Statements recorded during a search cannot solely justify income additions without corroborative evidence, especially when made under duress.

आदेश/ORDER

PER MANU KUMAR GIRI (Judicial Member)

This appeal by the revenue is arising out of the order of the Commissioner of Income Tax (appeal) [‘CIT(A)’ in short], Chennai-19 u/s. 250 of the Income Tax Act, 1961 (hereinafter the ‘Act’) in order No.ITBA/APL/S/250/2024- 25/1067780469(1) dated 20.08.2024.

2. The revenue has raised the following grounds of appeal:

1. The order of the learned Commissioner of Income Tax (Appeals) is erroneous on facts of the case and in law.

2 The Ld.CIT(A) erred in deleting the addition of Rs.18.76 crores received by the assessee on account of advances from distribution rights and estimated net profit of the assessee which was arrived at on basis of seized material found during the course of the search in the case of the assessee and the sworn statements recorded under oath from the partners.

2.1 The Ld.CIT(A) erred in not observing that the assessee themselves have acceded Rs.13.08 crores against distribution advances out of the total quantum of Rs.18.76 crores and accordingly disclosed Rs.9,24,59,000/- against distribution rights in the revised statement of income filed & the assessee further agreed to offer Rs.3,83,41,000/- vide their letter dated 06.06.2022 as the distribution advances could not be tagged to specific parties alongwith net profit of Rs.5.08 crores as submitted in their sworn statements and as evident from the seized material ANN/RR/SKT/LS/S-1 & ANN/KVK/SKT/LS/S found during the course of search.

2.2 The Ld.CIT(A) erred in deleting the addition of Rs.19,11,15,000/-on the ground that it was part of the total estimated income of Rs.95,67,20,000/- under the Minimum Guarantee Agreements (MGA) entered by the assesse without making any specific finding for the same or tagging of such MGA receipt vis-à-vis the total receipts either by the assesse or in the findings of the Ld.CIT(A).

2.3 The Ld.CIT(A) erred in deleting the addition on account of expenditure claimed of Rs.8,42,86,529/-, being 10% of the total expenditure of Rs.84,28,65,290/-, by not observing that the AO in his remand report has acceded to the transactions made through banking channels to the tune of Rs.59,78,85,870/- but objected to transactions amounting to Rs.24,49,79,424/- which were not evidenced with supporting documents, on the ground that they were based on an estimate.

3. For these grounds and any other ground including amendment of grounds that may be raised during the course of the appeal proceedings, the order of learned CIT(Appeals) may be set aside and that of the Assessing Officer be restored.

3. Brief facts of the case are as under:

The assessee is a Partnership Firm, engaged in the business of cine production. The first movie produced by the Appellant Firm is named as "PULI". A search u/s 132 of the Act was carried out at the residential premises of the partners of the assessee firm on 30.09.2015, accordingly the appellant firm was also subjected to search u/s 132 of the Act on 30.09.2015. During the course of search certain incriminating materials in the form of loose sheets, books & documents were found and seized. The Authorised officer confronted about the loose sheets, books & documents with Shri. Shibu.K who is one of the partner of the assessee firm and recorded a statement u/s 132(4) of the Act. In the statement recorded Shri. Shibu.K admitted that the seized materials consist of various transactions related to the making of movie "PULI" which is the first film produced by the assessee firm. Further he also admitted an amount of Rs. 13.08 crores and Rs. 5.68 Crores (totalling to Rs. 18.76 crores) as undisclosed income in the hands of the assessee firm in the FY 2015-16.

During the course of search, the Authorised Officer also recorded a statement u/s 132(4) of the Act from another of the partner of the assessee firm named Shri. P.T. Selva Kumar, wherein he admitted in response to question no. 10 put forth to him that the total cost incurred in the production of the movie is Rs. 65,70 Crores. He also con