AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2016 (2) TMI 345
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.... as under:- 2.1 The assessee, a company engaged in the business of design and supply of lighting products, filed its return of income for assessment year 2007-08 on 31/03/2008 declaring total income of Rs. 880/-. The return was processed u/s. 143(3) of the Act and the case was subsequently selected for scrutiny. In the course of assessment proceedings, the Assessing Officer observed that the assessee had claimed expenditure of Rs. 3,52,271/- on account of foreign travel against business income in respect of the trip of two directors, Shri Satish Kapoor and Shri Saroj Shroff to Bangkok. In this regard the assessee furnished explanations on the foreign trips undertaken alongwith details of air travel and amounts expended for boarding and l....
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....income sought to be evaded. On appeal by the assessee, the Ld. CIT(A) dismissed the assessee's appeal vide order dated 18/11/2011. The Ld. CIT(A) upheld the levy of penalty of Rs. 1,18,573/- under section 271(1)(c) of the Act on the grounds that (i) the assessee failed to produce evidence of foreign exchange obtained amounting to Rs. 2,71,400/- from Kanji Forex P. Ltd. And (ii) that the assessee failed to establish that the expenditure incurred on foreign travel was for the purposes of the assessee's business. 3.1 Aggrieved by the order of the CIT(A)-6, Mumbai confirming the levy of penalty of Rs. 1,18,573/- u/s.271(1)(c) of the Act vide order dated 22/11/2011 for assessment year 2007-08, the assessee has raised the following grounds:- ....
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....t on boarding and lodging of the two directors, but disallowed the entire expenditure of Rs. 3,52,271/- including Rs. 76,571/- spent on air tickets and Visa charges. 3.2.2. According to the Ld. Representative for the assessee, similar expenses on foreign travel were incurred by the assessee year on year and the fact that these were incurred for business purposes was never doubted. It is submitted that in immediately preceding assessment year 2005-06, disallowance of the same was made only to the extent where documentary evidences to support expenditure claimed would not be furnished and an adhoc disallowance of 15% was made on the reasoning that in such type of expenditure, the personal element could not be ruled out. The Ld. Representat....
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....ghting products. In the year under consideration it incurred foreign travel expenditure of Rs. 3,52,271/-. On examination thereof it was found that the foreign trips were undertaken by two Directors of the assessee company i.e. Shri Satish Kapoor and Shri Saroj Shroff to Bangkok; one from 11/10/2006 to 15/10/2006 and the other from 27/2/2007 to 4/3/2007. It was submitted that these trips were undertaken to meet their regular suppliers i.e. M/s. Green Light Products and M/s. Davis Lighting and others like C&P Lighting, BE-LIT, etc. for various proposed projects that the assessee was involved in. 3.4.2 From the material on record, admittedly, it is seen that the assessee furnished the details/break-up of foreign travel expenditure incurred....
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....aining to the issue of foreign travel expenses in its accounts and return of income, therefore, could neither be found to be inaccurate nor viewed as concealment of income. 3.4.4 The case of the authorities below was that the assessee failed to produce evidence to establish that the foreign travel expenditure was incurred wholly and exclusively for its business purposes. In this context, the following observations of the Hon'ble Apex Court in the case of Reliance Petroproducts Pvt. Ltd.(supra) are relevant and are extracted hereunder:- "............ it was upto the authorities to accept the claim in the return or not. Merely because the assessee had claimed the expenditure, which claim was not accepted or was not acceptable by r....