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TMI Blog2012 (5) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... ed income movie-wise and the basis of addition is that the film distributor namely, Sri.P.D.Abraham of Swargachitra Films for whom assessee produced the film, has accounted payment of higher amount than what is shown as received by the assessee in his books of accounts. - held that:- The assumption by the C.I.T.(Appeals) as well as by the Tribunal that without the confirmation statement by the assessees undisclosed income cannot be assessed based on evidence gathered on search is wholly unrealistic and contrary to statutory scheme for assessment of undisclosed income under Chapter XIV B of the Act. We, therefore, set aside the order of the Tribunal and that of the first appellate authority and restore the addition of Rs.10 lakhs being the undisclosed income from the film "Manathevellitheru". Regarding addition of Rs. 10 lakhs - held that:- The first appellate authority as well as the Tribunal deleted the addition by stating that assessee has not given statement to corroborate the unaccounted income. We do not know what more evidence is required other than the clandestine account received from the assessee - Decided in favor of revenue. No other ground raised by the Revenue gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he first appellate authority. It is against this order of the Tribunal, Revenue is in appeal before us. We have heard Senior counsel Sri.P.K.R.Menon appearing for the Revenue and Adv. Sri.Arun Raj appearing for the respondent- assessee. 3. The Revenue has challenged the deletion of entire additions made by the first appellate authority which are sustained by the Tribunal. Specific questions are raised with reference to each and every addition deleted by the Tribunal and the entire order of the Tribunal is challenged by raising a general question with reference to presumption available on the correctness of contents of books of accounts, documents etc. recovered during the course of search and also based on the evidentiary value of statements recorded under Section 132(4) of the Act. 4. Before proceeding to consider the various questions raised in the appeal, we have to consider the preliminary objection raised by the learned counsel for the respondent that no substantial question of law arises for consideration by this court with regard to the concurrent findings on fact recorded by the first appellate authority and confirmed by the Tribunal. Senior counsel appearing for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... find force in this contention because when block assessment of any item is made based on evidence collected in the course of search, the assessment under Section 158BC read with Section 158BD is supported by statutory provision namely, Section 158BB of the Act. The Tribunal cannot cancel the assessment of undisclosed income if the same is based on tenable and acceptable evidence recovered in the course of search and which is not disproved by the assessee. Keeping this in mind we proceed to consider the appeal on the various grounds raised and the questions raised with reference to specific additions. 5. It is seen from the assessment order that the Assessing Officer computed undisclosed income movie-wise and the basis of addition is that the film distributor namely, Sri.P.D.Abraham of Swargachitra Films for whom assessee produced the film, has accounted payment of higher amount than what is shown as received by the assessee in his books of accounts. The Assessing Officer has relied on the accounts seized, evidence collected from the film distributor namely, Sri.P.D.Abraham and the statements recorded from him and compared the same with the receipts recorded in the accounts of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s drawn by them therefrom. We, therefore, confine our consideration only in respect of items of undisclosed income deleted by the Tribunal assessed based on concrete and reliable documentary evidence received in the course of search and corroboratory statements given by the assessee and the distributor in their sworn statements which were ignored by the Tribunal by stating that assessee has not admitted it. In other words we propose to correct only fundamental errors committed by the Tribunal ignoring the scope of Section 158BB of the Act. 7. The first addition which we feel deserves to be considered is the addition of Rs.10 lakhs being the undisclosed income received by the assessee from the film "Manathevellitheru". Admittedly the major finance for this film which is produced by the assesssee for the distributor Sri.P.D.Abraham was provided by the said distributor. As per the accounts produced by assessee, only Rs.65 lakhs was credited to the account of Sri.Abraham. However, the realisation statement recovered from the assessee's premises in search shows that assessee had received Rs.85 lakhs from the distributor namely, Sri.Abraham. The records seized from the assessee revea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sidered. The assumption by the C.I.T.(Appeals) as well as by the Tribunal that without the confirmation statement by the assessees undisclosed income cannot be assessed based on evidence gathered on search is wholly unrealistic and contrary to statutory scheme for assessment of undisclosed income under Chapter XIV B of the Act. We, therefore, set aside the order of the Tribunal and that of the first appellate authority and restore the addition of Rs.10 lakhs being the undisclosed income from the film "Manathevellitheru". 8. The next issue relates to the addition of Rs.10 lakhs deleted by the first appellate authority as well as the Tribunal which is the undisclosed income determined by the Assessing Officer from the film "No.1 Snehatheeram Bangalore North". We notice that the facts pertaining to this addition is exactly similar to the facts stated above with regard to assessment of undisclosed income from the other film. As in the other case the film was produced for Sri.P.D.Abraham @ Appachan. As per the Profit and Loss Account the assessee disclosed an advance of Rs.66 lakhs from the distributor. However, it was seen from the realisation statement recovered from the assessee's ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t appellate authority as well as Tribunal is that the said income deserves to be excluded as the time for filing return for the assessment year 1997-98 was not over as on the date of search. We, therefore, do not find any ground to interfere with the Tribunal's order on this issue. The next effective ground that deserves to be considered is the addition of Rs.2,20959/- for the assessment year 1994-95 and Rs.62,611/- for the assessment year 1995-96 being the extra income received for the film "Pappayude Sontham Appoose". Since the amount involved for 1995-96 is very small, we do not propose to consider the same. However, the addition of Rs.2,20,959/- for 1994-95 deserves to be considered because evidence available by way of realisation statement clearly establish undisclosed income received by the assessee. The clear finding is that the realisation statement recovered from the assessee's premises with the same date showed recovery of Rs.1,26,61,856/- and Rs.1,72,87,353/-. Even though both realisation statements dated 30.9.1996 disclose realisation amounts substantially different leaving a margin of around Rs.56 lakhs, the assessee could not explain as to which is the correct one. Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctions particularly in sale of property, in film industry and the like atleast for payments over a certain limit in cash, black money generation and circulation cannot be controlled because the disincentives on cash dealings contained under the various provisions of the Income Tax Act have failed to achieve the objective. Further, by prohibiting use of cash in major transactions terror and mafia funding and corruption could be arrested to a large extent. Above all, the worst enemy of our economy that is, circulation of high denomination counterfeit currencies presently estimated over Rs.7000/- crores could be prevented to a large extent. Unfortunately, the response of the Central Finance Ministry is not at all encouraging in as much as Government wants status quo to continue to the detriment of the interest of the country and the people as a whole. Our limitation while exercising appellate jurisdiction under Section 260A of the Act inhibit us from initiating any proceedings or issuing direction against the Central Government. However, we express our anguish towards the attitude of the Central Government to have created and allowed this vicious situation to continue. - - TaxTMI ..... X X X X Extracts X X X X X X X X Extracts X X X X
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