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2021 (12) TMI 1196 - AT - Income TaxPenalty u/s. 271(1)(c) - unexplained loan creditors - HELD THAT:- As submitted by the assessee that the assessee has borrowed funds from the various creditors therefore, there is difference in confirmations given by the financiers and submitted that it is neither concealment nor filing of inaccurate particulars of income - A.O and CIT(A) has not accepted the explanation of the assessee and penalty is levied. We have considered the entire facts of the case, it is a fact that the assessee has borrowed money from various creditors nearly about 175 and there is a difference in confirmations when compared to books of accounts of the assessee - as explained by the assessee that said difference is due to reconciliation of year end entries between assessee and his creditors. In our opinion, this cannot be considered as neither concealment nor filing of inaccurate particulars of income. Levying of penalty on this count is not justified therefore, the same is deleted. Disallowance of interest - The claiming of the interest expenditure is neither concealment nor filing of inaccurate particulars of income. We find that the assessee borrowed certain amounts from various creditors and as per the books of accounts of the assessee, he has to pay interest - AO has asked the assessee to produce confirmation letters, the assessee is not able to produce the same. At the best, the A.O can make an addition in respect of loan borrowed is not explained by the assessee and also interest claimed by the assessee. In our opinion, the disallowance of interest claimed by the assessee cannot be considered neither concealment nor by filing of inaccurate particulars of income simply because the assessee was not able to file confirmation letters. We find that the A.O is not justified in levying the penalty on this count confirmed by the Ld. CIT(A). Amount was refunded to distributors debited to profit and loss account under the head ‘administrative expenses’ - We find that the assessee is in the business of film making and sometimes it is necessary to refund money to the distributors whenever there is a huge loss but it is depend upon the understanding between the parties and also agreement between parties. The assessee is not able to file any details however, taking into consideration of the nature of the business of the assessee, simply because the assessee is not able to file details of expenses debited to profit and loss account cannot be considered neither concealment of income nor filing of inaccurate particulars of income and therefore, we are of the opinion that the A.O and Ld. CIT(A) is not correct in levying the penalty on this count and the same is deleted. Difference in opening balance - When the assessee himself has admitted before the A.O that there is a difference in opening balance and the same is offered for taxation. In our opinion, it cannot be neither concealment nor filing of inaccurate particulars of income and therefore, the difference in opening balance cannot be considered the penalty levied u/s. 271(1)(c) of the Act. We are of the opinion that the A.O as well as Ld. CIT(A) not justified in levying the penalty. - Decided in favour of assessee.
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