9911796707
TMI Blog1985 (3) TMI 93X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of Rs. 15,03,090 only as income under s. 69 of the Act. The amount is represented by undated promissory notes/stamp receipts in the name of and for accounts as under: 1. M/s Kunal Chitra Rs. 40,000 2. M/s Sudarshan Chitra Rs. 50,640 3. M/s Khosla Enterprises Rs. 15,000 4. M/s Shaktiman Eterprises Rs. 1,07,500 5. M/s Asma Arts Rs. 1,35,050 6. M/s Em. Cr. Arts Rs. 3,15,950 7. M/s Punchhe Arts Rs. 1,14,000 8. M/s Eastern Films Rs. 7,25,000 The additions having been deleted by the CIT (A), the Department has come up in appeal. 2. It is contended that the CIT (A) was not justified in holding that the burden to prove that the assessee had made investment of the amounts represented by the undated promissory notes and undated stamp recepts during the financial year 1976-77 is on the Department, nor in holding that the assessee's explanation in respect thereof was satisfactory Sri D. M. Harish, the ld. counsel, for the assessee, has, on the other hand, strongly relied on the order of the CIT (A). 3. In order to appreciate the rival contentions, it is desirable to re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amp receipts have been found in the possession of the assessee in October/November, 1976. What does this plain fact establish? The Department's case is that this fact by itself establishes that the assessee had made investments represented by those promissory notices and receipts during the financial year 1976-77. On the other hand, it is the case of Shri Harish that that fact by itself establishes nothing. 5. On carefully considering the rival contentions in this regard we are of the view that both the parties before us have taken rather extreme stands. The correct position, according to us, is that the mere fact of possession of undated promissory notes and or undated stamp receipts is not a conclusive proof of either the investments made or the year of investment. It raises presumption of investment as promissory notes and or receipts are supposed to be executed for full consideration mentioned therein. However, there is not even a scope for presumption so far as the year of investment is concerned. In this connection, it is desirable to mention that the Departmental Representative had argued, besides referring to the provisions of s. 132 (4A) of the Act, that the facts being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plicable in this case and addition therefore required to be deleted. 6. It may not be out of place to mention that the Department's case rests entirely on the applicability or non-applicability of s. 69. We have already held that the condition precedent for the application of s. 69 is not satisfied in this case and therefore, the deletion of whole of Rs. 15,03,090 by the CIT (A) is fully justified. In the view we have taken strictly speaking it is not necessary for us to consider the assessee's explanation on merit. Since, however, the arguments were advanced and the CIT (A) has considered it, propose to briefly deal with it. 7. As stated earlier, during the course of the searches in the months of October-November, 1976, in the office and residential premises of the assessee, a number of documents, such as, financing agreements with the producers, undated promissory notes and undated stamped receipts were seized. It may not be out of place to mention that the assessee's case throughout has been that he had no financial commitments with the respective film producers except those which were referable to the agreements seized. In fact, there has not been even a suggestion from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and circumstances by the CIT (A) as well as his conclusion that the assessee could not have advanced any money to the respective film producers during the financial year. Before we conclude this part of the order, we consider it desirable to refer to the cases of two film producers which involve comparatively large amounts, namely, (i) EM CE R films Rs. 3,15,950 and (ii) Eastern Films Rs. 7,25,000. We will, first, take up the case of EM CE R films. The assessee contracted to finance this film producer under three agreements dt. 24th Oct., 1969, 15th July 1970 and 12th May, 1971 to the extent of Rs. 2,00,000, Rs. 3,00,000 and Rs. 3,00,000 respectively. The actual amount advanced upto 29th July, 1972 has been Rs. 2,98,050. Undated pronotes seized have been of the value of Rs. 5,54,000 and dated pronotes have been of the value of Rs. 60,000. The ITO has added a sum of Rs. 3,15,950 as the assessee's income under s. 69 of the Act, being the excess of the value of the promotes (both dated and undated) over the actual amount advanced. The CIT (Appeals) has passed a very brief order in this regard. There is no other material on record. We have already held that the burden is on the Reven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... si' on 16th Oct., 1974. He has also found that the seized material contained two letters. dt. 9th June, 1975. one is the letter by Shri Harmesh Malhotra addressed to the assessee in connection with the picture 'Phansi' and the other letter is addressed by the assessee to Messrs Film Centre in connection with the same picture. We are in agreement with the CIT (A) that these two letters laid down the extreme limit beyond which no finance could have been advanced by the assessee to Shri Harmesh Malhotra or Messrs Eeastern Films. For this and other reasons given by the CIT (A) in paras 15 to 18 of his order, we accept that no only no amount was advanced by the assessee in terms of the undated receipts in favour of Emgee films and Eastern Films but also that no amount could, possibly, have been advanced by the assessee to Messrs Eastern Films during the financial year 1976-77. Accordingly, we further hold that the addition was justifiably deleted. 10. This takes us to the addition of Rs. 3,05,000 representing cash credits in the books of the assessee. The ITO noted that a number of cash credits (numbering eight) were entered in the cash book of the assessee in pencil and that neither ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
