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TMI Blog2016 (7) TMI 618X X X X Extracts X X X X X X X X Extracts X X X X ..... olkata u/s. 271(1)(c) of the Act vide his order dated 30.06.2008. 2. The only issue to be decided in this appeal is as to whether penalty u/s. 271(1)(c) of the Act could be levied in the facts and circumstances of the case. 2.1. The brief facts of this issue are that the assessee runs film production house under the name and style of 'Venus Productions'. The assessee ventured into the said business for the first time during the assessment year under appeal. Two of the films produced by the assessee released during the year i.e. (i) Annaya Attachar and (ii) Cheeta. The assessee disclosed profit of Rs. 3,10,480/- out of release of the film Annaya Attachar. The assessee stated that the total cost of production of the said film including prin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e more revenue in the next year pursuant to advertisement cost already incurred and accordingly, decided to treat the loss as "deficiencies recoverable" and reflected the same in the asset side of Balance Sheet. In other words, no expenditure was indeed claimed by the assessee in respect of this film 'Cheeta' in the return of income. The Ld. AO stated that the entries in the impounded books of account has been recorded in a rough manner and in the absence of books and cogent reply, he proceeded to add a sum of Rs. 75,000/- as undisclosed income on account of film 'Cheeta'. 2.3. During the course of survey a sum of Rs. 8720/- was found in cash. The Ld. AO brought the same to tax as unaccounted cash in the absence of regular cash book. All t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order of CIT (A) is patently wrong & false upon mentioning some untrue remarks. 6) That the appellant craves to add or amend any grounds of appeal on or before the date of hearing." 2.4. The Learned AR reiterated the arguments as made before the Ld. AO and stated that the Ld. AO had merely erred in taking the total of the credit side of the Trial Balance prepared up to the date of survey in the sum of Rs. 1,01,07,088/- as revenue receipts of the assessee. He brought to the attention of the bench that the said Trial Balance admittedly included a sum of Rs. 36,87,490/- towards sundry creditors, a sum of Rs. 31,23,728/- towards advance received from sundry debtors which in any case, would not constitute revenue receipt. The real reven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as drawn up to the date of survey was not properly updated and hence, the addition was made by the Ld. AO by ignoring the final Balance Sheet as on 31.3.2005 presented to him along with the return of income. He argued that for improper maintenance of books of account as found by the ld. AO during the course of survey, the assessee had already been invited with the penalty u/s. 271A of the Act and all the additions made by the AO were only based on the accounts upto the date of survey completely ignoring the Balance Sheet filed for the whole FY 2004-05 and accordingly, no penalty would lie on any of the additions made. He argued further just because no explanation was given by the assessee in the penalty proceedings and just because no appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. CIT(A) wherein all the deficiencies pointed out by the Ld. AO have been properly rectified and there is no need to make any addition towards film of Annaya Attachar in the assessment. However, the assessee is not in appeal before us on the quantum addition. We also find that the total cost of production including the printing cost and publicity cost of the film Annaya Attachar has been accepted by the Ld. AO without making any addition thereon. We are also in agreement with the argument of Ld. AR that just because no explanation has been offered by the assessee during the penalty proceedings the Ld. AO cannot automatically proceed to levy penalty as admittedly penalty proceeding is independent of assessment proceedings. Under these circu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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