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2016 (7) TMI 618 - ITAT KOLKATA

2016 (7) TMI 618 - ITAT KOLKATA - TMI - Penalty u/s. 271(1)(c) - addition towards the film Annaya Attachar - Held that:- Trial Balance prepared up to 10.02.2005 admittedly contained substantial balance towards sundry creditors advance received from sundry debtors which are admittedly not revenue receipts unless proved otherwise. It is not the case of the Ld. AO that the sundry creditors reflected thereon and advance received from the customers (sundry debtors) are non-existent liabilities and bo .....

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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 assessm .....

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o 31.03.2005 which has not been properly considered by the Ld. AO and the cash balance found on the date of survey have been duly explained in the said Balance Sheet filed before the Ld. AO up to 31.03.2005. Hence, there is no case of any concealment of income or furnishing of inaccurate particulars of income on the part of the assessee. Accordingly, we have no hesitation in deleting the penalty levied in respect of the said addition. - Decided in favour of assessee. - I.T.A No.2781/Kol/2013 - D .....

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d 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 ye .....

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see which was disclosed in the P&L Account of the assessee. There was a survey u/s. 133A of the Act carried out on the premises of the assessee on 10.02.2005 wherein certain books and documents were impounded. Based on the said books the assessee was asked to prepare Trial Balance for the period 01.04.2004 to 10.02.2005 i.e. up to the date of survey. The Ld. AO considering the said Trial Balance and took the total of the credit side of the Trial Balance of ₹ 1,01,07,088/- as revenue re .....

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05, the assessee incurred total cost of production including printing and publicity cost of ₹ 1,06,63,714/-. The film did business to the tune of ₹ 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 a .....

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h. The Ld. AO brought the same to tax as unaccounted cash in the absence of regular cash book. All the three additions made by the AO in the assessment were not contested by the assessee by way of first appeal in view of smallness of the amount involved and lack of proper information of counsel to argue the same. The Ld. AO later levied penalty u/s. 271(1)(c) of the Act in respect of three additions, which was confirmed by the Ld. CITA in first appeal on the ground that no explanation was given .....

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me arbitrarily, whimsically on the basis of entire credit summation of trial balance. Thus imposition of penalty on such arbitrarily & vague amount of income is baseless and beyond the provision of law. 3. That the Ld CIT(A) was wrong in confirming the penalty u/s 271(1)(c) based on quantum addition of ₹ 75000/- bring made in general and on estimate basis without bringing any adverse material on record. 4. That under the overall factual position of business, the Ld CIT(A) erred in sust .....

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te of survey in the sum of ₹ 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 ₹ 36,87,490/- towards sundry creditors, a sum of ₹ 31,23,728/- towards advance received from sundry debtors which in any case, would not constitute revenue receipt. The real revenue receipt reflected in the said Trial Balance was only ₹ 12,90,770/- towards realization of sales and ₹ 5,100/- .....

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nishing of inaccurate particulars of income on the part of the assessee warranting levy of penalty inasmuch as that the Ld. AO himself had stated that upto the date of survey the books of accounts were not properly up to date and the Trial Balance prepared based on impounded books which were not properly updated cannot be the basis for framing any addition. In respect of film Cheeta he argued that no expenditure admittedly were claimed by the assessee in the P&L Account and the loss arising .....

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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 th .....

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hence, vehemently relied on the orders of the lower authorities. 2.6. We have heard rival submissions and gone through facts and circumstances of the case. The facts stated hereinabove remain undisputed and hence, the same are not reiterated for the sake of brevity. We are in complete agreement with the arguments advanced by the assessee with regard to the penalty levied on the addition made in the sum of ₹ 1,08,964/- towards the film Annaya Attachar. We find that the Trial Balance prepar .....

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. 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 .....

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