2011 (9) TMI 848 - AT - Income Tax

Taxability in assessment year - Held that - The statement given by Mr. Taurani has no evidentiary value due to so many contradictions and cannot be accepted as a valid proof especially in the absence of any corroborative evidence. Further when Mr. Taurani has stated that the amount has been paid in the year 1996 or 1999 and when the Department has no evidence that the money has not been received in the year 1996 there is no basis to conclude that the amount has been received in the year 1999. In this regard we find force in the submission of learned counsel for the assessee that since the assessment year prior to 1999-2000 had become time barred therefore this is the only reason for the Revenue to contend that the payment in question was made during the previous year relevant to the assessment year 1999-2000. In view of the detailed reasons given above we hold that the amount cannot be taxed in the impugned assessment year. Since we have decided the issue on merit the legal ground challenging the validity of the reassessment becomes academic in nature. In the result appeal filed by the assessee is allowed.

Summary

Issues Involved:
1. Validity of the reassessment proceedings.
2. Addition of Rs. 20 lakhs as concealed income.

Detailed Analysis:

1. Validity of the Reassessment Proceedings:

The assessee challenged the reassessment proceedings initiated under section 147 of the Income-tax Act, arguing that the notice under section 148 was not accompanied by the reasons for reopening the assessment. The reassessment was based on information received from M/s. Tips Films P. Ltd., indicating unaccounted cash payments to the assessee. The Commissioner of Income-tax (Appeals) upheld the reassessment, stating that the Assessing Officer had sufficient information to form a "reason to believe" that income had escaped assessment. The Tribunal referred to the decision in Haryana Acrylic Manufacturing Co. v. CIT, where it was held that reasons for reopening must be supplied to the assessee before the expiry of the limitation period. In this case, the reasons were provided after the notice was served, making the notice potentially void. However, since the issue was decided on merits, the legal ground became academic.

2. Addition of Rs. 20 Lakhs as Concealed Income:

The addition of Rs. 20 lakhs was based on a loose paper found during a search at the premises of M/s. Tips Films P. Ltd., which allegedly recorded unaccounted payments to the assessee. The assessee contended that the paper was undated, unsigned, and lacked specific details such as the name of the film "Kachche Dhaage" or the year of payment. The assessee also argued that the statement of Mr. Taurani, the director of Tips Films, was inconsistent and lacked corroborative evidence. During cross-examination, Mr. Taurani could not recall specific details about the payment, including the date, place, and person to whom the money was paid. The Tribunal found that the seized paper and Mr. Taurani's statement lacked evidentiary value due to contradictions and absence of corroborative evidence. It was noted that the payment could have been made in 1996 or 1999, and without concrete evidence, the amount could not be taxed in the assessment year 1999-2000. Consequently, the Tribunal allowed the appeal, rejecting the addition of Rs. 20 lakhs as concealed income.

Conclusion:

The Tribunal concluded that the reassessment proceedings were potentially void due to procedural lapses, but primarily decided the case on merits. The addition of Rs. 20 lakhs was not justified due to lack of concrete evidence and contradictions in the statements provided. The appeal filed by the assessee was allowed, and the order pronounced on September 23, 2011, favored the assessee.