the cash kept in the strong room.
A verbal talk between them is more than enough for the transactions to be undertaken.
27.3 Further the counsel of assessee also submitted the source of cash being statement of affairs of Shri Kishan Kumar as on 31.03.2018 and 31.03.2019
reflecting cash balance as on 31.03.2019 was Rs. 18,52,210/- in substantiation of the fact that cash of Rs. 18,00,000/- found in the strong room from the appellant company premises was belonging to Krishan Kumar. The statement of affairs of Sh. Krishan Kumar
27.4 Further the counsel of assessee in respect of balance cash of Rs.
16,47,000/- submitted that the same pertains to cash received by the appellant company from scrap dealers on sale of scrap.
27.5 We have heard the respective submissions made by the parties; we have also perused the relevant materials available on record. It is seen from the records that the Ld.AO has made addition of Rs. 34,67,000 as unaccounted cash under Section 69A of the Income Tax Act, 1961, based on cash found during a search at SCIPL’s premises. The total cash found was Rs. 55,00,369, of which Rs.
20,33,369 was released as it was accounted for in SCIPL’s books, while Rs.
34,67,000 was seized.

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270 | P a g e

271
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271 | P a g e

272
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272 | P a g e

“16.20 The contents of the assessment order and the submissions of the appellant have been carefully considered. Coming to the merits of the case and Ground Nos. 7, the appellant has contended that the A.O was not justified in making an addition of Rs. 1,25,00,000/- on account of alleged unaccounted cash income, in the absence of any inquiries conducted from corresponding parties and lack of corroborating material.
16.21 For the assessment year under consideration, the assessing officer has referred various chats found between Shri Shiv Chanana and Mr.
Bhushan Dua on different dates. The said chats are reproduced as under:

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273 | P a g e

274
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Super Cassettes Industries Pvt. Ltd.

274 | P a g e

275
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275 | P a g e

276 | P a g e which Mr. Bhushan replied that nothing can be done till Monday
(12.11.2018). In continuation of this chat the messages written by Mr. Shiv
Chanana on 12.11.2018 have been reproduced. As per the chats of 09.11.2018 no payment was made to Mr. Luv as discussed in para-No.
16.34 above. Similarly, in the chats dated 12.11.2018 there is no confirmation for the same from Shri Bhushan Kumar. The Assessing Officer has only reproduced the message sent by Mr. Shiv where he is saying to Mr.
Bhushan that Mr. Luv is asking for 0.75 KG sweets for today and balance tomorrow. There is no reply from Mr. Bhushan on this message and it seems an incomplete communication. The context of the chat "ok" from Shivam Chanana to Bhushan Kumar was for another matter not having any link with the Chat in reference to arrangement of 0.75 Kg for Luv
Ranjan. In this case, there is no evidence even in the chat that the transaction mentioned has actually been carried out or Shri bhushan
Kumar has given a nod to go ahead with the transaction. Therefore, the action of the AO in making addition of Rs. 75,00,000 based on this chat without any basis and justification, since there is no conformation as to whether the actual delivery took place or not.
16.36 In view of the above it is held that the addition of Rs. 1,25,00,000/- made based on whatapp chat with Shri Shiv Chanana is deleted.

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277 | P a g e

278
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278 | P a g e dated 09.11.2018 for which arrangement could not be made on 09.11.2018 and asking Shri Bhushan ji permission for 0.75 kg to be given to Luv Ranjan. In response to that said chat there is another message by Shiv Chanana to Bhushan
Kumar stating “Ok”. Here it is highlighted that there is no confirmation for the same from Shri Bhushan Kumar ji. The context of the chat “ok” from Shivam
Chanana to Bhushan Kumar was for another matter not having any link with the Chat in reference to arrangement of 0.75 Kg for Luv Ranjan. Further Sh.
Bhushan Kumar has not replied to the question asked by Shiv Chanana regarding permission for 0.75 kg sweets to be given to Luv. Therefore the action of the AO in treating the same as income of the appellant is without any basis and justification.
28.6 The Ld. Counsel of assessee highlighted that it is prima facie visible that chat dated 12.11.2018 is a continuing chat of 09.11.2018 which means that “half a kg of sweets” is part of 0.75kg of sweets and therefore alleged addition of 50
lacs is completely baseless and liable to be deleted. Further, the proposal of Shiv
Chanana dated 12.11.2018 for 0.75 kg of sweets was also not confirmed by Shri
Bhushan Kumar and therefore the addition made based only on the WhatsApp chat is nothing but a dumb document and therefore the addition made is liable to be deleted.
28.7 Further the counsel of the assessee submitted that there is no proof or evidence of the payment of cash of Rs. 75 lacs and 50 lacs as alleged in the 279
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279 | P a g e assessment order. It is also not clear that such cash payment allegedly by SCIPL to film director Luv Ranjan is on what account and for what purpose. It is submitted that inspite of specific request being made the assessee has not been provided with a copy of the printout of the complete transcript of the whatsapp chat referred for making the addition.
28.8 The Ld. Counsel of assessee argued that the addition has been made on the presumption that the assessee paid amounts mentioned in the chat to Luv Ranjan, based upon chat between Mr. Bhushan Kumar and Mr. Shiv Chanana. However, there is no chat between Mr. Luv Ranjan with either Mr. Bhushan Kumar or Mr.
Shiv Chanana wherein he had made such request asking cash from either of the two. In fact, the Ld Counsel pointed out that a search happened on Mr. Luv
Ranjan also and no chats were recovered from his phone to this effect. Further no enquiries have been conducted from Luv Ranjan. The counter party has not confirmed having received any cash payment from SCIPL. Even the chat referred does not specify that any amount in cash has been received. What is mentioned in the chat is the term “Kgs”. Therefore, it is presumptuous to treat “Kgs” as lacs and resultantly the addition made in assessment order is liable to be deleted.
28.9 The Ld. Counsel of assessee submitted that the well settled legal position is that a non-speaking document without any corroborative material, evidence on record and finding that such document has materialized into transactions giving rise to income of the assessee which had not been disclosed in regular books of 280
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280 | P a g e account by such assessee, has to disregarded for the purposes of assessments to be framed pursuant to search and seizure action. From the search and seizure perspective, such non speaking seized documents are referred to as ”Dumb
Documents”.
28.10 We have heard the respective submissions made by the parties; we have also perused the relevant materials available on record. It appears from the records that that the Ld.AO has disallowed the impugned amount of Rs.
1,25,00,000 as unaccounted cash expenditure based on WhatsApp chats dated
09.11.2018 and 12.11.2018 between Shiv Chanana and Shri Bhushan Kumar,
SCIPL’s Managing Director. The AO interpreted references to “half a kg” and “0.75 kg of sweets” in the chats as code for cash payments to Luv Ranjan, equating 1 kg to Rs. 1 crore, and added Rs. 50,00,000 and Rs. 75,00,000, respectively, as unaccounted expenditure.
28.11 SCIPL argued that the chats were “dumb documents” lacking evidentiary value under Section 65B of the Indian Evidence Act, 1872, due to the absence of a certifying officer’s certificate and failure to provide copies of the chats during proceedings. It is seen that chat dated 09.11.2018 was not confirmed by Shri
Bhushan Kumar and therefore the alleged transaction of half a kg of sweets never took place. Further chat dated 12.11.2018 where Shri Shiv Chanana again asked
Shri Bhushan Kumar for 0.75 kg to be given to Shri Luv Ranjan was also never confirmed. Shri Shiv Chanana was asking permission for the same which was 281
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281 | P a g e never confirmed and therefore this transaction never materialised. Further the WhatsApp chat between Shri Shiv Chanana and Shri Bhushan Kumar are not corroborated with any other evidence available on record, therefore the assumption of the AO that amounts mentioned are in Lacs is without any basis and not supported by any corroborative evidence. Therefore, the figures mentioned in the chat cannot be treated as figures mentioned in lakhs. Further, both the chat dated 09.11.2018 and 12.11.2018 are interlinked to each other which establishes that Rs. 50 lakhs which was mentioned in chat dated
09.11.2018 was doubly added in the income of appellant.
28.12 The AO has determined unaccounted cash expenditure to Shri Luv Ranjan on the basis of whatsapp chat. The Assessing Officer based on above referred chats has drawn an inference that kg is being used as code word for cash in the chats and 1 kg is equivalent to 1 crore. It has been found by him that the numerical figures appearing in the whatsapp message represent the amount paid to Shri Luv Ranjan as unaccounted expenditure of appellant company. The AO has not been able to establish that the alleged cash payment by SCIPL to film director Luv Ranjan was on what account and for what purpose. The first chat dated 09.11.2018 i.e. Friday in which Shiv Chanana was requesting Bhushan
Kumar for arrangement of half a kg of sweets, in response to which Shri Bhushan
Kumar replied and asked Shiv that the arrangement could not be done till
Monday i.e. 12.11.2018 cannot be ignored. The AO has interpreted that 1 would

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282 | P a g e mean 1 crore and accordingly the figures mentioned in chat dated 09.11.2018 i.e.
half kg sweets is equivalent to 50 Lakhs. Based on the same the AO considered
50 Lakhs for addition from this chat. Continuing to next chat dated 12.11.2018
i.e. Monday between Shiv Chanana and Bhushan Kumar dated 12.11.2018, where
Shri Shiv Chanana is asking Shri Bhushan Kumar, permission for 0.75 kg to be given to Luv Ranjan in response to which there is no reply by Shri Bhushan Ji but instead there is another message by Shiv Chanana to Shri Bhushan Kumar stating
"Ok" which has been reproduced. In this chat there is no confirmation by Shri
Bhushan Kumar. Based on this chat the Assessing Officer made addition of Rs.
75,00,000/-.From the chats firstly it is seen that both the chats cannot be read in isolation and have to be read together. In the first chat Shiv Chanana is asking from Mr. Bhushan that Luv has asked for half kg sweets for today i.e. 09/11/2018
which was Friday. Mr. Bhushan replied that nothing can be done till Monday.
Therefore, against this chat even if the assumption of the Assessing Officer that "sweets" represent cash and one kg is equivalent to 1 crore is taken as correct then also since no actual payment was made no addition can be made against this chat since no actual payment was made.
28.13 In the second chat made on Monday 12.11.2018, what has been reproduced is message written by Mr. Shiv Chanana. Firstly Mr. Shiv Chanana has written that Mr. Luv is saying that.75 KG be given today, and balance tomorrow is fine.
Then there is another message of Mr. Shiv Chanana which has been reproduced

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283 | P a g e in the message Mr. Shiv Chanana has written to Mr. Bhushan "Ok Sır". There is no message from Mr. Bhushan to Mr. Shiv Chanana on 12.11.2018 which has been reproduced. It is clear that this message was in continuation of chat dated
09.11.2018 wherein Mr. Shiv has written to Mr. Bhushan that Luv has asked for half a KG sweę to which Mr. Bhushan replied that nothing can be done till
Monday (12.11.2018). In continuation of this chat the messages written by Mr.
Shiv Chanana on 12.11.2018 have been reproduced. As per the chats of 09.11.2018 no payment was made to Mr. Luv as discussed above. Similarly, in the chats dated 12.11.2018 there is no confirmation for the same from Shri
Bhushan Kumar. The Assessing Officer has only reproduced the message sent by Mr. Shiv where he is saying to Mr. Bhushan that Mr. Luv is asking for 0.75 KG sweets for today and balance tomorrow. There is no reply from Mr. Bhushan on this message and it was an incomplete communication. The context of the chat
"ok" from Shivam Chanana to Bhushan Kumar was for another matter not having any link with the Chat in reference to arrangement of 0.75 Kg for Luv Ranjan. In this case, there is no evidence even in the chat that the transaction mentioned has actually been carried out or Shri bhushan Kumar has given a nod to go ahead with the transaction. Therefore, the action of the AO in making addition of Rs.
75,00,000 based on this chat is without any basis and justification, since there is no conformation as to whether the actual delivery took place or not.

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284 | P a g e

Departmental appeal - ITA Nos. 2510, 2509, 2950, 2951 & 279/Del/2023 (A.Y.
2013-14 to 2017-18) & ITA Nos. 280 & 281/Del/2024 (A.Y. 2018-19 & 2019-
20) in case of BHUSHAN DUA

285 | P a g e the business of selling and distribution of music and production of films during the assessment year under appeal. For its music business, SCIPL acquires copy rights in various sound recordings from film producers, composers and artists. It also produces in house music albums/ songs by engaging singers, composers and lyricists. The sound recordings so acquired or created in house are thereafter commercially exploited through physical and digital medium. The commercial exploitation of sound recordings through physical medium is carried out by sale of CDs, cassettes and pen drives. The commercial exploitation through digital medium is carried out through licensing arrangements with FM Radio Stations,
Satellite TV Channels, streaming service providers like Sportify, Kanha.com,
Savvan etc. and social media platforms such as YouTube and Face Book etc.

286
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Super Cassettes Industries Pvt. Ltd.

286 | P a g e made in the hands of the assessee on protective basis in all the years were deleted by the CIT(A). The revenue has preferred an appeal against the same.

iii.
Addition on account of diversion of Income in Bollywood Digital
FZE by investing in property of London for AY 2016-17 and 2017-18. iv.
Addition on account of retention of Income in Dubai through M/s
Highpath Limited for AY 2017-18 to AY 2019-20. v.
Addition on account of bogus expenses claimed for production of Roy / RaabtaMovie for AY 2016-17 and AY 2017-18. The common grounds are addressed first as under:

Common Grounds

Assessment
Year
Amount of Income retained

287
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287 | P a g e

2013-14
2,43,45,103
2014-15
7,12,97,129

288 | P a g e

50% each. This revenue sharing agreement between SCIPL and BDML was treated as diversion of income of SCIPL in the hands of BDML in a tax-free juri iction by the assessing authorities in the assessment orders passed for A.Y.
2007-08 to A.Y. 2014-15 pursuant to search action undertaken on SCIPL on 29.11.2018. The operations of BDML and the arrangement between SCIPL and BDML was later discontinued, A.Y. 2014-15 being the last year. Hence, from assessment year 2015-16 onwards the entire exploitation of its copyrighted content outside territory of India was carried out by SCIPL on its own. Details of additions made from AY 2007-08 to AY 2014-15 on this issue is tabulated as under:

Assessment year
Royalty Received
2007-08
3,69,88,901
2008-09
5,70,15,876
2009-10
1,17,62,546
2010-11
51,87,893
2011-12
3,40,78,168
2012-13
3,89,95,596
2013-14
2,43,45,103
2014-15
7,12,97,129

289
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289 | P a g e that sufficient evidence was adduced to establish that M/s BDML was not a sham entity and possessed an independent existence, justifying its autonomous operations from Dubai. Additionally, the protective addition made in the hands of the assessee to safeguard the revenue's interest was also deleted by the CIT(A), on the grounds that the substantive addition in the hands of SCIPL was not sustainableon merits, since it was held that BDML was not a sham entity, thereby warranting the deletion of the protective addition in the assessee's case.
33.5 The Learned Counsel for the assessee contended that the matter was adjudicated on a substantive basis in the case of Super Cassettes Industries Pvt.
Ltd. (SCIPL). It was emphasized that the Commissioner of Income Tax (Appeals)
[CIT(A)] had deleted the addition after a thorough examination of its merits in SCIPL’s case. Consequently, as the addition has been deleted on substantive grounds, it is not legally sustainable on a protective basis in the hands of the assessee.
33.6
Further the Ld. Counsel of the assessee submitted that this ground of appeal is already covered in case of SCIPL by the order of ITAT G Bench Delhi
Dated 18.09.2024 for AY 2007-08 to AY 2012-13 in ITAs Numbers ITAs
No.214, 215, 216, 1290, 1291 & 1292/Del/2023 in which the additions made on account of income retained in BDML in the hands of SCIPL on substantive basis were completely deleted and the order of the CIT(A) upheld for these years.
33.7
We have heard the respective submissions made by the parties; we have 290
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Super Cassettes Industries Pvt. Ltd.

290 | P a g e also perused the relevant materials available on record. It appears from the records that the substantive addition made in the hands of SCIPL is already dealth on merits and the same has been deleted by the CIT (A) in AY 2013-14 and 2014-
15 (Relevant para of appeal order of AY 2013-14 is 102 Page 74). Further the order of CIT(A) deleting the additions made in AY 2007-08 to AY 2012-13 in ITAs No.214, 215, 216, 1290, 1291 & 1292/Del/2023) has been upheld by the coordinate bench vide order dated 18.09.2024. The facts of the present year are identical to the Assessment Years 2007-08 till 2012-23. 33.8
The Protective addition was merely made in the hands of the assessee under consideration to protect the interest of revenue.
The AO made protective addition only in the hands of the assessee on the presumption that if substantive addition is made in the hands of M/s. SCIPL accepted, the protective addition may be made in the hands of the assessee and, therefore, it was imperative to protect the interest of revenue to avoid the possibility of leakage of revenue and to deal with the contingent situation till the substantive addition gets finalized.
We note that since the substantive addition has been deleted in the hands of the SCIPL for Assessment Years 2007-08 till 2012-13 on merits by the Coordinate Bench, then no protective addition can be susntained in the hands of the assessee.
The protective addition can only be made when prima facie it appears to the revenue that income has been diverted either by M/s. SCIPL or by assessee

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291 | P a g e under consideration, then it would be open to the Income Tax Authorities either to tax the income in hands of M/s. SCIPL or in the hands of the assessee under consideration. In view of the above the addition for AY 2013-14 and 2014-15
deleted by the CIT (A) in the case of the assessee is upheld since the same has been deleted on merits in the hands of SCIPL as discussed above.

Assessment Year
Expenses Incurred
2015-16
6,14,08,363
2016-17
86,88,235
2017-18
2,12,02,003
2018-19
7,92,18,696
2019-20
4,29,32,219

292
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292 | P a g e

2015-16, will be applicable for AY 2016-17, AY 2017-18, 2018-19 and 2019-20, as the issues are identical and no new circumstances exist.
34.2 Brief facts of the case are that funds were provided by BDML and Bollywood Digital FZE to BKK to make the investment without charging any interest. All these entities are based out in Dubai and the controlling interest in these entities is with Bhushan Kumar and not with SCIPL. The shareholders of BKK are Bollywood Digital FZE (99%) and Sh. Bhushan Dua (1%). The AO in the assessment order of SCIPL draws the observation that main purpose of BDML is diversion of income by the SCIPL in respect of copyright income and resultantly funds provided by BDML and Bollywood Digital FZE to BKK
Investment is also diversion of income. Further AO added the above-mentioned amounts to the total income of SCIPL alleging that funds remitted through
BDML and Bollywood Digital FZE to BKK Investment are logically foreign income of SCIPL retained outside India to avoid taxes in India. In order to protect the interest of revenue, same additions were also made in the hands of assessee on protective basis.
34.3 The additions made were deleted by the Commissioner of Income Tax
(Appeals) [CIT(A)] on the facts and circumstances, by concluding that sufficient evidence and rationale were provided to demonstrate that BDML was incorporated for legitimate purposes and was not a sham entity. Consequently, the 293
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

293 | P a g e investment made by BKK Investment in property through funds channeled via
BDML does not constitute a diversion of income.

294 | P a g e

BKK for property acquisition which is already established by the coordinate bench in the SCIPL case in AY 2007-08 to AY 2012-13 in ITAs No.214, 215,
216, 1290, 1291 & 1292/Del/2023.We observed that BDML is not a sham entity and possessed an independent existence, justifying its autonomous operations from Dubai and therefore funds remitted from BDML from to BKK for property acquisition are also legible.

295
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

295 | P a g e deleted by the CIT (A) in the case of the assessee is upheld since the same has been deleted on merits in the hands of SCIPL as discussed above.

296
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

296 | P a g e were added to the total income of the SCIPL on substantive basis and in the hands of assessee on protective basis. Details of the additions made are tabulated as under:

Assessment
Year
Profit In U Conversion rate
Addition Amount
2016-17
675276
66.24
4,47,30,282
2017-18
20,59,983
64.80
13,34,86,898

297
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

297 | P a g e

Ltd. (SCIPL). It was emphasized that the Commissioner of Income Tax (Appeals)
[CIT(A)] had deleted the addition after examination of its merits in SCIPL’s case.
Consequently, as the addition has been deleted on substantive grounds, it is not legally sustainable on a protective basis in the hands of the assessee.
35.5
We have heard the respective submissions made by the parties; we have also perused the relevant materials available on record. It appears from the records that the substantive addition made in the hands of SCIPL is already dealth on merits and the same has been deleted by the CIT (A) in AY 2016-17 and 2017-
18 (Relevant para of appeal order of AY 2016-17 is 82 Page 60).Documents placed on record including audited balance sheet, employee details in UAE, lease agreement for registered office and invoices for admn. office. In UAE, invoices for legal expenses incurred, audit fees, details of physical presence of Bhushan Dua in UAE for taking management decisions adequately prooves that BD FZE fuctions independently in UAE.
35.6
The Protective addition was merely made in the hands of the assessee under consideration to protect the interest of revenue.
The AO made protective addition only in the hands of the assessee on the presumption that if substantive addition is made in the hands of M/s. SCIPL accepted, the protective addition may be made in the hands of the assessee and, therefore, it was imperative to protect the interest of revenue to avoid the possibility of leakage of revenue and to deal with the contingent situation till

298
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

298 | P a g e the substantive addition gets finalized.
We note that since the substantive addition has been deleted in the hands of the SCIPL, then no protective addition should be susntained in the hands of the assessee.
The protective addition can only be made when prima facie it appears to the revenue that income has been diverted either by M/s. SCIPL or by assessee under consideration, then it would be open to the Income Tax Authorities either to tax the income in hands of M/s. SCIPL or in the hands of the assessee under consideration. In view of the above the addition for AY 2016-17 and 2017-18
deleted by the CIT (A) in the case of the assessee is upheld since the same has been deleted on merits in the hands of SCIPL as discussed above.
35.7 In the result, the appeal of the revenue is dismissed.

Assessment Year
Amount
2017-18
63,11,784
2018-19
89,29,050
2019-20
1,24,42,299

299
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

299 | P a g e payment of taxes in India, which is present in appeals for Assessment Years 2017-
18, 2018-19 and 2019-20 (ITA Nos. 279/DEL/2023, 280/DEL/2024 and 281/DEL/2024). The decision for the appeals for AY 2017-18 will be applicable for AY 2018-19 and 2019-20 as the issues are identical and no new circumstances exist.
36.2
Brief facts of the case are that during the search proceedings on SCIPL premises signed agreement was found between Highpath Ltd and SCIPL for sharing of revenue in the territories of Pakistan. Further, M/s HighPath Limited had another agreement with M/s Media Master Pakistan for distribution of music rights in Pakistan. The AO observed that the bank account of Highpath Ltd shows credit of U 97,344 which is equivalent to AED 357252. Relying on this argument, the assessing officer observed that income received in Highpath Ltd have been retained in Dubai.

300
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

300 | P a g e existence in Dubai is already established by coordinate bench in prior years
(2007-08 to 2012-13, per ITA Nos. 214, 215, 216, 1290, 1291, 1292), and additions treating BDML’s income as SCIPL’s diversion deleted by CIT(A) are upheld. Thus, the current addition of taxing income of Highpath in the hands of the assessee is not at all justified and without any basis, more so in this case the assessee or its directors have no stake or control in Highpath which is anindependent entity.

301
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

301 | P a g e the protective addition may be made in the hands of the assessee and, therefore, it was imperative to protect the interest of revenue to avoid the possibility of leakage of revenue and to deal with the contingent situation till the substantive addition gets finalized.
We note that since the substantive addition has been deleted in the hands of the SCIPL, then no protective addition should be susntained in the hands of the assessee.
The protective addition can only be made when prima facie it appears to the revenue that income has been diverted either by M/s. SCIPL or by assessee under consideration, then it would be open to the Income Tax Authorities either to tax the income in hands of M/s. SCIPL or in the hands of the assessee under consideration. In view of the above the addition for AY 2017-18, 2018-19 and 2019-20 deleted by the CIT (A) in the case of the assessee is upheld since the same has been deleted on merits in the hands of SCIPL as discussed above.

Assessment Year
Particulars
Amount
2016-17
Enhancement done on account of Roy
Movie Expenses
26,81,39,398

302
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

302 | P a g e

2017-18
Enhancement done on account of Raabta Movie Expenses
8,73,51,431

303
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

303 | P a g e addition was deleted in the hands of SCIPL, protective addition was also deleted by the assessee.

304
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

304 | P a g e

305 | P a g e revenue that income has been diverted either by M/s. SCIPL or by assessee under consideration, then it would be open to the Income Tax Authorities either to tax the income in hands of M/s. SCIPL or in the hands of the assessee under consideration. In view of the above the addition for AY 2016-17 and 2017-18
deleted by the CIT (A) in the case of the assessee is upheld since the same has been deleted on merits in the hands of SCIPL as discussed above.

306 | P a g e making of the film and T Series UK was only supposed to execute the project and the cost of Directors fees was paid by SCIPL to T Series UK Ltd. SCIPL has claimed inflated expenses on account of payment made to Sh. Anubhav Sinha
Director of Tum Bin 2. The payment to Sh. Anubhav Sinha was only Rs. 1.5
Crore as against transfer of 674150 Pounds to Magus. Therefore, the excess payment to Magus by T Series UK over and above what was paid to Anubhav
Sinha is to be disallowed.
39.2 The additions so made in AY 2017-18 were partly upheld by the Ld.
CIT(A) by holding that accrual amount transferred to Magus Consultancy Dubai for providing services of Anubhav Sinha Director and writer of the film was 6,74,00,000/- (674150 pound converted in INR) instead of Rs. 7,00,00,000/- claimed in the assessment order. Further Magus consultancy Dubai has paid
1,50,00,000/- only to Anubhav Sinha and therefore and therefore SCIPL inflated its expenditure for production of Film Tum Bin 2 to the extent of Rs.
5,24,00,000/- i.e. Rs. 6,74,00,000/- less 1,50,00,000/- and accordingly addition to the extent of Rs. 5,24,00,000/- was confirmed and relief of Rs. 26,00,000/- was provided.

307
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

307 | P a g e

No. 23/10394/ 2016-17 at Para No. 14.26 Page 88. That being the position, protective assessment of the same amount at the hands of the assessee would amounts to double taxation.

Un-Common Grounds for AY 2018-19

308
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

308 | P a g e etc. and resultantly Rs. 6,21,14,771/- being Rs. 7.50 crores transferred to NM
Worldwide less Rs. 1,28,85,229 actually paid by NM Worldwideis added to the total income of SCIPL being bogus expenses claimed on account of production of movie “Hate Story 4”. In order to protect the interest of revenue, same additions were also made in the hands of assessee on protective basis.

309
ITA Nos. 2713-2714/Del/2023; ITA Nos. 7,51,271/Del/2024 etc.
Super Cassettes Industries Pvt. Ltd.

309 | P a g e by the CIT(A) in the hands of SCIPL vide appeal order dated 10.11.2023 in ITA
No. 23/10295/ 2017-18 at Para No. 13.37 Page 66. That being the position, protective assessment of the same amount at the hands of the assessee would amounts to double taxation.

Order pronounced in the open court on 25.09.2025. (NAVEEN CHANDRA)
JUDICIAL MEMBER

Dated: 25.09.2025. *MP*
Copyforwarded to:

Appellant
Respondent
CIT
CIT(A)
DR
Asstt.