Ita/244/2009 Of The Commissioner Of Income Tax, Kottayam v. Shri.a.h.khais, Alappuzha

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN FRIDAY, THE 10TH DAY OF FEBRUARY 2012/21ST MAGHA 1933 ITA.No. 244 of 2009 ( ) -----------------------(ITA.18/COCH/2001 of I.T.A.TRIBUNAL,COCHIN BENCH) APPELLANT/APPELLANT: ------------------------ THE COMMISSIONER OF INCOME TAX, KOTTAYAM. BY ADV. SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT/RESPONDENT: --------------------------- SHRI.A.H.KHAIS, DARUSALAM, ZACHARIA WARD ALAPPUZHA. BY ADV. SRI.S.ARUN RAJ THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 08-12-2011, THE COURT ON 10-02-2012 DELIVERED THE FOLLOWING: ANNEXURE A: TRUE COPY OF ASSESSMENT ORDER OF THE ASSESSING OFFICERDT.30.7.1999. ANNEXURE B: TRUE COPY OF ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)DT.27.3.2011. ANNEXURE C: COPY OF ORDER OF THE APPELLATE TRIBUNAL DT.30.1.2004. TRUE COPY P.S. TO JUDGE C.N.RAMACHANDRAN NAIR, &K.VINOD CHANDRAN, JJ. .................................................................... I.T.A. No.244 of 2009 ....................................................................Dated this the 10[th] day of February, 2012. JUDGMENT Ramachandran Nair, J. This is an appeal filed by the Revenue against the order of theTribunal confirming the CIT(Appeals) order cancelling blockassessment made on the respondent-assessee. We have heard Seniorcounsel Sri.P.K.R.Menon appearing for the Revenue and Adv. Sri.ArunRaj appearing for the respondent-assessee. 2. Block assessment was made on the respondent-assessee basedon evidence collected in search conducted on 29.7.1997 along withsearch in the premises of the film distributor by name Sri.P.D.Abraham@ Appachan of Swargachitra Films and assessee's own brotherSri.A.M.Fazil, another film director. The questions raised in the appealrelate to the addition of undisclosed income of Rs.4.5 lakhs for 1994-95 and Rs.1,17,140/- for the assessment year 1995-96. The addition isbased on evidence recovered in the course of search in the form ofrealisation statement from the premises of another partner namely,Sri.A.M.Fazil who is assessee's brother. The addition relates to 40% ITA 1583/2009 share income which the respondent-assessee is entitled to as partner ofthe firm M/s.Khais Productions, wherein assessee's brotherSri.A.M.Fazil has 20% shares. We have today disposed of I.T.A.No.1583/2009 filed by the Revenue against Sri.A.M.Fazil, wherein wehave upheld the determination of undisclosed income from the verysame film “Pappayude Sontham Appoose”. In that judgment we havesustained addition of 20% income of the assessee's brother for the year1994-95 for the reasons stated in detail in the said judgment. Weextract hereunder the findings from that judgment on this issue. “The next effective ground that deserves to be considered is theaddition of Rs.2,20959/- for the assessment year 1994-95 andRs.62,611/- for the assessment year 1995-96 being the extra incomereceived for the film “Pappayude Sontham Appoose”. Since theamount involved for 1995-96 is very small, we do not propose toconsider the same. However, the addition of Rs.2,20,959/- for 1994-95deserves to be considered because evidence available by way ofrealisation statement clearly establish undisclosed income received bythe assessee. The clear finding is that the realisation statementrecovered from the assessee's premises with the same date showedrecovery of Rs.1,26,61,856/- and Rs.1,72,87,353/-. Even though bothrealisation statements dated 30.9.1996 disclose realisation amountssubstantially different leaving a margin of around Rs.56 lakhs, theassessee could not explain as to which is the correct one. However, ITA 1583/2009 ITA 1583/2009 corroboration was rendered in the statement given by the distributornamely, Sri.P.D.Abraham who stated that actual realisation wasRs.1,72,87,353/-. It is seen that the Assessing Officer was veryconsiderate in accepting another statement of the said distributor whosaid that Rs.55 lakhs was spent for printing and publicity and the samewas, therefore, allowed by the Assessing Officer leaving only a balanceof Rs.4,73,103/-. The Assessing Officer gave a further deduction ofRs.1,69,532/- being the amount declared by the assessee in the returnfiled. The addition of Rs.2,20,959/- is the undisclosed income fromthis film attributable for the assessment year 1994-95. The firstappellate authority as well as the Tribunal deleted the addition bymerely stating that there is no corroboration from the assessee. We areunable to uphold the order of the CIT(Appeals) or the Tribunalconfirming it because the distributor who is the author of the realisationstatement recovered from the assessee's premises gave clearcutstatement that actual amount realised was Rs.1,72,87,353/- and not thelower amount found in another statement of the same date. In fact,from out of this, the officer allowed Rs.55 lakhs as claimed by thedistributor towards print and publicity expenses. Assessee's 20%income from the balance distributed income is only assessed asundisclosed income for the year 1994-95. We do not find anyjustification for the Tribunal to ignore the documentary evidencerecovered which is corroborated by the statement given by thedistributor. We, therefore, reverse the orders of the first appellateauthority and that of the Tribunal on this issue and restore the additionof Rs.2,20,959/- towards undisclosed income from the film “Pappayude ITA 1583/2009 Sontham Appoose” for the year 1994-95.” Following the findings above we sustain the addition of 40%share income received by the assessee from the above said film i.e.Rs.4.5 lakhs for the assessment year 1994-95. In the case of assessee'sbrother, we have not considered the addition for the year 1995-96 inrespect of the same film as the amount involved was low. The findingstherein apply to this assessee also for the year 1995-96 . Based on thefindings in the above said judgment we allow this appeal in part byupholding the assessment of assessee's share of income from the firmwhich is 40% i.e. Rs.4.5 lakhs for the year 1994-95. For the year 1995-96, we do not think the addition should be separately considered in thecase of this assessee alone. Consequently we allow the appeal to theextent indicated above i.e. by sustaining addition of Rs.4.5 lakhs for thefilm “Pappayude Sontham Appoose” for the year 1994-95 only. C.N.RAMACHANDRAN NAIRJudge K.VINOD CHANDRANJudge