TMI Blog1979 (12) TMI 86X X X X Extracts X X X X X X X X Extracts X X X X ..... over the country. For the assessment years under consideration the gross billing for cinema publicity after adjusting credit notes for non-screening and cancellation of bills inclusive of provisions of bills to be issued as valued and certified by Managing Directors amounting to Rs. 2,75,000 and Rs. 1,00,000 respectively came to be Rs. 94,32,728.99 and Rs. 1,18,75,535.21 for the two years, against which the screening charges inclusive of Rs. 3 lakhs bills for the first year and Rs. 5 lakhs for the second year amounted to Rs. 64,32,684.84 in first year and Rs. 82,55,998.08 in the second year. When the original assessments under s. 143(3) for the two years were made by the ITO, none of the figures pertaining to gross billing or screening charges for the two years was disturbed by the ITO and the gross profit of Rs. 27,33,411 and Rs. 33,95,954 giving a percentage of 29 was accepted. 3. In the course of assessment proceedings for 1970-71 when the assessment was in process and details of Rs. 98,55,984.01 in respect of screening charges against which gross billing amounted to Rs. 1,44,69,768.42 were scrutinised, the assessee wrote a letter to CIT dt. 18th Dec., 1971 in which he not on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and in support of the assessee's contention he relied upon CIT vs. Sarda Rice Oil Mills (1979) 117 ITR 917 (Cal), Fairdeal Motors vs. CIT 1978 CTR (J K) 60: (1979) 117 ITR 137, Gumani Rami siri ram vs. CIT (1973) 85 ITR 67 (P H), d. Halappa Sons vs. CIT (1974) 95 ITR 543 CIT vs. Shivalal Desai and Sons 1977 CTR (Bom) 801 : (1978) 14 ITR 377 (Bom), CIT vs. Musaddi Lal Singh (1977) 106 ITR 672 (All) and Addl. CIT vs. Kashi Ram Mathur Prasad (1979) 119 ITR 497 (Pat). He argued vehemently that merely because the assessee has preferred to be fair for the sake of peace of its mind for those assessment year which were not even under consideration when the letter dt. 18th Dec., 1971 was written by the assessee it should have been enough for disallowing 40 per cent of such expenses which have been allowed in toto in original assessments because the assessee itself on its own verification found that some of these expenses could not be verified. He also submitted that even if such expenses as pointed out by the assessee itself were added back in course of subsequent assessments under s. 148, the assessee could not be on the strength of facts or law could be visited by penalties under s. 27 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atisfaction of the Department. As regards these theatres, we at this stage, are unable to lead evidence or prove substantially as they are located in various parts of the country and some of which are already closed and for some the ownership has changed. 7. It is at this distance of time and for reasons mentioned herein above, we find it extremely difficult to lead evidence in proof of those payments to the entire satisfaction of the IT authorities. All we can assure you, sir, is that the payments have been made and the money has been spent out only for the purpose of our business, and in view of the aforesaid difficulties, we feel that with a view to avoiding unnecessary litigation it would be more advisable to arrive at an amicable settlement. 8. With a view to showing our Bonafides, and with a keen desire to arrive at a fair amicable settlement, we have even looked into our past assessments, which have been otherwise already finalised and for similar reasons mentioned hereinabove, we are not in a position to substantiate our claim in respect of the following sums: . Rs. Asst. yr. 1968-69 2,70,850.00 Asst. yr. 1969-70 8,27,700. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, your Honour would be pleased not to levy any penalty. (iii) For the same reason we respectfully submit that there will be no question of prosecution of any kind under the IT Act. (iv) There should be no levy of any penal interest under the IT Act and if necessary, the power to waive such interest may also be exercised in our favour. (v) Since these are commercial outgoings, for the purpose of s. 104 of the IT Act, these amounts should be regarded as not available to us for the purpose of distribution, if otherwise it is held that s. 104 of the IT Act is applicable to our case. 13. We assure you, Sir, that once this settlement is amicably, finalised, we would do our best to arrange for payment of the necessary taxes within a reasonable time. 14. Needless to say, this application is made with a view to exploring the possibility of an amicable settlement of the entire matter and we trust the same will be considered in the same spirit in which it is made by us. We would like to state that this application is made without prejudice to all our rights and contentions in the matter and if for any reason this application is not finalised, nothing stated herein will be cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s its concealed income and included in its total income for the year under consideration. In the present two cases the assessee nowhere has accepted the two amounts added by the ITO as concealed income. The second case of Mahavir Metal Works vs. CIT (1973) 92 ITR 513 (P H) is also distinguishable and cannot lend any assistance to the contention of the Revenue. That was a case where the assessee itself, during the course of assessment proceedings, not only filed a revised return but owned the disputed amount to be its income and the admission of the assessee could be challenged by it in penalty proceedings as the same i.e. in the admission in the course of assessment proceedings could not be fatal to the case of the assessee so far as penalty was concerned, but as it was not challenged and the assessee failed to prove that it did not conceal any income or furnish inaccurate particulars thereof in course of penalty proceedings, the penalty was sustained. The case of M/s. Western Automobiles (India) vs. CIT 1977 CTR (Bom) 333 : (1978) 112 ITR 1048 (Bom), on which reliance was placed by the Deptl. Rep., is also quite distinct from the two cases under consideration, because in that ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngs on the basis of consent given by the assessee in its letter. There was no other evidence on which this addition was made by the ITO. In the penalty proceedings also the only materials before the IAC was the same letter of the assessee, in which even the levy of penalty at the rate of 20 per cent was offered to be accepted by the assessee. The assessee in that case however, accepted that merely it was unable to prove that branch in that case did not belong to the assessee, its income was surrendered for the sake of obtaining peace of mind. Since concealment was categorically denied, the levy of penalty was not confirmed by majority judgments of their Lordships of Jammu Kashmir High Court. 10. In the two cases under consideration the facts are even on better footing. As is apparent from the entire correspondence of the assessee with the Revenue regarding two additions, at no stage the same were accepted as concealed income of the assessee. In the case of Gumant Ram Siri Ram vs. CIT (1972) 85 ITR 67 (P H) the penalty was not sustained by their Lordships of Punjab Haryana High Court where cash deposits were surrendered by the assessee on the basis that there was no material ..... X X X X Extracts X X X X X X X X Extracts X X X X
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