Addition u/s 68 deleted for cash collection from exhibition of films in theaters

Addition u/s 68 for cash collection from exhibition of films in the theaters deleted as the amount was duly recorded in books of account. 

In a recent judgment, ITAT Chennai has deleted the addition u/s 68 towards cash collection from exhibition of films in the theaters as the said amount was duly recorded in books of account.

ABCAUS Case Law Citation:
4366 (2025) (01) abcaus.in ITAT

In the instant case, the assessee had challenged the order passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC) in confirming the addition of cash collection u/s 68 of the Income Tax Act, 1961 (the Act).

The assessee was a partnership firm engaged in the business of purchase and exhibition of films in the theaters.  During the relevant Assessment Year, the assessee had purchased distribution rights of two films, which was released and screened during the year. 

The assessee collected shares from theaters in cash as well as in cheque. The Assessing Officer (AO) in the assessment order made addition of cash collection as assessee had not been able to explain the cash collection.  The AO also made addition of bank receipts as the assessee had not been able to reconcile the bank receipt.

On appeal, before the CIT(A), the assessee made detailed submission explaining the source of cash deposit, and cheque deposit as collections from distribution of the film and duly recorded in the books of accounts.  The CIT(A) called for remand report from the AO and accepted the explanation for part of cash deposit and confirmed addition for the rest.  Similarly, the CIT(A) partly accepted cheque receipt and confirmed the balance addition.

Before the Tribunal the assessee submitted that the he had received collection from theaters on exhibition of two films in cash as well as cheque and all receipts have been duly recorded in the books of account. 

It was submitted that the cash collection not accepted by CIT(A) were duly recorded in the cash book and shown in the collection register of both the movies/films.  The in support of his contention the assesee had submitted copy of collection register and copy of cash book.  As regard to bank receipt, the assessee submitted that the deposit consisted of two cheques received from two theatre and had been duly included in the books of account. The assessee had submitted relevant documents in support of the same.  It was therefore submitted that all the cash and cheque receipts confirmed by CIT(A) had been duly recorded in the books of account.

The Tribunal observed that the assessee had explained the receipt of cash and it was accounting the books of accounts. The cash was collected and recorded from theatre, which included alleged unexplained cash by the CIT(A). Similarly, cash was collected from another theatre. Thus, the allegation that collection had not been recorded in the books of account is not correct.

Accordingly, the addition sustained by the CIT(A) was deleted.

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