TMI Blog2016 (8) TMI 909X X X X Extracts X X X X X X X X Extracts X X X X ..... e visit to Mecca and Medina by the Directors, in whose names, tickets were issued and spent money through their credit cards for the stay in hotels, SPA, etc., was for promotion of business, only it cannot be contended that both the original/appellate authorities have erred, in not properly adverting to the statutory provisions, under Sections 40A(2)(a) and 69C of the Income-Tax Act, 1961. On facts, when the appellant did not satisfy the requirements for claiming deductions, disallowance has to consequently follow. Thus, the disallowance under the head, “Business Promotion Charges”and under the head, “Foreign Travel Expenditure”, cannot be said to be said to be erroneous, both on law and facts. - Decided against assessee. - T.C.A.No.413 of 2016 - - - Dated:- 30-6-2016 - MR. S.MANIKUMAR AND MR. D.KRISHNA KUMAR, JJ. For The Appellant : Mr.N.Senthil Kumar ORDER (Order of the Court was made by S.MANIKUMAR, J. ) Tax Case Appeal is directed against the order made in I.T.A.No.1017/Mds/2014, dated 22.05.2015, passed by the Income-Tax Appellate Tribunal, B Bench, Chennai, for the assessment year 2011-12. 2. Short facts leading to the appeal are that M/s.Rifah Shoe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , on account of foreign Travel, by stating that no material was filed by the appellant to the extent of ₹ 13,90,620/-? (3) Whether in the facts and circumstances of the case, the Appellate Tribunal was right in law in sustain the addition made by the Assessing Officer, u/s.69C of the Income-Tax Act, on account of unexplained expenses, wherein the entire expenses were made through Account Payee cheques and are evident from the books of accounts of the appellant? 5. Inviting the attention of this Court to Section 40A(2)(a) of the Income-Tax Act, Mr.N.Senthil Kumar, learned counsel for the appellant submitted that when the assessee had incurred expenditure in respect of which payment has been or to be made to any person referred to in clause (b) of the above sub-Section and if the Assessing Officer is of the opinion that such expenditure was excessive or unreasonable, having regard to the fair market value of the goods, services or facilities for which payment was made or the legitimate needs of the business or profession of the assessee or the benefits derived by or accruing to him therefrom, so much of the expenditure, considered by him, to be excessive or unreasonable, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8377; 49,17,343/-. Case has been taken up for scrutiny and on notice, his authorised representative has appeared. Going through the material documents, the assessing officer has found that payments have been made through Credit Cards and many entries have been made, towards expenditure incurred towards stay in the Hotels/Resorts, Disney Vacancy purchase, apparels purchase, departmental stores, SPA/life style and stay in the Hotels at Mecca Medina. Though the appellant has contended that credit card payments were made in relation to foreign travel for business purposes, the assessing officer has observed that foreign visits made was for religious pilgrimage. 9. Though Mr.N.Senthil Kumar, learned counsel for the appellant has contended that the assessing officer has failed to record any reasons for disallowing a sum of ₹ 4,73,345/-, being 30% of ₹ 15,77,819/-, the latter being claimed as expenditure incurred towards business promotion charges, and that he has not assigned any reason, as to why, it was excessive or unreasonable, during the course of hearing, when the learned counsel was posed with a specific question, as to whether, any material was placed before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 13,90,620/- was disallowed by the assessing officer, as unexplained expenditure, under Section 69C of the Income Tax Act and thus, added to the total income of the assessee. 13. Section 69C of the Income Tax Act, deals with unexplained expenditure, etc., and the said section is extracted hereunder: Where in any financial year an assessee has incurred any expenditure and he offers no explanation about the source of such expenditure or part thereof, or the explanation, if any, offered by him is not, in the opinion of the Assessing Officer, satisfactory, the amount covered by such expenditure or part thereof, as the case may be, may be deemed to be the income of the assessee for such financial year. Provided that, notwithstanding anything contained in any other provision of this Act, such unexplained expenditure which is deemed to be the income of the assessee shall not be allowed as a deduction under any head of income. 14. It is an admitted fact that the appellant has not produced all the bills and vouchers before the assessing officer to substantiate the claim that an extent of ₹ 22,14,876/-, incurred for foreign travel, for the purpose of business. Befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s for promotion of business, having regard to the expenses incurred towards foreign travel for Mecca and Medina, stay in hotels, etc., and upon considering the materials, the appellate authority, by observing that as most of the bills, furnished were in the name of the individuals and that the same cannot be treated, as business expenditure, held that the addition made by the assessing officer, on account of foreign travel expenditure, is not related to business, and treated the same as personal expenditure and so saying, confirmed the disallowance of ₹ 13,90,620/-. Question is whether the appellant has substantiated the plea that the visits made to foreign countries were for promotion of business? Has he satisfied the above condition to claim deductions? 18. As observed in the foregoing paragraphs, it is the categorical admission of the learned counsel for the appellant that no documents were produced, either, before the Original Authority or Appellate Authority, as the case may be, to prove that there was any business transactions or activity in the foreign countries, visited by the Directors of the appellant-Company, on the said aspect. Pilgrimage to Mecca and Medina is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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