TMI Blog2014 (7) TMI 954X X X X Extracts X X X X X X X X Extracts X X X X ..... ee, the Revenue cannot, impending the resolution of the dispute, collect tax twice, so that the demand for one year shall have to be kept in abeyance. AB may have never agreed for being paid any compensation for the Asthma campaign for which his pictures were being sought - there is as such no basis to hold that a liability to AB had ever accrued during the year, and ceased to do so at a later point in time - There is no merit in the charge of the income having been subject to tax on cash basis who admittedly was not paid any amount - the payment having been made, source of which is unexplained - the addition u/s 69C would also arise - The argument, though valid, would yet give rise to a single adjustment and not two in-as-much as there has been a single payment against a single liability - the liability is reflected in the accounts, its stands discharged prior to March, 2001, so that the source of payment remained unexplained - irrespective of the response from RM, there shall arise only a single adjustment to the assessee's returned income on account of liability toward and payment to RM, for the current year – Decided against Assessee. - I.T.A. No. 2250/Mum/2007 - - - Date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 000/- The said liabilities were found by the Assessing Officer (A.O.) as in truth and essence as non-existent, i.e., as having no existence in reality, and only camouflaged as such for reducing/deferring tax. The same finding confirmation by the ld. CIT(A), the assessee is in second appeal. We shall proceed to discuss the case of the respective parties qua each liability, and decide accordingly. Liability to Ab (Rs.17.50 lacs): 4. The same is stated to arise out of the two agreements entered into by AME, one dated 03.06.1999 with M/s. Pepsi Foods Ltd., New Delhi (PFL) and another with Ab (dated 09.06.1999). The relevant clauses of the agreements stand reproduced by the A.O. in his order, and are not a subject matter of dispute. As per the principal agreement (with PFL/PB pgs.45-51), the assessee was to arrange personal appearance of agreed celebrity/s (Ab) for six (6) mutually agreed upon events/occasions over a period of 18 months (from the commencement of the agreement) for a consideration of ₹ 50 lacs, to fall due on the following dates: Sr. No. Month/Year When accrued Amount accrued 1 June, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om PFL in the following year (A.Y. 2002-03) and accounted for as income for that year. No further payment was made to Ab during the year relevant to A.Y. 2001-02 as the performance period stood extended by another year, i.e., upto 02.12.2001 (PB pg. 44). In fact, another ₹ 10,27,500/- (Rs.37,50,000/- - ₹ 27,22,500/-) was due to Ab, which, however, was not paid. The said amount getting time barred in 2004, would be offered to tax for A.Y. 2004-05 (refer assessee's letter dated 09.03.2004/PB pgs.64-67/pgs.5-6 of the assessment order). The matter was put to cross-verification by the Revenue from Ab, whereat it stood clarified that he had received ₹ 31.25 lacs and ₹ 4.725 lacs during the previous years relevant to A.Y. 2000-01 and 2001-02 respectively, and that, that no further amount was due from the assessee. This information stood confirmed by the A.O. through the concerned officer assessing Ab. In his view, therefore, the assessee had overbooked liability of ₹ 17.50 lacs to Ab. The same being non-existent as on 31.03.2001, the assessee's income was increased on account of unproved liability (expenditure) by that amount. The same stood confirmed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ithin 15 days of the commencement of the performance period, which, i.e., due date, remains unchanged. The accrual of income to the celebrity, as per the agreement, is not linked mathematically to his personal appearance. All that he has to do is to make himself available for 10 days during the performance period, of which personal appearance is to be made on six occasions at mutually agreed dates. Thus, though in respect of performance, for which time span is defined, the revenue arising (or expense accruing) is not a linear function of time. In fact, there is nothing to show that the assessee, though claims so (PB pgs.64-67), has booked income and expenditure on the basis of celebrity appearances, either generally or during the relevant period, so much so that, as it transpires, and undisputedly, the assessee while making the payment of ₹ 4,72,500/-, an odd figure, made full and final payment to the celebrity. It has nowhere explained the basis of the payment in such an odd sum, much below the amount that was required to be paid as per the agreement itself. However, though the assessee has not stated the full facts, the fact of the matter, as confirmed by the payee, is that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act, accrued, or, in any case existing as on 31.03.2001, with the assessment having been finalized prior to 31.03.2004, at the same time, the same amount cannot be subject to tax twice. Accordingly, where the assessee accepts the assessment of this income for the current year, he shall, on moving the Revenue, be allowed, upon verification, consequential relief for A.Y. 2004-05. In fact, even in the case of non-acceptance by the assessee, the Revenue cannot, impending the resolution of the dispute, collect tax twice, so that the demand for one year, i.e., the latter year, shall have to be kept in abeyance. We decide accordingly. Liability to Shri Amitabh Bachchan (AB) - ₹ 4.50 lacs: 6. The assessee was paid ₹ 5 lacs (in his proprietary firm M/s. Limelight) by M/s. Glaxo India during the relevant year for releasing stock pictures of AB, which the said firm wanted to utilize, among others, as a part of their Asthma media campaign as well as Patient Education Programme for a defined period of time (five years), as a part of their media plan, under a Memorandum of Understanding (MOU). The assessee, as claimed, was to pay ₹ 4.50 lacs to AB, retaining the balance & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) - ₹ 6 lacs: 8. The assessee's explanation for this liability was that the same stands since paid on 31.03.2002. As, however, the same was paid in cash, 20% thereof stood disallowed suo motu u/s.40A(3) of the Act for A.Y. 2002-03. Upon confirmation from RM, it was found that she had been subject to search and seizure action on 08.10.2000, whereat cash amounting to ₹ 7.50 lacs was found from her locker. As explained by her father, Shri Ram Mukherjee, ₹ 1.50 lacs of the same belonged to the family, and the balance ₹ 6 lacs was received for safe keeping from the assessee, a family friend, on 25.09.2000 and, therefore, deposited in the locker on the same day. However, as the assessee was not available for confirming the same due to his busy schedule, the same stood offered to tax by RM as her undisclosed income for the block period. The said explanation, however, was not found valid by the Revenue, which, on the basis of the material gathered in search, viz. diary, statement, etc., found ₹ 6 lacs to be her income from Bata advertisement, which was arranged by the assessee. The assessee's claim for liability as on 31.03.2001 was, thus, found une ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as on 31.03.2001. Besides, in that case, what is the payment on 31.03.2002 for? Again, what is the source of payment in September, 2000, not recorded in the assessee's books of account? The availability of cash in the assessee's accounts at the relevant time would, therefore, be to no avail. Nobody would withdraw cash - which as per the assessee's own books is for commercial shooting expenses, from bank for safe keeping and, further, deposit it with another for the purpose, and that too without any evidence. The cash as per the books would, in any case, only stand to be utilized for business purposes in due course of time, and it is nobody's case that it continues to be unutilized to date. At the same time, RM admittedly offered the cash found in search, explained as sourced from the assessee, as her income. The same only implies a rejection of her explanation of being the assessee's money, kept with her for safe keeping, as affirmed by the assessee vide his letter dated 04.10.2000. The cash found with her would thus not automatically stand to be considered as the assessee's money and, thus, unexplained income, which would imply an acceptance of the RM' ..... X X X X Extracts X X X X X X X X Extracts X X X X
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