DCIT CEN CIR 22, MUMBAI v. RANI RAM MUKHERJI, MUMBAI

ITSSA 93/MUM/2008 | misc
Pronouncement Date: 07-01-2010 | Result: Partly Allowed

Appeal Details

RSA Number 9319916 RSA 2008
Assessee PAN AALPM8973B
Bench Mumbai
Appeal Number ITSSA 93/MUM/2008
Duration Of Justice 1 year(s) 4 month(s) 12 day(s)
Appellant DCIT CEN CIR 22, MUMBAI
Respondent RANI RAM MUKHERJI, MUMBAI
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 07-01-2010
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted D
Tribunal Order Date 07-01-2010
Date Of Final Hearing 27-11-2009
Next Hearing Date 27-11-2009
Assessment Year misc
Appeal Filed On 25-08-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D MUMBAI BEFORE SHRI SHRI T.R. SOOD A.M. AND SMT. ASHA VIJ AYARAGHAVAN J.M. I.T(SS) A. NO. 90/MUM/08 BLOCK ASSESSMENT : 1990-91 TO 2001-02 MS. RANI RAM MUKERJI 701 VIDYA APARTMENTS 7 TH FLOOR JANKI KUTIR CHURCH ROAD JUHU MUMBAI 400 049. PAN:AALPM 8973 B VS. THE DY. COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE 22 R.NO. 403 AAYAKAR BHAVAN M.K. RD. MUMBAI 400 020. (APPELLANT) (RESPONDENT) I.T(SS) A. NO. 93/MUM/08 BLOCK ASSESSMENT : 1990-91 TO 2001-02 THE DY. COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE 22 R.NO. 403 AAYAKAR BHAVAN M.K. RD. MUMBAI 400 020. VS. MS. RANI RAM MUKERJI 701 VIDYA APARTMENTS 7 TH FLOOR JANKI KUTIR CHURCH ROAD JUHU MUMBAI 400 049. PAN:AALPM 8973 B (APPELLANT) (RESPONDENT) ASSESSEE BY : S/SHRI B.V. JHAVERI KIRAN V. KAMA T & RAM MUKHERJEE REVENUE BY :: SHRI R.N. JHA O R D E R PER T.R. SOOD AM: THESE CROSS APPEALS FILED BY THE ASSESSEE AND TH E REVENUE ARE DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIO NER OF INCOME-TAX (APPEALS) CENTRAL-IV MUMBAI DATED 23.06.2008 FOR THE BLOCK ASSESSMENT YEARS 1990-91 TO 2201-02. SINCE THESE APPEALS WERE HEARD TOGETHER THEY ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER. ITA NO.90/MUM/2008 2. IN THIS APPEAL OF THE ASSESSEE DETAILED GROUNDS HAVE BEEN RAISED BUT AT THE TIME OF HEARING THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUES COULD BE TAKEN AS PER THE CHART FILED AT THE TIME OF HEARING. THE CHART SHOWS THAT THE FOLLOWING ISSUES ARE INVOLVED: ITA NOS.90 & 93/M/08 MS.RANI RAM MUKERJI 2 (I) CONFIRMATION OF ADDITION OF RS.99 000/- ON ACCOUNT OF PURCHASE OF AMPLIFIER AND SPEAKERS. (II) CONFIRMATION OF ADDITION OF RS. 2 81 716/- ON ACCOU NT OF RENOVATION EXPENSES FOR FLAT NO.305. (III) CONFIRMATION OF ADDITION AMOUNTING TO RS. 5 21 000/ - TOWARDS RENOVATION OF FLAT NOS.404 AND 405. (IV) CONFIRMATION OF ADDITION AMOUNTING TO RS. 17 000/- FOR PURCHASE OF FURNITURE ITEMS. (V) CONFIRMATION OF ADDITION OF RS.2 50 000/- ON ACCOU NT OF REMUNERATION RECEIVED FOR THE FILM BICHCHU. (VI) CONFIRMATION OF ADDITION OF RS.12 00 000/- FOR EXTR A REMUNERATION OF FILM CHORI CHORI CHUPKE CHUPKE (VII) CONFIRMATION OF ADDITION AMOUNTING TO RS.21 00 000/ - FOR THE FILM BUS ITNA SA KHWAB HAI. (VIII) LEVY OF INTEREST U/S. 158BFA OF THE ACT. (IX) LEVY OF SURCHARGE 3. THE ASSESSEE IS A CINE ARTISTE. A SEARCH WAS CON DUCTED IN HER PREMISES ON 26.09.2000 AND CASH JEWELLERY AND SOME INCRIMINATING DOCUMENTS WERE FOUND AND SEIZED. IN RESPONSE TO THE NOTICE U/S.158BC A BLOCK RETURN WAS FILED ON 24.4.2001 DECLARING AN UN DISCLOSED INCOME OF RS. 26 17 283/-. 4. GROUND NO. 1. AFTER HEARING BOTH THE PARTIES WE FIND THAT DURING THE SEARCH DOCUMENTS A-4 COPY OF THE DIARY WAS SEIZED AND PAGE NO.41 REFLECTED PURCHASE OF TV AMPLIFIER AND SPEAKERS ET C. ASSESSING OFFICER NOTICED THAT TOTAL PURCHASES OF THESE ITEMS COMES T O RS.4 30 000/- AND T.V. WAS SHOWN AT RS. 3 53 000/- AND AMPLIFIER AT RS.20 000/-. FURTHER FIVE SPEAKERS WITH STANDS WERE SHOWN AT RS. 57 000/- TOT ALING TO RS. 4 30 000/-. IN A QUERY REGARDING THE SOURCE OF THESE PURCHASES IT WAS SUBMITTED AS UNDER: THIS NOTING REGARDING TELEVISION PURCHASED ON 28.10.1999 FOR RS. 1 50 000/- AND DVD PLAYER ON 29. 10.1999 FOR RS. 30 000/- BY CHEQUES. LEDGER BOOK PAGE NO. 2 63 AND ITA NOS.90 & 93/M/08 MS.RANI RAM MUKERJI 3 295 RS. 1 51 000/- PAID FOR PURCHASE OF TELEVISION & ACCESSORIES DECLARED IN BLOCK ASSTT . 5. ASSESSING OFFICER OBSERVED THAT ASSESSEE HAS GIV EN EXPLANATION ONLY FOR RS. 3 31 000/- WHERE AS PER NOTINGS THE COST OF TV AND DVD ITSELF WAS RS.3 53 000/-. AFTER THAT THERE WAS NARRATION AS UN DER: BAL. 22 AMPLIFIER 20 77 5 BPL SPEAKER ------ WITH S TAND 57 99 ---- 77 6. ACCORDING TO THE ASSESSING OFFICER THE ABOVE CLEARL Y SHOWS THAT THE EXPENDITURE WAS INCURRED FOR RS. 4 30 000/- AND RS. 99 000/-WAS STILL OUTSTANDING FOR WHICH NO SOURCE WAS GIVEN AND THERE FORE ACCORDINGLY HE MADE ADDITION FOR RS. 99 000/- TOWARDS UNDISCLOSED INCOME. 7. BEFORE THE CIT(A) IT WAS MAINLY SUBMITTED THAT A O HAS FAILED TO SEE THE WORD BALANCE AGAINST THE AMOUNT OF RS.99 000 /- WHICH MEANS THE SUM OF RS. 99 000/- WAS STILL OUTSTANDING AND THERE FORE THE SAME COULD NOT BE ADDED TO THE INCOME OF THE ASSESSEE. LEARNED C IT(A) AFTER EXAMINING THE SUBMISSIONS WAS OF THE VIEW THAT NO PROOF FOR P AYMENT OF THE BALANCE SUM OF RS.99 000/- WAS FILED AND NO SUPPLIER WOULD KEEP THE AMOUNT OUTSTANDING THEREFORE HE CONFIRMED THE ADDITION. 8. BEFORE US THE LEARNED COUNSEL FRO THE ASSESSEE R EITERATED THE SUBMISSIONS MADE BEFORE THE CIT(A). HE ALSO REFERRE D TO PAGE 307 OF PAPER BOOK WHICH IS THE COPY OF THE DOCUMENT PAGE 41 (ANN EXURE A-4) AND POINTED OUT THAT AGAINST THE FIGURE 22 CLEARLY THE WORD BA LANCE IS MENTIONED WHICH MEANS THIS AMOUNT WAS OUTSTANDING. THOUGH THERE IS FURTHER NOTING FOR AMPLIFIER 20 AND 5 SPEAKERS WITH STAND 57 BUT THE TOTAL AMOUNT OF RS.99 000/- WAS OUTSTANDING AND THEREFORE THE SAME COULD NOT BE ADDED TOWARDS UNDISCLOSED INCOME WITHOUT ANY FURTHER MATE RIAL IN THIS REGARD. ITA NOS.90 & 93/M/08 MS.RANI RAM MUKERJI 4 9. ON THE OTHER HAND THE LEARNED DEPARTMENTAL REP RESENTATIVE STRONGLY SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES AND P OINTED OUT THAT NO PROOF REGARDING PAYMENT OF THE BALANCE AMOUNT OF RS.99 00 0/- HAS BEEN FURNISHED EVEN BEFORE US AND NO SUPPLIER WOULD KEEP THE BILLS PENDING FOR 9 YEARS AND THEREFORE ONLY ASSUMPTION IS THAT THE ASSESSEE MU ST HAVE PAID THE SAME IN CASH. 10. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFU LLY AND FIND FORCE IN THE SUBMISSION OF THE LEARNED DEPARTMENTAL REPRESEN TATIVE. THE PURCHASE OF TV DVD AMPLIFIER AND SPEAKERS IS NOT DENIED. THE AMOUNT OF PURCHASE IS ALSO NOT DENIED. THE ONLY ARGUMENT RAISED BEFORE US IS THAT MONEY WAS OUTSTANDING ON THE DATE OF SEARCH BUT THAT CANNOT B E ACCEPTED BECAUSE EVEN IF THE ASSESSEE HAS PAID THE MONEY LATER THE ASSES SEE SHOULD HAVE FILED SOME EVIDENCE REGARDING PAYMENT AFTER THE SEARCH. B UT EVEN BEFORE US NO SUCH PROOF HAS FILED WHICH ONLY SHOWS THAT THE AMOU NT MUST NOT HAVE BEEN PAID EVEN AT THE TIME OF SEARCH. THE DISCOVERY OF T V DVD AMPLIFIER ETC. ITSELF IS THE MATERIAL FOUND DURING THE SEARCH IN A DDITION TO ENTRIES IN DIARY AND THEREFORE THEREFORE THERE IS NO FURTHER NEED F OR ANY FURTHER MATERIAL FOR PROVING THIS BY THE REVENUE. IN THE CIRCUMSTANCES WE FIND NOTHING WRONG WITH THE ORDER OF THE CIT(A) AND CONFIRM THE SAME. 11. ISSUE NOS. 2 AND 3 OF THE ASSESSEES APPEAL AND GROUND NOS. 1(B) 1(C) AND 1(D) OF THE REVENUES APPEAL. THESE ISSUES ARE BEING TAKEN TOGETHER BECAUSE ALL THESE ISSUES RELATE TO BASICALLY RENOVA TION OF THE HOUSE. THE ASSESSEE IS THE OWNER OF 3 FLATS NOS.305 ADMEASURIN G ABOUT 680 SQ.FT. 404 AND 405 ADMEASURING ABOUT 1360 SQ. FT. IN SHAKTI BU ILDING WHERE SHE WAS RESIDING. SOME RENOVATION HAS BEEN CARRIED OUT IN T HESE FLATS AND VARIOUS DOCUMENTS WERE SEIZED DURING THE SEARCH IN RESPECT OF THE RENOVATIONS CARRIED OUT BY VARIOUS CONTRACTORS. ITA NOS.90 & 93/M/08 MS.RANI RAM MUKERJI 5 12. THE ISSUE REGARDING ADDITION OF RS. 2 81 716/-R AISED BY THE ASSESSEE PERTAINS TO RENOVATION OF FLAT NO.305 WHICH WAS CA RRIED OUT BY M/S. INDIGO CONSTRUCTIONS. THE BILL DATED 2.3.2000 FOR RS. 17 0 1 630/- WAS FOUND DURING THE SEARCH. IT SEEMS THAT CERTAIN DISPUTES WERE TH ERE IN RESPECT OF THE BILL AND ULTIMATELY THE SAME WAS EVALUATED BY ANOTHER AR CHITECT TO A VALUE OF RS. 14 40 716/-. ASSESSEE CONTENDED THAT SHE HAS PAID A SUM OF RS.13 33 573/- TO THE SAID FIRM AND ALL THE PAYMENTS WERE MADE BY CHEQUES EXCEPT FOR A SUM OF RS.30 000/- WHICH WAS PAID IN CASH. HOWEVER THE AO OBSERVED THAT TOTAL PAYMENTS OF RS.13 33 573/- INCLUDED THE PAYME NT OF RS.1 02 110/- TO JUST MARBLES ANOTHER SUM OF RS.75 000/- TO TOP AIM PROPERTIES AND ALSO A PAYMENT OF RS. 67 463/- FOR PURCHASE OF MISCELLANEO US MATERIALS. HE FURTHER OBSERVED THAT THESE AMOUNTS WERE NOT INCLUDED IN TH E BILLS RAISED BY M/S. INDIGO CONSTRUCTIONS AND TO WHOM ONLY PAYMENT TO T HE EXTENT OF RS.10 59 000/- WAS PROVED AND THEREFORE THE BALANCE WAS PAID OUT OF UNDISCLOSED INCOME AND HE MADE AN ADDITION OF RS. 2 81 716/- (RS.13 40 716 RS. 10 59 000). 13. BEFORE THE CIT(A) IT WAS SUBMITTED THAT INITIAL ESTIMATION MADE BY M/S. INDIGO CONSTRUCTION GAVE COST OF CIVIL WORK AT RS. 11 03 000/- AND BALANCE WAS FOR FURNITURE. SINCE A HIGHER AMOUNT OF BILL AMOUNTING TO RS. 17 01 630/- WAS RAISED THE SAME WAS EVALUATED BY AN OTHER INDEPENDENT ARCHITECT SHRI BHUPEN MISTRY. SINCE THE OTHER AMOUN TS PAID TO JUST MARBLES AND TOP AIM PROPERTIES ETC. WERE INCLUDED IN THE BI LLS OF M/S. INDIGO CONSTRUCTIONS WAS EVIDENCED BY THE FACT THAT SAID I TEMS WERE INCLUDED IN EVALUATION DONE BY THE INDEPENDENT ARCHITECT. IT WA S POINTED THAT IN RESPONSE TO THE SUMMONS ISSUED BY THE AO M/S. INDI GO CONSTRUCTIONS CONFIRMED THE PAYMENTS ONLY FOR A SUM OF RS. 10 59 000/- BY CHEQUE AND ITA NOS.90 & 93/M/08 MS.RANI RAM MUKERJI 6 FURTHER SUM OF RS. 30 000/-BY WAY OF CASH. HOWEVER CIT(A) DID NOT AGREE WITH THE SUBMISSIONS OF THE ASSESSEE AND CONFIRMED THE ADDITION. 14. THE ADDITION OF RS. 5 21 000/- WAS DISPUTED BY THE ASSESSEE. THIS ADDITION HAS BEEN DISCUSSED BY THE ASSESSING OFFICE R AT PAGE 18 IN WHICH IT IS STATED THAT THERE WAS CERTAIN NOTING ON PAGE 85 IN THE HANDWRITING OF SHRI RAM MUKHERJI FATHER OF THE ASSESSEE. THE NOTING HA S BEEN MADE ON THE FRONT AS WELL AS THE BACK SIDE OF THE PAPER. THESE NOTINGS ARE AS UNDER: FRONT SIDE OF PAGE NO. 85: 85560 267400 3 30 000 3 60 000 -------------- 8 42 960 ------------- 1 50 000 ------------- 9 92 960 CH 2 49 000 ------------ 12 41 960 51 000 ------------- 12 92 960 2 00 001 ------------- 14 92 96 0 BACK SIDE OF PAGE NO. 85 88560/- JUST MARBLES 13 550/- JUST MARBLES (102 110) 67 400/- TOP A.M. PROPERTIES PVT. LTD . 8 600/- (76 000) 6 00 000/- INDIGO CONSTRUCTION 3 60 000/- CHEQUE 27 17 99 CH. 1/50 FURTHER DETAILS REGARDING PAYMENTS HAVE ALSO BEEN E XTRACTED WHICH ARE AS UNDER: MARBLE 85 560 + SALES TAX 24/11 636400 + 24/11 ITA NOS.90 & 93/M/08 MS.RANI RAM MUKERJI 7 3 30 000 6/11 CH. 3/- 3 60 000 24/11 CH. 4 50 000 27/12 CH. 2 49 000 10/1/200 CH 51 00 CASH 2 00 000 C ASH ----------- 14 92 960 ------------ 15. ACCORDING TO THE ASSESSING OFFICER SINCE ALL TH ESE ENTRIES TALLY WITH THE DETAILS OF CHEQUES AS WELL AS CASH HAVE BEEN GIVEN AND NO SOURCE FOR CASH WAS EXPLAINED. FURTHER NO REPLY WAS GIVEN IN RESPO NSE TO THE QUERIES IN THIS REGARD AND THEREFORE ULTIMATELY THE ADDITION WAS MADE VIDE PARA 7.5 4.4 WHICH READS AS UNDER: 7.5.4.4 ONE WILL OBSERVE FROM THE REPLY OF THE ASS ESSEE THAT SHE IS COMPLETELY SILENT ABOUT THE PAYMENT OF RS.2 LAKHS MADE BY7 WAY OF CASH. IT SEEMS THAT SHE DELIBERATELY AV OIDED THE REPLY BECAUSE SHE HAS NO REPLY AND SHE HAS NO EXPLA NATION TO PROVE THE SOURCE OF RS. 2 LAKHS PAID BY WAY OF CAHS . AS REGARDS THE BALANCE AMOUNT OF RS. 81 000/- PAID BY WAY OF CASH SHE HAS PROMPTLY REPLIED STATING THAT THE SAM E HAS BEEN DECLARED IN THE BLOCK RETURN OF INCOME FILED. IF TH E PAYMENT OF RS. 81 000/- MADE BY WAY OF CASH IS GENUINE THEN P AY7MENT OF RS. 2 LAKHS BY WAY OF CASH IS ALSO GENUINE. THER E ARE NO TWO WAYS FOR THESE PAYMENTS. SINCE THIS AMONT OF RS. 2 LAKHS HAS BEEN PAID FROM UNDISCLOSED INCOME SHE HAS DELIBERA TELY NOT FILED ANY REPLY. IT IS THEREFORE ESTABLISHED THAT SHE HAS PAID RS. 2 LAKHS IN CASH FOR THE RENOVATION WORK DONE WH ICH IS CLEARLY MENTIONED ON PAGE NO. 85 & 89. THE SAME IS ADDED IN THE UNDISCLOSED INCOME OF THE ASSESSEE FOR THE F.Y. 1999-2000. FURTHER AT THE BACKSIDE OF PAGE 85 THERE ARE NOTI NGS RELATED FOR THE PAYMENTS MADE TO A CONTRACTOR WHEREIN AGAIN ST NOTING OF THE RS.6 00 000/- IT IS STATED THAT RS. 3 60 000 /- WAS PAID BY CHEQUE. DEFINITELY THE BALANCE AMOUNT OF RS. 2 40 000/- WAS PAID IN CASH. AS THE ASSESSEE HGAS NOT BEEN ABLE TO EXPLAIN THE SOURCE OF THIS EXPENDITURE I HAVE NO OPTION BUT TO TREAT IT AS UNEXPLAINED AND HENCE THE TOTAL AMOUNT OF CASH PAY MENT OF RS. 5 21 000/- IS BEING ADDED AS UNDISCLOSED INCOME OF THE ASSESSEE FOR F.Y. 1999-2000 RELEVANT TO ASSESSMENT YEAR 2000- 2001. 16. BEFORE THE CIT(A) IT WAS SUBMITTED THAT IT WAS EXPLAINED VIDE LETTER DATED 18.12.2001 THAT THE SUM OF RS. 2 LAKHS WAS PA ID IN CASH AND THE SAME ITA NOS.90 & 93/M/08 MS.RANI RAM MUKERJI 8 WAS ALREADY ACCOUNTED FOR IN THE BOOKS OF ACCOUNT. IN RESPECT OF THE ADDITION OF RS. 2 40 000/- IT WAS STATED THAT ASSESSEE HAD P AID A SUM OF RS. 3 60 000/- AGAINST THE WORK DONE OF RS. 6 LAKHS BY SETTLING THE AMOUNT BY A LOWER FIGURE. LEARNED CIT(A) AFTER EXAMINING THE SU BMISSIONS WAS NOT SATISFIED AND OBSERVED THAT DIRECT EVIDENCE IN RESP ECT OF PAYMENT WAS FOUND. THEREFORE THE ADDITION WAS JUSTIFIED. 17. ISSUE NO.3 REGARDING DELETION OF ADDITION AMOUN TING TO RS. 8 68 230/- CHALLENGED BY THE REVENUE. IT WAS OBSERVED BY THE A O THAT RENOVATION AND DECORATION WAS ALSO CARRIED OUT IN FLAT NO.404 AND 405 AND THE PAYMENTS WERE MADE TO M/S. INDIGO CONSTRUCTIONS WHO HAVE SUB MITTED TWO BILLS DATED 12.12.1999 AND ONE BILL WAS FOR RS. 6 50 230/- AND ANOTHER FOR RS. 7 68 000/-. THOUGH THE SECOND BILL MENTIONS ABOUT T HE AGREED PAYMENT OF RS.5 25 000/- PLUS THE ADDITIONAL AMOUNT OF RS. 2 4 3 000/- TOTALING TO RS. 7 68 000/-. HOWEVER THE AO TOOK BOTH THESE BILLS TOGETHER I.E. BILLS FOR RS.6 50 230/- + RS.7 68 000/- TOTALING TO RS. 14 18 .230/- AND GAVE CREDIT OF RS. 5 50 000/- ACCEPTING THE SOURCE OF PAYMENT A ND MADE ADDITION FOR THE BALANCE AMOUNT OF RS. 8 68 230/-. 18. BEFORE THE CIT(A) IT WAS ARGUED THAT M/S. INDI GO CONSTRUCTION HAD AGREED TO THE RENOVATION OF COMMON LIVING ROOM OF F LAT NO. 404 AND 405 FOR CONSIDERATION OF RS.5 25 000/- WHICH WAS LATER ON INCREASED BY RS. 2 43 000/- FOR ADDITIONAL WORK AND THEREFORE TOTAL WORK TO RS.7 68 000. OUT OF THIS THEY HAD REFLECTED THE PAYMENT OF RS. 5 00 000/- AND THEREFORE THE BALANCE AMOUNT SHOWN AT RS.2 68 000/- AND THESE TRA NSACTIONS WERE REFLECTED AT PAGE 81. IT WAS FURTHER SUBMITTED THA T ORIGINAL BILL OF RS. 7 68 000/- WAS REDUCED TO RS. 6 50 230/- AND THE SO URCE OF PAYMENT FOR RS. 5 50 000/- WERE MADE IN CASH. THE LEARNED CIT(A) DE LETED THE ADDITION VIDE PARA 41 WHICH READS AS UNDER: ITA NOS.90 & 93/M/08 MS.RANI RAM MUKERJI 9 I HAVE CAREFULLY CONSIDERED THE FINDINGS AND CONCL USIONS OF THE AO AS WELL AS THE DETAILED SUBMISSIONS OF THE APPE LLANT. I HAVE ALSO PERUSED THE PHOTOCOPIES OF THE RELEVANT SEIZED MATERIALS I.E. PAGES 81 & 83 OF ANNEXURE A-3. MY OBSERVATIONS IN T HIS REGARD ARE AS UNDER: A COMPARISON OF THESE TWO PAGES WHICH WERE THE BILL S RAISED BY M/S. INDIGO CONSTRUCTIONS SHOW THAT BOTH THESE BILLS HA D THE SAME DATE I.E. 12.12.99 THE SAME REFERENCE NUMBER I.E. AA11550 AN D THE SAME SUBJECT MATTER I.E. FLAT NO. 404/405 AT SHAKTI APA RTMENTS YARI ROAD. MOREOVER THE BILL RAISED FOR RS. 7 68 000/- CONTAI NED DETAILS AND BREAK UP OF ONLY THE ADDITIONAL WORK DONE FOR THE SUM OF RS. 2 43 000/- WHICH WAS IN ADDITION TO THE COST OF RS. 5 25 000/- WHICH HAD ALREADY BEEN AGREED UPON EARLIER BETWEEN THE TWO PARTIES. T HIS AGREED COST WAS CLEARLY NOTED ON THE BILL. EVEN THEN AT LEAST TWO ITEMS OF THE ADDITIONAL WORK DONE WERE ALSO REFLECTED ON THE BI LL FOR THE SUM OF RS.6 505 230/- WHICH ACCORDING TO THE APPELLANT WA S THE FINAL BILL RAISED BY M/S. INDIGO CONSTRUCTIONS. THIS CLEARLY I NDICATED AND SUBSTANTIATED THE APPELLANTS CONTENTIONS THAT BOTH THE BILLS WERE IN FACT FOR THE SAME WORK DONE IN THE SAME FLATS AND DID NO T REPRESENT TWO DIFFERENT BILLS FOR SEPARATE TYPES OF WORK DONE BY THE CONTRACTOR. IN THIS CONTEXT IT MUST BE NOTED THAT THE AO HAD NO MATERIAL EVIDENCE FOR TAKING THE VIEW THAT BOTH THESE BILLS WERE SEPARATE . HENCE THE TOTAL COST OF THE RENOVATION OF THE SAID FLATS AMOUNTED T O RS. 14 18 230/-. 19. THE FOURTH ISSUE REGARDING DELETION OF ADDITION ON ACCOUNT OF RENOVATION EXPENDITURE AMOUNTING TO RS. 4 98 680/- IN FLAT NO. 305. THE ASSESSING OFFICER REFERRED TO PAGE 41 OF ANNEXURE A -3 AND OBSERVED THAT VALUE OF CIVIL WORKS CARRIED OUT SHOWN AT THIS PAGE WAS RS. 4 98 680/-. ASSESSEE SUBMITTED THAT THESE WERE ONLY ESTIMATES A ND NO AMOUNT WAS SPENT. HOWEVER THE AO OBSERVED THAT FROM THE DETA ILS OF THE QUOTATIONS ESTIMATES GIVEN BY THE ARCHITECT ETC. NO ESTIMATE OF THIS AMOUNT WAS SHOWN AND ASSESSEE MUST HAVE SPENT THIS MONEY AND ACCORDI NGLY HE ADDED THIS SUM TO THE UNDISCLOSED INCOME OF THE ASSESSEE. 20. BEFORE THE CIT(A) IT WAS MAINLY SUBMITTED THA T PAGE 41 WAS BASICALLY AN INTERIM BILL OF M/S. INDIGO CONSTRUCTI ON. IT WAS POINTED OUT THAT THE WORK MENTIONED IN THE SAID BILL WAS IN RESPECT OF FLAT NO. 404/405 WHICH IS COVERED ULTIMATELY BY THE FINAL BILL OF RS. 6 50 230/- VIDE BILL DATED 12.12.2009 FOR WHICH THE ASSESSING OFFICER HAD MADE SEPARATE ADDITION. IT WAS POINTED OUT THAT THIS COULD BE VERIFIED BY COMP ARING A NOTING ON PAGE 41 ITA NOS.90 & 93/M/08 MS.RANI RAM MUKERJI 10 WITH THOSE OF PAGES 42 AND 43. THE LEARNED CIT(A) AFTER VERIFYING THE NOTINGS OBSERVED THAT THE NOTINGS WERE VERY SKETCHY AND CRYPTIC AND WERE IMPOSSIBLE TO DECIPHER. IT WAS ALSO OBSERVED THAT IN THIS BACKGROUND THERE WAS NO MENTION OF M/S. INDIGO CONSTRUCTION. HE OBS ERVED THAT THE TYPE OF CIVIL WORK MENTIONED IN THIS PAGE APPEARS TO HAVE T HE SAME JOB WORK DONE BY M/S. INDIGO CONSTRUCTION WHICH WAS REFLECTED IN THE IR BILL DATED 12.12.1999 AND ACCORDINGLY HE DELETED THE SAID ADDITION. 21. DELETION OF ADDITION AMOUNTING TO RS. 5 LAKHS O N ACCOUNT OF RENOVATION EXPENDITURE CHALLENGED BY THE REVENUE. T HE ASSESSING OFFICER OBSERVED THAT ON A SMALL SHEET OF YELLOW SHEET PAP ER MARKED/IDENTIFIED AS PAGE NO. 42 OF ANNEXURE A-3 CONTAINED NOTINGS REGAR DING CERTAIN CIVIL WORK DONE/TO BE DONE THE COST OF WHICH WAS SHOWN AT RS. 4 35 000/- AND AN ADDITIONAL AMOUNT OF RS. 5 25 000/-. PAGE NO. 43 OF THE SAME ANNEXURE WAS ALSO A SMALL YELLOW SHEET OF PAPER CONTAINING NOTIN GS REGARDING CERTAIN PAYMENTS OF RS. 16 000/- RS.26 500/- RS. 8 500/- RS. 12 000/- RS. 25 000/- AND RS. 10 000/-. AGAINST THESE FIGURES TH ERE WAS A NOTING STATING THAT THESE PAYMENTS WERE INCLUDED IN A PAYMENT OF R S. 5 00 000/-. ACROSS THE PAGE THERE WAS ALSO A NOTING STATING THAT A SU M OF RS. 98 000/- WAS ALSO INCLUDED IN THE PAYMENT OF RS. 5 50 000/-. ON ENQUI RY IT WAS MAINLY ARGUED THAT THESE NOTINGS REPRESENTED ONLY ESTIMATES OF CO ST OF RENOVATION AND THESE ITEMS ARE ULTIMATELY REFLECTED IN THE BILLS ISSUED BY M/S. INDIGO CONSTRUCTIONS FOR WHICH THE PAYMENT OF RS. 5 50 000/- WAS MADE BY THE ASSESSEE THROUGH CHEQUES. ASSESSING OFFICER DID NOT ACCEPT THIS EXPL ANATION AND ULTIMATELY MADE AN ADDITION OF RS. 5 LAKHS. 22. BEFORE THE CIT(A) IT WAS MAINLY SUBMITTED THAT THESE PAYMENTS WERE INCLUDED IN THE OTHER PAYMENTS AND THEREFORE SEPARA TE ADDITION COULD NOT BE ITA NOS.90 & 93/M/08 MS.RANI RAM MUKERJI 11 MAINTAINED. THE LEARNED CIT(A) DELETED THIS ADDITIO N VIDE PARA 51 52 AND 53 OF HIS ORDER WHICH ARE AS UNDER: SCRUTINY OF THE CONTENTS OF PAGE 43 OF ANNEXURE A- 3 WOULD REVEAL THE FOLLOWING: 1. RS.16 000/- ALREADY INCLUDED IN REC. IN 5 LAKHS PAYMENT. 2. INCLUDE SLIDING 26 500/- CEILING - 8 500 ) IN 5 LAKHS PAINTING 12 000 ) 3. ALREADY PAID RS.25 000/- IN 5 LAKHS 4. ALREADY PAID RS. 10 000/- IN 5 LAKHS 5. NEW ITEM TO BE PAID 6. THE NEW ITEM TO BE PAID TOTAL 98 000/- INCLUDED IN 5/50. OUT OF THE SIX NOTINGS WITH REGARD TO PAYMENTS FOR DIFFERENT ITEMS THE FIRST FOUR HAD THE WORDS ALREADY AND INCLUDED W HICH MEANT THAT THE PAYMENTS FOR THE SAID ITEM HAD BEEN EITHER ALRE ADY PAID OR HAD ALREADY BEEN INCLUDED IN AN EARLIER PAYMENT OF RS.5 0 000/- AGAINST THE BILL RAISED BY THE CIVIL CONTRACTOR. ONLY THE I TEMS AT SERIAL NUMBERS 5 AND 6 REMAINED TO BE PAID. THE LAST LINE AT THE B OTTOM OF THE NOTINGS CLEARLY INDICATED THAT THE TOTAL OF THE A MOUNTS ALREADY PAID OR INCLUDED IN EARLIER BILLS WAS RS.98 000/- AND T HIS WAS INCLUDED IN THE PAYMENT OF RS. 5 50 000/-. AT THIS POINT IT IS NECESSARY TO GO BACK TO THE ISSUE DISCUSSED IN THE SEVENTH GROUND OF APP EAL CONCERNING THE PAYMENTS MADE TO M/S. INDIGO CONSTRUCTIONS FOR THE RENOVATION OF FLAT NOS. 404/405. IN PARA 7.4.2.1 OF THE ASSESSMENT ORD ER (PAGE 15) IT HAD BEEN NOTED BY THE AO THAT THE APPELLANT HAD PAI D A TOTAL SUM OF RS. 5 50 000/- THROUGH THREE CHEQUES. THIS WAS ALSO 0 INDICATED ON PAGE 81 OF ANNEXURE A-3 WHERE IT WAS NOTED THAT M /S. INDIGO CONSTRUCTIONS HAD RECEIVED A PAYMENT OF RS. 5 00 00 0/- FROM THE APPELLANT AND FURTHER SUMS OF RS. 50 000/- EACH WER E PAID ON TWO ITA NOS.90 & 93/M/08 MS.RANI RAM MUKERJI 12 OCCASIONS WHICH TOOK THE TOTAL PAYMENTS MADE BY THE APPELLANT TO THE SAID FIRM TO RS. 5 00 000/- + RS.50 000 + RS.50 000 = RS.6 00 000/-.THEREFORE IT WAS CLEAR FROM THE NOTI NGS ON PAGE 43 THAT THE SUMS MENTIONED THEREIN HAD ALREADY BEEN IN CLUDED IN THE PAYMENT OF RS.500 000/- MADE BY THE APPELLANT IN TH E FIRST INSTANCE. THE TOTAL SUM OF RS.98 000/- HAD BEEN INCLUDED IN T HE PAYMENT OF RS. 5 50 000/- MADE BY THE APPELLANT TILL THAT POINT OF TIME. IN FACT IT MAY BE RECOLLECTED THAT IT WAS ON THE BASIS OF THESE NO TINGS BY THE APPELLANTS FATHER SHRI RAM MUKERJI THAT M/S.INDI GO CONSTRUCTIONS HAS RECTIFIED THE ORIGINAL BILL SO THAT THE FINAL A MOUNT HAD BEEN SCALED DOWN FROM RS.7 68 000/- (PAGE 81 OF ANNEXURE A-3) T O RS . 6 50 230/- (PATE 83 OF ANNEXURE A-3). 52. THE AO MADE AN ADDITION OF RS. 5 00 000/-. HOWE VER HE DID NOT CLARIFY AS TO HOW AND WHERE FROM HE ARRIVED AT THIS FIGURE ESPECIALLY IF HE WAS RELYING ON THE TWO PIECES OF PAGER AT PAGES 42 & 43 OF ANNEXURE A-3. THE AO OBSERVED IN THE ASSTT. ORDER T HAT THE APPELLANT HAD CLAIMED TO HAVE SETTLED THE BILLS OF M/S. INDIG O CONSTRUCTIONS BY THE PAYMENT OF RS. 3 00 000/-. THE APPELLANT HAS DE NIED THE CONTENTION OF THE AO. A CLOSE LOOK AT THE SUBMISSI ON OF THE APPELLANT MADE AS PER LETTER DATED 9.4.2002 AND REPRODUCED O N PAGE 17 OF THE ASSESSMENT ORDER SHOWS THAT THE APPELLANT HAD SUBMI TTED BEFORE THE AO THAT AFTER DETECTING THE MISTAKE IN THE INTERIM BILL WHEREBY THE SUM OF RS. 98 000/- HAD BEEN DOUBLY CHARGED THE AM OUNT WHICH WAS PAYABLE AFTER DEDUCTING THE SAID AMOUNT WAS RS.4 00 000/-. AGAINST THIS THE APPELLANT HAD PAID ON ACCOUNT AN AMOUNT OF RS. 3 00 000/- BY CHEQUE. BY NO STRETCH OF IMAGINATION COULD THE S TATEMENT OF APPELLANT BE CONSTRUED THAT THE APPELLANT SETTLED THE CLAIM OF M/S. INDIGO CONSTRUCTIONS. 53. THE AO RELIED UPON A PAPER WITH ROUGH NOTINGS WITHOUT ANY CORROBORATIVE EVIDENCE. THEREFORE I DIRECT THE AO TO DELETE THE ADDITION OF THE SUM OF RS.5 00 000/-. ITA NOS.90 & 93/M/08 MS.RANI RAM MUKERJI 13 23. BOTH THE PARTIES ARGUED THIS ISSUE OF RENOVATIO N EXPENSES AND VARIOUS ADDITIONS DETAILED ABOVE AT LENGTH WITH REFERENCE T O THE VARIOUS DOCUMENTS. 24. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFU LLY. WE HAVE ALSO PERUSED VARIOUS DOCUMENTS COPIES OF WHICH ARE AT P AGES 310 TO 330 OF THE PAPER BOOK. THERE DEFINITELY SEEM TO BE SOME OVER LAPPING IN THE SENSE THAT ITEMS OF WORK HAVE BEEN INCLUDED IN ONE BILL AND T HE SAME ARE AGAIN INCLUDED IN THE NEXT BILL. AO HAS MADE ADDITIONS MA INLY ON THE BASIS OF INDIVIDUAL LOOSE SHEETS. NO DEFINITE CONCLUSION CA N BE ARRIVED AT ON THE ONE SIDE OR THE OTHER. THEREFORE CONSIDERING ALL THE D OCUMENTS AVAILABLE AS WELL AS OVER ALL CIRCUMSTANCES OF THE CASE AND KEEPING THE STATUS OF THE ASSESSEE IN VIEW WE PROPOSED TO ESTIMATE THE COST OF INTERI OR DECORATION AT RS.2000/- PER SQ. FT. FOR THE COMBINED AREA OF FLAT NOS. 404 AND 405 WAS TAKEN TO BE 1360 SQ. FT. AND AREA OF FLAT NO.305 WAS STATED TO BE 680 SQ..FT. AND THUS TOTAL AREA IS 2040 SQ. FT. THUS TOTAL COST OF INTE RIOR DECORATION WOULD BE APPROXIMATELY RS. 40 LAKHS. WE FURTHER FIND THAT AS SESSEE HAS ALREADY DECLARED INTERIOR DECORATION COST AT RS.34 84 082/- AS PER THE DETAILS AT PAGE 112 OF THE PAPER BOOK AS WELL AS THE DETAILS FILED BEFORE THE AO. ULTIMATELY WE PROPOSED AN ADDITION OF RS.5 LAKHS ON ACCOUNT UN DISCLOSED INVESTMENT IN INTERIOR DECORATION. THIS ADDITION WAS ACCEPTED BY THE LEARNED COUNSEL FOR THE ASSESSEE AS WELL AS THE FATHER OF THE ASSESSEE SHRI RAM MUKHERJI WHO WAS PRESENT IN THE COURT. THEREFORE WE SET ASIDE THE ORDER OF THE LEARNED CIT(A) IN RESPECT OF GROUND NO. II AND III RAISED I N THE ASSESSEES APPEAL AND GROUND NOS. 1(B) 1(C) 1(D) RAISED BY THE REVENUE AND DIRECT THE AO TO MAKE ADDITION OF RS. 5 LAKHS TOWARDS UNDISCLOSED INVESTM ENT MADE IN INTERIOR DECORATION. ITA NOS.90 & 93/M/08 MS.RANI RAM MUKERJI 14 25. NEXT ISSUE REGARDING ADDITION OF RS. 17 000/-. THIS ADDITION HAS BEEN MADE ON THE BASIS OF PAGE 14 OF ANNEXURE A-1 COPY OF WHICH IS PLACED AT PAGE 331 OF THE PAPER BOOK. THE DOCUMENT READS AS U NDER: SETTLED 33 000 15 000 ----------- 48 000 PAID ADV. 21 000 --------- DUE 27 000 --------- 25/6 10 000 --------- 17 000 NOW PD. 20 001/- 15/9/00 26. IN RESPONSE TO THE QUERY REGARDING THIS NOTIN G IT WAS SUBMITTED BY LETTER DATED 18.12.2001 AS UNDER: THIS IS A NOTING REGARDING PURCHASE OF FURNITURES RS. 10 000/- AND RS.21 000/- PAID DECLARED IN BLOCK ASSESSMENT. THE ASSESSING OFFICER NOTED THAT ASSESSEE HAD GIVE N EXPLANATION REGARDING THE PAYMENT BY CHEQUE BUT HAS NOT GIVEN A NY REPLY REGARDING PAYMENT OF CASH. ACCORDING TO THE ASSESSING OFFICER THE ASSESSEE HAD PURCHASED FURNITURE FOR RS. 48 000/- FOR WHICH SHE MADE PAYMENT OF RS. 21 000/- IN ADVANCE AND RS.10 000/- ON 25.6.2000. ACCORDING TO HIM THE BALANCE AMOUNT WAS ALSO PAID TO THE SUPPLIER FOR WH ICH DATE WAS NOT MENTIONED. SHE HAD DECLARED ONLY A SUM OF RS. 31 0 00/- AND THEREFORE ADDITION OF THE BALANCE AMOUNT OF RS. 17 000/- WAS MADE REGARDING UNDISCLOSED INVESTMENT FOR PURCHASE OF FURNITURE. 27. LEARNED CIT(A) CONFIRMED THE ADDITION BY OBSER VING THAT THE LEARNED COUNSEL HAS NOT SUBMITTED ANY EXPLANATION. 28. BEFORE US THE LEARNED COUNSEL FOR THE ASSESSEE REFERRED TO PAGE 331 OF THE PAPER BOOK AND SUBMITTED THAT TWO ITEMS OF F URNITURE WERE ORDERED AGGREGATING TO RS. 48 000/- FOR WHICH A SUM OF RS. 21 000/- WAS PAID IN ITA NOS.90 & 93/M/08 MS.RANI RAM MUKERJI 15 ADVANCE. FURTHER RS. 10 000/- WAS PAID ON 25.6.200 0 AND THE BALANCE OF RS. 17 000/- REMAINED TO BE PAID. SUBSEQUENTLY THE FU RNITURE WAS NOT FOUND SUITABLE AND THEREFORE SOME MODIFICATIONS WERE OR DERED WHICH INCREASED THE COST AND ULTIMATELY A SUM OF RS. 20 001/- WAS P AID BY CHEQUE ON 15.9.2000 WHICH WERE DULY RECORDED IN THE BOOKS. T HEREFORE IT IS WRONG TO SAY THEN THAT THERE WAS EXTRA PURCHASE OF FURNITURE AMOUNTING TO RS. 17 000/-. 29. ON THE OTHER HAND THE LEARNED DEPARTMENTAL REP RESENTATIVE STRONGLY SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 30. AFTER CONSIDERING THE RIVAL SUBMISSIONS CAREFU LLY WE FIND FORCE IN THE SUBMISSION OF THE LEARNED COUNSEL FOR THE ASSESSEE. THE SEIZED DOCUMENTS READ AS UNDER: SETTLED 33 000 15 000 ----------- 48 000 PAID ADV. 21 000 --------- DUE 27 000 --------- 25/6 10 000 --------- 17 000 NOW PD. 20 001/- 15/9/00 THE ABOVE DOCUMENT CLEARLY SHOWS THAT TWO ITEMS VI Z. MULTI UNIT SETTING AND BED ROOM CLOSE SET WERE ORDERED FOR RS. 48 000/- AGAINST WHICH A SUM OF RS. 21 000/- WAS PAID. THEN THE BALANCE FIGU RE HAS BEEN DRAWN AT RS. 27 000/- AGAINST WHICH PAYMENT OF RS. 10 000/- IS S HOWN ON 25.06.00 AND BALANCE IS SHOWN AT RS. 17 000/-. LATER ON ONLY ONE ADDITION IS THERE I.E. NOW PAID RS. 20 001/- ON 15.9.2000.. THEREFORE IT IS CLEAR THAT ASSESSEE MIGHT HAVE GOT THE ITEMS OF FURNITURE CHANGED AND M ADE ONE LUMP SUM PAYMENT BECAUSE THERE IS NO MENTION OF ANY ADDITION AL PURCHASE OF ANY OTHER ITEM. THEREFORE THE ADDITION SEEMS TO BE ONLY ON THE BASIS OF CONJECTURES ITA NOS.90 & 93/M/08 MS.RANI RAM MUKERJI 16 WHICH IS NOT POSSIBLE. ACCORDINGLY WE SET ASIDE TH E ORDER OF THE LEARNED CIT(A) AND DELETE THE ADDITION OF RS. 17 000/-. 31. THE NEXT ISSUE IS REGARDING ADDITION OF RS. 2 5 0 000/-. IN THIS REGARD THE ASSESSING OFFICER REFERRED TO PAGE 4 OF THE SEI ZED DIARY (ANNEXURE A-4) WHICH READS AS UNDER: GUDDU DHANOA BICHCHU BO BBY DEOL HERO CONTRACT AMT. 12 SIGNING 0. 5 RECD. FURTHER PD. 3.0 16/11/99 CH 2.50 10/4/2000 } THIS ENTRY IS CANCELLED 4.0 27/01/2000 2.50 10/4/2000 BALANCE TO RECEIVE 2 LAKHS RECD. CH.DT. 07/07/2000 ON 22/9 1 LAC. S IG. 32. THE ASSESSING OFFICER OBSERVED THAT ASSESSEE HA D ENTERED INTO A CONTRACT FOR DOING THE FILM BICHCHU FOR RS. 12 L AKHS AGAINST WHICH SIGNING AMOUNT OF RS. 0.5 LAKHS WERE RECEIVED. HE F URTHER OBSERVED THAT FURTHER PAYMENT OF RS. 3 LAKHS WAS RECEIVED ON 16.1 1.1999 BY CHEQUE AFTER WHICH THERE WAS A NOTING OF RS. 2.5 LAKHS WHICH HA S BEEN OBLITERATED. THERE WERE SUBSEQUENT ENTRIES REGARDING RECEIPT OF BALANC E PAYMENTS. WHEN ENQUIRY WAS MADE REGARDING OBLITERATION SHRI RAM M UKHERJEE STATED IN HIS STATEMENT RECORDED IN RESPONSE TO THE SUMMONS UNDER SECTION 131 ON 10.01.2001 BEFORE THE DDI (INVESTIGATION) AS UNDER: THE CONTRACT AMOUNT WAS RS. 12 LAKHS. THE AMOUNT R ECEIVED 0.5 LAKHS ON SIGNING. 3 LAKHS ON 16.11.19099 THE AMOUN T OF RS 4 LAKHS WAS RECEIVED ON 27.01.2000 WAS NOT WRITTEN BY ME AN D THE FIGURE OF RS. 2.5 LAKHS WHICH WAS RECEIVED ON 10.04.2000. THE REFORE IN ORDER TO WRITE THE AMOUNT IN PROPER CALENDAR I CUT THE FI GURE OF RS. 2.5 LAKHS AND WROTE IT BELOW THE RECEIPT OF RS. 4 LAKHS . FURTHER IN REPLY DATED 18.12.2001 IT WAS STATED AS UNDER: SUBSEQUENT NOTING IS REGARDING BHAGWAN CHITRAMANDI R (GUDDU DHANOA) FILM BICHCHU STARRING BOBBY DEOL CONTRACT AMOUNT RS. 12 00 000/- SIGNING AMOUNT OF RS. 50 000/- RECEIVED ON 11.11.0 9 FURTHER RS. 3 00 000 RECEIVED ON 19.11.1999 ITA NOS.90 & 93/M/08 MS.RANI RAM MUKERJI 17 RS.4 00 000/- RECEIVED ON 26.01.2000 AND RS. 2 50 000/- RECEIVED ON 13.04.2000 BALANCE TO RECEIVE RS.2 00 000 RECEIVED RS.1 00 000/- ON 22.09.2000. RECEIVED RS. 1 00 000/- ON 14.11.2000. THE AMOUNTS RECEIVED HAD BEEN ACCOUNTED IN THE REGU LAR BOOKS OF ACCOUNTS. 33. THE ASSESSING OFFICER NOTED THAT THERE WAS NO E XPLANATION REGARDING OBLITERATION OF THE ENTRY FOR RECEIPT OF RS. 2.5 LA KHS ON 10.4.2000 AND THEREFORE FURTHER ENQUIRY WAS MADE AND THE ASSESSEE HAS STATED IN REPLY DATED 28.02.2002 AS UNDER: THE OBLITERATE IS DUE TO THE MISTAKE IN SERIAL ORD ER OF PAYMENT RECEIPT OF THE PAYMENT RECEIPT. AN AMOUNT OF RS. 4 LAKHS RE CEIVED ON 26.01.2000 REMAINED TO BE NOTED IN THE DIARY. WHEN MR. RAM MUKERJI NOTICED THE SAME HE INSERTED THIS PAYMENT AFTER RS. 2 50 000/- WHICH THEY RECEIVED ON 10.04.2000. HOWEVER THIS ENTRY CA ME AFTER 26.01.2000. IN ORDER TO SHIFT THIS ENTRY AFTER PAYM ENT OF RS.4 LAKHS RECEIVED ON 26.01.2000 HE OBLITERATED THE ENTRY OF RS.2 50 000/- AND SHIFTED IT TO CORRECT PLACE. 34. THE ASSESSING OFFICER OBSERVED THAT ASSESSEE HA S BEEN SHIFTING THE EXPLANATION IN VARIOUS REPLIES AND THE REPORT FROM FORENSIC SCIENCE LABORATORY CLEARLY INDICATED THAT ENTRY IS 2.50 1 0.04.2000 AND THEREFORE MUST HAVE RECEIVED THIS PAYMENT AND ACCORDINGLY THI S SUM WAS ADDED TO THE UNDISCLOSED INCOME OF THE ASSESSEE. 35. ON APPEAL THE LEARNED CIT(A) CONFIRMED THE ADD ITION BY OBSERVING THAT ASSESSEE HAS BEEN SHIFTING THE STAFF. 36. BEFORE US THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT AN AGREEMENT WAS ENTERED BETWEEN THE ASSESEE WITH M/S. BHAGWAN CHITRAMANDIR DATED 20.04.2000 FOR DOING THE FILM B ICHCHU FOR WHICH REMUNERATION OF RS. 12 LAKHS WAS TO BE RECEIVED IN INSTALMENTS. COPY OF THE AGREEMENT WAS FILED BEFORE THE AO. THEN HE REFERRE D TO PAGE 296 OF THE PAPER BOOK AND POINTED OUT THAT IN THE STATEMENT RE CORDED ON 10.01.2001 IT WAS STATED BY SHRI RAM MUKHERJEE THAT THE AMOUNT OF RS. 4 LAKHS WAS ITA NOS.90 & 93/M/08 MS.RANI RAM MUKERJI 18 RECEIVED ON 27.01.2000 WHICH WAS NOT ENTERED IN THE DIARY AND THEREFORE TO MAKE THE PROPER SPACE EARLIER ENTRY OF RS. 2.5 LAKH S WAS OBLITERATED AND FIRST ENTRY FOR RS. 4 LAKHS WAS MADE AND THEN THE ENTRY O F RS. 2.5 LAKHS RECEIVED ON 10.4.2000 WAS MADE. HE ARGUED THAT SAME STATEME NT WAS MADE BEFORE THE AO AND THEREFORE THERE IS NO QUESTION OF SHIFT ING OF THE STAND. 37. ON THE OTHER HAND THE LEARNED DEPARTMENTAL REP RESENTATIVE SUBMITTED THAT WHEN ENTRIES WERE METICULOUSLY RECOR DED IN THE DIARY THE ENTRY FOR RS. 4 LAKHS COULD HAVE BEEN MADE LATER AL SO. 38. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFU LLY. PERUSAL OF PAGE 337 OF THE PAPER BOOK WHICH IS COPY OF THE SEIZED D OCUMENT CLEARLY SHOWS THAT ENTRY FOR RS. 2.5 LAKHS ON 10.4.2000 HAS BEEN OBLITERATED. HOWEVER WE FURTHER FIND AGAIN ENTRY OF RS. 2.50 LAKHS HAS BE EN MADE BELOW THE ENTRY OF RS.4.00 ON 27.1.2000. THE EXPLANATION OF THE ASSESS EE SEEMS TO BE PLAUSIBLE. IN ANY CASE THE ENTRY OF RS. 2.50 LAKHS HAS AGAIN BEEN SHOWN ON 10.4.2000 ONLY. THERE IS NO OTHER MATERIAL SUPPORT ING THE THEORY OF REVENUE THAT ASSESSEE HAD RECEIVED TWO PAYMENTS ON 10.4.200 0 FOR A SUM OF RS. 2.50 LAKHS ONE IN CHEQUE AND ONE IN CASH. FURTHER THERE DOES NOT SEEM TO BE ANY SHIFTING FOR THE STAND OF THE ASSESSEE. THEREFORE WE SET ASIDE THE ORDER OF THE LEARNED CIT(A) AND DELETE THE ADDITION. 39. THE NEXT ISSUE IS REGARDING ADDITION OF RS. 12 LAKHS AS UNACCOUNTED RECEIPT FROM THE FILM CHORI CHORI CHUPKE CHUPKE . ASSESSING OFFICER REFERRED TO PAGE 7 OF THE DIARY (ANNEXURE A-4) WHIC H CONTAINED THE FOLLOWING NOTING: CONTRACT AMOUNT RS. 24 00 000/- SIGINING AMOUNT OF RS.2 61 000/- RECEIVED ON 27.05.1999 LIC ANNUITY TAKEN FOR RS.6 00 000/-. BAL ANCE OF RS. 12 00 000/- DURING THE PRODUCTION OF THE FILM. BEFORE DUBBING RS.339000/-. OUT OF RS.12 00 000/- RS.3 00 000/- RECE IVED ON 06.01.2000 RS.300000/- ON 27.06.2000. ITA NOS.90 & 93/M/08 MS.RANI RAM MUKERJI 19 40. ASSESSING OFFICER NOTED THAT THE NOTINGS REGARD ING TWO PAYMENTS RECEIVED HAD BEEN OBLITERATED BY STRIKING DOWN THE SAME. ACCORDING TO THE ASSESSING OFFICER AS PER THE FORENSIC SCIENCE LABOR ATORY REPORT THE OBLIGATED FIGURES STAND AT RS. 9 LAKHS AND RS. 3 LAKHS. HE AL SO OBSERVED THAT THE PRODUCER AND DIRECTOR OF THE FILM WERE KNOWN FOR M AKING THE PAYMENT OF CASH AND ACCORDINGLY ADDED A SUM OF RS. 12 LAKHS TO WARDS UNACCOUNTED RECEIPT OF THE ASSESSEE. 41. BEFORE THE LEARNED CIT(A) IT WAS SUBMITTED THAT THE ASSESSING OFFICER NEVER RAISED ANY QUERY REGARDING THIS ISSUE. IT WAS FURTHER POINTED OUT THAT DDIT (INVESTIGATION) UNIT IV HAD SUMMONED SHRI RIZ VI ON 17.11.2000 AND SUBSEQUENTLY SHRI RIZVI HAD FILED A LETTER IN WHICH COMPLETE DETAILS REGARDING PAYMENT OF RS.24 LAKHS WERE FURNISHED. THE LEARNED CIT(A) DID NOT AGREE WITH THIS EXPLANATION AND CONFIRMED THE ADDITION VI DE PARA 127 WHICH AS UNDER: I HAVE CAREFULLY PERUSED THE ASSESSMENT ORDER. I H AVE ALSO SCRUTINIZED THE NOTINGS MADE ON THE SAID PAGE OF THE DIARY. IT IS CLEAR THAT THE CONTRACT SUM AGREED UPON WAS RS. 24.00 LACS. OUT OF THIS THE APPELLANT HAD RECEIVED RS.261000/- AS THE SIGNING AMOUNT AND ANOTHER SUM OF RS.6.00 LACS IN THE FORM OF LIC POLICY. THE APPELL ANT WAS TO RECEIVE A SUM OF RS. 12.00 LACS DURING PRODUCTION AND A SUM O F RS.339000/- BEFORE DUBBING. OUT OF THE SUM OF RS. 12.00 LACS B ALANCE THE APPELLANTS FATHER NOTED THAT RS.3.00 LACS WAS PAID ON 06.01.2000. THE TWO OBLITERATIONS CAME BELOW THIS NOTING AND AFTER THAT WAS NOTED THAT THE APPELLANT RECEIVED FURTHER SUM OF RS.3.00 LACS ON 17.06.2000. THE LD. COUNSEL EXPLAINED TO THE ME THAT THE WORD PAID WAS NOT WRITTEN BEFORE SUCH OBLITERATED ENTRIES WHEREAS BEFORE ALL OTHER ENTRIES THE RESPECTIVE SUMS WERE PRECEDED BY THE WORD PAID. THE LD. COUNSEL REITERATED THAT THE OBLITERATED ENTRIES REPRESENTED THE PAYMENTS EXPECTED BY THE APPELLANT ON TWO DIFFERENT DATES. ON CAREFUL SCRUTINY OF THE EVIDENCE FILED BEFORE ME AND THE MANNER IN W HICH THE LEGAL JARGON HAS BEEN PLAYED WITH BY THE LD.COUNSEL APPEA RS TO BE A CLEAR CASE OF AFTER THOUGHT. THERE IS NO DOUBT THAT OBLI TERATIONS MADE IN THE NOTINGS IN THE DIARY PERTAINED TO PAYMENT OF RS.12. 00 LACS WHICH HAS NOT BEEN EXPLAINED BY THE LD. COUNSEL. IN THE ABSEN CE OF ANY VALID EXPLANATION. I HOLD THAT THE AO WAS JUSTIFIED IN MA KING THE ADDITION OF THE SUM OF RS. 12.00 LACS TO THE TOTAL UNDISCLOSED INCOME OF THE APPELLANT. THE SAID ADDITION THEREFORE STANDS CON FIRMED. 42. BEFORE US THE SUBMISSIONS MADE BEFORE THE CIT(A ) WERE REITERATED AND REFERENCE WAS MADE TO THE LETTER DATED 24.11.20 00 BY SHRI NAZIM RIZVI ITA NOS.90 & 93/M/08 MS.RANI RAM MUKERJI 20 COPY OF WHICH IS PLACED AT PAGE 363 OF THE PAPER BO OK IN WHICH DETAILS REGARDING FULL PAYMENTS OF RS. 24 LAKHS ARE INCORPO RATED. HE ARGUED THAT ASSESSEE WAS SUPPOSED TO RECEIVE RS.24 LAKHS AND HA D ACTUALLY RECEIVED A SUM OF RS.24 LAKHS INCLUDING LIC POLICY OF RS. 6 LA KHS. HE SUBMITTED THAT ASSESSEE WAS TO RECEIVE RS.9 LAKHS DURING PRODUCTIO N BUT THAT AMOUNT COULD NOT BE RECEIVED BECAUSE OF THE DIFFICULTIES FACED B Y THE PRODUCER AND THOSE AMOUNTS WERE RECEIVED AFTER THE SEARCH BY CHEQUE AM OUNTING TO RS. 4 LAKHS AND RS. 5.39 LAKHS ON 3.11.2000 AND 20.11.2000 RESP ECTIVELY WHICH HAS ALREADY BEEN DECLARED IN THE INCOME-TAX RETURNS FOR THE ASSESSMENT YEAR 2001-02. HE ALSO SUBMITTED THAT ASSESSING OFFICER F AILED TO NOTICE THAT IN THE DIARY THERE IS NO MENTION OF THE WORD PAID OR REC EIVED AND THEREFORE WRONG INFERENCE HAS BEEN DRAWN THAT THESE SUMMONS H AVE ALREADY IN RECEIPT WITHOUT ANY CORROBORATIVE EVIDENCE. 43. ON THE OTHER HAND THE LEARNED DEPARTMENTAL REP RESENTATIVE STRONGLY SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES AND A RGUED THAT IF THE AMOUNTS WERE RECEIVED LATER ON HOW THE ENTRIES WERE MADE EA RLIER. 44. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFU LLY AND FIND FORCE IN THE SUBMISSIONS OF THE LEARNED COUNSEL FOR THE ASSE SSEE. IT IS NOT DISPUTED THAT TOTAL SUM TO BE RECEIVED FOR DOING THE FILM CHORI CHORI CHUPKE CHUPKE WAS RS. 24 LAKHS. ONE OF THE ENTRIES IN THE DIARY S HOWS THAT BALANCE OF RS. 12 LAKHS WAS TO BE RECEIVED DURING PRODUCTION AND RS. 3.39 LAKHS BEFORE DUBBING OF THE FILM. MAY BE THE ASSESSEE HAS RECORD ED THIS FIGURE OF RS. 12 LAKHS WHICH WAS EXPECTED TO BE RECEIVED BUT WHICH H AS BEEN PAID LATER ON. THE DETAILS OF PAYMENT WAS SUBMITTED BEFORE DDIT (I NV.) UNIT IV BY SHRI NAZIM RIZVI AND THE ASSESSEE HAD ALREADY OFFERED A SUM OF RS. 9 39 000/- FOR TAXATION IN THE NEXT YEAR. IN THESE CIRCUMSTANCES WE SET ASIDE THE ORDER OF THE LEARNED CIT(A) AND DELETE THE ADDITION. ITA NOS.90 & 93/M/08 MS.RANI RAM MUKERJI 21 45. THE NEXT ISSUE IS REGARDING ADDITION OF RS. 21 LAKHS TOWARDS UNACCOUNTED RECEIPT FROM THE FILM BUS ITNA SA KHWA B HAI. THE ASSESSING OFFICER REFERRED TO PAGE 16 OF THE DIARY (ANNEXURE A-4) WHICH READS AS UNDER: CONTRACT 36 LAKHS ABHISHEK & RANI SIGNING 1.5 LACS DURING PRODUCTION 22/5 LACS LIC 9 LACS BEFORE DUBBING 3 LACS 46. ASSESSEE WAS ASKED TO EXPLAIN THE NOTINGS IN RE SPONSE TO THE SAME IT WAS SUBMITTED AS UNDER: PAGE 16: THIS IS A NOTING REGARDING ROSE MOVIES FILM BUS IT NA SA KHAWAB HAI STARRING ABHISHEK BACCHHAN. CONTRACT AMOUNT OF RS.36 00 000/- YET TO FINALISE. ULTIMATELY THE CONTRACT WAS FINALIZED FOR RS. 27 00 000/- AS THE F ILM DID NOT FAIR WELL. SIGNING AMOUNT RS.1 50 000/- RECEIVED ON 21.12.1999 . LIC ANNUITY RS.9 00 000/- NOT TAKEN TILL TODAY. RS.22 50 000/- DURING THE PRODUCTION OF THE FILM R S. 300 000/- BEFORE DUBBING OF THE FILM. PICTURE UNDER PRODUCTION. FURTHER AMOUNTS NOT RECEI VED/RECEIVABLE. THE AMOUNTS RECEIVED HAVE BEEN ACCOUNTED IN REGULAR BOOKS OF ACCOUNT. AGREEMENT IS ENCLOSED. 47. THE ASSESSING OFFICER NOTICED THAT THE THEORY R EGARDING REDUCTION OF REMUNERATION FROM RS. 36 LAKHS TO RS. 27 LAKHS WAS AN AFTER THOUGHT AND CONCERNED LETTER WAS ALSO FILED ONLY ON 18 TH MAY 2001. HE OBSERVED THAT NOTING MADE AGAINST ROSE MOVIES CLEARLY SHOWS THE F IGURE OF RS. 48 LAKHS. HE ALSO NOTICED THAT EVEN SCHEDULE OF PAYMENT MENTIONE D IN THE AGREEMENT DID NOT MATCH WITH THE ACTUAL PAYMENTS RECEIVED. THERE FORE HE CONCLUDED THAT ASSESSEE MUST HAVE RECEIVED A SUM OF RS. 21 LAKHS I N CASH AND ACCORDINGLY ADDED THE SUM TOWARDS HER UNDISCLOSED INCOME. 48. BEFORE THE CIT(A) IT WAS MAINLY CONTENDED THAT AGREEMENT WAS ENTERED INTO WITH M/S. ROSE MOVIES ON 20.11.2000 WH EREIN REMUNERATION WAS MENTIONED AT RS.36 LAKHS. LATER ON ROSE MOVIES REQ UESTED THE ASSESSEE TO ITA NOS.90 & 93/M/08 MS.RANI RAM MUKERJI 22 REDUCE THE REMUNERATION WHICH THE ASSESSEE AGREED B ECAUSE OF THE DIFFICULTIES IN THE FILM INDUSTRY AND REMUNERATION WAS REDUCED TO RS. 27 LAKHS WHICH HAS ALREADY BEEN RECEIVED BY THE ASSES SEE. 49. LEARNED CIT(A) DID NOT AGREE WITH THE SUBMISSIO NS AND CONFIRMED THE ADDITION VIDE PARA 131 WHICH READS AS UNDER: I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORDER A S WELL AS THE WRITTEN SUBMISSIONS MADE BY THE APPELLANT. THE CONTENTIOUS ISSUE WITH REGARDS TO THE GROUND OF APPEAL IS THAT THE NOTINGS IN THE DIARY WERE AT VARIANCE WITH THE AGREEMENT SUBSEQUENTLY ENTERED INTO BETWEE N THE APPELLANT AND THE PRODUCER WHICH WAS ON A DATE AFTER THE SEA RCH ON THE APPELLANT. THE AO WAS OF THE VIEW THAT THE REVISED CONSENT LETTER WAS PREPARED TO MATCH THE AMOUNTS AND THE DATES OF RECE IPT OF THE AFORESAID SUMS. THE AGREEMENT MADE SUBSEQUENT TO S EARCH WAS TAILOR MADE TO SUIT THE NOTINGS IN THE DIARY FOUND AT THE TIME OF SEARCH. ALL THE CORRESPONDENCE AND DOCUMENTS WHICH ARE PART OF THE WRITTEN SUBMISSIONS MADE BEFORE ME AND ALSO THE AO SHOW TH AT THE CORRESPONDENCE TOOK PLACE AFTER THE DATE OF SEARCH AND WAS DESIGNED TO MATCH THE NOTINGS IN THE SAID DIARY. IT IS CLEA R FROM THE ABOVE DISCUSSION THAT THE AO HAD RIGHTLY HELD HAT RS.21.0 0 LACS HAS BEEN RECEIVED IN CASH AND IS THE UNACCOUNTED INCOME OF T HE APPELLANT. THE GROUND OF APPEAL OF THE APPELLANT FAILS. 50. BEFORE US THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT FIGURE 48 MENTIONED ON THE RIGHT HAND SIDE OF THE DIARY HA S NO SIGNIFICANCE AND ACTUALLY ASSESSEE HAD AGREED TO DO THE FILM BUS IT NA SA KHAWAB HAI FOR RS. 36 LAKHS VIDE AGREEMENT DATED 20.11.2000 COPIES OF WHICH WERE FILED BEFORE THE LOWER AUTHORITIES AND ARE PLACED AT PAGES 86 AN D 87 OF THE PAPER BOOK. HE ARGUED THAT THERE WERE DIFFICULTIES IN THE FILM INDUSTRY AND M/S. ROSE MOVIES REQUESTED THE ASSESSEE TO REDUCE THE REMUNER ATION VIDE LETTER DATED 18.5.2001 AND ASSESSEE AGREED TO THAT REQUEST BY LE TTER COPY OF WHICH IS FILED AT PAGE 89 OF THE PAPER BOOK. HE ARGUED THAT ASSESSEE MIGHT HAVE QUOTED THE PRICE OF RS. 48 LAKHS WHICH AFTER NEGOTI ATION GOT SETTLED TO RS. 36 LAKHS WHICH FURTHER HAD TO BE REDUCED BECAUSE DIFFI CULTIES IN THE FILM INDUSTRY AND THEREFORE THERE WAS NO JUSTIFICATION IN THE ADDITION. 51. ON THE OTHER HAND THE LEARNED DEPARTMENTAL REP RESENTATIVE SUBMITTED THAT AS ARGUED EARLIER ASSESSEE HAS BEEN MAINTAINING A METICULOUS ITA NOS.90 & 93/M/08 MS.RANI RAM MUKERJI 23 DIARY. HE SUBMITTED THAT WHILE ARGUING THE GROUND R EGARDING ADDITION OF RS. 2.5 LAKHS FOR THE FILM BICHCHU IT WAS POINTED B Y THE LEARNED COUNSEL FOR THE ASSESSEE THAT AN ENTRY OF RS. 2.5 LAKHS WAS DEL ETED TO PLACE CORRECT ENTRY OF RS. 4 LAKHS AT THE APPROPRIATE DATE. WHEN THE A SSESSEE WAS SO ACCURATE THEN WHY ASSESSEE HAS NOT CHANGED THE DIARY IN RESP ECT OF THE FILM BUS ITNA SA KHAWAB HAI. HE POINTED THAT THE THEORY REGARD ING REDUCTION OF REMUNERATION IS ONLY AN AFTER THOUGHT AND CANNOT BE ACCEPTED. 52. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFU LLY AND FIND THAT PAGE 16 OF THE DIARY WHICH WAS SEIZED AND PLACED AT PAGE R BOOK PAGE 343 READS AS UNDER: BUS ITNA SA KHWAB HAI ROSE MOVIES 48 CONTRACT AMT. 36 LACS ABHISHEK & RANI SIGNING 1.5 LACS DURING PROD. 22.5 LACS L.I.C. 9 LACS BEFOFE DUBBING 3 LACS 53. WE PARTLY AGREE WITH THE SUBMISSION OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE ASSESSEE HAVE ORIGINALLY ASKED FO R A SUM OF RS. 48 LAKHS AS REMUNERATION FOR DOING THE FILM BUS ITNA SA KHAWAB HAI. BUT THE SAME WAS NEGOTIATED TO RS. 36 LAKHS. THE ENTRY IN THE DIARY CLEARLY SHOWS AGAINST THE CONTRACTED AMOUNT THE FIGURE OF RS. 36 IS MENTIONED . HOWEVER IF THERE WAS FURTHER ANY REDUCTION WHY THIS AMOUNT WAS NOT CHANG ED. AS POINTED OUT BY THE LEARNED DEPARTMENTAL REPRESENTATIVE THE ASSESSE E HAS BEEN STATED TO BE VERY METICULOUS IN MAINTAINING THE DIARY AND WHILE ARGUING THE ADDITION OF RS.2.5 LAKHS RECEIVED ON 10.4.2000 WAS OBLITERATED SO AS TO ACCOMMODATE THE RECEIPT OF RS. 4 LAKHS AT THE APPROPRIATE DATE WHICH WAS RECEIVED ON 27.1.2000 AND THEN THE ENTRY FOR RS. 2.5 LAKHS WAS MADE BELOW THIS ENTRY OF RS. 4 LAKHS SO AS TO MAKE IT APPROPRIATE DATE. WE FAIL TO UNDERSTAND THAT WHEN ASSESSEES FATHER WHO HAS WRITTEN THE DIARY IS SO PARTICULAR IN RESPECT OF ITA NOS.90 & 93/M/08 MS.RANI RAM MUKERJI 24 THE AMOUNTS AS WELL AS THE DATES THEN THERE IS NO EXPLANATION WHY THE AMOUNT OF RS. 36 LAKHS WAS NOT CHANTED TO RS. 27 LA KHS. THE THEORY REGARDING REDUCTION OF REMUNERATION SEEMS TO BE AN AFTER THOUGHT ONLY. THE ORIGINAL AGREEMENT THE COPY OF WHICH IS PLACED AT PAGES 86 AND 87 CLEARLY SHOWS THAT AGREED REMUNERATION WAS RS. 36 LAKHS. TH E LETTER WRITTEN BY M/S. ROSE MOVIES ON 18.5.2001 TO THE ASSESSEE WHICH IS A T PAGE 88 READS AS UNDER: ROSE MOVIES COMBINE TO MISS RANI MUKERJI B-405 SHAKTI BLDG. YARI ROAD VERSOVA ANDHERI (W) MUMBAI 400 061 18 TH MAY 2001 DEAR MADAM FIRST LET ME TAKE THIS OPPORTUNITY TO THANK YOU FOR ALL THE SUPPORT AND CO-OPERATION EXTENDED BY YOU AND YOUR ENTIRE FAMILY FOR THE SMOOTH COMPLETION OF OUR FILM BUS ITNA SA KHWAAB HAI.. AS YOU MAY BE AWARE THE ENTIRE FILM INDUSTRY IS FA CING A CRISES TIME AND WE ARE NO EXCEPTION. BEING AN ACTIVE MEMBER OF THE FILM TRADE WE ARE SUR E YOU TOO FELT THE EFFECT OF THE SEVER FINANCIAL CRUNCH. IT IS ON THIS NOTE THAT WE WISH TO REQUEST ANY FURT HER HELP AND CO- OPERATION YOU CAN EXTEND TO HELP US TO TIDE OVER TH ESE TESTING TIMES. IM SURE THAT AS ALWAYS YOU WILL STAND BY US. THANKING YOU WARM REGARDS SD. (PROPRIETOR) 54. THE REPLY OF THE ASSESSEE WHICH IS AT PAGE 89 W HICH ALSO READS AS UNDER: TO ROSE MOVIES COMBINE 3 AMAN PALACE 10 TH ROAD JUHU MUMBAI -49 [REG. BAS ITNA SA KHWAAB HAI] DEAR MADAM WITH REFERENCE TO YOUR LETTER DATED 18-05-2001 AND SUBSEQUENT DISCUSSION THIS IS TO PUT ON RECORD THAT THE CONTRA CT AMOUNT IS REDUCED ITA NOS.90 & 93/M/08 MS.RANI RAM MUKERJI 25 AND IT WILL NOW BE READ AS 27 LACS ONLY INSTEAD OF 36 LACS AS PREVIOUSLY AGREED. KINDLY NOTE THAT YOU HAVE PAID SO FAR RS. 6.50 ;LA CS AND THE BALANCE AMOUNT IS 20.50 LACS. NOW IT HAS BEEN AGREED THAT THE BALANCE AMOUNT WIL L BE PAID BY YOU AS FOLLOWS: (1) 7.5 LACS ON 18 TH MAY 2001 (2) 6 LACS IN FAVOUR OF L.I.C. OF INDIA ON 3 RD JUNE 2001 (3) 7 LACS WIL BE PAID ON 18 TH JUNE 2001. WE HOPE AND PRAY THAT OUR ENDEAVOUR PROVES A TREMEN DOUS SUCCESS. WITH BEST WISHES YOURS TRULY SD. (RNI MUKERJI. 55. IT IS TO BE NOTED THAT NO DATE HAS BEEN MENTION ED IN THE REPLY AND THE LETTER REQUESTING FOR REDUCTION OF REMUNERATION HAS BEEN MADE AND THE SAME HAS BEEN ACCEPTED SEEMS TO BE TOTALLY UNNATUR AL AS FILM STARS ARE REPUTED TO HAGGLE FOR MONEY TO THE LAST PIE. IN TH ESE CIRCUMSTANCES WE ARE OF THE VIEW THAT ASSESSEE WAS TO RECEIVE A SUM OF R S. 36 LAKHS FOR THE FILM BUS ITNA SA KHAWAB HAI AND THEREFORE THE ASSESS EE MUST HAVE RECEIVED THE BALANCE SUM OF RS. 9 LAKHS IN CASH BECAUSE ONL Y RS. 27 LAKHS HAS BEEN DECLARED AS REMUNERATION. AS OBSERVED EARLIER WE A RE NOT IN AGREEMENT WITH THE LOWER AUTHORITIES THAT THE REMUNERATION SHOULD BE AT RS. 48 LAKHS BECAUSE THE FIGURE OF RS. 36 LAKHS ITSELF IS NOTED IN THE DIARY AGAINST CONTRACT AMOUNT AND AGREEMENT IS ALSO FOR RS. 36 LAKHS. IN THESE CIRCUMSTANCES WE SET ASIDE THE ORDER OF THE LEARNED CIT(A) AND CONFI RM THE ADDITION OF RS. 9 LAKHS BEING CASH RECEIVED AS REMUNERATION FOR DOING THE FILM BUS ITNA SA KHAWAB HAI. THEREFORE THIS GROUND IS PARTLY ALL OWED. 56. THE NEXT ISSUE IS REGARDING LEVY OF INTEREST UNDER SECTION 1588BFA(1) OF THE ACT. THE LEARNED COUNSEL FOR THE ASSESSEE PO INTED OUT THAT INTEREST CAN BE LEVIED ONLY IF THE RETURN IS FILED BEYOND THE PE RIOD OF NOTICE SPECIFIED UNDER ITA NOS.90 & 93/M/08 MS.RANI RAM MUKERJI 26 SECTION 158 BFA. IN THE CASE BEFORE US 45 DAYS TIME WAS GIVEN AND RETURN WAS FILED WITHIN THE PERIOD OF 45 DAYS. THEREFORE I NTEREST CANNOT BE LEVIED. 57. ON THE OTHER HAND THE LEARNED DEP. REPRESENTA TIVE SUBMITTED THAT THIS ISSUE MAY BE SET ASIDE AND THE ASSESSING OFFIC ER MAY BE ASKED TO LEVY INTEREST AS PER THE PROVISIONS OF THE ACT. 58. AFTER CONSIDERING THE RIVAL SUBMISSIONS CAREFUL LY WE FIND THAT THIS ISSUE IS OF CONSEQUENTIAL NATURE AND THE AO IS DIRECTED T O LEVY INTEREST IN TERMS OF SECTION 158 BFA(1) IF THE RETURN HAS BEEN FILED AFT ER THE TIME GIVEN IN THE NOTICE. 59. THE LAST ISSUE REGARDING LEVY OF SURCHARGE. AFT ER HEARING BOTH THE PARTIES WE FIND THAT THE ISSUE REGARDING LEVY OF S URCHARGE IS SQUARELY COVERED AGAINST THE ASSESSEE BY THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT V. SURESH N. GUPTA (297 ITR 322) AND THEREFORE WE FIND NOTHING WRONG WITH THE ORDER OF THE LEARNED CIT(A). 60. IN THE RESULT THE ASSESSEES APPEAL IS PARTLY ALLOWED. IT(SS) AA NO.93/M/2008 61. IN THIS APPEAL THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: 1 . (A) ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION OF RS. 1.50 L ACS MADE BY THE A.O. AS INCOME FROM UNEXPLAINED SOURCE IN RESPE CT OF CASH FOUND IN ASSESSEES OWN LOCKER WITHOUT APPRECIATING IN RIGHT PERSPECTIVE THE OBSERVATIONS MADE BY THE A.O. (B) ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION OF RS. 8 68 2 30/- BEING UNEXPLAINED EXPENDITURE INCURRED BY ASSESSEE ON REN OVATION OF FLATS 404-405 OF SHAKTI BUILDING YARI ROAD BY NOT PROPERLY APPRECIATING THE SEIZED MATERIAL/DOCUMENTS. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE LEARNED CIT(A) ERRED IN DELETING THE UNACCOUNTED EXPENDITUR E ON FLAT NO. 305 OF RS. 4 98 680/- BY NOT PROPERLY APPRECIAT ING THE SEIZED MATERIALS/DOCUMENTS AND OBSERVATIONS MADE B6 THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. (D) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION OF RS. 5 LACS ON ACCOUNT OF UNACCOUNTED EXPENDITURE ON RENOVATION OF FLATS BY N OT PROPERLY APPRECIATING THE SEIZED MATERIAL/DOCUMENTS AND OBSE RVATIONS MADE BY THE A.O. IN THE ASSESSMENT ORDER. ITA NOS.90 & 93/M/08 MS.RANI RAM MUKERJI 27 (E) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) ERRED DELEING THE ADDITION OF RS.2 LACS MADE BY THE A.O. ON ACCOUNT OF UNDISCLOSED INCOME RECEIVED FOR THE F ILM BADAL BY NOT PROPERLY APPRECIATING THE SEIZED MATERIAL/DO CUMENTS AND OBSERVATIONS MADE BY THE A.O. IN THE ASSESSMENT ORD ER. (F) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION OF RS.9 LACS BEING UNDISCLOSED INCOME FROM BATA INDIA LTD. BY NOT PROP ERLY APPRECIATING THE SEIZED MATERIALS/DOCUMENTS AND FIN DINGS OF THE A.O. IN THE ASSESSMENT ORDER. (G) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION OF RS. 6 LACS MADE BY THE A.O. AS UNDISCLOSED INCOME WITH REGARD TO THE ENDOR SEMENT OF LUX SOAP BY NOT PROPERLY APPRECIATING THE SEIZED MATERIALS/DOCUMENTS AND OBSERVATIONS MADE BY THE A. O. IN THE ASSESSMENT ORDER. (H) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION OF RS. 11 LAC S AS UNACCOUNTED INCOME FROM M/S. SOUTHERN STAR COMBINE WITHOUT PROPERLY APPRECIATING THE SEIZED MATERIALS/DOCUMENT S AND OBSERVATIONS MADE BY THE A.O. IN THE ASSESSMENT ORD ER. (I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) ERRED IN DELEING THE ADDITION OF RS. 15 51 0 00/- BEING ADVANCE RECEIVED FROM THE FILM SHRIKANT WITHOUT P ROPERTY APPRECIATING THE SEIZED MATERIAL/DOCUMENTS AND OBSE RVATIONS MADE BY THE A.O. IN THE ASSESSMENT ORDER. (J) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION OF RS. 10 LAC S MADE BY THE A.O. AS UNEXPLAINED MONEY RECEIVED FROM M/S. S.K.FI LMS INTERNATIONAL WITHOUT PROPERTY APPRECIATING THE SEI ZED MATERIALS/DOCUMENTS AND FINDINGS OF THE A.O. IN THE ASSESSMENT ORDER. 62. AFTER HARING BOTH THE PARTIES WE FIND THAT DURING THE SEARCH TOTAL CASH AMOUNTING TO RS. 23.72 LAKHS WAS FOUND. OUT OF RS. 15.2 LAKHS WAS FOUND AT THE RESIDENCE RS.1 LAKH FOUND IN LOCKER NO . 313 BELONGING TO SHRI RAM MUKHERJEE FATHER OF THE ASSESSEE. RS. 7 50 000 /- WAS FOUND IN LOCKER NO. 385 BELONGING TO THE ASSESSEE AND RS.10 000/- W AS FOUND IN LOCKER NO. 640 BELONGING TO SHRI RAJA MUKHERJEE AND SMT. JYOTI MUKHERJEE FAMILY MEMBERS OF THE ASSESSEE. OUT OF THIS A SUM OF RS. 1 8 LAKHS WAS DECLARED AS UNDISCLOSED INCOME CONSISTING OF RS. 6 LAKHS BY THE ASSESSEE AND ANOTHER RS. 12 LAKHS BY SHRI RAM MUKHERJEE FATHER OF THE ASSES SEE. FOR THE BALANCE OF RS. 5.72 LAKHS IT WAS MAINLY EXPLAINED THAT THIS C ASH WAS ALREADY RECORDED ITA NOS.90 & 93/M/08 MS.RANI RAM MUKERJI 28 AS CASH ON HAND IN THE BOOKS OF ACCOUNT AND THE REC ONCILIATION FOR THE SAME WAS FILED BEFORE THE ASSESSING OFFICER. THE AO DID NOT AGREE WITH THE EXPLANATION AND OBSERVED THAT IF THE CASH WAS ALRE ADY RECORDED IN THE BOOKS OF ACCOUNT AND WAS KEPT FOR THE PURPOSE OF EMERGENC Y USE THEN WHY CASH AMOUNTING TO RS. 1.5 LAKHS WAS KEPT IN LOCKER WHIC H COULD BE OPENED ONLY AT FROM 11 .00 A.M.TO 5.00 P.M. FURTHER SINCE THE A SSESSEE WAS THE ONLY EARNING MEMBER WHY CASH OF RS. 1 LAKH WAS KEPT IN ASSESSEES FATHERS LOCKER NO. 313 AND ANOTHER RS. 10 000/- IN ASSESSE ES BROTHERS LOCKERS NO. 640. ACCORDINGLY HE OBSERVED THAT AS FAR AS RS. 1 10 000/- IS CONCERNED WHICH WAS KEPT IN FAMILY MEMBERS LOCKERS WOULD BE A SSESSED AS PROTECTIVE INCOME WHEREAS THE BALANCE OF RS. 1 50 000/-WAS ASS ESSED AS UNDISCLOSED INCOME OF THE ASSESSEE. 63. BEFORE THE CIT(A) IT WAS MAINLY SUBMITTED THAT ASSESSEE HAD ALREADY EXPLAINED THE EXISTENCE OF CASH WITH THE HELP OF BO OKS OF ACCOUNT RECONCILIATION STATEMENT AND SUCH BOOKS WERE FOUND DURING THE COURSE OF SEARCH. THE SAME WAS ALSO VERIFIABLE FROM THE COMPU TER FLOPPIES SEIZED DURING THE SEARCH. IT WAS THE FUNDAMENTAL RIGHT OF THE ASSESSEE TO KEEP THE CASH ANYWHERE SHE LIKES. IT WAS ALSO MENTIONED THAT PRIVATE SAFETY LOCKERS WERE ASSESSABLE EVEN DURING THE NIGHT. THE LEARNED CIT(A) AGREED WITH THIS STATEMENT AND ALSO OBSERVED THAT AS FAR A S PROTECTIVE ADDITION IS CONCERNED THE ADDITION IN RESPECT OF RS.10 000/- W AS ALREADY DELETED BY HIS PREDECESSOR AND THE SAME HAD NOT BEEN CHALLENGED BY THE DEPARTMENT AND IN RESPECT OF RS. 1 LAKH FOUND IN THE LOCKER OF SH RI RAM MUKHERJEE NO ADDITION HAS BEEN MADE OF SUBSTANTIVE BASIS IN HIS RETURN. HE ALSO OBSERVED THAT IT WAS THE RIGHT OF THE ASSESSEE TO KEEP THE C ASH ANYWHERE SHE LIKES AND IN ANY CASE A SUM OF RS. 3 12 650/- WAS AVAILABLE AT THE RESIDENCE FOR HER ITA NOS.90 & 93/M/08 MS.RANI RAM MUKERJI 29 EMERGENCY USE. IN THE BACKGROUND OF THESE OBSERVAT IONS THE ADDITION OF RS. 1.5 LAKHS WAS DELETED. 64. BEFORE US THE LEARNED DEPARTMENTAL REPRESENTATIVE STRONGLY RELIED ON THE ORDER OF THE ASSESSING OFFICER. 65. ON THE OTHER HAND THE LEARNED COUNSEL FOR THE ASSE SSEE STRONGLY RELIED ON THE APPELLATE ORDER AND SUBMITTED THAT IT HAS NO T BEEN DISPUTED BY THE DEPARTMENT THAT BALANCE CASH WAS RECORDED IN THE BO OKS OF ACCOUNT AND THEREFORE THE ASSESSEE COULD HAVE KEPT THE SAME IN ANYWHERE SHE LIKES. 66. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREF ULLY AND FIND FORCE IN THE SUBMISSION OF THE LEARNED COUNSEL FOR THE ASSES SEE. IT WAS NOT DISPUTED BEFORE US THAT CASH WAS AVAILABLE AS PER THE BOOKS OF ACCOUNT. THE ASSESSING OFFICER MADE ADDITION MAINLY ON THE BASIS OF THE CA SH WAS KEPT IN LOCKER. WE ARE OF THE VIEW THAT ONCE THE CASH IS AVAILABLE IN THE BOOKS OF ACCOUNT AND SINCE THE ASSESSEE IS NOT DOING ANY TRADING BUSINES S IT WAS HER PREROGATIVE TO KEEP THE CASH WHEREVER SHE LIKES. THEREFORE WE FIND NOTHING WRONG IN THE ORDER OF THE LEARNED CIT(A) WHICH WE CONFIRM. 67. IN REGARD TO GROUND NO. 1(B) 1(C) AND 1(D) T HESE GROUNDS HAVE BEEN ADJUDICATED BY US WHILE ADJUDICATING GROUND NO S. 2 AND 3 OF THE ASSESSEES APPEAL WHEREIN AFTER DETAILED DISCUSSION S WE HAD ESTIMATED THE EXPENDITURE ON RENOVATION AT RS. 5 LAKHS AND ALLOWE D THE ASSESSEES APPEAL IN PART AND THEREFORE THESE GROUNDS ARE ALLOWED IN PART. 68. IN REGARD TO GROUND NO. 1(E) AFTER HEARING BO TH THE PARTIES WE FIND THAT DURING THE ASSESSMENT PROCEEDINGS WHILE EXAMI NING THE DIARY (ANNEXURE A-4) WHICH WAS FOUND DURING THE SEARCH ASSESSING OFFICER NOTICED THAT ON PAGE 2 OF THE DIARY NOTING INDICAT ING THAT A SUM OF RS. 12 LAKHS WAS NEGOTIATED FOR THE FILM BADAL AGAINST W HICH ASSESSEE HAD RECEIVED ONLY A SUM OF RS. 10 LAKHS. ON ENQUIRY IT WAS EXPLAINED THAT ITA NOS.90 & 93/M/08 MS.RANI RAM MUKERJI 30 CONTRACT AMOUNT OF RS. 12 LAKHS WAS TO BE FIXED BUT FINALLY AFTER NEGOTIATION ONLY A SUM OF RS. 10 LAKHS WAS FIXED AND THE SAME H AS ALREADY BEEN RECEIVED. HOWEVER THE ASSESSING OFFICER DID NOT AG REE WITH THIS EXPLANATION AND OBSERVED THAT SHRI RAM MUKHERJEE HAS NOT MADE A NY CORRECTION IN THE DIARY AND THEREFORE A SUM OF RS. 2 LAKHS WAS ADDE D TO THE UNDISCLOSED INCOME OF THE ASSESSEE. 69. BEFORE THE LEARNED CIT(A) IT WAS MAINLY SUBMI TTED THAT AFTER THE FIGURE OF 12 IN THE DIARY THE WORDS TO FIX WERE A LSO WRITTEN WHICH CLEARLY INDICATED THAT THIS WAS THE INTENDED PRICE FOR ACTI NG IN THE FILM. BUT THE SAME WAS FINALIZED ONLY AT RS.10 LAKHS AND THEREFORE NO ADDITION SHOULD NOT HAVE BEEN MADE. 70. THE LEARNED CIT(A) AGREED WITH THIS EXPLANAT ION AND DELETED THE ADDITION VIDE PARA 88 WHICH IS AS UNDER: THE AO DID NOT HAVE ANY EVIDENCE IN HIS POSSESSION OR ANY INFORMATION WHICH COULD ESTABLISH THE FACT THAT THE APPELLANT H AD INDEED RECEIVED A TOTAL SUM OF RS. 12 00 000/- FOR THE SAID FILM AND OUT OF THE SAID AMOUNT OF RS. 2 00 000/- WAS RECEIVED IN CASH. THE ADDITION THEREFORE WAS BASED PURELY ON AN ASSUMPTION MADE BY THE AO. I N VIEW OF THE ABOVE I HOLD THAT THE AO WAS NOT JUSTIFIED IN MAKI NG THE SAID ADDITION OF RS. 2 00 000/- TO THE UNDISCLOSED INCOME OF THE APPELLANT WHICH CONSEQUENTLY STANDS DELETED. 71. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMIT TED THAT ASSESSEE HAD ACCEPTED ALL OTHER ENTRIES IN THE DIARY THEN TH IS ENTRY ALSO NEEDS TO BE ACCEPTED. 72. BEFORE US THE LEARNED COUNSEL FOR THE ASSESSEE REIT ERATED THE SUBMISSIONS MADE BEFORE THE CIT(A) AND EMPHASIZED T HAT SOME MEANING HAS TO BE ASSIGNED TO THE WORD TO FIX. HE ALSO REFERR ED TO PAGE 55 OF THE PAPER BOOK WHICH COPY OF THE AGREEMENT WITH AFTAB MUSIC I NDUSTRIES WHICH SHOWS THAT PRICE FOR ACTING IN THIS FILM WAS FIXED AT RS. 10 00 000/- ONLY. 73. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFULLY AND FIND FORCE IN THE SUBMISSION OF THE LEARNED COUNSEL FOR THE ASSES SEE. NO DOUBT THAT THE ITA NOS.90 & 93/M/08 MS.RANI RAM MUKERJI 31 DIARY WHICH WAS FOUND DURING THE SEARCH HAS BEEN M ETICULOUSLY WRITTEN BY SHRI RAM MUKHERJEE FATHER OF THE ASSESSEE BUT AGAI NST THE FIGURE OF RS. 12 LAKHS WHICH IS FEE FOR THE PICTURE BADAL THE WOR DS TO FIX ARE ALSO WRITTEN WHICH CLEARLY SHOWS THAT PRICE WAS NOT FIXED AT THE TIME WHEN THIS ENTRY OF 12 WAS WRITTEN IN THE DIARY. THE DEPARTMENT DID NOT BR ING ANY MATERIAL TO SHOW THAT ASSESSEE HAD RECEIVED RS. 2 LAKHS EXTRA ON A CCOUNT OF REMUNERATION FOR ACTING IN THIS FILM. ACCORDINGLY WE FIND NOTHING W RONG WITH THE ORDER OF THE LEARNED CIT(A) AND WE CONFIRM THE SAME. 74. IN REGARD TO GROUND NO. 1(F) AFTER HEARING BO TH THE PARTIES WE FIND THAT DURING THE ASSESSMENT PROCEEDINGS ASSESSING O FFICER EXAMINED THE SEIZED DIARY (ANNEXURE A-4) AND NOTED THAT ASSESSEE HAD ENTERED INTO A CONTRACT WITH M/S. BATA INDIA LTD. AND FOR THE FIRS T YEAR THE CONTRACT WAS FOR RS. 39 LAKHS. NOTINGS ON PAGE 11 READ AS UNDER: ON SIGNING 12 CH + 9 = 21 9 LIC APRIL 2001 12 CH + 6 = 18 6 LIC. ON THE BASIS OF THE ABOVE NOTING HE OBSERVED AS UN DER: IN NOTINGS AT PAGE NO 11 IT IS CLEARLY NOTED DOWN AS ON SIGNING 12 CHEQUE AND 9 LIC. ANOTHER ENTRY IS 12 CHEQUE AND 6 LIC. OVER AND ABOVE THERE ARE ANOTHER ENTRIES OF +9 AND +6. WHEN ASKED TO EXPLAIN THESE ENTRIES THE ASSESSEE SIMPLY STATED THAT +9 & +6 REPRESENTS LIC ANNUITY WHICH WAS DECIDED BUT CANCELLED. THEN HE REFERRED TO THE SEIZURE OF CASH AMOUNTING T O RS. 7.5 LAKHS FROM LOCKER 385 AND WHILE EXPLAINING THE SAME IT WAS STA TED THAT RS. 6 LAKHS WAS GIVEN TO SHRI RAM MUKERJEE BY SHRI SUNIL DOSHI FOR SAFE CUSTODY. LATER IT TRANSPIRED THAT SHRI SUNIL DOSHI WAS PROVIDING CONS ULTANCY SERVICES TO VARIOUS COMPANIES LIKE PEPSI ICICI BATA ETC. FOR MARKET ING ACTIVITIES INCLUDING USE OF CELEBRITIES. IT WAS FURTHER NOTED THAT HE HAD A RRANGED SEVERAL ITA NOS.90 & 93/M/08 MS.RANI RAM MUKERJI 32 ADVERTISEMENTS FOR MS. RANI MUKERJEE INCLUDING THAT OF BATA. IT WAS ALSO NOTED THAT SHRI SUNIL DOSHI WAS PAID A SUM OF RS. 1 5 64 500/- BY BATA INDIA LTD. FOR PROVIDING THE ABOVE SERVICES AND RS. 6 LAK HS WAS GIVEN IN CASH BY SHRI SUNIL DOSHI TO MS. RANI MUKHERJEE AND THIS CAS H WAS ULTIMATELY SURRENDERED BY THE ASSESSEE AS UNDISCLOSED INCOME. 75. IN THE ABOVE BACKGROUND AO OBSERVED THAT +6 W AS CLEARLY THE CASH RECEIVED FROM M/S. BATA INDIA LTD. FOR ADVERTISEMEN TS AND ON THE SAME ANALOGY +9 ALSO HAVE BEEN THE CASH RECEIVED AND THE REFORE THE EXPLANATION OF +6 AND +9 SIGNIFY THE LIC ANNUITY WAS BASELESS A ND THEREFORE HE ACCORDINGLY ADDED A SUM OF RS. 9 LAKHS TOWARDS UNDI SCLOSED INCOME OF THE ASSESSEE. 76. BEFORE THE CIT(A) IT WAS SUBMITTED THAT ON PAG E 10 OF THE DIARY IT WAS CLEARLY RECORDED THAT ASSESSEE WOULD WORK FOR T HE ADVERTISEMENT FOR M/S. BATA INDIA LTD. FOR A SUM OF RS. 27 LAKHS OUT OF WH ICH ASSESSEE WOULD RECEIVE TWO LIC ANNUITY POLICIES FOR RS. 9 LAKHS AND RS. 6 LAKHS AND THE BALANCE AMOUNT OF RS. 12 LAKHS WAS TO BE RECEIVED IN CHEQU E. THESE NOTINGS WERE MADE ON 27.4.1999. THESE NOTINGS WERE CANCELLED AND FRESH NOTINGS WERE MADE ON AGE 25 OF THE DIARY WHEREIN A SUM OF RS. 39 LAKHS WAS SHOWN AS RECEIVED AND AO HAD TOTALLY IGNORED THE ENTRIES MAD E AT PAGE 25. IT WAS FURTHER SUBMITTED IN THE STATEMENT RECORDED BY SHRI RAM MUKHERJEE ON 10.2.2001 IT WAS CLEARLY STATED THAT ORIGINALLY PA RT PAYMENT WAS TO BE RECEIVED IN LIC BUT SINCE THE COMPANY HAD RESERVATI ONS REGARDING LIC POLICIES THE SUMS WERE CHANGED AND THE WHOLE AMOUN T WAS RECEIVABLE IN CHEQUES ONLY. THE FINAL AGREEMENT WAS EXECUTED ON 2 7.08..2000 TO 26.08.2001 FOR A SUM OF RS. 39 LAKHS OUT OF WHICH R S. 21 LAKHS WAS TO BE RECEIVED AS SIGNING AMOUNT AND BALANCE OF RS.18 LAK HS WAS TO BE RECEIVED ON OR BEFORE 06.4.2001 AND ACCORDINGLY THE PAYMENTS WE RE MADE. IT WAS ITA NOS.90 & 93/M/08 MS.RANI RAM MUKERJI 33 REPRESENTED THAT THESE FACTS WERE CONFIRMED BY THE REPRESENTATIVE OF M/S. BATA INDIA LTD. SHRI TUHIM CHATERJEE MANAGER LEG AL MANAGER OF BATA INDIA LTD. 77. LEARNED CIT(A) AFTER EXAMINING THE SUBMISSIONS WAS SATISFIED AND DELETED THE ADDITION. 78. BEFORE US THE LEARNED DEPARTMENTAL REPRESENTAT IVE SUBMITTED THAT AS OBSERVED BY THE ASSESSING OFFICER +6 FIGURE HAD ALR EADY BEEN SURRENDERED BY THE ASSESSEE ON ACCOUNT OF CASH RECEIVED FROM SHRI SUNIL DOSHI ON BEHALF OF M/S. BATA INDIA. THEREFORE SIMILARLY +9 COULD HAVE ALSO BEEN INTERPRETED ONLY AS CASH RECEIVED. 79. ON THE OTHER HAND THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES A ND FURTHER ARGUED THAT ORIGINALLY THE ASSESSEE WAS TO RECEIVE SOME MONEY I N THE FORM OF LIC ANNUITIES. HOWEVER M/S. BATA INDIA LTD. EXPRESSED WHETHER THE PAYMENT WOULD BE MADE IN ANNUITIES BECAUSE THE ROLE PLAYED IN PROMOTIONAL MATERIALS MAY NOT AMOUNT TO ACTING AND ACCORDINGLY THE WHOLE PAYMENT WAS CHANGED TO CHEQUE PAYMENT. IN THIS REGARD HE REFERRED TO P AGE 271 WHICH IS COPY OF THE LETTER IN WHICH THE ASSESSEE HAD AGREED TO RECE IVE THE WHOLE OF THE PAYMENT BY CEHQUE INSTEAD OF SOME PAYMENT IN THE FO RM OF LIC ANNUITY. HE ARGUED THAT IN THIS BACKGROUND THE ADDITION WAS NOT JUSTIFIED. 80. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREF ULLY AND FIND FORCE IN THE SUBMISSIONS OF THE LEARNED COUNSEL FOR THE ASSE SSEE. LETTER OF MS. RANI MUKHERJEE WRITTEN TO M/S. BATA INDIA LTD. WHICH RE ADS AS UNDER: TO MR. SUMANTA MUKERJI BATA INDIA LIMITED 6 A.S. N. BANERJEE ROAD POST BOX NO. 8913 CALCUTTA 700 013. INDIA. ITA NOS.90 & 93/M/08 MS.RANI RAM MUKERJI 34 DEAR SIR I AM IN RECEIPT OF YOUR LETTER DATED 18.08 .2000 ALONG WITH DRAFT CONTRACT I HAVE A FEELING THAT YOUR COMPANY IS HAV ING SOME RESERVATIONS REGARDING THE L.I.C. OF INDIA FACTOR S O I HAVE COMPLETELY TAKEN THE FACTOR OUT OF OUR CONTRACT NOW BATA WIL L PAY ONLY TO RANI MUKERJI. THERE ARE SOME MODIFICATIONS WHICH I HAVE NOTED DOW N IN THE CONTRACT ENCLOSED HEREWITH. CLAUSE -3 I HAVE ADDED DURING THE CONTRACTED PERIOD WHICH IS QUITE RELEVANT TO THE SPIRIT OF THE CONTRACT. CLAUSE 4 I HAVE REMOVED FILMSTAR WILL INDEMNIFY B ALA FROM THE CLAUSE. IN NON OF HER ADD CONTRACTS THIS SENTENCE IS BEING PUT UP. CLAUSE 7 THE FIGURE IS TO BE 39 AS IT IS IN CONFI RMATION OF NUMERICAL NUMBER OF RANI AS WELL AS OUR UNDERSTANDING. CLAUSE 7 THE FIGURE IS TO BE 39 AS IT IS IN CONFI RMATION OF NUMERICAL NUMBER OF RANI AS WELL AS OUR UNDERSTANDING. CLAUSE 11 (A) MODE OF PAYMENT TOTAL AMOUNT HAS TO COME TO RANI I.E. 21 LACS. (B) I DO NOT WANT IT TO BE PAID BEFORE 31 ST MARCH SO I HAVE PUT ON OR BEFORE 6 TH APRIL 2001. CLAUSE 12 IS NOW REDUNDANT SO IT IS TO BE TAKEN O UT. HENCE TOTAL NO OF CLAUSES WILL BE 15. ARRANGEMENT OF DATES : - LIKE ALL ADD CONTRACTS THE DATES WILL BE FIXED WITH MUTUAL AVAILABILITY AND CONSENT. WITH REGARDS YOURS SINCERELY SD. (RAM MUKERJI ) (FATHER & CONST.ATTN.) N.B. I HAVE NOT CHANGED THE NO OF DATES 3 TO 2 FOR HELPING BATA. TO AVOID FURTHER CORRESPONDENCES AND DISCUSSION THE CONTRACT IS TO BE SIGNED IN YOUR PRESENCE IN ORDER TO FULFILL ALL OUR UNDERSTANDINGS. THE ABOVE CLEARLY SHOWS THAT WHEN SOME RESERVATIONS WERE EXPRESSED BY M/S. BATA INDIA LTD. THE ASSESSEE AGREED TO RECEIV E THE PAYMENT THROUGH CHEQUE INSTEAD OF PART PAYMENT IN LIC ANNUITIES. 81. THE LEARNED CIT(A) ADJUDICATED THE ISSUE VIDE P ARAS 92 AND 93 2HICH ARE AS UNDER: ITA NOS.90 & 93/M/08 MS.RANI RAM MUKERJI 35 I HAVE CAREFULLY CONSIDERED THE FINDINGS AND CONCL USIONS OF THE AO AS WELL AS THE DETAILED SUBMISSIONS OF THE APPELLANT. I HAVE A LSO PERUSED PHOTOCOPIES OF THE RELEVANT PAGES OF THE SEIZED DIARY. MY OBSERVAT IONS IN THIS REGARD ARE AS UNDER: I. A CONTRACT IS AN AGREEMENT BETWEEN TWO PARTIES WHER E CERTAIN TERMS AND CONDITIONS ARE MUTUALLY AGREED UPON BY BO TH SIDES. TILL THE TIME THE AGREEMENT IS REACHED IT WOULD B NATURAL FOR BOTH THE PARTIES TO HAVE THEIR OWN REQUIREMENTS TH EIR OWN TERMS AND CONDITIONS WHICH THEY WOULD NATURALLY EX PECT THE OTHER PARTY TO ACCEPT AN WHICH MAY OR MAY NOT BE AC CEPTABLE IN TOTO. HOWEVER BY THE TIME THE AGREEMENT IS SIGNED AND THE CONTRACT FINALIZED MUCH OF SUCH EXPECTATION WOULD HAVE TO BE COMPROMISED DEPENDING UPON THE NEGOTIATING POWER OF EITHER PARTY. IT IS IN THIS CONTEXT THAT THE ISSUE HAD TO BE EXAMINED AND CONSIDERED. AS STATED BY THE APPELLANTS FATHER IN HIS STATEMENT RECORDED BY THE A.O. THEY HAD DESIRED THAT A PART O F THE CONTRACT FEES SHOULD BE PAID BY M/S. BATA INDIA LTD. IN THE FORM OF LIC POLICIES. THIS HOWEVER WAS NOT AGREED UPON BY M/S . BATA INDIA LTD. THEREUPON AS REFLECTED IN THE FINAL AGREEMENT WHICH WAS SIGNED BETWEEN THE TWO PARTIES ON 27.8.2000 THE EN TIRE PAYMENT WAS TO BE MADE BY M/S. BATA INDIA LTD. THRO UGH CHEQUES. BOTH THESE ASPECTS WERE COMPLETELY IGNORED BY THE AO. THERE WAS NO MENTION IN THE BODY OF THE ASSESSMENT ORDER EITHER REGARDING THE STATEMENT OF THE APPELLANTS F ATHER OR THE FINAL AGREEMENT ENTERED INTO BY THE TWO PARTIES. II. THE MODE OF PAYMENT AND THE TOTAL AMOUNT PAID BY M/ S. BATA INDIA LTD. WAS ALSO CONFIRMED BY THE LEGAL MANAGER OF THE SAID COMPANY IN WRITING TO THE AO. A COPY OF THIS LETTER DATED 13.2.2000 WHICH WAS SUBMITTED BEFORE THE AO IN RESP ONSE TO THE NOTICE ISSUED U/S.133(6) OF THE I.T.ACT HAS BEEN FI LED BEFORE ME IN THE PAPER BOOK. FROM THIS LETTER IT APPEARS THA T M/S. BATA INDIA LTD. HAD ENTERED INTO TWO AGREEMENTS WITH THE APPELLANT ONE OF WHICH WAS DATED 27.8.2000 AND THE OTHER DATE D 3.9.2001. IN TERMS OF THE FIRST AGREEMENT THE COMP ANY PAID RS. 21 LKHS TO THE APPELLANT ON SIGNING AND A FURTHER RS.18 LAKHS WHICH WAS PAID BEFORE 6.4.2001. AS PER THE SECOND AGREEMENT DATED 3.9.2001 THE SAI D COMPANY PAID A SUM OF RS.40 50 000/- TO THE APPELLANT AND I T WAS AGREED THAT THE SAME AMOUNT WOULD BE PAID IN THE NEXT YEAR . THE PERIOD FOR WHICH THE FIRST AGREEMENT WAS OPERATIONAL WAS 2 7.8.2000 TO 26.8.2001. WHILE THE SECOND AGREEMENT WAS FOR THE PERIOD 3.9.2001 TO 3.9.2002 AND WAS EXTENDABLE FOR ANOTHER YEA I.E. FROM 3.9.2002 TO 3.9.2003. III. THE AO USED THE EVIDENCE OF PAGE 11 OF THE DIARY WH ICH HAD BEEN STRUCK OFF BY THE APPELLANTS FATHER WHO CLAI MED TO HAVE MADE A FRESH NOTHING ON PAGE 25 OF THE SAME DIARY WITH REGARD TO THE FRESH CONTRACT MADE BY HIM WHICH HAS BEEN REPR ODUCED ABOVE. THIS WAS CLEARLY POINTED OUT BY THE APPELLAN T IN THE WRITTEN SUBMISSIONS FILED. IN THIS NOTING ON PAGE 25 IT WA S CLEARLY STATED THAT THE CONTRACT FOR THE FIRST YEAR WAS FOR SUM OF RS.39 LAKHS OUT OF WHICH RS.21 LAKHS WAS RECEIVED ON SIGNING WHIL E RS. 18 LAKHS WAS RECEIVED ON 6.4.2001. THIS NOTING WAS FULLY CORROBORATED BY THE FIRST AGR EEMENT DATED 27.8.2000 A COPY OF WHICH WAS NOT ONLY AVAILABLE WI TH THE AO BUT ITA NOS.90 & 93/M/08 MS.RANI RAM MUKERJI 36 WAS ALSO0 CONFIRMED BY THE LEGAL MANAGER OF M/S. BA TA INDIA LTD. IN HIS LETTER DATED 13.2.2002 ADDRESSED TO THE AO. SIN CE THE NOTINGS ON PAGE 25 STOOD FULLY CO-RELATED AND CORROBORATED BY OTHER MATERIAL EVIDENCE FOUND IN COURSE OF THE SEARCH AND ALSO OB TAINED BY THE AO UNDER THE PROVISIONS OF 133(6) OF I.T.ACT IN COURSE OF THE BLOCK- ASSESSMENT PROCEEDINGS THERE IS NO JUSTIFICATION O F MAKING ADDITION ON THE BASIS OF EARLIER NOTINGS ON PAGE 11 OF THE D IARY WHICH IS SUPERSEDED BY SUBSEQUENT NOTING ON PAGE 25 OF THE S AME DIARY. IV. COMING TO THE CONTENTS OF PAGE 11 QUITE OBVIOUSLY THE NOTINGS WERE MADE MUCH BEFORE THE ACTUAL CONTRACT WAS SIGNE D THE TOTAL AMOUNT OF RS. 39 LAKHS WHICH WAS ACTUALLY RECEIVED BY THE APPELLANT WAS CORRECTLY MENTIONED IN THE NOTHING. THE TWO INS TALMENTS OF RS. 21 LAKHS AND RS. 18 LAKHS WERE ALSO CORRECTLY RECOR DED. THE ONLY OBJECTION THAT THE AO TOOK WAS THE NOTING LIC BEL OW THE FIGURES OF 9 AND 6. HE CONCLUDED THAT THE APPELLANT HAD RE CEIVED RS. 9 LAKHS AND RS. 6 LAKHS NOT ONLY IN THE FORM OF LIC P OLICIES BUT ALSO IN CASH. ACCORDING TO ME THERE WAS ABSOLUTELY NO BASI S FOR THE AO TO INTERPRET THE NOTINGS IN SUCH A MANNER. IF THE APPE LLANT WAS TO RECEIVE THE SAID AMOUNTS BOTH I CASH AND ALSO IN TH E FORM OF LIC POLICIES THEN THE TOTALS OF THE TWO INSTALMENTS WO ULD WORK OUT TO RS. 30 LAKHS AND RS. 24 LAKHS WHICH WOULD TAKE THE TOTA L RECEIPT OF RS. 54 LAKHS WHICH DEFINITELY WAS NOT THE AMOUNT EITHE R AGREED UPON OR RECEIVED BY THE APPELLANT AS WAS CLEARLY EVIDENCED BY THE AGREEMENT AS WELL AS HE WRITTEN CONFIRMATION FROM T HE LEGAL MANAGER OF M/S. BATA INDIA LTD. THE AOS INTERPRET ATION WAS THEREFORE INCORRECT. IN ANY CASE WITHOUT ANY EVIDE NCE AT HIS DISPOSAL TO SHOW THAT THE APPELLANT HAD RECEIVED THE SAID AM OUNTS OF RS. 9 LAKHS AND RS. 6 LAKHS BOTH IN THE FORM OF LIC POLIC IES AS WELL AS IN CASH IT WAS NOT JUSTIFIED ON HIS PART TO COME TO S UCH A CONCLUSION. IV) IN VIEW OF THE ABOVE I AM CONVINCED THAT THE A DDITION MADE BY THE AO OF THE SUM OF RS. 9 LAKHS EVEN AFTER OBTAINI NG CONFIRMATION FROM M/S. BATA INDIA LTD. U/S.133(6) WAS CONTRARY TO EVIDENCE ON RECORD. HE IS THEREFORE DIRECTED TO DELETE THE SA ID ADDITION OF RS.9 LAKHS. 82. THE ABOVE PARAS CLEARLY SHOW THAT THE LEARNED CIT(A ) HAS EXAMINED ALL THE ASPECTS OF THE ISSUE AND CORRECTLY ADJUDICATED THE SAME. WE AGREE WITH THE FIRST APPELLATE AUTHORITY THAT IF THE FIGURE OF RS. 9 LAKHS IS INTERPRETED AS CASH + LIC ANNUITY THEN THE CONTRACT AMOUNT WOULD INCREASE AND THIS IS NOT THE CASE OF ASSESSING OFFICER AND THEREFORE WE FIN D NOTHING WRONG WITH THE ORDER OF THE LEARNED CIT(A) AND CONFIRM THE SAME. 83. IN REGARD TO GROUND NO.1(G) AFTER HEARING BOTH TH E PARTIES WE FIND THAT THE ASSESSING OFFICER REFERRED TO PAGE 3 OF THE SEI ZED DIARY (ANNEXURE A-4) AND NOTED THAT ENTRIES IN RESPECT OF LUX CONTRACT HAD CERTAIN OBLITERATIONS. ACCORDING TO HIM AS PER FORENSIC SCIENCE LABORATORY REPORTS SUGGEST THAT ITA NOS.90 & 93/M/08 MS.RANI RAM MUKERJI 37 NOTING WAS 6 + 18 WHICH WAS LATER ON CHANGED TO 6 + 12 = 18. IN RESPONSE TO THE QUERY IT WAS EXPLAINED BY LETTER DA TED 18.12.2001 AS UNDER: THIS IS NOTING REGARDING LUX AD FILM CONTRACT WI TH HINDUSTAN THOMPSON ASSOCIATES LTD. CONTRACT AMOUNT FOR FIRST YEAR AS R S.18 00 000/- AND RS. 25 00 000/- FOR SECOND YEAR. SIGNING RS. 6 00 000/- RECEIVED ON 15.8.1998 AND RS. 12 00 000/- RECEIVED ON 18.7.1999. SECOND Y EAR CONTRACT OF RS. 25 LAKHS WAS CANCELLED. PREVIOUSLY ONLY LST YEAR 18 LA CS AND 2ND YEAR 25 LACS WAS WRITTEN. SUBSEQUENTLY WHEN A CHEQUE OF RS.6 LAC S WAS RECEIVED THEN MR. RAM MUKERJI CHANGED 8 TO 2 (I.E. 18 LACS TO 12 LACS) AND BETWEEN 1 ST YEAR AND 12 LACS HE INSERTED 6 AND + SIGN. HE ALS O ADDED = AND 18/- AS RANI MUKERJI HAS RECEIVED RS. 6 LACS AND RS.12 L ACS WAS BALANCE. LEDGER A/C. OF RS. 6 LACS AND RS.12 LACS RECEIVED F ROM HINDUSTAN THOMPSON ASSOCIATES LTD. (AD AGENCY FOR LUX) IS EN CLOSED. THESE AMOUNTS HAVE BEEN ACCOUNTED IN REGULAR BOOKS OF ACCOUNT AGREEMENT IS ENCLOSED. 84. IN THE ABOVE DOCUMENT A.O. OBSERVED THAT SINC E THE FIGURE OF 18 HAS BEEN OBLITERATED TO 12. THEREFORE RS. 6 LAKHS REP RESENTING NOTHING BUT CASH RECEIVED FROM THE ABOVE CONTRACT AND ACCORDINGLY W AS ADDED TO THE INCOME OF THE ASSESSEE. 85. BEFORE THE CIT(A) THE EXPLANATION BEFORE THE AO WAS REITERATED. IT WAS FURTHER EXPLAINED THAT CONTRACT WITH HTA FOR LUX A DVERTISEMENT WAS ENTERED ON 30.7.1998 FOR RS. 18 LAKHS OUT OF WHICH RS. 6 LA KHS WAS THE SIGNING AMOUNT AND RS. 12 LAKHS WAS TO BE PAID AFTER COMPLE TION OF SHOOTING OF THE AD. FILM. THE CONTRACT COULD BE REVIEWED FOR ONE MO RE YEAR AT THE REMUNERATION OF RS.24 LAKHS. THE SAME FACTS WERE EXPLAINED IN THE STATEMENT RECORDED FROM SHRI RAM MUKHERJEE ON 10.1. 2001. THE LEARNED CIT(A) AGREED WITH THE SUBMISSIONS AND DELETED THE ADDITION. 86. BEFORE US THE LEARNED DEPARTMENTAL REPRESENTATI VE REFERRED TO PAPER BOOK PAGE 336 AND POINTED OUT THAT ORIGINALLY THE AMOUNT WAS NOTED AS 6 + 18 LAKHS WHICH HAS BEEN LATER ON OBLITERATED TO 6 +12 AND THEREFORE TOTAL CONTRACT MUST HAVE BEEN FOR RS. 24 LAKHS AND AO WA S JUSTIFIED IN TREATING THE SUM OF RS. 6 LAKHS AS CASH REMUNERATION RECEIVE D BY THE ASSESSEE. ITA NOS.90 & 93/M/08 MS.RANI RAM MUKERJI 38 87. ON THE OTHER HAND THE LEARNED COUNSEL FOR THE A SSESSEE STRONGLY SUPPORTED THE ORDER OF THE LEARNED CIT(A) AND EMPHA SIZED THAT ONLY THE FIGURE OF RS. 18 WAS WRITTEN AND WHEN RS. 6 LAKHS W AS RECEIVED IT WAS MADE AS +6 +12 =18. HE SUBMITTED THAT 18 SHOULD BE CONSI DERED AS PART OF OBLITERATED ENTRY WHICH WAS FOUND FROM THE SEIZED D IARY WHICH CLEARLY SHOWS THAT TOTAL CONTRACT OF RS. 18 LAKHS AND EARLIER FIG URE OF RS. 18 LAKHS WAS GENERATED INTO 6+12. 88. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFUL LY AND WE FIND THAT THE CIT(A) HAS DECIDED THE ISSUE VIDE PARA 98 OF HI S ORDER WHICH READS AS UNDER: I HAVE CAREFULLY CONSIDERED THE VIEW TAKEN BY THE AO AND THE VERY BRIEF OBSERVATIONS MADE BY HIM IN THE ASSESSMENT ORDER. I HAVE ALSO GONE THROUGH THE APPELLANTS SUBMISSIONS AS WELL AS A PH OTOCOPY OF PAGE 3 OF THE SAID DIARY AND THE AGREEMENT BETWEEN THE APPEL LANT AND HTA DATED 30.7.98. I AM OF THE VIEW THAT THE NOTING OF 18 LA CS WAS OVERWRITTEN AND CHANGED TO 6 + 12 LACS = 18. THE OVERWRITING IS CLEARLY VISIBLE AND SO IS THE FIGURE OF 18 BELOW THE FIGURE OF 12. IN FACT THE INSERTION OF THE FIGURE OF 6 AND THE OVERWRITING OF THE FIGURE OF 12 HAD BEEN ACCEPTED BY THE APPELLANT IN NO UNCERTAIN TERMS. SE CONDLY THE OPINION OF THE FORENSIC SCIENCE LABORATORY DID NOT CHANGE T HE FACT THAT THE APPELLANT HAD RECEIVED A TOTAL SUM OF RS . 18 LAKHS ONLY FROM HTA FOR ACTING IN THEIR AD-FILMS TO PROMOTE THE PRODUCTS OF LUX. THIS WAS SUBSTANTIATED BY THE COPY OF THE AGREEMENT BETWEEN THE APPELLANT AND HTA WHICH WAS AVAILABLE WITH THE AO AND WHICH UNFOR TUNATELY HE CHOSE TO IGNORE. THE ISSUE WOULD BECOME CLEARER BY REPRODUCTION OF PAGE 3 OF THE DIARY WHICH IS AS UNDER: NO.2 ADD FILM LUX CONTRACT 30/7/98 1 ST YEAR 6 + 12 LACS = 18/- (ORIGINAL NOTING- 1 ST YEAR 18 LACS) 2 ND YEAR 25 LACS CANCELLED SIGNING 6 LACS RECD. ALL THE APPELLANT DID WAS TO REPLACE THE FIGURE OF 18 LACS WITH 6 + 12 LACS = 18. THIS WAS BECAUSE AS STATED BY THE APPE LLANT AND HER FATHER THE SUM OF RS . 18 LAKHS WAS RECEIVED IN TWO INSTAL MENTS I.E. RS.6 LAKHS WAS FIRST RECEIVED AS THE SIGNING AMOUNT. IN ORDER TO INDICATE THE TWO INSTALMENTS THE FIGURE OF 6 WAS INSERTED WHILE THE FIGURE OF 18 WAS CHANGED TO 12 WHICH EQUALED 18 WHICH WAS ALSO I NSERTED. THE AOS CONTENTION IS THAT THE APPELLANT HAD ACTUALLY RECEI VED 6 + 18 = 24 LAKHS. FIRSTLY HE HAD NO EVIDENCE TO PROVE HIS ASSUMPTION THAT THE TOTAL RECEIPT WAS OF RS. 25 LAKHS. SECONDLY SINCE HE WAS RELYING ONLY ON THE NOTINGS OF THE SAID PAGE THEN HE WOULD HAVE TO GO BY THE NO TINGS ITSELF WHICH CLEARLY STATED THAT A TOTAL OF RS. 18 LAKHS WAS ONL Y RECEIVED BY THE ITA NOS.90 & 93/M/08 MS.RANI RAM MUKERJI 39 APPELLANT. HE COULD NOT IGNORE THE FACT THAT APART FROM THE INSERTION OF THE FIGURE OF 6 + AND THE OVERWRITING OF 12 A FURTHER INSERTION OF =18 WAS ALSO MADE WHICH INDICATED CLEARLY THE TOT AL SUM RECEIVED BY THE APPELLANT. HE COULD NOT UNDER ANY CIRCUMSTANCES BE SO SELECTIVE IN HIS INTERPRETATION OF SUCH NOTINGS. IN VIEW OF THE ABOVE I HAVE NO HESITATION IN TAKIN G THE VIEW THAT THE NOTINGS ON PAGE 3 OF THE DIARY MARKED A-4 WAS INCOR RECTLY AND UNFAIRLY INTERPRETED BY THE A.O. THE OPINION OF THE FORENSIC SCIENCE NEITHER SAID ANY THING NEW NOR DID IT JUSTIFY OR FORM THE BASIS FOR THE ADDITION. IN THE CIRCUMSTANCES SUCH AN ADDITION CANNOT BE SUSTAINED . I THEREFORE DIRECT THE AO TO DELETE THE ADDITION OF RS. 6 LAKHS. 89. THE ABOVE PARA CLEARLY SHOWS THAT THE FIGURE OF RS. 18 LAKHS HAS BEEN REPLACED BY +6+12= 18 AND THIS SEEMS TO BE MOST NAT URAL INTERPRETATION OF THE FIGURES. OTHERWISE =18 WILL HAVE NO MEANING. I T IS TO BE NOTED THAT THESE OBLITERATIONS WERE MADE BEFORE THE SEARCH AND EVEN =18 WAS THERE BEFORE THE SEARCH. THEREFORE WE AGREE WITH THE REASONINGS GIVEN BY THE LEARNED CIT(A) WHILE GIVING THIS RELIEF AND CONFIRM HIS ORD ER. 90. IN REGARD TO GROUND NO.1(H) THE FACTS ARE THAT DUR ING THE ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER EXAMINED PAGE 6 A ND NOTED THAT THERE ARE CERTAIN ENTRIES REGARDING GEETA ARTS AND SOUTHERN S TAR GIVING DETAILS OF PAYMENTS RECEIVED WHICH WERE EXPLAINED VIDE LETTER DATED 18.12.2001 AS UNDER: CONTRACT AMOUNT RS. 30 00 000/- SIGNING AMOUNT RS. 1 00 000/- RECEIVED ON 2.12.1998 . DIRECTOR MUKESH UDESHI GEETA ARTS. RECEIVED RS. 3 00 000/- AS SIGNING AMOUNT FROM SOUT HERN STAR COMBINE ON 3.12.1999. LIC ANNUITY OF RS. 9 00 000/- IS NOT YET TAKEN RS.4 00 000/- BEFORE THE DUBBING OF THE FILM. RS.5 00 000/- RECEIVED FROM SOUTHERN STAR COMBINE O N 15.9.2000 RS.3 00 000/- RECEIVED FROM SOUTHERN STAR COMBINE ON 4.12.2000 BALANCE OF RS.10 00 000/- NOT RECEIVED TILL DATE. THE AMOUNTS RECEIVED HAVE BEEN ACCOUNTED IN REGULAR BOOKS OF ACCOUNT. AGREEMENT IS ENCLOSED. 91. THE ASSESSING OFFICER OBSERVED THAT AGREEMENT WAS D ATED 24.7.2000 WHEREAS THE ENTRIES REFLECTED THE PAYMENTS PRIOR TO THAT DATE. THERE WERE OTHER ENTRIES FOR WHICH NO EXPLANATION WAS GIVEN. T HEREFORE FURTHER ENQUIRIES ITA NOS.90 & 93/M/08 MS.RANI RAM MUKERJI 40 WERE MADE AND ULTIMATELY ASSESSEE REPLIED VIDE LETT ER DATED 9.4.2002 AS UNDER: THIS IS A NOTING REGARDING PICTURE PRODUCED BY SOU THERN STAR COMBINE AND PARTNER OF SOUTHERN STAR COMBINE SHRI MUKESH UD ESHI PROP. GEETA ARTS STARRING ANIL KAPOOR IN THE LEAD ROLE. THE CON TRACT AMOUNT WAS RS. 30 00 000/-. SIGNING AMOUNT OF RS. 1 00 000/- WAS R ECEIVED ON 2.12.1998 FROM ONE OF THE PARTNER MUKESH UDESHI. SI GNING AMOUNT OF RS. 3 00 000/- WAS ALSO RECEIVED FROM SOUTHERN STAR COMBINE ON 3.12.1999. CHEQUE OF RS. 5 00 000/- RECEIVED FROM S OUTHERN STAR COMBINE ON 6.9.2000 DISHONOURED BY BANK AND FRESH C HEQUE OF RS.5 00 000/- WAS RECEIVED ON 15.9.2000. BECAUSE OF THIS DISHONOURING OF CHEQUE AND RECEIPT OF SIGNING AMOUNT TWICE RS. 1 LAC FROM MUKESH UDESHI AND RS. 3 LACS FROM SOUTHERN STAR COMBINE. R AM MUKERJI WRONGLY WRITTEN SIGNING AMOUNT OF RS. 3 LACS TWICE AND MADE A CLERICAL ERROR. HE WROTE THAT HE HAS RECEIVED 3+3+5. BUT IN REALITY HE HAS RECEIVED 1+3+5. THIS WAS CLERICAL ERROR ON THIS P AGE. THERE ARE SO MANY CUTTINGS OBLITERATION OF FIGURES MAINLY DUE T O PAYMENTS RECEIVED BOTH FROM THE PARTNER OF THE PICTURE SOUTHERN STAR COMBINBE AS WELL AS FROM PRODUCER AND ALSO BECAUSE OF DISHONOURED CH EQUE. YOU WILL ALSO OBSERVE THAT THE TOTAL OF 11 (PD) AND 19 (BAL) IS COMING 30 OF THE CONTRACT PRICE. THIS FACT IS VERIFIABLE FROM THE RE CORD. WE ARE ENCLOSING HEREWITH XEROX COPY OF DISHONOURED CHEQUE OF DENA B ANK. 92. THE ASSESSING OFFICER NOTICED THAT EXPLANATION OF T HE ASSESSEE WAS QUITE CONTRADICTORY BECAUSE AT THE FIRST INSTANCE A SSESSEE HAD CLAIMED THAT SHE HAS RECEIVED 1+3+5 THAT IS RS. 9 LACS AND LATER ON SHE HAS TRIED TO JUSTIFY THE FIGURES 3+3+5=11 AND 6+9+4= 19 AND 11+19=30 I.E . CONTRACT AMOUNT. HE ALSO DID NOT FIND ANY FORCE IN THE CLAIM THAT CO NFUSION OF THE DISHONOURED CHEQUE OF RS. 5 LACS BECAUSE NONE OF THESE FIGURES CAME TO 5. ACCORDINGLY HE HELD THAT FIGURE 3+3+5 = 11 IS AN UNDISCLOSED R ECEIPT OF A SUM OF RS. 11 LAKHS NOT REFLECTED IN THE BOOKS AND ACCORDINGLY AD DED THE SAME TO THE UNDISCLOSED INCOME OF THE ASSESSEE. 93. IN APPEAL PROCEEDINGS IT WAS CONTENDED THAT CONTRA CT WITH SOUTHERN STAR COMBINE VIDE AGREEMENT DATED 24.2.200 0 WAS FOR RS. 30 LAKHS AND M/S. SOUTHERN STAR COMBINE ISSUED A CONFI RMATION LETTER DATED 15.2.2002 IN WHICH THEY HAD CONFIRMED THE PAYMENT O F RS. 18 LAKHS AND THE BALANCE OF RS. 12 LAKHS WAS STILL RECEIVABLE. THE LEARNED CIT(A) DELETED THE ADDITION VIDE PARA 116 AND 117 AND 118 WHICH ARE AS UNDER: ITA NOS.90 & 93/M/08 MS.RANI RAM MUKERJI 41 I HAVE CAREFULLY CONSIDERED THE FINDINGS A ND CONCLUSIONS OF THE AO AND ALSO THE WRITTEN SUBMISSIONS OF THE APPE LLANT. THE NOTINGS ON PAGE 6 OF THE DIARY HAVE ALSO BEEN SCRUT INIZED. THE AOS CONCLUSION THAT THE SUM OF RS. 11.00 LACS REPR ESENTED PAYMENTS RECEIVED BY THE APPELLANT IN CASH WAS BASE D ON ASSUMPTIONS AND WAS NOT BACK BY ANY LOGIC. I OBSERVE THAT AS PER THE NOTINGS ON THE IMPUGNED PAGE IT IS CLEARLY MENTIONED THAT THE CONTRACT AMOUNT WAS R S.30.00 LACS. THE APPELLANT HAD RECEIVED THE SIGNING AMOUNT OF RS .3.00 LACS AND WAS TO RECEIVE AN LIC POLICY FOR RS.90.00 LACS. LEAVING A BALANCE OF RS. 18.00 LACS. OUT OF THIS AMOUNT RS. 4.00 LAKHS WAS TO BE RECEIVED BEFORE DUBBING AND THE REMAINING SUM OF RS. 14.00 LACS WAS TO BE RECEIVED DURING THE PRODUCTION OF TH E FILM. AGAINST THE BALANCE OF RS. 18.00 LACS THE APPELLANT RECEIV ED A CHEQUE FOR RS.5.00 LACS ON 05.09.2000 AND ANOTHER CHEQUE OF RS .3.00 LACS ON 04.12.2000. THUS DURING THE PRODUCTION OF THE FILM THE APPELLANT HAD RECEIVED RS.8.00 LACS OUT OF RS.14.00 LACS LEAV ING A BALANCE OF RS.6.00 LACS. IT WAS THESE TRANSACTIONS WHICH WAS SUMMED BY SHRI RAM MUKHERJEE AT THE BOTTOM OF THE NOTINGS ON THE IMPUGNED PAGE AS UNDER: (3+3+5)=11 BAL (6+9+4)=19 THE DISPUTE WAS WITH REGARD TO THE SUM OF RS.11.00 LAKHS. FROM THE DISCUSSION ABOVE IT MAY BE CLEARLY SENT T HAT THE FIRST FIGURE OF 3 REPRESENTED THE SIGNING AMOUNT. THE S ECOND FIGURE OF 3 REPRESENTED THE CHEQUE FOR RS.3.00 LAKHS RECEIV ED ON 04.12.2000 WHILE THE FIGURE OF 5 REPRESENTED THE CHEQUE OF RS.5.00 LAKHS RECEIVED ON 05.09.2000 WHICH ACCORDI NG TO THE APPELLANT HAD BOUNCED AND WAS SUBSEQUENTLY RECEIVE D ON 15.09.2000. AS FOR THE BALANCE FIGURES THE FIGURE OF 6 REPRESENTED THE BALANCE OUT OF RS.14.00 LAKHS AFTER REDUCING THE SUMS OF RS.3.00 LAKHS AND RS. 5.00 LAKHS. THE FIGUR E OF 9 REPRESENTED THE LIC POLICY TO BE RECEIVED WHILE THE FIGURE OF 4 REPRESENTED THE AMOUNT TO BE RECEIVED BEFORE DUBBIN G. THUS IF ONE WAS TO READ THE ENTIRE NOTING ON THE SAID PAGE IN A SEQUENCE THAN THE FIGURES IN THE BRACKETS WHICH WAS THE SUB JECT MATTER OF DISPUTE BETWEEN THE AO AND THE APPELLANT WOULD ST AND CLEARLY EXPLAINED. WHAT EMERGES FROM CLOSE SCRUTINY OF THE NOTINGS ON THE IMPUGED PAGE IS THAT THE SUM OF RS. 11.00 LACS WAS NOT ANY RECEIPT WHICH WAS EITHER UNRELATABLE THROUGH THE NO TINGS MADE EARLIER ON THE SAME PGE NOR WAS IT A FIGURE WHICH WAS NOT ACCOUNTED FOR IN THE BOOKS OF ACCOUNT. IN ANY CASE THE AO DID NOT DISPUTE TYE TOTAL CONTRACT AMOUNT OF RS.3.00 LA KHS. THE AGREEMENT BETWEEN THE APPELLANT AND THE PRODUCER OF THE FILM CLEARLY DEMONSTRATES THAT THE TOTAL CONTRACT AMOUN T WAS RS.30.00 LACS WHICH WAS RECEIVED BY THE APPELLANT. THIS WAS CONFIRMED BY THE CONFIRMATION WHICH THE AO RECEIVED FROM M/S. SO THERN STAR COMBINE. IN VIEW OF THE ABOVE THE ADDITION OF RS. 11.00 LACS IS DELETED. ITA NOS.90 & 93/M/08 MS.RANI RAM MUKERJI 42 94. BEFORE US THE LEARNED DEPARTMENTAL REPRESENTATIVE R EFERRED TO PAGE 338 OF THE PAPER BOOK AND PARA 8.6 OF THE ASSESSMEN T ORDER AND AFTER GOING THROUGH THE ENTRIES SUBMITTED THAT THERE WAS A CLEA R DISCREPANCY IN THE FIGURES AND THEREFORE THE ADDITION WAS JUSTIFIED. 95. ON THE OTHER HAND THE LEARNED COUNSEL FOR THE AS SESSEE REITERATED THE SUBMISSIONS BEFORE THE CIT(A) AND ALSO SUPPORTE D THE ORDER OF THE CIT(A). 96. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ACCORDINGL Y AND FIND THAT THERE IS DEFINITELY SOME CONTROVERSY IN SPITE OF TH E FIGURES NOTED IN THE DIARY. WE FURTHER FIND THAT AS PER CONFIRMATION LETTER PL ACED AT PAGE 360 OF THE PAPER BOOK THE PAYMENTS MADE BY M/S. SOUTHERN STA R COMBINE TOTALED TO RS. 18 LAKHS AND THEY HAVE SHOWN THE BALANCE AT RS. 12 LAKHS. HOWEVER IF THE FIGURE NOTED IN THE DIARY WHICH IS REPRODUCED A BOVE ARE ADDED THEN THE TOTAL UPTO 35 LAKHS. IT IS NOT CLEAR WHETHER THE E NTRY REGARDING SUM OF RS. 4 LAKHS TO BE RECEIVED BEFORE DUBBING IS INCLUDING IN THE BALANCE OF RS. 10 LAKHS. THEREFORE IN THE INTEREST OF JUSTICE. WE SE T ASIDE THE ORDER OF THE LEARNED CIT(A) AND RESTORE THE MATTER BACK TO THE F ILE OF THE AO FOR FRESH EXAMINATION. NEEDLESS TO SAY THAT ASSESSEE SHOULD B E PROVIDED ADEQUATE OPPORTUNITY TO PUT HER CASE. THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 97. IN REGARD TO GROUND NO. 1(I) AFTER HEARING BOTH T HE PARTIES WE FIND ON EXAMINATION OF PAGE 7 OF THE DIARY (ANNEXURE A-4 ) AO NOTICED THAT THERE WAS A NOTING IN THE TITLE SHRIKANT FOR A CONTRACT AMOUNT OF RS.36 LAKHS AND SINGING AMOUNT WAS MENTIONED AT RS. 51 000/-. HE OB SERVED THAT PAYMENT PRIOR TO PRODUCTION INCLUDING SIGNING AMOUNT WAS RS . 15 51 000/- AND AS THE ASSESSEE HAD NOT GIVEN ANY DETAILS NOR ANY AGREEMEN T WAS PRODUCED THEREFORE ASSESSEE MUST HAVE RECEIVED A SUM OF RS. 15 51 000/- AND ACCORDINGLY ADDED THIS AMOUNT TO THE UNDISCLOSED IN COME OF THE ASSESSEE. ITA NOS.90 & 93/M/08 MS.RANI RAM MUKERJI 43 98. BEFORE THE CIT(A) IT WAS MENTIONED THAT THE FILM W AS CANCELLED DUE TO NON-AVAILABILITY OF THE HERO. IT WAS CLAIMED THA T ASSESSEE NEVER GOT ANY ADVANCE PAYMENT AND THEREFORE THERE WAS NO QUESTIO N OF RETURNING THE SAME. IT WAS FURTHER ARGUED THAT A LETTER DATED 25. 8.2000 THROUGH WHICH M/S. LONDON FILM INTERNATIONAL HAD CONFIRMED THE TERMINA TION OF THE CONTRACT. LIST OF LIC WAS ALSO FURNISHED WHICH SHOWED NO LIC ANNUI TY POLICY FOR RS. 15 LAKHS WAS ISSUED BY THIS FIRM IN FAVOUR OF THE ASSE SSEE. 99. LEARNED CIT(A) AGREED WITH THIS SUBMISSION AND DELE TED THE ADDITION VIDE PARA 123 WHICH READS AS UNDER: I HAVE CAREFULLY CONSIDERED THE DETAILS FILED BY T HE APPELLANT IN THE ASSESSMENT PROCEEDINGS AND ALSO IN THE APPELLA TE PROCEEDINGS. A READING OF THE IMPUGNED PAGE MAKES I T AMPLY CLEAR THAT THE CONTRACT WAS FOR RS.36.00 LACS AND T HE CONTRACT WAS SUBSEQUENTLY CANCELLED. MR. RAM MUKHERJEE WAS CLEAR LY MENTIONED ON THE IMPUGNED PAGE THAT THE PRODUCER CA NCELLED THE PRODUCTION AND ARRANGEMENT STANDS TERMINATED. WHERE THEN WAS A SCOPE ON MAKING ADDITION OF RS. 1551000/- PURPORT EDLY RECEIVED IN CASH. THE AO HAS MADE A CASUAL OBSERVATION THAT THE APPELLANT HAS NOT GIVEN DETAILS OF THE ADVANCES RETURNED BACK AND AS ACCOUNTING IS MADE ON CASH BASIS THE AMOUNT OF RS. 15 51 000/- IS TREATED AS UNDISCLOSED INCOME OF THE ASSESSEE FO R THE BROKER PERIOD 01.04.2000 TO 26.09.2000. THE OBSERVATION OF THE AO DEFIES LOGIC. THE AO IGNORED THE LETTER OF THE PROD UCER FURNISHED BEFORE HIM CERTIFYING THE CANCELLATION OF THE CONTR ACT. A COPY OF THE LETTER WAS FILED BY THE APPELLANT IN THE PAPER BOOK. I SEE NO REASON TO UPHOLD THE ORDER OF THE AO. THE SAID ADDI TION IS DELETED. 100. BEFORE US THE LEARNED DEPARTMENTAL REPRESENTATIVE R EFERRED TO PAGE 338 AND PARA 8.7 OF THE ASSESSMENT ORDER. HE CONTEN DED THAT ASSESSEE HAS BEEN MAINTAINING THE DIARY VERY METICULOUSLY AND IF NO TRANSACTION TOOK PLACE THEN THERE WAS NO NEED TO MENTION ABOUT THIS CONTRA CT IN THE DIARY. THIS CLEARLY SHOWS THAT ASSESSEE MUST HAVE RECEIVED THIS SUM. HE FURTHER REFERRED TO PAGE 69 OF THE PAPER BOOK WHICH IS COPY OF THE LETTER DATED 25.8.2000 AND POINTED OUT THAT THE LINE WE REQUEST YOU TO KI NDLY RETURN THE ADVANCE PAID TO YOUR GOODSELF HAS BEEN CROSSED BY PUTTING A LINE ON THESE WORDS WHICH CLEARLY SHOWS THAT THE ADVANCE MUST HAVE BEEN PAID. ITA NOS.90 & 93/M/08 MS.RANI RAM MUKERJI 44 101. ON THE OTHER HAND THE LEARNED COUNSEL FOR THE ASSE SSEE STRONGLY SUPPORTED THE APPELLATE ORDER AND SUBMITTED THAT TH E NOTING ITSELF SHOWS THAT SUM OF RS.15 LAKHS WAS TO BE RECEIVED IN THE FORM O F A LIC POLICY WHICH WAS NEVER ISSUED. THEREFORE THIS SUM COULD NOT HAVE BE EN TAXED AT ALL. FURTHER ASSESSEE NEVER RECEIVED ANY ADVANCE AND THE LETTER DATED 25.8.2000 CLEARLY CONFIRMS THAT FACT. HE SUBMITTED THAT THERE IS DEF INITELY A CROSSING ON THE LINE WE REQUEST YOU TO KINDLY RETURN THE ADVANCE PAID TO YOU BUT AFTER THAT IN HAND-WRITTEN LINE IT IS STATED MUTUALLY CANCELLED OUR COMMITMENT. HE ARGUED THAT IF AO HAD ANY DOUBT HE SHOULD HAVE EXA MINED THE PARTY BY SUMMONING HIM. 102. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFULLY. WE FINE THAT ENTRIES MADE ON PAGE 7 OF THE DIARY COPY OF WHICH I S PLACED AT PAPER BOOK PAGE 338 AND AS EXTRACTED BY THE CIT(A) WHICH READ S AS UNDER: SHRIKANT HERO GOVINDA CONTRACT 36 SIGNING 51 000 LIC 15 DURING PRODUCTION 20.49 PRODUCER CANCELLED THE PRODUCTION ARRANGEMENT STANDS TERMINATED 25/9/00 103. THE ENTRY ITSELF CLEARLY SHOWS THAT THIS FILM WAS C ANCELLED. THIS FACT IS FURTHER STANDS CONFIRMED BY LETTER DATED 25.8.2000. FURTHER THE QUESTION ARISES WHEN THE ASSESSEE HAS BEEN MAINTAINING THE D IARY VERY METICULOUSLY AS STATED IN VARIOUS PARAS OF THE DIARY AND IF NO ADVANCE WAS RECEIVED THEN WHY ANY ENTRY WAS MADE AT ALL. WE WOULD AGREE WITH THE SUBMISSION OF THE LEARNED DEPARTMENTAL REPRESENTATIVE THAT THE WAY TH E DIARY HAS BEEN WRITTEN THE ONLY INFERENCE IS THAT THE ASSESSEE MUST HAVE R ECEIVED SOME ADVANCE. HOWEVER AT THE SAME TIME THE SIGNING AMOUNT IS S HOWN AT RS.51 000/-. THE FACT OF ADVANCE FURTHER STANDS CONFIRMED THE WA Y THE REQUEST FOR ITA NOS.90 & 93/M/08 MS.RANI RAM MUKERJI 45 RETURNING THE ADVANCE IN THE LETTER DATED 25.8.2000 WITH THE NARRATION: WE REQUEST YOU TO KINDLY RETURN THE ADVANCE PAID TO YO UR GOODSELF HAS BEEN CROSSED. THEREFORE THE ASSESSEE MUST HAVE RECEIVED SOME ADVANCE. AT THE SAME TIME AGAINST THE ENTRY OF 15 IT IS CLEARLY MEN TIONED LIC WHICH MEANS THE ASSESSEE WAS TO RECEIVE RS. 15 LAKHS BY WAY OF LIC WHICH WAS NEVER RECEIVED AND THIS FACT HAS NOT BEEN CONTROVERTED BE FORE US. THEREFORE THE ONLY ASSUMPTION IS THAT ASSESSEE RECEIVED A SUM OF RS. 51 000/- FOR SINGING OF THIS PICTURE AND THEREFORE WE SET ASIDE THE OR DER OF THE CIT(A) AND CONFIRM THE ADDITION TO THE EXTENT OF RS.51 000/-. 104. IN REGARD TO GROUND NO. 1(J) AFTER HEARING BOTH THE PARTIES WE FIND THAT DURING THE ASSESSMENT PROCEEDINGS THE ASSESSI NG OFFICER NOTICED THAT FOLLOWING ENTRY WAS THERE ON PAGE 21 OF THE DIARY ( ANNEXURE A-4) S.K. FILM INTERNATIONAL DIRECTOR SHANKAR HERO ANIL KAPOOR AMRISH PURI 51 SIGNING 9 00 000 AMT. 1 00 000/RECD. 105. IN RESPONSE TO THE QUERY IT WAS EXPLAINED THAT THE CONTRACT AMOUNT WITH SURYA MOVIES FOR THE FILM NAYAK WAS RS. 51 L AKHS AND SIGNING AMOUNT OF RS. 10 LAKHS WAS RECEIVED ON 7.6.2000 AND RS. 10 LAKHS WAS RECEIVED ON 10.10.2000 . BOTH THESE AMOUNTS HAVE BEEN ACCOUNT ED FOR IN THE REGULAR BOOKS OF ACCOUNT. AO NOTED THAT NO EXPLANATION HAS BEEN GIVEN IN RESPECT OF THE ENTRIES FOR RS. 9 LAKHS AND RS. 1 LAKH AND THER EFORE FURTHER QUERIES WERE RAISED. IN RESPONSE TO THIS QUERY THE FOLLOWING REP LY VIDE LETTER DATED 9.4.2002 WAS GIVEN: LETTER DATED 9.4.2002 FAMILY OF RANI MUKERJI BELIEVES IN NUMEROLOGY: YOUR HONOUR MUST HAVE SEEN FROM THE RECORD THAT MIST OF THE PAYMENTS AND RECEIPTS ARE ALWAYS DIVISIBLE BY 3. THUS THEY ACCEPT AMOUNTS IN 3 6 9 12 15 21 36 ETC. AND ALSO MAKE PAYMENTS IN THE SAME MANNER. IN ITA NOS.90 & 93/M/08 MS.RANI RAM MUKERJI 46 CASE OF SRI SURYA MOVIES FOR FILM NAYAK STARRING ANIL KAPOOR AND DIRECTED BY SHANKAR AND PRODUCED BY A.M. RATNAM SI GNING AMOUNT WAS RS. 10 00 000/-. BUT AS THEY BELIEVE IN NUMEROLOGY THEY RECEIVED RS.9 00 000/- AND RS. 1 00 000/- ON T HE SAME DAY ON 7.6.2000 FROM SRI SURYA MOVIES THROUGH S.K. FILM INTERNATIONAL AND THEREFORE THE TWO SEPARATE ENTRIES IN THE DIAR Y. BOTH THESE AMOUNTS HAVE BEEN ACCOUNTED IN THE REGULAR BOOKS OF ACCOUNT. 106. HOWEVER THE AO NOTICED THAT THE THEORY OF NUMEROL OGY IS AN AFTER THOUGHT AND HE QUOTED VARIOUS EXAMPLES WHERE ASSESS EE HAD RECEIVED PAYMENTS IN VARIOUS OTHER MOUNTS FOR EXAMPLE RS. 95 000/- FOR THE FILM HELLO BROTHER RS. 1 51 000/- FOR THE FILM HAD K AR DE APNE ETC. THEREFORE HE REJECTED THE NUMEROLOGY THEORY AND ADDED THE SUM OF RS. 10 LAKHS AS UNDISCLOSED INCOME OF THE ASSESSEE. 107. BEFORE THE CIT(A) IT WAS SUBMITTED THAT A CONTRACT FOR THE PICTURE NAYAK WAS ENTERED INTO FOR RS. 51 LAKHS ON 15.2.2 001 AND A SUM OF RS. 10 LAKHS WAS RECEIVED AS SIGNING AMOUNT. BALANCE PAYME NT WAS TO BE RECEIVED AT VARIOUS STAGES INCLUDING LIC POLICY OF RS. 12 L AKHS. IT WAS FURTHER SUBMITTED THAT A SUM OF RS. 10 LAKHS WAS RECEIVED I N TWO PARTS I.E. RS. 9 LAKHS AND RS. 1 LAKH RESPECTIVELY AND THEREFORE A DDITION WAS NOT CALLED FOR. 108. LEANED CIT(A) AFTER EXAMINING THE SUBMISSION DELETE D THIS ADDITION VIDE PARA 136 WHICH READS AS UNDER: I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORDER AS WELL AS THE SUBMISSIONS OF THE APPELLANT. I FIND CONSIDERABLE M ERIT IN THE ARGUMENTS OF THE APPELLANT. THE AGREEMENT BETWEEN T HE APPELLANT AND PRODUCER WAS ENTERED ON 15.2.2001. THE AGREEMEN T SHOWS THAT THE SIGNING AMOUNT WAS RS. 10.00 LACS. THE APPELLAN TS FATHER HAS NOTED THIS AMOUNT AS RS. 9.00 LACS AND RS . 1.00 LA C. RESPECTIVELY. THE WORDS ENTERED ATAINST THESE TWO FIGURES WAS MEN TIONED AS SIGNING AMOUNTZ AND BOTH THESE AMOUNTS WERE BRACK ETED ON ONE SIDE AND BEYOND THE BRACKET WAS NTOED THE WORD REC D.. THERE IS ABSOLUTELY NO DOUBT THAST A CONSOLIDATED SUM OF RS. 10.00 LACS WAS RECEIVED BY THE APPELLANT AS SIGNING AMOUNT. THE AP PELLANT EXPLAINED TO THE AO THAT THE SUM OF RS. 9.00 LAC AND RS. 1.00 LAC WAS RECEIVED THROUGH TWO SEPARATE DEMAND DRAFTS AND WAS ENTERED IN THE BOOKS OF ACCOUNTS. THE AO WAS WRONG IN HIS CONCLUSION THA T THE TOTAL SIGNING AMOUNT RECEIVED BY THE APPELLANT RS. 20.00 LACS OUT OF WHICH RS. 10.00 LACS HAS BEEN ACCOUNTED FOR. I HAVE NO HE SITATION IN DELETING THE ADDITION OF RS. 10.00 LACS MADE BY THE AO AS UNACCOUNTED RECEIPTS. ITA NOS.90 & 93/M/08 MS.RANI RAM MUKERJI 47 109. BEFORE US THE LEARNED DEPARTMENTAL REPRESENTATIVE R EFERRED TO PAGE 345 OF THE PAPER BOOK AND PAGE 30 AND 31 OF THE ASS ESSMENT ORDER AND ARGUED THAT WHY THERE WAS NO EXPLANATION REGARDING RECEIPT OF TWO PAYMENTS OF RS. 9 LAKHS AND RS. 1 LAKH. 110. ON THE OTHER HAND THE LEARNED COUNSEL FOR THE ASSE SSEE REITERATED THE SUBMISSIONS MADE BEFORE THE APPELLATE AUTHORITY . HE ALSO REFERRED TO PAGE 379 OF THE PAPER BOOK WHICH IS COPY OF THE AC COUNTS OF THE ASSESSEE IN THE BOOKS OF M/S. SREE SURYA MOVIES. HE REFERRED TO ENTRY DATED 27.5.2000 WHEREIN AGAINST THE PAYMENT OF RS. 10 LAKHS THE DET AIL CLEARLY SHOWS THAT CHEQUE/DD FOR RS. 9 LAKHS AND RS.1 LAKH WERE ISUSED . THUS IT IS CLEAR THAT RECEIPT OF RS. 10 LAKH WHICH HAS ALREADY BEEN SHOWN IN THE BOOKS OF ACCOUNT WAS CONSISTING OF TWO AMOUNTS. 111. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFULL Y AND FIND FORCE IN THE SUBMISSION OF THE LEARNED COUNSEL FRO THE ASSES SEE. PAGE 379 OF THE PAPER BOOK READS AS UNDER: M/S. SRI SURYA MOVIES [200 0-2001] GENERAL LEDGER A/C. CODE EHO 151 MS. RANI MUKARJEE PAGE NO.1 TANS DATE A/C. PARTICULARS NARRATION D EBIT CREDIT NO. CODE_ 01/04/2000 BY BALANCE B/F 0.00 810 27/05/2000 AB1001 TO ANDHRA BANK C/A CHQ.968 895 VIDE DDS 900000 AND RS.100000/-ISSUED 1 0 000.00 4194 10.10.2000 AB2025 TO AMERICAN EXPRESS [510 CHQ. 730359 ISSUED AS REAN. 10 00 000.00 7484 13/02/2001 AB2025 TO AMERICAN EXPRESS [510 CHQ. 737313 ISSUED AS REAN 5 00 000.00 97725 31/03/2001 EH01 BY ARTISTE REMUNERATION BEING A MOUNT TRANSFERRED 25 00 000.00 31/03/2001 TO BALANCE C/D. 0.00 --------------------------------------------------- --------------------------------------------------- ------------------------ TOTAL 25 00 000.00 25 00 000.00 --------------------------------------------------- --------------------------------------------------- ------------------------ 112. THE FIRST ENTRY ON 27.5.2000 CLEARLY SHOWS THAT AN AMOUNT OF RS. 10 LAKHS PAID TO THE ASSESSEE COMPRISED OF TWO CHEQUES /DDS CONSISTING OF RS. 9 LAKHS AND RS. 1 LAKH AND THIS PAYMENT HAS ALREADY B EEN SHOWN IN THE BOOKS ITA NOS.90 & 93/M/08 MS.RANI RAM MUKERJI 48 OF ACCOUNT. THEREFORE WE FIND NOTHING ON THE ORDER OF THE LEARNED CIT(A) AND CONFIRM THE SAME. 113. IN THE RESULT THE REVENUES APPEAL IS PARTLY ALLOW ED. ORDER PRONOUNCED ON THIS 7 TH DAY OF JANUARY 2010. SD. SD. (ASHA VIJAYARAGHAVAN) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI DATED THE 7 TH JANUARY 2010. COPY TO: 1. THE ASSESSEE 2. THE DCIT CENTRAL CIR. 22 MUMBAI 3. THE CIT CENTRAL-II MUMBAI 4. THE CIT(A)-IV MUMBAI 5. THE DR D BENCH MUMBAI BY ORDER /TRUE COPY/ KN/ ASST. REGISTRAR ITAT MUM BAI ITA NOS.90 & 93/M/08 MS.RANI RAM MUKERJI 49 S.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 18/21.12.09 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 22.12.09 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7. FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER