TaxTMI 
TaxTMI 
2010 (7) TMI 517
X X X X Extracts X X X X
X X X X Extracts X X X X
....d by the learned CIT(A) vide order dated 2-11-2006. The addition was confirmed on the basis of information received from Babtie Consultants India Pvt. Ltd. (hereinafter mentioned as 'employer') in response to the enquiries made by the learned CIT(A) from this concern. This concern had terminated the services of the assessee with effect from 28-2-2002 by way of 14 days notice given in writing on 15-2-2002 and the foreign trips for which expenses of Rs. 2,24,134 have been claimed by the assessee was executed in May, 2002, when the assessee was not in the employment of the said employer. ITAT Ahmedabad Bench vide order dated 14-9-2007 upheld the disallowance made by the Assessing Officer and confirmed by the findings of the learned CIT(A) given in the order dated 2-11-2006. In the background of the above facts penalty under section 271(1)(c) of the IT Act was levied by the Assessing Officer. The penalty order was challenged before the learned CIT(A) and it was submitted that findings in the assessment proceedings though good evidence, are however, not conclusive for levying penalty. It was stated that the assessee being Structural Engineer for building and industrial plants etc. went ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ine disallowance of expenses rather the Department detected that the appellant made a false claim, hence the case laws cited would not be applicable. However, in the interest of justice, as the appellant has regularly been filing his Income-tax returns at high figures and has been paying taxes, I find it reasonable to restrict the penalty at 100 per cent of tax sought to be evaded. This penalty comes to Rs. 70,602. The appellant gets relief of Rs. 1,41,204 (Rs. 2,11,806 minus Rs. 70,602)". 4. The learned Counsel for the assessee reiterated the submissions made before the authorities below. He has filed two letters issued by M/s. Babtie Consultants India Pvt. Ltd. dated 10-3-2003 and 25-11-2002 in which the assessee was again called for one day workshop on certification of Masons in Gujarat. He has submitted that the above letters would show that the assessee was in continued employment of the employer, therefore, the assessee was in bona fide belief that the amount incurred for foreign trip would be reimbursed by the employer. In the absence of actual reimbursement of the expenditure by the employer the assessee claimed it to be business expenditure laid out wholly and exclus....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g to the truth or erroneous. Where there is no finding that any details supplied by the assessee in its return are found to be incorrect or erroneous or false there is no question of inviting the penalty under section 271(1)(c). A mere making of a claim which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such a claim made in the return cannot amount to furnishing inaccurate particulars. Decision of the Gujarat High Court affirmed." 5. On the other hand, the learned DR relied on the orders of the authorities below and submitted that the learned CIT(A) on quantum has rejected the claim of the assessee by holding that the assessee has made totally misleading and false claim. The learned DR submitted that the finding of facts recorded, by the learned CIT(A) on quantum vide order dated 2-11-2006 have become final because the Tribunal dismissed the appeal of the assessee on quantum vide order dated 14-9-2007. The learned DR submitted that finding of facts recorded on quantum have a probative value. The learned DR referred to PB-6 and PB-8 which are the letters communicated to the learned CIT(A) by the e....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e [and fails to prove that such explanation is bona fide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him], then, the amount added or disallowed in computing the total income of such person as a result thereof shall, for the purposes of clause (c) of this sub-section, be deemed to represent the income in respect of which particulars have been concealed". 7. It is admitted fact that that the Assessing Officer disallowed the claim of the assessee for travelling expenses relating to his foreign trips to London and Paris in the month of May, 2002 undertaken on behalf of his employer and the learned CIT(A) at the appellate stage on quantum made a direct enquiry from the employer of the assessee namely Babtie Consultants India Pvt. Ltd. who have furnished their reply denying the claim of the assessee because the services of the assessee were terminated with effect from 28-2-2002 because of appearance made by the assessee in TV programme on 26-1-2002. The learned Counsel for the assessee did not dispute this fact during the course of argument that the services of the assessee were terminated by his employer M/....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... that Mr. Vani was not on the pay roll of the company after the 28th day of February, 2002 i.e. the date on which his services were terminated as a result of his appearance on ND TV channel in a programme called Big Fight on 26-1-2002. The company thus had nothing to do with Mr. Vani after the date of termination of his services and his contention that the employer company got furious with him on his TV interview in the month of May, 2002 and as a result terminated his services, is thus found to be devoid of any merit and deserves outright rejection. It has also been exposed that Mr. Vani had submitted a misleading submission regarding termination of his services which according to him, were orally terminated by the company whereas there was a written record of such termination and the appellant was fully aware of this fact. On this basis of evidence collected, it is also proved beyond doubt that the appellant had submitted a totally false claim of the foreign tour expenses duly supported by an affidavit dated 3-1-2006 filed before the Assessing Officer with the plea that the expenses under consideration has not been reimbursed to him by the company whereas he knew fully well that ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Consultants India Pvt. Ltd. on the date of foreign trips there was no reason to accept the explanation of the assessee that he has undertaken foreign trips on behalf of the employer. Thus, the claim of the assessee for deduction of the expenditure was rightly found to be false. Explanation 1 to section 271(1)(c) is part of section 271(1)(c) of the IT Act and is clearly attracted in the case of the assessee. The assessee has failed to offer any explanation and whatever explanation was offered was found to be false by the authorities below. Since the assessee has made false claim of deduction of the expenditure, therefore, explanation of the assessee cannot be considered to be bona fide. Considering the facts and circumstances above, we are of the view that subsequent letters written by Babtie Consultants India Pvt. Ltd. would have no impact on the levy of penalty. The subsequent letters were written for a day's workshop which has no relevance to the matter under consideration. The assessee has made a false claim of deduction of the expenditure, therefore, authorities below were justified in holding that the assessee has concealed particulars of income or filed inaccurate particulars....