TMI Blog2016 (7) TMI 618X X X X Extracts X X X X X X X X Extracts X X X X ..... as been prepared up to 31.03.2005 which has been completely ignored by the Ld. AO and also by the Ld. 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 p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come tax Act, 1961 (hereinafter referred to as the Act ) for AY 2005-06 vide his order dated 27.12.2007. Penalty was imposed by Ld. DCIT, Cir-55, Kolkata 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 pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f ₹ 88,85,212/- up to 31.03.2005. The assessee incurred a loss of ₹ 17,78,502/- and chose not to debit the same in the P L Account as the assessee thought that the film would generate 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 ₹ 75,000/- as undisclosed income o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... verse material on record. 4. That under the overall factual position of business, the Ld CIT(A) erred in sustaining the concealment penalty based on quantum addition of ₹ 8720/- being cash found during survey. 5) That 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 ₹ 1,01,07,088/- as revenue receipts of the assessee. He brought to the attention of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce Sheet by the assessee. In any case, the Ld. AO had only made an estimated addition of ₹ 75,000/- in respect this film without any basis. Hence, no penalty would lie on the same. In respect of cash found on the date of survey, he argued that the books of account 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nature. This can be proved from the very fact that the Ld. AO had not made any separate addition thereon in respect of those two items. Moreover, we find that the Balance Sheet has been prepared up to 31.03.2005 which has been completely ignored by the Ld. AO and also by the Ld. 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 agree ..... X X X X Extracts X X X X X X X X Extracts X X X X
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