TMI Blog2010 (7) TMI 517X X X X Extracts X X X X X X X X Extracts X X X X ..... , challenging the levy of penalty under section 271(1)( c ) of the IT Act. 2. We have heard learned representatives of both the parties, perused the findings of the authorities below and considered the material on record pointed out by the parties. 3. Facts in brief are that in the order passed under section 143(3) of the IT Act on dated 5-1-2006, an addition of Rs. 2,24,134 was made on account of travelling expenses because the Assessing Officer found that the trips made by the assessee to London and Paris could not be claimed as business expenses by the assessee, who is Structural Engineer by profession. This addition made by the Assessing Officer was confirmed by the learned CIT(A) vide order dated 2-11-2006. The addition was confirmed on the basis of information received from Babtie Consultants India Pvt. Ltd. (hereinafter mentioned as employer ) in response to the enquiries made by the learned CIT(A) from this concern. This concern had terminated the services of the assessee with effect from 28-2-2002 by way of 14 days notice given in writing on 15-2-2002 and the foreign trips for which expenses of Rs. 2,24,134 have been claimed by the assessee was executed in May, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he enquiries made by my predecessor that appointment of Mr. Vani as sub-consultant did not require any services to be performed on behalf of the company abroad . It was also informed by the Company that since no such foreign trip was approved by the company, no reimbursement was made to the sub-consultant. Thus the claim of the appellant with respect to Rs. 2,24,134 incurred on foreign visit ( London and Paris ) on behalf of Babtie Consultants India Pvt. Ltd. is found false which tantamounts to furnishing inaccurate particulars and concealment. The disallowance of expense has been confirmed by CIT ( A ) as well as by ITAT, C Bench, Ahmedabad. And this is not the case of routine disallowance of expenses rather the Department detected that the appellant made a false claim, hence the case laws cited would not be applicable. However, in the interest of justice, as the appellant has regularly been filing his Income-tax returns at high figures and has been paying taxes, I find it reasonable to restrict the penalty at 100 per cent of tax sought to be evaded. This penalty comes to Rs. 70,602. The appellant gets relief of Rs. 1,41,204 ( Rs. 2,11,806 minus Rs. 70,602 ) . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... incorrect or inaccurate, the assessee cannot be held guilty of furnishing inaccurate particulars. In order to expose the assessee to penalty, unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By no stretch of imagination can making an incorrect claim tantamount to furnishing inaccurate particulars. There can be no dispute that everything would depend upon the return filed by the assessee, because that is the only document where the assessee can furnish the particulars of his income. When such particulars are found to be inaccurate, the liability would arise. To attract penalty, the details supplied in the return must not be accurate, not exact or correct, not according to the truth or erroneous. Where there is no finding that any details supplied by the assessee in its return are found to be incorrect or erroneous or false there is no question of inviting the penalty under section 271(1)( c ). A mere making of a claim which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such a claim made in the return cannot amount to furnishing inaccurate particulars. Dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer or Commissioner (Appeals) or Commissioner in the course of any proceedings under this Act is satisfied that any person has concealed particulars of his income or furnished inaccurate particulars of such income, he may direct that such person shall pay by way of penalty. Explanation 1 to section 271(1)( c ) of the IT Act reads as under: Explanation 1. Where in respect of any facts material to the computation of the total income of any person under this Act (A) such person fails to offer an explanation or offers an explanation which is found by the [Assessing] Officer or the [Commissioner (Appeals)][or the Commissioner] to be false, or (B) such person offers an explanation which he is not able to substantiate [and fails to prove that such explanation is bona fide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him], then, the amount added or disallowed in computing the total income of such person as a result thereof shall, for the purposes of clause ( c ) of this sub-section, be deemed to represent the income in respect of which particulars have been concealed . 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he information received from Babtie Consultants ( India ) Pvt. Ltd. and have also considered the various arguments of the appellant. On the basis of information received from Babtie Consultant India ( P. ) Ltd. which has duly been confronted to the appellant, it is conclusively proved that the appellant has made a totally unwarranted claim with respect to his tour to London and France. First of all, his claim that his foreign tour to London and France during May, 2002 was undertaken in the performance of his duties as Sub-Consultant is proved to be totally misleading and false as his duties with Babtie Consultant (P.) Ltd. did not require at all any services to be performed by him abroad so as to necessitate his foreign travel. It has been established on record that Mr. Vani was not on the pay roll of the company after the 28th day of February, 2002 i.e. the date on which his services were terminated as a result of his appearance on ND TV channel in a programme called Big Fight on 26-1-2002. The company thus had nothing to do with Mr. Vani after the date of termination of his services and his contention that the employer company got furious with him on his TV interview in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on record that the assessee was not in the service of his employer Babtie Consultants India Pvt. Ltd. on the date when the assessee undertaken tour on their behalf. The claim of the assessee that he has undertaken foreign tours in performance of his duties was thus found to be misleading and false. The explanation of the assessee was thus not accepted and reached the finality. The finding given in the assessment order which is confirmed by the learned CIT(A) and the Tribunal have thus probative value for the purpose of considering the penalty matter. The finding of facts recorded on quantum are thus relevant and clearly proved that the assessee made false claim of deduction of the foreign trip expenditure. When the assessee was not in the services of his employer Babtie Consultants India Pvt. Ltd. on the date of foreign trips there was no reason to accept the explanation of the assessee that he has undertaken foreign trips on behalf of the employer. Thus, the claim of the assessee for deduction of the expenditure was rightly found to be false. Explanation 1 to section 271(1)( c ) is part of section 271(1)( c ) of the IT Act and is clearly attracted in the case of the assessee. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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