2019 (3) TMI 1109 - HC - Income Tax

Claim of liability rejected - subsequent year liability written back and offer for tax - claim of outstanding liability of ₹ 17.50 lacs on accrual basis for which payment was to be made - The assessee claimed an outstanding liability of ₹ 17.50 lacs on accrual basis for which payment was to be made. Such claim was cross verified by the Assessing Officer that Mr. Abhishek Bachchan whose representative stated that he had received sum of ₹ 31.35 lacs and 4.72 lacs and that no further amount was payable. This falsified the assessee s claim of pending liability. On this basis, the AO as well as the CIT(A) and the Tribunal rejected the assessee s claim - HELD THAT - we find that the additions sustained by the Tribunal are based on material on record and on the basis of assessment of such material. When it was established that the liability of ₹ 17.50 lacs did not exist, as claimed by the assessee and that sum of ₹ 4.50 lacs was never paid to Mr. Amitabh Bachchan, we do not find that the Tribunal s view requires any interference. Voluntarily offered to tax the liabilities due to Mr. Abhishek Bachchan and Mr. Amitabh Bachchan in assessment year 2004-05 when the liabilities became time barred - Tribunal, while confirming above addition had given directions for not taxing the same income twice. HELD THAT - we record the contention of the learned counsel for the assessee that despite the repeated requests, the Revenue has not refunded the tax in relation to these receipts for the assessment year 2004-05. One possibility could be that the assessee was in the appeal disputing the addition in the current year. Be that as it may, now that we are disposing of this appeal accepting the additions in this year, the Revenue is directed to act according to the Tribunal s direction in this respect for the assessment year 2004-05. The same may be done latest by 30.4.2019.

Summary

Issues involved:
1. Treatment of actual liabilities due to Mr. Abhishek Bachchan and Mr. Amitabh Bachchan as non-existent.
2. Ignoring the voluntary offer to tax the liabilities due to Mr. Abhishek Bachchan and Mr. Amitabh Bachchan in a previous assessment year.
3. Perverse order by the Tribunal regarding the liability of Rs. 6,00,000 given for safe custody to Mr. Ram Mukherjee.

Analysis:
1. The first issue pertains to the addition of Rs. 17.50 lacs by the Assessing Officer, rejecting the claim of liability by the assessee. The assessee, engaged in media publicity business, had received Rs. 50 lacs for featuring Mr. Abhishek Bachchan in an advertisement. The claim of Rs. 17.50 lacs as outstanding liability was refuted by Mr. Abhishek Bachchan's representative, stating no further amount was payable. The Tribunal noted that the liability had ceased in a previous assessment year and directed the Revenue to collect tax only once.

2. The second issue involves a similar scenario where the assessee claimed that a company intended to use Mr. Amitabh Bachchan's photograph for an advertisement, agreeing to pay Rs. 5 lacs. The assessee claimed to retain Rs. 50,000 as commission and pay Rs. 4.50 lacs to Mr. Amitabh Bachchan, which was later waived by him. The Revenue, however, taxed the entire amount as the assessee's income. The Tribunal, while upholding the addition, directed against taxing the same income twice, considering the possibility of unauthorized use of Mr. Amitabh Bachchan's pictures.

3. Regarding the third issue, the Tribunal's decision was upheld as the additions were based on material evidence. The Court directed the Revenue to act on the Tribunal's direction for the assessment year 2004-05, emphasizing the need for timely refund of tax. The Court acknowledged the inadvertent oversight in showing the liability of Rs. 17.50 lacs and agreed that the Tribunal's assumption about the unauthorized use of Mr. Amitabh Bachchan's pictures lacked substantial evidence.

In conclusion, the appeal was disposed of with the Court broadly agreeing with the Tribunal's decisions, while emphasizing the need for the Revenue to comply with the directions regarding tax refunds and addressing the liability issues in a timely manner.