TaxTMI 
TaxTMI 
2014 (11) TMI 469
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.... 2 Out of sale of serials 2,50,000 3 Out of payments made to artists 18,46,338 4 Out of food expenses 1,46,610 5 Out of Editing transfer charges 6,36,374 43,48,497 Taxable Income (-) 196,99,611 3. The assessee preferred appeal before ld. CIT(A) which was dismissed. The AO initiated penalty proceedings u/s 271(1)(c). The assessee filed its reply dated 16/03/2009. The AO after considering the facts in regard to various expenses claimed by assessee held that assessee had claimed excess expenditure to the tune of Rs. 43,48,497/- and, therefore, levied a penalty of Rs. 15,98,073/- being 100% of tax sought to be evaded. 4. Ld. CIT(A) dismissed the assessee's appeal, inter-alia, observing that assessee had claimed wrong expenses and had, therefore, furnished inaccurate particulars of income. Ld. CIT(A) relied on various decisions for holding that penalty can be imposed u/s 271(1)(c) even when disallowances are made on estimate basis. He also referred to the decision of ITAT Ahmedabad Bench in the case of Patel Chemical Works vs. ITO, wherein it has been held that penalty is leviable where payments made to sister concerns are not gen....
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....s. 18,46,338/- was allegedly made. He, therefore, submitted that the expenses were not verifiable and since the assessee failed to discharge its burden of establishing the genuineness of expenses, the addition was rightly made. 6.1 Ld. DR further referred to page 2 of penalty order and pointed out that in para 3.2 the AO has, inter-alia, observed as under: 3.2 "On perusal of the details of sale of software (Serials) in the case of Arecha Kamal Ahe, A Marathi Serial the assessee had shown received Rs. 76,40,000/- for 131 episodes. It was noticed by the AO that the assessee had sold the 6 episodes of this serial at Rs. 65,000/- per episode and Rs. 58,000/- per episode for 125 episodes. When confronted the assessee had given no justification for dual rates applied for sale of software and that to the associate concern of the assessee company, M/s Advance Entertainment Ltd. where the shareholders were of associates company." With reference to above observations ld. DR submitted that onus was not on AO but of assessee to substantiate the genuineness of dual rates. Ld. DR, therefore, submitted that penalty has rightly been sustained by ld. CIT(A). 7. We have considered the rival subm....
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....e of the job which was entrusted to the sister concern was of only Rs. 32,09,974/- for which the assessee had made a payment of Rs. 63 lakhs. As the MPIC filed a loss return it was held by the AO that the assessee made excessive payment with a view to reduce its own tax liability. He, therefore, disallowed an amount of Rs. 30,82,026/- as excessive payment u/s 40A(2)(b) of the I.T. Act. Ld. CIT(A) had confirmed the disallowance. In the backdrop of these facts, penalty proceedings u/s 271(1)(c) were initiated. On the ground that explanation of the assessee was not bonafide. Tribunal held that in the absence of any particular form of disclosure of the transaction in question, the disclosure of the same in its books of account as done by the assessee was sufficient in law. It was held as under: "We therefore hold that in the absence of any provision of particular disclosure of the transaction in question, the disclosure of the same in its books of account as done by the assessee was sufficient in law. There cannot be any charge of furnishing inaccurate particulars as well. This is because, the assessee had furnished all the details and the details admittedly were correct. By applying....
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.... had received Rs. 76,40,000/- for 131 Serials. He further noticed that assessee had sold six episodes of the serial at Rs. 65,000/- per episode and Rs. 58,000/- per episode for 125 episodes. This sale was made to the associate concern of the assessee company, M/s Advance Entertainment Ltd. In the backdrop of these facts, the AO considered the sale of 125 episodes @ 60,000/- per episode instead of Rs. 58,000/- per episode declared by assessee. Admittedly, there was no material on the basis of which this addition was made. Merely on the ground of dual rates being charged by assessee for the same episode the addition was made. No discrepancy had been found in the disclosures made by the assessee. Therefore, the penalty is not sustainable. Further in our opinion, this issue is also fully covered by the decision of Tribunal in the case of Jhawar Properties Pvt. Ltd. In view of the discussion, we delete the penalty apropos this addition. 8.4 The third addition was of Rs. 18,46,338/- in regard to payments made to artists. The AO had issued notices u/s 133(6) to various artists who had no PAN Number. He has pointed out that only two replies were received but in case of eight persons, as ....
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....ween the payment made to the artists and the enquiries initiated by AO. Moreover, the artists were engaged for short periods. In our opinion the assessee's explanation cannot be branded as malafide. We, therefore, do not find any justification in sustaining the penalty apropos this addition. 8.5 The next disallowance is on account of excess food expenditure of Rs. 1,46,610/-. In this regard the facts are assessee had debited an amount of Rs. 14,66,120/-in the profit and loss account as food expenses. The AO observed in assessment proceedings that a perusal of the details of expenses revealed that these expenses were not fully supported by the supporting vouchers. He, therefore, made a disallowance of Rs. 1,46,610/- being 10% of the total food expenses. 8.5.1 Admittedly, AO had not pointed out even a single voucher in his order which was not verifiable. This by no stretch of reasoning can be held to be a wrong claim made by assessee. The nature of expenditure was such for which infallible evidence could not be expected. Under such circumstances, there was no basis for levying penalty. We, accordingly, delete penalty apropos this addition. 8.6 The last addition was of Rs. 6,36,374....