TMI Blog2012 (11) TMI 937X X X X Extracts X X X X X X X X Extracts X X X X ..... e, attracts the penal provisions of sec. 271(1)( c) of the IT Act - ITA No. 5964/m UM/2009 - - - Dated:- 20-1-2012 - SHRI R.K. PANDA SHRI VIJAY PAL RAO, JJ. Assessee by Sh. Ajay R. Singh Revenue by Sh. D.S. Sunder Singh ORDER PER VIJAY PAL RAO, JM This appeal by the assessee is directed against the order dated 17.7.2009 arising from the penalty order passed u/s 271(1)( c) of the I T Act for the Assessment Year 2000-01. 2. The assessee has filed the revised grounds of appeal as under: i) The ld CIT(A) erred in upholding levy of penalty u/s 271(1 )( c) of the Act of Rs. 6,49,354/- in regards to travelling expenses and business promotion expenses without appreciating the all the details and particular were filed before the Assessing Officer, therefore, there was no concealment or furnishing of inaccurate particulars of income, the penalty may be deleted. ii) The penalty order has been passed by the Assessing Officer on 30.1.2009 more so when the CIT(A) order in quantum proceeding was passed on 17.12.2004, therefore, the penalty order is passed much beyond the time limit prescribed under the provision of sec. 275(1) of the Act. 3. At the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal of the assessee is dismissed. 6.1 In the meantime, the Assessing Officer initiated penalty proceedings u/s 271(1)( c) and levied a penalty of Rs. 6,49,354/- being 100% of the tax sought to be evaded on such disallowance. 6.2 The assessee challenged the penalty order before the CIT(A) but could not succeed. 7. Before us, the ld AR of the assessee has submitted that the entire details and the relevant material have been filed during the course of assessment proceedings and there was no concealment of income or furnishing of inaccurate particulars of income in the return of income of the assessee. He has referred the order of the Tribunal whereby the disallowance has been confirmed and submitted that the disallowance has been confirmed by the Tribunal on the ground that the expenditure was incurred on account of travelling expenses of the directors who are common in assessee s group companies and therefore, the Tribunal has held that the said expenditure has not been incurred for the purpose of business of the assessee. He has further submitted that the genuineness of the expenditure has not been doubted. The assessee has tendered bonafide explanation for claim of expenses, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess of the company is carried out in Mumbai whereas many trips were made to Delhi, Bangalore, Chennai, Cochin, etc. Penalty proceedings u/s 271(1)(c) was initiated simultaneously for furnishing inaccurate particulars of income. The assessee vide its letter dated 3.3.2003 submitted that most of the trips have been undertaken on behalf of the group companies and gave many major reasons for the same. 3.2 Further, the assessee has debited a sum of Rs.7,83,116/- to its P L A/c under the head Business promotion expenses. The assessee was asked to furnish the details of the same along with the vouchers and establish the business purpose of these expenses. The assessee filed the details vide letter dated 3.3.2003 and submitted that most of the expenses are in connection with travelling specified above such as Hotel Bills for food, accommodation, meeting with various peoples, etc. Payments are made through credit cards of the Directors and we are also producing requisite supporting evidences for your verification, On verification, it was found that most of the expenses booked under this head have been paid through credit cards and the assessee was asked to explain in whose names the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat mere submitting a claim which is incorrect in law would not amount to giving inaccurate particulars of the income of the assessee, but it cannot be disputed that the claim made by the assessee needs to be bona fide. If the claim besides being incorrect in law is mala fide, Explanation 1 to section 271(1)(c) would come into play and work to the disadvantage of the assessee. The court cannot overlook the fact that only a small percentage of the income-tax returns are picked up for scrutiny. If the assessee makes a claim which is not only incorrect in law but is also wholly without any basis and the explanation furnished by him for making such a claim is not found to be bona fide, it would be difficult to say that he would still not be liable to penalty under section 271(1)(c) of the Act. If we take the view that a claim which is wholly untenable in law and has absolutely no foundation on which it could be made, the assessee would not be liable to imposition of penalty, even if he was not acting bona fide while making a claim of this nature, that would give a licence to unscrupulous assessees to make wholly untenable and unsustainable claims without there being any basis for mak ..... X X X X Extracts X X X X X X X X Extracts X X X X
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