Madras High Court
Shri S.J.Suryah vs The Income Tax Officer on 25 January, 2021
TCA.No.604 of 2019
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 25.01.2021
CORAM :
The Honourable Mr.Justice T.S.SIVAGNANAM
and
The Honourable Ms.Justice R.N.MANJULA
Tax Case Appeal No.604 of 2019
Shri S.J.Suryah ...Appellant
Vs
The Income Tax Officer,
Media Ward III,
Chennai - 34. ...Respondent
APPEAL under Section 260A of the Income Tax Act, 1961 against the
order dated 27.07.2016 made in ITA.No.1863/Mds/2014 on the file of the
Income Tax Appellate Tribunal, Chennai Bench 'C' for the assessment year
2002-03.
For Appellant: Ms.Vandhana Vyas
for Mr.R.Sivaraman
For Respondent: Mr.M.Swaminathan, SSC
assisted by Ms.V.Pushpa, JSC
1/10
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TCA.No.604 of 2019
JUDGMENT
(Delivered by T.S.Sivagnanam,J)
This appeal filed by the assessee under Section 260A of the
Income Tax Act, 1961 ('the Act' for brevity) is directed against the order
dated 27.07.2016 made in ITA.No.1863/Mds/2014 on the file of the Income
Tax Appellate Tribunal, Chennai Bench 'C' ('the Tribunal' for brevity) for the
assessment year 2002-03.
2. The assessee filed this appeal by raising the following
substantial questions of law:
"1. Whether, on the facts and in the
circumstances of the case, the Tribunal was right
in law in disallowing an amount of Rs.30,00,000/-
as an "undisclosed investment" u/s. 69 of the Act
without considering the letter from Indira
Productions Pvt. Ltd. addressed to the ADIT,
Investigation Unit IV(1), evidencing the nature of
payment made to the Appellant?
2. Whether, on the facts and in the
circumstances of the case, the Tribunal was right
in law in not considering the fact that the revised
computation filed by the Appellant wherein he has
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TCA.No.604 of 2019
categorically admitted the income received by him
in the specific Assessment Year which has not be
considered by the Respondent?
3. Whether, on the facts and in the
circumstances of the case, the Tribunal committed
an error in not considering the revised
computation which reflects the actual income of
the Appellant as it is a settled law that only the
real income of the Appellant could be taxed?
4. Whether on the facts and in the
circumstances of the case, the Tribunal was right
in law in accepting the revised computation of
Rs.1,27,28,414/- inclusive of Rs.34,13,386/- which
was written back in the subsequent year and
therefore it is not taxable in the hands of the
Appellant for the current Assessment Year?"
3. We have heard Ms.Vandhana Vyas, learned counsel appearing
on behalf of the appellant and Mr.M.Swaminathan, learned Senior Standing
Counsel assisted by Ms.V.Pushpa, learned Junior Standing Counsel
appearing for the respondent/Revenue.
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TCA.No.604 of 2019
4. We need not labour much to go into the factual matrix, as the
Tribunal, with regard to one of the issues, remanded back the matter to the
Assessing Officer for a fresh consideration. The direction issued by the
Tribunal is to the following effect:
"3.4...........
The Assessing Officer has not considered this
amount. In our opinion, the amount returned by
the assessee in the revised computation of
statement is to be accepted at Rs.1,27,28,414/-
subject to our finding in para 3.5 herein below
and instead of making addition of Rs.1.00 crore by
overlooking the revised statement. Accordingly, we
direct the Assessing Officer to consider the revised
computation of income for the assessment year
2002-03 with reference to the income at
Rs.1,27,28,414/- subject to our finding in para 3.5
herein below. In other words, the assessee is not
entitled for loss of Rs.11 lakhs in respect of
"Kushi" Telugu movie."
5. It is the submission of the learned counsel appearing for the
appellant/assessee that out of the total income of Rs.1,27,28,414/- for
direction of Hindi version of the movie "Kushi", the assessee did not receive
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TCA.No.604 of 2019
a sum of Rs.34,13,386/- and Mr.Bonny Kapoor has also written the said sum
in his books of accounts in the assessment year 2005-06 and as such, there
is no incidence for the Department to arrive at a conclusion that the entire
amount is taxable. Further, it is submitted that the communication received
by the said Mr.Bonny Kapoor, which was referred to by the Assessing
Officer, was not furnished to the assessee and the assessee was at a loss in
not being able to properly defend his case. It is also submitted that the
assessee included a sum of Rs.34,13,386/- erroneously by oversight and the
said sum was written back in the subsequent year by the said Mr.Bonny
Kapoor and the amount was neither accrued nor received by the assessee. It
is further submitted that when the assessee submitted a revised computation
along with a letter dated 28.03.2005, the amount of Rs.34,13,386/- was
shown as outstanding payment and this amount was never received by the
assessee.
6. Considering this fact, we are of the opinion that an open
remand to the Assessing Officer to reconsider the issue would meet the ends
of justice.
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TCA.No.604 of 2019
7. Therefore, we set aside the order of direction issued by the
Tribunal in paragraph 3.4 of the impugned order and remand the issue back
to the Assessing Officer for a fresh consideration leaving all points open to
be canvassed by the assessee and such remand will be by way of open
remand.
8. The next issue is with regard to the disallowance of Rs.30 lakhs
as undisclosed investment under Section 69 of the Act.
9. It is the submission of the learned counsel appearing for the
appellant that the Assessing Officer disallowed the said amount without
taking note of the communication sent by M/s.Indira Productions Pvt. Ltd.
addressed to the Assistant Director Income Tax, Investigation Unit, IV(1),
Chennai, evidencing the nature of payment. If this payment has been taken
into consideration, in all probabilities, the disallowance should not have
been made. Though the Tribunal is aware of this fact, it faulted the assessee
for not producing Mr.Prasad Potluri to appear in person before the
Assessing Officer. However, the fact remains that the statement of accounts
was available with the Assessing Officer, which should have been
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TCA.No.604 of 2019
considered by the Assessing Officer. Further, the assessee, while admitting
that there was a cash deposit of Rs.30 lakhs in the assessee's bank account,
stated that this amount has been received by him from M/s.Indira
Productions Pvt. Ltd., Hyderabad towards advance for their film "Nani",
which was released in the month of May 2004 and that confirmation letters
were awaited and the same would be furnished with an application under
Rule 46A of the Income Tax Rules. However, the assessee was non suited
on the ground that they could not substantiate the submission.
10. The prayer made before this Court by the assessee is to afford
an opportunity to the assessee to substantiate that the said investment is an
undisclosed investment.
11. Considering the nature of the transaction involved, which is
verifiable, we are of the view that this issue can also be reconsidered by the
Tribunal.
12. Accordingly, the finding rendered by the Tribunal confirming
the disallowance of Rs.30 lakhs as undisclosed investment under Section 69
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TCA.No.604 of 2019
of the Act is set aside and the matter is remanded back to the Assessing
Officer for a fresh consideration.
13. Since it has been pointed out by the learned Senior Standing
Counsel that the assessee is not co-operating with the earlier proceedings,
we direct the assessee to co-operate in the assessment proceedings and any
failure to extend co-operation to the Department would be viewed seriously.
If the assessee, in spite of this observation/direction, fails to co-operate,
then the Assessing Officer is entitled to proceed and take a decision in
accordance with law.
14. In the result, the tax case appeal is allowed and the matter is
remanded on the aforementioned two grounds to be considered by the
Assessing Officer afresh in accordance with law. Consequently, the
substantial questions of law are left open. No costs.
(T.S.S.,J.) (R.N.M.,J.)
25.01.2021
Index: Yes/No
Speaking Judgment/Non speaking Judgment
hvk
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TCA.No.604 of 2019
To
1. The Income Tax Appellate Tribunal,
'A' Bench, Chennai.
2. The Income Tax Officer,
Media Ward III,
Chennai - 34.
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TCA.No.604 of 2019
T.S.SIVAGNANAM,J
AND
R.N.MANJULA,J
hvk
TCA.No.604 of 2019
25.01.2021
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