×Latest Case Laws on Income Tax by various Income Tax Appellate Tribunals in India
These are the latest case laws decided by various Income Tax Appellate Tribunals (ITAT) of India on Income Tax which have been published recently. The case laws are open for discussion and we invite expert comments from our members on its applicability and effect on relevant issues.
All these appeals filed by the assessee and revenue are directed against the orders passed by Ld CIT(A) for assessment years 2009-10, 2010-11 and 2011-12. All these appeals were heard together and are being disposed of by this common order, for the sake of convenience.
2. The assessee is engaged in the business of event management like conducting shows/concerts/award ceremonies etc. The assessee is part of Cineyug Group. The revenue carried out search and seizure operations u/s 132 of the Act in the case of Cineyug Group on 25.11.2009. On the very same day, a survey operation u/s 133A of the Act was conducted on Kusegaon Fruits & Vegetables. The name of the assessee was changed into Cineyug Media & Entertainment P Ltd. The name of M/s Kusegaon Fruits & Vegetables was changed into M/s Kusegaon Realty P Ltd. The main promoters of Cineyug are S/s Karim Morani, Ali Morani and Mohamed Morani. M/s Kusegaon belongs to “Dynamix Balwas” group company (in short “DB Group”). The main promoters of DB group are S/Shri Vinod Goenka and Shahid Balwa.
3. During the course of search proceedings, incriminating documents relating to various events conducted by the assessee were found. The information given in the website of the assessee about the events organized by them was also collected. On collation of the details and upon comparison of the same with the entries made in the books of accounts, the AO noticed that the assessee has not accounted for certain events, claimed to have been conducted by it in its website n some cases, the amount recorded was different from that one found in the incriminating materials. Hence in AY 2009-10, the AO made addition towards suppression of receipts to the tune of Rs.5.02 crores. We shall discuss the details thereof in the ensuing paragraphs.
4. The search operations also revealed that the assessee was part of series of payments made to M/s K TV, Chennai. During the years 2008 and 2009, a total sum of Rs.200 crores were seen paid to K TV by Cineyug, the assessee herein, whose sources were found to be DB reality group of companies. The monies were routed through M/s Dynamix and M/s Kusegaon to Cineyug, which, in turn, was paid to K TV. The analysis of the books of accounts revealed that the assessee herein, M/s Cineyug, has received a sum of Rs.206.25 crores, i.e., a sum of Rs.28.50 crores was received during the FY 2008-09 relevant to AY 2009-10 and the remaining 177.75 crores was received during the year relevant to AY 2010-11. The transfer of money had taken place in the following manner:-
(a) M/s Dynamix Reality transferred a sum of Rs.209.251 crores to M/s Kusegaon.
(b) M/s Kusegaon transferred Rs.206.25 crores to M/s Cineyug.
(c) M/s Cineyug transferred Rs.200 crores to M/s K TV.
The AO further noticed that the above cited money transactions were alleged to be related to 2G spectrum Scam and the entire transactions became subject matter of criminal investigation by CBI and charge sheets have also been filed.
5. The AO also noticed that the assessee M/s Cineyug has claimed to have received funds from M/s Kusegaon towards allotment of Shares and ICD. However, the entries made in the books of accounts of M/s Kusegaon, Cineyug were showing different picture, i.e., as loans and advances. The AO has discussed the inconsistencies in a detailed manner in paragraph 17 and 18 of his order.
6. The AO noticed that the assessee herein has received a sum of Rs.28.50 crores from M/s Kusegaon and the same was used to make payment of Rs.25.00 crores to M/s K TV. The AO considered the same as transfer of money by M/s Kusegaon to M/s K TV, wherein the assessee has acted as a facilitator. Accordingly the difference amount of Rs.3.50 crores (Rs.28.50 crores (-) Rs.25.00 crores) was considered by the AO as facilitation fee received by the assessee for transfer of funds. Accordingly the AO assessed the above said amount of Rs.3.50 crores as income of the assessee.
7. Now we shall take up the appeal filed by the assessee for AY 2009-10. The first issue contested by the assessee relates to the addition of facilitation fee of Rs.3.50 crores made by the AO. The Ld CIT(A) confirmed the said addition and hence the assessee is challenging the same.