TMI Blog1985 (11) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... e-firm, M/s. Hazari Mal Milap Chand Surana. Shri Surana took two foreign tours in the year 1975-76. In one of the tours, Mrs. B. D. Surana accompanied her husband, M. L. Surana, and in another tour, the daughter of Shri Surana accompanied Mm. The assessee claimed a deduction amounting to Rs. 8,416.70 and Rs. 10,444, i.e., total expenditure of Rs. 18,860, on account of foreign tours as allowable expenditure, being business expenditure. The Income-tax Officer, vide order of assessment dated January 12, 1979, held that so far as the first tour was concerned, the tour was merely undertaken for medical purposes. The assessee's contention before the Income-tax Officer was that during his stay in the USA, Shri Surana, the managing partner of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income, inasmuch as the expenses of the partner and his relative amounting to Rs. 21,312 were claimed as business expenses of the firm, penalty proceedings under section 271(1)(c) of the Act were initiated and a show-cause notice was served. The assessee-firm filed a reply on October 23, 1978. The assessee-firm submitted that the additions are in the nature of disallowance of expenses claimed by the firm under the honest and bona fide belief that the said expenses are allowable under the law. It was also submitted that the firm has not concealed any part of the income and has also not suppressed the profits in any way. Thus, the provisions of section 271(1)(c) are not applicable. The submissions of the assessee-firm were not found to be cor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aside the imposition of the penalty levied by the Income-tax Officer and in not stating the case for reference in the matter to this court, when an application for reference was moved. Controverting the submissions of Mr. Surolia, Mr. N. M. Ranka, learned counsel for the assessee, submitted that the order passed by the Income-tax Appellate Tribunal declining to make a reference to this court, is absolutely correct and no question of law arises from the order of the Income-tax Appellate Tribunal, dated March 10, 1981. The main contention raised by Mr. Surolia, learned counsel for the Revenue, is that since the original assessment proceedings for computing the tax have been decided against the assessee and, as such, a presumption should be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh the initial responsibility is that of an assessee to advance some cause, it is the task of the Income-tax Officer or the Appellate Assistant Commissioner to satisfy himself whether the cause advanced is reasonable or not. He submits that no penalty can be levied unless the satisfaction of the concerned officer is indicated that the cause advanced by the assessee is not a reasonable one. As regards the finding recorded in the assessment proceedings, Mr. Ranka submits that the finding in the original assessment proceedings for computing tax may be a good item of evidence in the penalty proceedings, but penalty cannot be levied solely on the basis of the reasons given in the original assessment. Mr. Ranka relies on CIT v. Khoday Eswarsa and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he expenditure incurred by the firm was an allowable revenue expenditure on the ground of commercial expediency. The learned Tribunal also considered that the expenditure was incurred under the bona fide belief that such an expenditure would be allowed on the ground of commercial expediency. The learned Tribunal also considered the effect of the Explanation added to section 271(1)(c) of the Act and recorded the finding that it was not attracted in the instant case inasmuch as the income returned was not less than 80% of the total income assessed for the year after adjustment of Rs. 21,312 in view of the fact that the said expenditure was incurred bona fide by the assessee for the purpose of earning income included in the total income of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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