Research › Search › Judgment

Kerala High Court · body

2012 DIGILAW 186 (KER)

Commissioner Of Income Tax v. A. H. Khais

2012-02-10

C.N.RAMACHANDRAN NAIR, K.VINOD CHANDRAN

body2012
Judgment :- RamachandranNair, J. 1. This is an appeal filed by the Revenue against the order of the Tribunal confirming the CIT(Appeals) order cancelling block assessment made on the respondent-assessee. We have heard Senior counsel Sri.P.K.R.Menon appearing for the Revenue and Adv. Sri.Arun Raj appearing for the respondent-assessee. 2. Block assessment was made on the respondent-assessee based on evidence collected in search conducted on 29.7.1997 along with search in the premises of the film distributor by name Sri.P.D.Abraham @ Appachan of Swargachitra Films and assessee's own brother Sri.A.M.Fazil, another film director. The questions raised in the appeal relate 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 is based on evidence recovered in the course of search in the form of realisation statement from the premises of another partner namely, Sri.A.M.Fazil who is assessee's brother. The addition relates to 40% share income which the respondent-assessee is entitled to as partner of the firm M/s.Khais Productions, wherein assessee's brother Sri.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 we have upheld the determination of undisclosed income from the very same film "Pappayude Sontham Appoose". In that judgment we have sustained addition of 20% income of the assessee's brother for the year 1994-95 for the reasons stated in detail in the said judgment. We extract hereunder the findings from that judgment on this issue. "The next effective ground that deserves to be considered is the addition of Rs.2,20959/- for the assessment year 1994-95 and Rs.62,611/-for the assessment year 1995-96 being the extra income received for the film "Pappayude Sontham Appoose". Since the amount involved for 1995-96 is very small, we do not propose to consider the same. However, the addition of Rs.2,20,959/- for 1994-95 deserves to be considered because evidence available by way of realisation statement clearly establish undisclosed income received by the assessee. The clear finding is that the realisation statement recovered from the assessee's premises with the same date showed recovery of Rs.1,26,61,856/- and Rs.1,72,87,353/-. Even though both realisation statements dated 30.9.1996 disclose realisation amounts substantially different leaving a margin of around Rs.56 lakhs, the assessee could not explain as to which is the correct one. However, corroboration was rendered in the statement given by the distributor namely, Sri.P.D.Abraham who stated that actual realisation was Rs.1,72,87,353/-. Even though both realisation statements dated 30.9.1996 disclose realisation amounts substantially different leaving a margin of around Rs.56 lakhs, the assessee could not explain as to which is the correct one. However, corroboration was rendered in the statement given by the distributor namely, Sri.P.D.Abraham who stated that actual realisation was Rs.1,72,87,353/-. It is seen that the Assessing Officer was very considerate in accepting another statement of the said distributor who said that Rs.55 lakhs was spent for printing and publicity and the same was, therefore, allowed by the Assessing Officer leaving only a balance of Rs.4,73,103/-. The Assessing Officer gave a further deduction of Rs.1,69,532/- being the amount declared by the assessee in the return filed. The addition of Rs.2,20,959/- is the undisclosed income from this film attributable for the assessment year 1994-95. The first appellate authority as well as the Tribunal deleted the addition by merely stating that there is no corroboration from the assessee. We are unable to uphold the order of the CIT(Appeals) or the Tribunal confirming it because the distributor who is the author of the realization statement recovered from the assessee's premises gave clearcut statement that actual amount realised was Rs.1,72,87,353/-and not the lower amount found in another statement of the same date. In fact, from out of this, the officer allowed Rs.55 lakhs as claimed by the distributor towards print and publicity expenses. Assessee's 20% income from the balance distributed income is only assessed as undisclosed income for the year 1994-95. We do not find any justification for the Tribunal to ignore the documentary evidence recovered which is corroborated by the statement given by the distributor. We, therefore, reverse the orders of the first appellate authority and that of the Tribunal on this issue and restore the addition of Rs.2,20,959/- towards undisclosed income from the film "Pappayude 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's brother, we have not considered the addition for the year 1995-96 in respect of the same film as the amount involved was low. The findings therein apply to this assessee also for the year 1995-96 . In the case of assessee's brother, we have not considered the addition for the year 1995-96 in respect of the same film as the amount involved was low. The findings therein apply to this assessee also for the year 1995-96 . Based on the findings in the above said judgment we allow this appeal in part by upholding the assessment of assessee's share of income from the firm which 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 the case of this assessee alone. Consequently we allow the appeal to the extent indicated above i.e. by sustaining addition of Rs.4.5 lakhs for the film "Pappayude Sontham Appoose" for the year 1994-95 only.