2016 (9) TMI 388 - AT - Income Tax

Unexplained investment under section 69 - Held that - Had it been genuine transaction, the assessee should have been explained the entire transaction between the assessee and Shri Prasad Potluri and the circumstances under which it was paid by Shri Prasad Potluri to the assessee on behalf of Indira Production Pvt. Ltd. Further, the Assessing Officer during the course of assessment requested Indira Production Pvt. Ltd. for the personal appearance and explains it. But, instead of personal appearance before the assessing authority, they opted to send the statement of account, which does not explain itself the nature of transaction between the parties. In our opinion, as rightly pointed out by the ld. DR, the evidence brought on record by the assessee, the assessee has not discharged his burden cast upon him to substantiate the source and genuineness of the transaction. In these circumstances, it is appropriate to hold that the deposit of ₹.30 lakhs in the Dena Bank account has not properly explained. Therefore, the provisions of section 69 of the Act was rightly invoked by the Assessing Officer and confirmed by the ld. CIT(A). - Decided against assessee Adhoc addition towards gross remuneration for Kushi Hindi version of movie - Held that - Admittedly, in this case, the assessee has filed a statement before us confirming the receipt of income from Narasimha Enterprises owned by Shri Bonny Kapoor for ₹.1,15,96,414/-. In addition to this, it is to be noted that the assessee filed revised statement of income before the Assessing Officer on 28.03.2005 at ₹.1,27,28,414/-. The Assessing Officer has not considered this amount. In our opinion, the amount returned by the assessee in the revised computation of statement is to be accepted at ₹.1,27,28,414/- subject to our finding in para 3.5 herein below and instead of making addition of ₹.1.00 crore by overlooking this revised statement. Accordingly, we direct the Assessing Officer to consider the revised computation of income for the assessment year 2002-03 with reference to the income at ₹.1,27,28,414/- subject to our finding in para 3.5 herein below. In other words, the assessee is not entitled for loss of ₹.11 lakhs in respect of Kushi Telugu movie. - Decided in favour of assessee

Summary

Issues involved:
1. Addition of unexplained investment of ?30 lakhs under section 69 of the Income Tax Act, 1961.
2. Addition of ?1 crore as income based on a statement without considering a conditional offer.
3. Disallowance of expenditure of ?11 lakhs for the loss from the expenditure of a movie.

Issue 1:
The first issue pertains to the addition of ?30 lakhs as unexplained investment under section 69 of the Income Tax Act, 1961. The appellant failed to provide satisfactory explanation regarding the source of the deposited amount. Even though a letter from Indira Production Pvt. Ltd. was submitted, confirming the transfer of ?30 lakhs to the appellant through Shri Prasad Potluri, the tribunal found the evidence insufficient. There was no clarification on the circumstances of the payment by Shri Prasad Potluri, and the absence of counter confirmation raised doubts. The tribunal concluded that the appellant did not discharge the burden to substantiate the source and genuineness of the transaction, leading to the confirmation of the addition by the authorities below.

Issue 2:
The second issue involves the addition of ?1 crore as income based on a statement without considering a conditional offer. The appellant received remuneration for a movie but claimed a lower income in the return. However, Shri Bonny Kapoor's statement revealed a higher agreed amount, leading to the addition by the assessing officer. The tribunal noted discrepancies in the computation of income and the failure to consider the revised statement filed by the appellant. The tribunal directed the assessing officer to accept the revised computation of income at ?1,27,28,414, instead of the ad-hoc addition of ?1 crore, subject to certain conditions. The tribunal also addressed the disallowance of expenditure of ?11 lakhs, which was not pressed by the appellant during the hearing.

Issue 3:
The third issue relates to the charging of interest under sections 234A and 234B of the Act, which was deemed mandatory and consequential. The tribunal confirmed the computation of interest as per the provisions of the Act. Ultimately, the appeal filed by the appellant was partly allowed, with specific directions given regarding the treatment of income and expenditure in the assessment.

This judgment by the Appellate Tribunal ITAT Chennai addressed multiple issues concerning additions to income, unexplained investments, and compliance with tax provisions. The detailed analysis provided insights into the burden of proof on the appellant, the importance of substantiating transactions, and the proper consideration of revised income statements. The tribunal's decision highlighted the need for accurate income computation and adherence to tax regulations to ensure fair assessment and compliance.