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TMI Blog2021 (12) TMI 1196X X X X Extracts X X X X X X X X Extracts X X X X ..... oks of accounts of the assessee - as 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 of income. Levying of penalty on this count is not justified therefore, the same is deleted. Disallowance of interest - The claiming of the interest expenditure is neither concealment nor filing of inaccurate particulars of income. We find that the assessee borrowed certain amounts from various creditors and as per the books of accounts of the assessee, he has to pay interest - AO has asked the assessee to produce confirmation letters, the assessee is not able to produce th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. 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. - Decided in favour of assessee. - ITA No. 1113/Chny/2015 - - - Dated:- 17-11-2021 - SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER Appellant by : Mr. S. Sridhar, Advocate Respondent by : Mrs. R. Anita, Addl. CIT ORDER Per V. Durga Rao, Judicial Member: This appeal filed by the assessee is directed against the order of the Learned Commissioner of Income Tax (Appeals)-14, Chen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 68,40,000 4. In the course of the assessment proceedings, the A.O has noticed that the assessee s major expenditure claimed as interest paid of ₹ 1,39,02,046/- on money borrowed from more than 175 loan creditors totaling ₹ 11,81,72,827/-. The A.O picked up some cases to verify the genuineness of loans and she noticed that the closing balance of loan creditors as per the books and as per confirmation letters, there is a vast difference in some cases. When the assessee was asked to explain, the assessee vide his letter dated 21.03.2006 offered the difference in closing balance as his income to the tune of ₹ 14,40,000/-. As the A.O found discrepancy in the figures offered by the assessee as per their books ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lty proceedings on 21.03.2012 and submitted that the additions are due to difference in confirmation letters relating to loan amounting to ₹ 23,00,000/- and interest paid on loans at ₹ 7,53,000/- and difference in opening balance of ₹ 14,40,000/- totaling of ₹ 44,93,500/- and submitted that neither concealment of income nor filed inaccurate particulars of income and the assessee could not file the confirmation letters due to strange relationship between the creditors with the assessee. 6. On appeal before Ld. CIT(A), the Ld. CIT(A) only confirmed the additions in respect of penalty levied by the assessee difference in loan account of ₹ 23,00,000/-, interest of ₹ 7,00,000/-, administrative expenses of & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... far as penalty levied on disallowance of interest amounting to ₹ 7,50,000/- is concerned, the A.O gave a finding that the assessee is not able to substantiate that the assessee has payable the principle amount and therefore, restricted disallowance to only interest and the same is confirmed by the Ld. CIT(A). We find that the difference arose because of books of accounts of the assessee and the assessee is not able to file confirmations that the amounts are payable to the creditors therefore, the A.O has disallowed the interest on the ground that the principle amount itself is not paid by the assessee therefore, interest cannot be allowed. The assessee is not able to establish before the A.O that the amounts borrowed by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... butors debited to profit and loss account under the head administrative expenses . The A.O as well as Ld. CIT(A) has confirmed the additions and penalty is levied on the ground that no evidence was produced that the amount was refunded to distributors. Before us, the ld. counsel for the assessee has submitted that an amount of ₹ 15,00,000/- was refunded to various distributors and not able to file confirmation letters from them due to strange relationship with the distributors. We find that the assessee is in the business of film making and sometimes it is necessary to refund money to the distributors whenever there is a huge loss but it is depend upon the understanding between the parties and also agreement between parties. The asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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