2012 (10) TMI 845

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.... That the Ld. Commissioner of Income Tax (A) was not justified on facts and under the law in upholding the action of the Assessing Officer in levying penalty u/s. 271(1)(c) of the I.T. Act with reference to disallowance on foreign travel expenses of Rs. 7,31,363/-. Various observations made by the authorities below in their respective order on the above issue are either incorrect or are untenable. Facts stated, submissions made and the evidence produced before the authorities below were not appreciated properly. The case law relied upon by the authorities below in their respective orders were distinguishable on facts and had no application to the facts of appellant's case. ii) That without prejudice to ground no. (i), the penalty a....

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....und that the visit was on tourist visa. As regard supporting evidence only the bills for purchase of air tickets and foreign currency were submitted. The Assessing Officer mentioned that purchase of foreign currency was not an expenditure. No bills or vouchers for actual travelling expenses were furnished. In view of this the Assessing Officer required the assessee to show cause as to why expenditure on foreign travel should not be disallowed. Assessee responded in this regard that expenditure has been incurred for the purpose of business and Directors met several parties in those countries for betterment of business. Assessing Officer was not satisfied by this reply, he proceeded to disallow 50% of travelling expenses amounting to Rs. 7....

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....in this regard is that two directors and their wives who were also directors visited foreign countries which was not fully for business purposes. Assessee's submissions in this regard is note worthy that both the wives, who were also Directors of the company were receiving considerable salary which was accepted year after year. Hence, the visits cannot be said to be for non-business purposes. It has further been noted that disallowance in this regard in the preceding year was only 20% and on that addition penalty was not imposed, even the penalty notice has been issued by the Assessing Officer. In this background, we have to see whether the penalty proceedings u/s. 271(1)(c) is sustainable or not. We find that section 271(1)(c) of the Act p....