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TMI Blog2011 (9) TMI 848X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 148 was issued and served on the assessee on March 24, 2006 for the reasons recorded as under : "In this case the return of income for the assessment year 19992000 was processed under section 143(1) on February 29, 2000 accepting the returned income of Rs. 20,76,110 (inclusive of agricultural income of Rs. 33,663). M/s. Tips Films P. Ltd., 501, Durga Chambers, 5th floor. Linking Road, Khar (West), Mumbai 400 052 vide undated letter filed on May 10, 2004 has informed that they had effected cash payment of Rs. 20,00,000 (rupees twenty lakhs only) to Mr. Saif Ali Khan in addition to payment of Rs. 20,00,000 (Rupees twenty lakhs only) made by cheque for rendering services as artiste in the film 'Kachche Dhaage'. M/s. Tips Films P. Ltd. in their undated letter has also informed that the cash payment of Rs. 20,00,000 (rupees twenty lakhs only) was not recorded in the books of account and was made in cash to Mr. Saif Ali Khan. During the course of assessment proceedings for the assessment year 2000-01, it is found that the payments mentioned above relates to a period prior to February 1999 and as such, falls within the assessment year 1999-2000. Ihave, therefore, reason to bel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmed the cash payments as submitted by the letters mentioned above. However, during the course of cross examination it was stated by Mr. Taurani that the film Kachche Dhaage was released in February 1999 and the cash payments as above were made prior to the release of the film. Since the payments do not pertain to the previous year relevant to the assessment year 2000-01, the assessment year in question was reopened and the proceedings initiated. The assessee requested the Assessing Officer not to make any addition on account of the following reasons : No date was mentioned in the said paper, nor was the film "Kachche Dhaage" mentioned. The seized paper did not indicate the year or years to which the alleged unaccounted money relate. There is no indication that the amount in question is cash or unaccounted payment. A loose paper of this nature may not be genuine. It could be a ploy of the Tips people to avoid taxes which the Department appears to have allowed as business deduction. The party searched was Mr. Kumar Taurani of Tips and not the assessee. In cross-examination, Mr. Taurani gave vague and evasive replies on which no reliance can be placed. Mr. Taurani did ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . While upholding the action of the Assessing Officer in reopening the assessment, he held that the Assessing Officer came to be in possession of information with regard to unaccounted cash payment to the assessee by Tips. Therefore, it cannot be said that there was no information in the possession of the Assessing Officer on the basis of which he could not have formed reason to believe. According to him "reason to believe" is not the same as "opinion" but is not mere suspicion either. At the stage of issue of notice, the Assessing Officer has to have a basis linking escapement of income through formation of reason to believe. Since in the instant case, the Assessing Officer had information in his possession that the assessee has received unaccounted cash, therefore, the notice issued under section 148 is valid. On merit, while upholding the addition made by the Assessing Officer, he noted that the document found and seized during the course of search indicates payment of Rs. 20 lakhs to the assessee. The entries made in the said paper cannot simply be a figment of imagination. It does relate to specific persons and the amounts are consistent with the amounts paid through recorded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ening of the assessment was supplied on June 29, 2006, therefore, the notice issued under section 148 becomes barred by limitation in view of the decisions cited above. He accordingly submitted that on this preliminary ground alone the reassessment proceeding should be held as null and void. Now coming to the merits of the case, he submitted that the addition was made on the basis of a loose paper found from the residence and business premises of M/s. Tips Films P. Ltd. and its director on July 27, 1999. Referring to page 3 of the paper book, learned counsel for the assessee drew the attention of the Bench to the said paper and submitted that the same is undated, unsigned and does not contain the name of the picture "Kachche Dhaage". Further, the said seized document does not show any year in which the payment has been made. He submitted that against the name of the assessee an amount of Rs. 20 lakhs has been shown. However, identical amount has been received by the assessee by cheque from the said company, therefore, it cannot be said that the assessee has received an amount of Rs. 20 lakhs in cash over and above the amount of Rs. 20 lakhs received by cheque. He submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmitted that the law nowhere mandates the Assessing Officer to give the reasons along with section 148 notice. Referring to page 3 of the paper book he submitted that the papers seized contain the names of different persons including that of the assessee to whom unaccounted cash payments have been made. The assessee has also never disputed that he has not acted in the film "Kachche Dhaage". He submitted that when the assessee received notice under section 148 on March 24, 2006, he has seven days before March 31, 2006 to ask for the reason. However, the assessee filed letter dated May 8, 2006 asking the Assessing Officer to supply the reasons. He submitted that as per the provisions of the Act, when a notice under section 148 is issued, one has to first file the return and then ask for the reasons recorded under section 148. In the instant case the assessee asked the reasons recorded for the reassessment proceeding only on May 8, 2006. Therefore, the notice under section 148 was not required to be accompanied with the reasons recorded. Distinguishing the decisions of the hon'ble Delhi High Court in the case of Haryana Acrylic Manufacturing Co. [2009] 308 ITR 38 (Delhi) he submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee, in his rejoinder, again reiterated that a notice under section 148 and reasons recorded for such re-opening go hand in hand. The assessee has nowhere admitted that he had received the money. He submitted that even if the assessee has received unaccounted cash, still the same cannot be taxed in the assessment year 1999-2000 since the director has stated that it is either in 1996 or 1999 during which the amount has been paid. If the money is paid during 1996, the case is time barred. As regards the submission of the learned Departmental representative that so many names are appearing in the seized documents, learned counsel for the assessee submitted that the assessee is least bothered about the others or in the film industry. So far as the argument of the learned Departmental representative that no one has filed a case against Mr. Taurani or Tips Films P. Ltd., he submitted that it tarnishes the public image since everybody will come to know of it. Since it is confined to the Incometax Department only the assessee preferred not to file any suit. Referring to the decision of the hon'ble Calcutta High Court in the case of Peerless Finance and Investment Co., the decisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id the money, the person to whom he paid the money, etc. Under these circumstances, 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. The order pronounced on Septe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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