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VINOD KAPUR Versus INCOME-TAX OFFICER

IT APPEAL NO. 362 (MUM.) OF 2002 - Dated:- 21-11-2002 - R.V. EASWAR, JUDICIAL MEMBER AND R.P. RAJESH, ACCOUNTANT MEMBER B.V. Jhaveri for the Appellant. R.S. Arneja for the Respondent. ORDER Per R.V. Easwar, JM - This appeal by the assessee is directed against the penalty of ₹ 30,000 imposed on it under section 271(1)(c) of the Income-tax Act. The assessee is a HUF. It is carrying on business in rendering sales liaison services under the name and style of Gaurav Enterprises. Mainly, the ass .....

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sum of ₹ 7,770. Both of them were claimed to be sales representatives. Those persons had also been paid travelling expenses of ₹ 25,437.69 and ₹ 19,663 respectively. In the assessment proceedings, the Assessing Officer did not see any justification for allowing those amounts as deduction. The matter was carried by the assessee up to the Tribunal. The Tribunal upheld the disallowance by order dated 18-11-2000 and observed as under :- "We find from the paper book that the as .....

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CIT(Appeals) on this issue." 3. After the Tribunal s order, the Assessing Officer initiated penalty proceedings against the assessee for concealment of income. The assessee initiated explained that it had furnished all the details regarding the amounts paid to those two persons as salary and travelling expenses, that the salary was paid by account payee demand draft, that the reimbursement of the travelling expenses was also by account payee demand draft, that Ghatte was based at Kolhapur .....

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t was submitted that merely because the amounts are not found available in the assessment for lack of evidence, it cannot be stated that the assessee had concealed its income. 4. The Assessing Officer did not accept the assessee s explanation. He held that it has not been proved that the expenditure claimed by way of salary and allowances to Ghatte and Joshi were incurred wholly and exclusively for the purposes of the assessee s business under section 37(1) and that the assessee was not in a pos .....

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t of the genuineness of the expenses incurred and even the identity of the employees had not been established. According to him, the amount claimed cannot be treated as bona fide expenses. In this view of the matter, the penalty was confirmed. 6. The assessee is in further appeal before the Tribunal to contend that in the facts and circumstances of the case there was no justification for levying any penalty on the ground that the assessee furnished inaccurate particulars of its income. We have c .....

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e-wise details have been given in respect of both the persons, showing the actual fare, other expense, etc. The expense sheet which are at pages 7 & 9 of the paper book also show the details of journeys undertaken, the mode of transport, the fare, postage or telephone expenses, hotel expenses etc. incurred by the employees in columnar form. The fact that these details have been furnished even at the assessment stage is not disputed before us. It is not also disputed that the amounts were pai .....

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