Assessee penalized for false deductions on foreign trips, penalty reduced to 100% tax sought

Yogesh T. Vani Versus ITO

Yogesh T. Vani Versus ITO - [2011] 8 ITR 779 Issues Involved:
1. Levy of penalty under section 271(1)(c) of the IT Act for assessment year 2003-04.
2. Disallowance of travelling expenses claimed as business expenses.
3. Determination of whether the assessee furnished inaccurate particulars or concealed income.

Issue-Wise Detailed Analysis:

1. Levy of Penalty under Section 271(1)(c) of the IT Act:
The primary issue was the levy of penalty under section 271(1)(c) of the IT Act, which concerns the concealment of income or furnishing inaccurate particulars of income. The penalty was imposed following the disallowance of Rs. 2,24,134 claimed as travelling expenses by the assessee. The CIT(A) confirmed the penalty but reduced it to 100% of the tax sought to be evaded, amounting to Rs. 70,602. The Tribunal upheld this decision, emphasizing that the assessee's claim was false and misleading.

2. Disallowance of Travelling Expenses:
The Assessing Officer disallowed the travelling expenses claimed by the assessee for trips to London and Paris, reasoning that these trips could not be considered business expenses since the assessee, a Structural Engineer, was not employed by Babtie Consultants India Pvt. Ltd. at the time of the trips. The CIT(A) and ITAT confirmed this disallowance based on information from the employer, who stated that the assessee's services were terminated before the trips, and no such foreign trips were authorized or reimbursed by the company.

3. Determination of Furnishing Inaccurate Particulars or Concealing Income:
The Tribunal examined whether the assessee had furnished inaccurate particulars or concealed income. The assessee argued that the trips were undertaken to learn about seismic design practices abroad, which was necessary for his profession. However, the employer's response and the timing of the trips (after the termination of services) led to the conclusion that the claim was false. The Tribunal noted that the assessee's explanation was not bona fide and that the claim was misleading. The Tribunal referenced the Supreme Court's decision in CIT v. Reliance Petroproducts Pvt. Ltd., which clarified that merely making an unsustainable claim does not amount to furnishing inaccurate particulars unless the claim is found to be false or misleading.

Conclusion:
The Tribunal dismissed the assessee's appeal, confirming the penalty under section 271(1)(c) of the IT Act. The Tribunal found that the assessee had made a false claim of deduction for foreign trip expenses, thus furnishing inaccurate particulars of income. The penalty was deemed justified, and the original disallowance of expenses was upheld.