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Hannover Milano Fairs India P. Ltd. Versus DCIT, Circle-3 (1) , Mumbai

2015 (12) TMI 1020 - ITAT MUMBAI

Penalty u/s. 271(1)(c) - disallowance of Exhibitor Promotion expenses - Held that:- Assessing Officer had given a specific show cause notice and examined the relevant invoices for Exhibit Promotion expenses and thereafter found that invoices for Euro 36993.45 were actually meant for Chinese exhibitions and as such were not related to the exhibition/fairs organized by the assessee. The disallowance was accordingly made to the equivalent amount in Rupees amounting to ₹ 24,96,318/-. This is n .....

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d ample opportunity to get those invoices from its counterpart and/or could have obtained copy thereof from the parent company itself and submitted to the Assessing Officer at least during the penalty proceedings. Unfortunately, no such evidence was filed neither before the Assessing Officer nor even before the CIT(A) in the appellate proceedings. In view of the above the CIT(A) was justified in upholding the order of the Assessing Officer wherein he has held that the assessee has concealed its .....

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. 2009-10. 2. Following grounds were raised by the assessee:- "1. The learned Commissioner of Income Tax (Appeals) - 5, Mumbai [CIT(A)] erred in confirming the order of the learned DCIT, Range 3(1), Mumbai (Assessing Officer) levying penalty u/s. 271(1)(c) of the Act. Your appellant submits that the order u/s. 271(1)(c) is illegal, bad-in-law and the same ought to be cancelled. 2. The learned CIT(A) erred in confirming the order of the Assessing Officer levying penalty u/s. 271(1)(c) of the .....

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of the additions was on account of disallowance of ₹ 24,96,318/- on which the Assessing Officer imposed penalty under the provisions of section 271(1)(c) vide order dated 30.05.2012. 4. The matter was carried before the first Appellate Authority wherein various contentions were raised on behalf of the assessee and after considering the same the CIT(A) upheld the penalty in question. 5. The learned A.R. for the assessee, before us, submitted that the CIT(A) was not justified in confirming t .....

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rder of the CIT(A). 6. After going through rival submissions and the record we find that the assessee is a company engaged in the business of organizing, arranging and promoting trade fairs, exhibitions, conferences and conventions. For A.Y. 2009-10 assessee s case was selected for scrutiny by the concerned Assessing Officer who passed an order under section 143(3) disallowance the expenditure in relation to Exhibitor Promotion expenses and the Assessing Officer has levied penalty on account of .....

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c) of the Act amounting to ₹ 8,48,499/- for the same. During the relevant financial year certain Exhibitor Promotion expenses were incurred by Deutsche Messe AG (DMAG), the parent company of the assessee, for fairs organized in India and China. Four fares were organized in India and China for which the parent company had incurred certain expenses. The parent company apportioned the expenditure between the assessee and the company in China equally. The Assessing Officer called for details o .....

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ro as on 31.03.2009, i.e. 1 Euro is equivalent to INR 67.48 and disallowance and added back ₹ 24,96,318/- to the total income of the assessee. Learned A.R. for the assessee has fairly admitted that assessee accept the quantum addition but simultaneously penalty under section 271(1)(c) amounting to ₹ 8.48,499/- was levied for the aforesaid addition. The stand of the assessee has been that all the details called for by Assessing Officer were submitted with respect of Exhibitor Promotio .....

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e assessee has been that the assessee has claimed certain expenditure which could not be accepted by Assessing Officer. 6.1 The provisions of section 271(1)(c) of the Act together with Explanation-1 there under, no principles of menserea is required for levy of such civil penalty. Levying penalty may not be justified in cases of explanation given is found bonafide and all the facts relating to the same and material to the computation of his total income have been disclosed by assessee. The discl .....

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to exercise their discretion based on the facts of the case. Mere claim of the assessee that issue was debatable and or two views were possible in law and facts is also not enough. The burden to substantiate the claim is upon the assessee. If the explanation given is found not to be bonafide then levy of penalty would be justified. In the case before us the Assessing Officer had given a specific show cause notice and examined the relevant invoices for Exhibit Promotion expenses and thereafter fo .....

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