Subscription   Feedback   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Articles Highlights TMI Notes SMS News Newsletters Calendar Imp. Links Database Experts Contact us More....
Extracts
Home List
← Previous Next →

Oasis Infrastructure Pvt Ltd Versus Asstt. Commissioner of Income Tax, Circle 10 (2) , Mumbai

2016 (7) TMI 102 - ITAT MUMBAI

Penalty u/s 271(1)(c) - Assessee has claimed the expenses of foreign travelling of both the directors who are husband and wife - Held that:- the assessee has fully disclosed the particulars of claim which in no way can be termed as furnishing of inaccurate particulars and is a debatable point. - Levy of penalty set aside in view of the decision in the case of M/S Vistar Construction Pvt Ltd Vs DCIT [2012 (10) TMI 845 - ITAT, DELHI] - Decided in favour of assessee. - I.T.A. No.5501/Mum/2014 - Dat .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

vaded as against the 200% levied by the AO in respect of disallowance of AIR discrepancy and foreign travelling expenses. 3. The facts in brief are that the AO framed the assessment u/s 143(3) of the Act vide order dated 30.11.2011 assessing the income of the assessee at ₹ 3,35,57030/- as against the returned income of ₹ 3,27,12,510/- by the assessee by adding ₹ 79,680/- on the basis of AIR information which is related to short offering of hire income to this extent, disallowan .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

vising the penalty imposed to ₹ 4,38,568/-.The assessee did not challenge the quantum additions before the First Appellate Authority(FAA) and the assessment attained finality. 4. The aggrieved assessee preferred an appeal before the FAA which was also dismissed by the ld. CIT(A) by rejecting the contentions and submissions of the assessee as incorporated in para 2.3 of the appeal order by observing and holding as under:- 2.4 I have carefully considered the above submission of the appellant .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

penditure. 2.5 The second component of Foreign Travel Expenses amounting to ₹ 6,45,142/- was in respect of Foreign Travel Expenses undertaken by two of its Directors towards visit to Europe. The purpose of foreign visit was alleged to have been towards survey of new cranes available in the market. From the details filed it could be ascertained that both the Directors have booked their foreign tour through Thomas Cook in the name of the company. The appellant could file only the receipt iss .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ctors of the Company. In the absence of such evidence, a conclusion can be drawn that they have travelled in a group tour. Generally, the travel itinerary by M/s:Thomas Cook or any other travel agents are such that there will be no time left for any individual to explore any other" activity. It is for the appellant to prove that really the Directors had spare time to carry out the survey of new cranes available in the market. In my opinion, it was only a pleasure trip undertaken by the Dire .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e appellant failed to furnish any documentary evidence, the AO had rightly come to the conclusion that Foreign Travel Expenses is not for the purpose of the business. 2.6 The appellant had filed a resolution passed by the Board of Directors in this regard. However, in the absence of any documentary evidence to prove that really the Directors have carried out' inquiry with several crane manufacturers, the claim of the appellant cannot be entertained. 2.7 The appellant had also filed copy of t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

hed before the A.O. 2.8 As rightly pointed out by the AO, Explanation 1 to Section 271(1) squarely applies to the facts of the appellant's case and appellant had miserably failed to rebut the presumption raised under the explanation. Hence, in my view, it is a fit case for levy of penalty u/s 271 (1)(c) of I.T Act and therefore the penalty levied is hereby sustained. However in the interest of justice, I direct the AO to restrict the penalty to 100% of the tax sought to be evaded. 5. The ld .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

eceipt of the travel agency, board resolution sanctioning the foreign trip of the directors were produced before the AO. The ld AR argued that the explanation 1 to sec 271(1)( c ) wrongly invoked as the assessee has offered and given full explanation qua claiming those foreign travel expenses which was not found by the AO to be false and the assessee believed the same to be bonafide. Alternatively the ld counsel submitted that even if for a moment if the expenses are incurred to be not in connec .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t leviable. The ld counsel submitted that the provisions of section 271(1)( c) of the Act could be invoked if the assessee has concealed the particulars of income or furnished inaccurate particulars of income which was not so in the present case as the assessee did not conceal its income and nor furnished inaccurate particulars as all the particulars qua the foreign expenses were disclosed in the return of income. The counsel of the assessee argued that mere making a claim which is not sustainab .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

51 SOT 27 (Kol). The ld AR of the assessee further relied on the decisions of tribunal in the case of M/S Vistar Construction Pvt Ltd Vs DCIT (ITA No.5149/Del/2011) dated 19.10.2012 and DCIT Vs Control & Switchgears Ltd (ITA No1981/Del/2013) dated 4.3.2015 in which the coordinate benches of the Tribunal deleted the penalty levied u/s 271(1) ( c ) of the Act for disallowance of foreign travel expenses. Finally the ld AR prayed for deletion of the penalty as the assessee is fully covered by t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

penalty was reduced to ₹ 2,19,284/- being 100% of the tax sought to be evaded. The facts are that the assessee incurred expenses for the traveling of two directors who happen to be spouse of each other by rejecting the arguments of the AR that the said expenses were incurred for business purposes and exigencies in order to carry out survey the new cranes in the foreign market. Now the issue before us is whether the disallowance of expenses incurred for foreign travelling of directors are .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e claim in its return of income. In our opinion this is not a case of filing inaccurate particular of income as the assessee claimed the same to be business expenses under bonafide belief and the issue of admissibility is debatable one. Even the claim by the assessee which is not sustainable in law does not amount to furnishing of inaccurate particulars of income as has been held in the case of CIT Vs Reliance Petro Products (P) Ltd (supra). The hon'ble Supreme Court has held that mere makin .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

In the following cases, the tribunal considered and followed the decision of the Hon‟ble Apex Court in the case of CIT Vs Reliance Petro Products Ltd (Supra) and held that penalty is not leviable where foreign travelling of directors were disallowed. In the case of M/S Vistar Construction Pvt Ltd Vs DCIT , the tribunal held as under:- 7. We have carefully considered the submissions and perused the records. We find that disallowance in this case has been made to the extent of 50% of expend .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ted that disallowance in this regard in the preceding year was only 20% and on that addition penalty was not imposed, even the penalty notice has been issued by the Assessing Officer. In this background, we have to see whether the penalty proceedings u/s. 271(1)(c) is sustainable or not. We find that section 271(1)(c) of the Act postulates imposition of penalty for furnishing of inaccurate particulars and concealment of income. In this case disallowance has been made only on estimate basis. In t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ilure to carry out a statutory obligation is the result of a quasi-criminal proceedings, and penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. Penalty will not also be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

case of CIT vs. Reliance Petro Products Ltd. in Civil Appeal No. 2463 of 2010. In this case vide order dated 17.3.2010 it has been held that the law laid down in the Dilip Sheroff case 291 ITR 519 (SC) as to the meaning of word concealment‟ and inaccurate‟ continues to be a good law because what was overruled in the Dharmender Textile case was only that part in Dilip Sheroff case where it was held that mensrea was a essential requirement of penalty u/s 271(1)(c). The Hon‟ble A .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

as under:- 4. We have considered the rival submissions and have perused the order of the AO. With regard to the disallowance of Additional Depreciation and of Exemption u/s10B of the Act, the matter has been restored to the file of the AO to determine the same afresh in accordance with law as per the directions of the Tribunal and the matter is still pending before the AO. In these facts, we cancel the penalty levied u/s 271(1)(c) of the Act on these two items of disallowance. However, the AO wh .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

/s 271(1)(c) of the Act on this issue and the same is accordingly cancelled. With regard to the other two items of disallowance of Repair and Maintenance Expenses and disallowance out of Foreign Travelling Expenses, we find that part of disallowance has been confirmed in appeal by the appellate authority. However, the disallowance was made on the basis of information and facts made available to the AO by the assessee itself. The fact that assessee has in fact spent the amounts in question, is no .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

what is new what is new
  ↓     bird's eye view     ↓  


|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version