ORDER

R.K. Panda, Accountant Member - This appeal filed by the assessee is directed against the order dated December 3, 2008 of the Commissioner of Income-tax (Appeals)-XI, Mumbai, relating to the assessment year 1999-2000.

2. The assessee in his grounds of appeal No. 1 has challenged the validity of the reassessment proceedings which has been upheld by the learned Commissioner of Income-tax (Appeals). In the second ground the assessee has challenged the order of the learned Commissioner of Income-tax (Appeals) in confirming the addition of Rs. 20 lakhs made by the Assessing Officer.

3. The facts of the case in brief are that the original return of income was filed by the assessee on October 8, 1999 declaring total income of Rs. 20,76,110 which was processed under section 143(1) on February 29, 2000 accepting the returned income. Subsequently, proceedings under section 147 of the Act were initiated and notice under section 148 was issued and served on the assessee on March 24, 2006 for the reasons recorded as under :

"In this case the return of income for the assessment year 1999-2000 was processed under section 143(1) on February 29, 2000 accepting the returned income of Rs. 20,76,110 (inclusive of agricultural income of Rs. 33,663). M/s. Tips Films P. Ltd., 501, Durga Chambers, 5th floor. Linking Road, Khar (West), Mumbai 400 052 vide undated letter filed on May 10, 2004 has informed that they had effected cash payment of Rs. 20,00,000 (rupees twenty lakhs only) to Mr. Saif Ali Khan in addition to payment of Rs. 20,00,000 (Rupees twenty lakhs only) made by cheque for rendering services as artiste in the film 'Kachche Dhaage'. M/s. Tips Films P. Ltd. in their undated letter has also informed that the cash payment of Rs. 20,00,000 (rupees twenty lakhs only) was not recorded in the books of account and was made in cash to Mr. Saif Ali Khan. During the course of assessment proceedings for the assessment year 2000-01, it is found that the payments mentioned above relates to a period prior to February 1999 and as such, falls within the assessment year 1999-2000. I have, therefore, reason to believe that income chargeable to tax of Rs. 20,00,000 (Rupees twenty lakhs only) has escaped assessment for the assessment year 1999-2000."

4. The assessee requested the Assessing Officer to treat the original return of income filed as in response to the notice under section 148 and also requested to provide him the reasons recorded for initiating the proceedings under section 148. After rejecting the objections raised by the assessee during assessment proceedings, the Assessing Officer proceeded to assess the income. The Assessing Officer noted that a search and seizure action under section 132 was carried out in the case of M/s. Tips Films P. Ltd., and its directors on July 27, 1999. During the course of search in the residence of one of the directors Shri Kumar S. Taurani, certain papers were seized, which were kept behind the photo frame kept in his dressing room and seized as annexure A-1 containing pages 1-23, in which in page No. 4 certain expenditure were recorded being payment to artists. One of the name included in it is of the assessee Shri Saif Ali Khan against whom a payment of Rs. 20,00,000 have been recorded. The Assessing Officer noted that during the course of assessment proceedings in the case of Tips Films P. Ltd. the payments recorded in page 4 as stated above have been treated as cash expenditure not recorded in the books of Tips Films P. Ltd. Accordingly, Shri Kumar Taurani vide his letter submitted on May 10, 2004 and June 10, 2004 has submitted that the amount of Rs. 20,00,000 have been made to the assessee for the services rendered as an artiste in the film "Kachche Dhaage" in cash, over and above Rs. 20,00,000 paid in cheque.

5. During the course of assessment proceedings for the assessment year 2000-01, the assessee was given a copy of the loose paper in which the above mentioned transactions were recorded and was asked to explain why the said cash payment of Rs. 20,00,000 shall not be treated as his concealed income. In response to this the assessee's representative vide letter dated December 27, 2005 expressed his desire to cross examine the person representing Tips Films P. Ltd. Accordingly, an opportunity was given by the Assessing Officer to the assessee on January 9, 2006 and Shri Kumar Taurani, director of Tips Films P. Ltd. was cross-examined by the assessee. During the course of cross-examination Shri Kumar Taurani reconfirmed the cash payments as submitted by the letters mentioned above. However, during the course of cross examination it was stated by Mr. Taurani that the film Kachche Dhaage was released in February 1999 and the cash payments as above were made prior to the release of the film. Since the payments do not pertain to the previous year relevant to the assessment year 2000-01, the assessment year in question was reopened and the proceedings initiated.

6. The assessee requested the Assessing Officer not to make any addition on account of the following reasons :

No date was mentioned in the said paper, nor was the film "Kachche Dhaage" mentioned.
The seized paper did not indicate the year or years to which the alleged unaccounted money relate.
There is no indication that the amount in question is cash or unaccounted payment.
A loose paper of this nature may not be genuine.
It could be a ploy of the Tips people to avoid taxes which the Department appears to have allowed as business deduction.
The party searched was Mr. Kumar Taurani of Tips and not the assessee.
In cross-examination, Mr. Taurani gave vague and evasive replies on which no reliance can be placed.
Mr. Taurani did not remember the date on which such payment was made, place or timing of payment and the person to whom paid.
The assessee requested not to make addition on the basis of such loose paper.

7. Rejecting the various explanation given by the assessee and considering the fact that Shri Kumar Taurani, director of the Tips Films P. Ltd. vide letters filed on May 10, 2004 and June 10, 2004 had again reiterated during the course of cross-examination by the assessee the Assessing Officer held that the same leads to the circumstantial evidence that payment in cash of Rs. 20,00,000 was accepted by the assessee. The Assessing Officer therefore treated the amount of Rs. 20,00,000 as concealed income of the assessee being cash payments received from M/s. Tips Films P. Ltd. for acting in the film "Kachche Dhaage".

8. In appeal, the assessee filed written submissions, the gist of which, are as under :

The admission made by the party searched binds him (for e.g., Mr. Taurani) and not the assessee.
The assessee had received Rs. 20 lakhs in cheque which has been recorded in his books.
The ratio of the decision in Additional Commissioner Of Income-Tax, Bombay City-I v. Miss Lata Mangeshkar. [1974] 97 ITR 696 (Bom.) would apply.
The Assessing Officer's letters to the assessee citing the letter from Tips stated that cash payment of Rs. 20 lakhs was mentioned in the said loose paper on various dates and from time to time but not recorded in the regular books of account.
In response to query No. 6 during cross-examination, Mr. Taurani was asked about the date of payment to which he replied that he did not recollect the exact date but should be 1996 or 1999.
The stand taken by Mr. Taurani and Tips are inconsistent because in their letter of May, 2004 it was mentioned that the payments were made on various dates and from time to time whereas in the cross examination Mr. Taurani stated that the payment was made in 1996 or 1999.
The said amount of Rs. 20 lakhs was allowed as expenditure in the hands of Tips in the block assessment relevant to the year ended March 31, 2008. In that case the same could not be taxed in the hands of the assessee in the assessment year 1999-2000.

9. However, the Commissioner of Income-tax (Appeals) was not convinced with the explanation given by the assessee and upheld the action of the Assessing Officer in reopening the assessment as well as making addition of Rs. 20 lakhs. While upholding the action of the Assessing Officer in reopening the assessment, he held that the Assessing Officer came to be in possession of information with regard to unaccounted cash payment to the assessee by Tips. Therefore, it cannot be said that there was no information in the possession of the Assessing Officer on the basis of which he could not have formed reason to believe. According to him "reason to believe" is not the same as "opinion" but is not mere suspicion either. At the stage of issue of notice, the Assessing Officer has to have a basis linking escapement of income through formation of reason to believe. Since in the instant case, the Assessing Officer had information in his possession that the assessee has received unaccounted cash, therefore, the notice issued under section 148 is valid.

10. On merit, while upholding the addition made by the Assessing Officer, he noted that the document found and seized during the course of search indicates payment of Rs. 20 lakhs to the assessee. The entries made in the said paper cannot simply be a figment of imagination. It does relate to specific persons and the amounts are consistent with the amounts paid through recorded channels. Therefore, it could be either recorded payments or payments over and above the recorded payments. Further, Mr. Taurani has consistently taken a stand that these were in the nature of unaccounted payments to the persons concerned including the assessee. Even during the cross-examination he has held on to such stand. Therefore, the Assessing Officer was justified in making the addition of Rs. 20 lakhs. He accordingly rejected the contention of the assessee. Aggrieved with such order of the learned Commissioner of Income-tax (Appeals), the assessee is in appeal before us.

11. Learned counsel for the assessee at the outset referring to the decision of the Tribunal in the case of Asstt. CIT v. Ajay Devgan [IT Appeal No. 4135/Mum/2009] for the assessment year 1999-2000 order dated May 21, 2010 submitted that the Tribunal in the said decision has upheld the reassessment proceeding. However, the said decision is not applicable to the facts of the present case in view of the decision of hon'ble Delhi High Court in the case of Haryana Acrylic Manufacturing Co. v. CIT [2009] 308 ITR 38/[2008] 175 Taxman 262 . He submitted that in the instant case the notice under section 148 was served on the assessee on March 24, 2006 which is just before the completion of six years from the end of the assessment year. Further notice under section 148 was not accompanied with the reasons for reopening of the assessment. Therefore, in view of the decision of the hon'ble Delhi High Court, in the case of Haryana Acrylic Manufacturing Co., the notice issued under section 148 is void.

12. Referring to the decision of the Delhi Bench of the Income-tax Appellate Tribunal in the case of Balwantrai Rai Wadhwan v. ITO [IT Appeal No. 4806/Del/10] for the assessment year 2001-02 order dated January 14, 2011, he submitted that the Tribunal, following the decision of the hon'ble Delhi High Court in the case of Haryana Acrylic Manufacturing Co. (supra) has quashed the reassessment proceedings on the ground that issuance of the notice and the communication and furnishing of reasons would go hand in hand. The reasons are to be supplied to the assessee before the expiry of the period of six years. If it has not been done then validity under section 148 could not be upheld. Since in the instant case, notice under section 148 was served on March 24, 2006 and the reasons for reopening of the assessment was supplied on June 29, 2006, therefore, the notice issued under section 148 becomes barred by limitation in view of the decisions cited above. He accordingly submitted that on this preliminary ground alone the reassessment proceeding should be held as null and void.

13. Now coming to the merits of the case, he submitted that the addition was made on the basis of a loose paper found from the residence and business premises of M/s. Tips Films P. Ltd. and its director on July 27, 1999. Referring to page 3 of the paper book, learned counsel for the assessee drew the attention of the Bench to the said paper and submitted that the same is undated, unsigned and does not contain the name of the picture "Kachche Dhaage". Further, the said seized document does not show any year in which the payment has been made. He submitted that against the name of the assessee an amount of Rs. 20 lakhs has been shown. However, identical amount has been received by the assessee by cheque from the said company, therefore, it cannot be said that the assessee has received an amount of Rs. 20 lakhs in cash over and above the amount of Rs. 20 lakhs received by cheque. He submitted that in absence of corroborative evidence, the seized paper cannot be construed as a valid proof. The statement of Mr. Taurani has no evidentiary value due to number of contradictions and inconsistencies in his statement. He submitted that there is no witness to substantiate that extra money has been paid, the place where cash has been paid to the assessee, the denominations, etc., to the assessee. He submitted that presumption under section 132(4) can only be against Tips Films P. Ltd. and not against the assessee.

14. Referring to the letter dated May 10, 2004 and June 9, 2004 addressed by Tips Films P. Ltd. to the Assistant Commissioner of Income-tax (copies of which are placed, at paper book pages 6 to 8) he submitted that those letters were written by Tips Films P. Ltd. to the Assessing Officer after a period of above five years.

15. Referring to the proceedings of cross-examination recorded during the course of assessment proceedings for the assessment year 2000-01 (copy of which is placed at paper book pages 3 to 5), learned counsel for the assessee drew the attention of the Bench, to the reply given by Mr. Taurani to the question put by the assessee. He submitted that Mr. Taurani in the said statement has stated that, he does not recollect the exact date but it should be 1996 or 1999. He further stated that he does not recollect whom he has handed over the cash, he does not maintain any record for making cash payment, he does not remember the denomination of the cash, he does not remember the place where he made the alleged payment, he does not remember the exact time when he made the payment, he even did not remember whether the cash has been paid directly to the assessee or to any other person. Therefore, in view of all these contradictions, the statement cannot be relied upon. Mr. Taurani was evasive in his replies. Therefore, no emphasis can be given to the loose papers. For this proposition, he relied upon the decision of the hon'ble Bombay High Court in the case of Miss. Lata Mangeshkar (supra) wherein it has been held that entries in the books of account regarding payment to an assessee was not sufficient as there was no guarantee that the entries were genuine.

16. The learned Departmental representative, on the other hand, while challenging the preliminary ground on validity of the reopening of the assessment submitted that the law nowhere mandates the Assessing Officer to give the reasons along with section 148 notice. Referring to page 3 of the paper book he submitted that the papers seized contain the names of different persons including that of the assessee to whom unaccounted cash payments have been made. The assessee has also never disputed that he has not acted in the film "Kachche Dhaage". He submitted that when the assessee received notice under section 148 on March 24, 2006, he has seven days before March 31, 2006 to ask for the reason. However, the assessee filed letter dated May 8, 2006 asking the Assessing Officer to supply the reasons. He submitted that as per the provisions of the Act, when a notice under section 148 is issued, one has to first file the return and then ask for the reasons recorded under section 148. In the instant case the assessee asked the reasons recorded for the reassessment proceeding only on May 8, 2006. Therefore, the notice under section 148 was not required to be accompanied with the reasons recorded. Distinguishing the decisions of the hon'ble Delhi High Court in the case of Haryana Acrylic Manufacturing Co. (supra) he submitted that in the said case there was no indication in the reasons recorded about the failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. Further, the reasons supplied to the assessee are different from the reasons mentioned in the counter affidavit. The period between when the assessee made request for communicating the reason and when counter affidavit filed are fairly very long which was not a reasonable period. Under these circumstances, the hon'ble court came to the conclusion that the notice issued under section 148 is invalid. However, in the instant case no such failures are there. There was proper recording of reasons in the reassessment proceedings. The reasons were supplied to the assessee immediately after the request was made by him, therefore, the validity of the reassessment proceeding cannot be disputed.

17. Now, coming to the merits of the case, he submitted that the assessee has only questioned the date of receipt. He has never said that he had received the money earlier to 1999. This implies that he has received the payment during the impugned assessment year. Referring to the statement, of Mr. Taurani and various letters addressed to the Assessing Officer by Tips Films P. Ltd., he submitted that it has been categorically stated by them that the amount of Rs. 20 lakhs paid in cash to the assessee is over and above the amount of Rs. 20 lakhs paid to him by cheque. So far as the reliance of the decision of the hon'ble jurisdictional High Court in the case of Miss. Lata Mangeshkar (supra), he submitted that the said case is an old case. In the instant case specific details are there, a paper has been found and the director of the company has given his statement. The assessee has never denied that he has not acted in the film. Not a single person as per the loose paper placed at page 3 of the paper book has filed a case against Mr. Taurani or Tips Films P. Ltd. till date. He submitted that the assessee has also acted in the films produced by Tips Films P. Ltd. subsequently.

18. Referring to the provisions of section 292(1) of the Act, he submitted that when the document is found during the course of search under section 132, it may be presumed that the said document belongs to such person and the contents of such document are true.

19. Learned counsel for the assessee, in his rejoinder, again reiterated that a notice under section 148 and reasons recorded for such re-opening go hand in hand. The assessee has nowhere admitted that he had received the money. He submitted that even if the assessee has received unaccounted cash, still the same cannot be taxed in the assessment year 1999-2000 since the director has stated that it is either in 1996 or 1999 during which the amount has been paid. If the money is paid during 1996, the case is time barred. As regards the submission of the learned Departmental representative that so many names are appearing in the seized documents, learned counsel for the assessee submitted that the assessee is least bothered about the others or in the film industry. So far as the argument of the learned Departmental representative that no one has filed a case against Mr. Taurani or Tips Films P. Ltd., he submitted that it tarnishes the public image since everybody will come to know of it. Since it is confined to the Income-tax Department only the assessee preferred not to file any suit.

20. Referring to the decision of the hon'ble Calcutta High Court in the case of Peerless Finance and Investment Co., the decision of the hon'ble Allahabad in the case of Addl. CIT v. Hasmat Rai Raj Pal [1987] 167 ITR 794/32 Taxman 72 and the decision of the hon'ble Delhi High Court in the case of Commissioner Of Income-Tax v. Gupta Abhushan P. Ltd. [2009] 312 ITR 166/178 Taxman 473 (Delhi) , he submitted that the period of escapement has to he clear in the reasons recorded. So far as the argument of the learned Departmental representative regarding the presumption in the case of documents seized, he submitted that the presumption applies to the person who has been searched. In the instant case, the person searched is Tips Films (P.) Ltd. and Mr. Taurani. Therefore the presumption applies to them and not to the assessee.

21. We have considered the rival arguments made by both sides, perused the orders of the Assessing Officer and the learned Commissioner of Income-tax (Appeals) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. Before deciding the legal ground challenging the validity of the reassessment proceedings, we would first like to decide the issue on merit. In the instant case, a piece of paper containing names of different persons of the film industry including that of the assessee was found and seized during the course of search in the premises of M/s. Tips Films P. Ltd. and its directors on July 27, 1999. Against the name of the assessee in the said seized paper, an amount of Rs. 20 lakhs has been shown. A perusal of the seized paper shows that it is neither signed nor dated. Further, it does not contain the name of the picture "Kachche Dhaage". The seized paper does not indicate the year or years to which the alleged unaccounted money relates. It does not contain any narration of "on money" or "cash money" paid to the assessee in terms of agreement dated February 14, 1996 for playing a leading role in the film "Kachche Dhaage". The statement given by Mr. Taurani and the letter addressed by Mr. Taurani and Tips Films P. Ltd. are not supported by any corroborative evidence. Further, Mr. Taurani in his reply to the questions put by Saif Ali Khan during the course of cross-examination has stated that he does not recollect the exact date, but it should be 1996 or 1999. Similarly, Mr. Taurani in his statement has categorically stated that he does not remember the denomination of the cash paid, the place where he paid the money, the time when he paid the money, the person to whom he paid the money, etc. Under these circumstances, the statement given by Mr. Taurani has no evidentiary value due to so many contradictions and cannot be accepted as a valid proof especially in the absence of any corroborative evidence. Further, when Mr. Taurani has stated that the amount has been paid in the year 1996 or 1999 and when the Department has no evidence that the money has not been received in the year 1996, there is no basis to conclude that the amount has been received in the year 1999. In this regard, we find force in the submission of learned counsel for the assessee that since the assessment year prior to 1999-2000 had become time barred, therefore, this is the only reason for the Revenue to contend that the payment in question was made during the previous year relevant to the assessment year 1999-2000. In view of the detailed reasons given above we hold that the amount cannot be taxed in the impugned assessment year. Since we have decided the issue on merit, the legal ground challenging the validity of the reassessment becomes academic in nature.

22. In the result, appeal filed by the assessee is allowed.