TMI Blog2014 (9) TMI 954X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 4,00,000. Thus no reason to interfere with the order passed by CIT(A) - Decided against revenue. Disallowance of travelling expenses and studio hire charges - CIT(A) deleted the addition - Held that:- For making any addition, the Assessing Officer should have supportive evidence and the Assessing Officer has not stated in the assessment order based on which evidence he made the above additions. Since, the learned Commissioner of Income-tax (Appeals) has not obtained any remand report from the Assessing Officer, we set aside the order of the learned Commissioner of Income-tax (Appeals) and direct the Assessing Officer to decide the issue afresh based on material evidence in accordance with law, after allowing sufficient opportunity of hearing to the assesse - Decided in favour of revenue for statistical purposes. Addition on account of cash deposit in the bank account - CIT(A) deleted the addition - Held that:- Commissioner of Income-tax (Appeals) has stated in his order that the amount of ₹ 8,67,552 was available as per the cash book on the date of deposit and deleted the addition made by the Assessing Officer. The order of the learned Commissioner of Income- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned Commissioner of Income-tax (Appeals) order, the seized document "receipt" is reproduced, wherein it is stated that the assessee entered into agreement on November 23, 2005, but advance of ₹ 1,00,001 was already paid and an amount of ₹ 6,12,499 was received on April 22, 2004 and TDS also deducted. We could not understand as to how full remuneration was made in advance on different dates before entering into agreement. The very basis for making the above addition "receipt" seized appears to be contradictory. The Assessing Officer has stated in the assessment order that the assessee has shown receipt of ₹ 1,00,001 only on January 10, 2005. We are of the opinion that the each and every fact requires detailed verification. Thus remit the matter back to the Assessing Officer with a direction to decide the issue afresh after - Decided in favour of Revenue for statistical purpose. Addition made on account of suspense account - CIT(A) deleted the addition - Held that:- IT(Appeals), after examining suspense account and also the seized document on which addition was made, gave categorical finding that the banking transactions recorded in the suspense account are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined the expenditure actually incurred by the assessee and the assessee should furnish relevant vouchers and books of account for making such claim of expenditure. Thus remit the matter to the Assessing Officer with a direction to decide the issue afresh by examining the issue in detail - Decided in favour of revenue for statistical purposes. - I.T.A.Nos.1388, 1389, 1390 & 1391/Mds/2008 - - - Dated:- 26-9-2014 - Shri A. Mohan Alankamony Shri V. Durga Rao, JJ. For the Appellant : Dr. S. Moharana, CIT For the Respondent : Shri S. Sridhar, Advocate ORDER V. Durga Rao (Judicial Member).- These four appeals filed by the Revenue are directed against different orders of the learned Commissioner of Income-tax (Appeals)-II, Chennai, relevant to the assessment years 2003-04, 2004-05, 2005-06 and 2006-07. Since all the appeals pertaining to the same assessee and heard together are being disposed of by this common order for the sake of brevity. I. T. A. No. 1388/Mds/2008 (assessment year 2003-04) 2. Brief facts of the case are that the assessee is a music director. A search and seizure action under section 132(1) of the Income-tax Act, 1961 ( Act in s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,09,000 31 01/07/2002 9,000 31 31/07/2002 22,500 32 25/11/2002 49,500 34 26/11/2002 49,500 34 28/11/2002 49,500 34 12/12/2002 32,500 35 16/12/2002 34,700 35 02/01/2003 20,400 36 09/01/2003 43,600 36 20/02/2003 20,000 37 Total deposited 4,60,200 It was further explained before the learned Commissioner of Income-tax (Appeals) that the assessee was having a opening balance of ₹ 4,29,380 on April 1, 2002 and the assessee has received payment in cash towards professional fee from two parties amounting to ₹ 6,39,562, which was offered as income in the tot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ereafter cheque was issued to a party. Therefore, he came to a conclusion that the cash deposits found in the bank account of the assessee was unaccounted transactions and accordingly disallowance of ₹ 4,10,700 was made. He also found that the assessee has deposited ₹ 4,00,000 during the previous year ending March 31, 2003. It is not clear when the assessee has deposited this amount and no details were made available in the assessment order. The learned Commissioner of Income-tax (Appeals), after examining the books of account and also entire transactions made by the assessee, gave a specific finding that the assessee was having a opening balance of ₹ 4,29,380 and gave a finding that when the books of account shows that the assessee was having sufficient balance in his cash book and there is no justification in making addition on account of deposits made in cash in the bank account. The Assessing Officer himself agreed that the assessee was receiving remuneration in cash as well as in cheque. When the assessee has already recorded as remuneration in the books of account and subsequently deposited in the bank, it cannot be said that it is unaccounted money. In so f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h artists. Accordingly, he made disallowance of travelling and conveyance and studio hire charges amounting to ₹ 23,65,367. 12. Before the learned Commissioner of Income-tax (Appeals), it was submitted that regular books of account were maintained which were duly audited and the tax audit report was enclosed along with the return of income. It was also submitted that in response to the notice under section 153A of the Act, an additional income of ₹ 14,15,000 was offered on account of personal expenses, etc., and there is no justification in making addition on travel expenses. It was also submitted before the learned Commissioner of Income-tax (Appeals) that the studio hire charges are paid to various studies through cheques for the purpose of recording and there is no personal element in this expenses. The learned Commissioner of Income-tax (Appeals), after considering the submissions of the assessee and also details filed by the assessee, deleted the addition made in respect of studio charges amounting to ₹ 14,49,000 and in respect of travelling expenses claimed at ₹ 9,15,467 was restricted to ₹ 1,00,000. 13. Aggrieved, the Revenue is in appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer has not come across any books of account or vouchers as stated to have been filed by the assessee along with the return. The learned Commissioner of Income-tax (Appeals) in his order at paragraph 4.2 has stated that he has examined the records and books of account. If it is so, we are of the considered opinion that the learned Commissioner of Income-tax (Appeals) should have obtained remand report from the Assessing Officer on the books of account/records as stated to have been examined by the learned Commissioner of Income-tax (Appeals) before arriving at any conclusion. Further, the Assessing Officer has stated that he has approached the CBFC in connection with the above additions. For making any addition, the Assessing Officer should have supportive evidence and the Assessing Officer has not stated in the assessment order based on which evidence he made the above additions. Since, the learned Commissioner of Income-tax (Appeals) has not obtained any remand report from the Assessing Officer, we set aside the order of the learned Commissioner of Income-tax (Appeals) and direct the Assessing Officer to decide the issue afresh based on material evidence in acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Income- tax (Appeals) that the assessee has explained the source of cash of ₹ 5,00,000 deposited in his HSBC bank account. It is also not clear whether the assessee has explained the source of cash deposited in his account or not. Therefore, we set aside the order of the learned Commissioner of Income-tax (Appeals) on this issue. To meet the ends of justice, we remit the matter back to the Assessing Officer with a direction to give one more opportunity of hearing to the assessee for furnishing the details of sources for the cash deposits and decide the issue de novo in accordance with law. Accordingly, the ground raised by the Revenue is allowed for statistical purpose. 20. In the result, the appeal filed by the Revenue is allowed for statistical purposes. I. T. A. No. 1390/Mds/2008 (assessment year 2005-06) 21. A search was conducted in the assessee's case on October 26, 2005 and in response to the notice under section 153A of the Act, the assessee filed his return of income showing total income of ₹ 52,29,240. The assessment was completed under section 143(3) read with section 153A of the Act on December 31, 2007, by assessing total income of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment proceedings for the assessment year 2006-07. Therefore, he held that the addition made by the Assessing Officer was invalid. According to the learned Departmental representative, this amount was not offered for taxation in the assessment year 2006-07. In so far as this assessment year is concerned, the above seized amount is not relevant. However, it is open to the Assessing Officer to proceed as per law, if the assessee has not offered for taxation, which he ought to have been offered as per law. However, we find no infirmity in the order passed by the learned Commissioner of Income-tax (Appeals) on this issue. Accordingly, the ground raised by the Revenue is dismissed. 28. The second ground raised by the Revenue is relating to deletion of addition in respect of ₹ 15,35,211 on account of gold jewellery found during the course of search. In the assessment order, the Assessing Officer has observed that during the course of search, gold jewellery of weighing 3088.6 grams was found. When the assessee was asked to explain the source of the same, he was not able to explain and also it was found that it was not accounted for. Accordingly, the Assessing Officer cal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re is difference of ₹ 6,50,000. Further, similar discrepancies were found for the remuneration received from Indira Innovations for the film Kurumbu. As per page 17 of the seized materials, the total remuneration received by the assessee from Indira Innovations during the financial year ending March 31, 2003 was ₹ 4,00,000. However, the assessee has submitted only ₹ 3,00,000 received from Indira Innovation. Since the difference of ₹ 1,00,000 was not explained by the assessee, the same was added to the income of the assessee and addition made was aggregated to ₹ 7,50,000 (Rs. 6,50,000 + ₹ 1,00,000). 33. Before the learned Commissioner of Income-tax (Appeals), it was submitted that the assessee has received total amount of ₹ 20,67,209 from AVM Production for the film Perazhagan. That the payment was received through cheque issued on Indian Overseas bank which was deposited in the assessee's bank account with HSBC and the same was cleared on April 23, 2004, an amount of ₹ 6,50,000 was part of the above total amount received by the assessee. The learned Commissioner of Income-tax (Appeals), after consideration of the explanation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the each and every fact requires detailed verification. Therefore, we set aside the order of the learned Commissioner of Income-tax (Appeals) and remit the matter back to the Assessing Officer with a direction to decide the issue afresh after making detailed verification. Accordingly, the ground raised by the Revenue is allowed for statistical purpose. 35. The fourth ground of appeal of the Revenue relates to deletion of addition of ₹ 14,19,000 made on account of suspense account. In the assessment order, the Assessing Officer has observed that during the course of search, seized document No. ANN/VP/B D/S-4 reveals that an amount of ₹ 14,90,000 was shown as suspense account at page 109. Since the assessee has not explained the source in detail, the said amount was added as unexplained income of the assessee. The seized document on which the addition was made produced before the learned Commissioner of Income- tax (Appeals) is extracted as under : Yuvan Shankar Raja Suspense Ledger account 1-April-2004 to 31-March-2005 Date Particulars Vch Typ Debit Credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see strongly supported the order passed by the learned Commissioner of Income-tax (Appeals). 36. We have heard both sides, perused the materials on record and gone through the orders of the authorities below. The learned Commissioner of Income-tax (Appeals), after examining suspense account and also the seized document on which addition was made, gave categorical finding that the banking transactions recorded in the suspense account are regular transaction duly recorded in the books of account. He accordingly directed the Assessing Officer to delete the addition made. Therefore, we find no reason to interfere with the order passed by the learned Commissioner of Income-tax (Appeals) and accordingly, the ground raised by the Revenue stands dismissed. 37. The fifth ground of appeal of the Revenue relates to deletion of addition of ₹ 13,82,948 on account of the investment in immovable property. In the assessment order, the Assessing Officer has observed that the assessee owns immovable property at G-1, MRC Garden Sterling Road, Chennai. As per seized material in ANN/VP/B D/S-4, sale consideration was shown at ₹ 13,36,440. However, the market value of the property was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39. The sixth ground of appeal of the Revenue relates to deletion of addition of ₹ 50 lakhs made on account of cash deposits in bank account. In the assessment order, the Assessing Officer has observed that during the course of search, it was found that the assessee has deposited a sum of ₹ 50 lakhs in cash during the period from March 16, 2005 to September 15, 2005, in HSBC account No. 041104951006. Since the assessee is found to be receiving cash and making deposits, such cash deposits have to be explained item-wise. But the assessee has not explained same. In the absence of any explanation of item-wise cash deposits, the same was treated as undisclosed income deposited directly in the bank in cash. Accordingly, the addition was made. 40. Before the learned Commissioner of Income-tax (Appeals), it was submitted that this is an unfortunate addition of ₹ 50 lakhs for the reason that during the course of search, it was found that the assessee has deposited a sum of ₹ 50 lakhs during the period from March 16, 2005 to September 15, 2005, in HSBC account No. 041104951006. The Assessing Officer does not gave details as to on what dates he found such cash depos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Income-tax (Appeals) on this issue and remit the matter to the Assessing Officer to decide the issue de novo in accordance with law after allowing opportunity of hearing to the assessee. Accordingly, the ground raised by the Revenue is allowed for statistical purpose. 43. The seventh ground of appeal of the Revenue relates to restricting professional expenditure of ₹ 15,54,750 as travelling and conveyance expenses to ₹ 1.5 lakhs. The assessee has claimed various expenses like conveyance, boarding, lodging, etc., and no details were produced. According to the Assessing Officer most of the expenses claimed by the assessee such as conveyance, travelling, etc., are only for personal purpose and not directly attributed to the purpose of profession. Accordingly, addition of ₹ 15,54,750 was made. 44. On appeal, the learned Commissioner of Income-tax (Appeals) gave a finding that on examining the facts of the case, there is element of personal expenses in the conveyance and travelling expenses to some extent. In the return filed by the assessee in response to notice under section 153A of the Act, the assessee has declared undeclared income on account of personal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. Subsequently notice under section 153A of the Act was issued to the assessee and in response to that, the assessee filed the return of income on September 22, 2006, declaring total income of ₹ 53,49,899. The assessment was completed under section 143(3) read with section 153A of the Act by assessing total income of the assessee at ₹ 79,46,632. In the assessment order, the Assessing Officer has disputed an amount of ₹ 5,69,754 towards travelling expenses and conveyance and ₹ 25,96,733 towards studio hire charges. With regard to the claim of expenditure out of professional receipts, since the expenses claimed by the assessee are not supported by any regular books of account or vouchers, the Assessing Officer had approached the Central Board Film Certification (CBFC in short) authority for getting some information. The CBFC, in turn advised the Assessing Officer certain sources like websites maintained by the stars, trade bodies and renowned journalists from which the information can be obtained. Based on the above advise of the Board and considering the nature of expenses, the Assessing Officer made enquiries and accordingly, he came to a conclusion that in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is being a music director, the expenses incurred towards travel and studio hire charges has to be incurred by the producer of the firm. Since the expenses claimed by the assessee are not supported by any regular books of account or vouchers and to come to the above conclusion, the Assessing Officer approached the CBFC authorities, who advised the Assessing Officer certain sources like websites maintained by the stars, trade bodies and renowned journalists and thereafter, he disallowed the claim made by the assessee. On appeal, the learned Commissioner of Income-tax (Appeals) gave a specific findings that the total fee receipt by the assessee as music director amounts to ₹ 1,44,84,648 and the profit and loss account and the books of account show total expenses of ₹ 20,26,979 for studio hire charges. This studio charges expense was incurred for the purpose of recording music for the film against which the fee of ₹ 1,44,84,648 has been received. All these expenses are duly vouched and duly recorded in the books of account. With the above findings, the learned Commissioner of Income-tax (Appeals) deleted the addition on account of travelling expenses and studio hire c ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
