9911796707
TMI Blog2021 (12) TMI 1196X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome Tax Act, 1961 (hereinafter as "the Act"). 3. The brief facts of the case are that the assessee is a film producer, filed his return of income for the assessment year 2003-04 on 01.12.2003 by declaring total income of Rs. 80,00,114/-, which was set off against brought forward loss of earlier years. The case was selected for scrutiny and assessment was completed u/s. 143(3) of the Act on 23.03.2006 assessing total income of Rs. 1,48,40,872/- before set off of brought forward losses of earlier years. While computing the assessment, the Assessing Officer (AO) made addition of Rs. 68,40,758/- towards following heads: (i) Difference in loan account Rs. 23,00,000 (ii) Interest Rs. 7,00,000 (iii) Cash expenditure Rs. 2,30,668 (i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s was disallowed. The A.O stated in the assessment order that expenses relating to Cost of Print and Publicity amounting to Rs. 5,31,590/- and Rs. 85,000/- respectively incurred in connection with the films which were produced and released in earlier years were claimed in this year and hence, the same is disallowed. So far as the administrative expenses of Rs. 15,00,000/- was concerned, the same was disallowed by the A.O for want of supportive evidence. On appeal, the Ld. CIT(A) confirmed the order of the A.O on the ground that the assessee has not filed any supportive evidence nor produced any books of accounts/confirmation letters to verify the expenditure claimed by the assessee. 5. Subsequently, the A.O has initiated penalty proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, there is difference in confirmations given by the financiers and submitted that it is neither concealment nor filing of inaccurate particulars of income. However, the A.O and Ld. 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. However, it was 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... various creditors and as per the books of accounts of the assessee, he has to pay interest of Rs. 7,53,500/-. The A.O 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). 10. So far as penalty levied on account of Rs. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate his case before the A.O as well as Ld. CIT(A) that how this difference has arose therefore, penalty is levied. In our opinion, 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. 12. In view of the above, the penalty levied by the A.O and confirmed by the Ld. CIT(A) is cancelled. Hence, the appeal filed by the assessee is allowed. 13. In the result, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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