TaxTMI 
TaxTMI 
TaxTMI 
2020 (2) TMI 69
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....eady available on record. 1.2 That the CIT(A) erred in not appreciating that reassessment proceedings under section 147 of the Act having been initiated merely on the basis of certain third party information, without independent application of mind by the assessing officer, is illegal and bad in law. Without Prejudice 2. That the CIT(A) erred on facts and in law in upholding the disallowance of travel expenditure amounting to Rs.l 1,00,000, incurred by the appellant for availing services of a chartered flight on the ground that the appellant had failed to substantiate that such expenditure was incurred wholly and exclusively for the purpose of business. 2.1 That the CIT(A) erred on facts and in law in concluding that the chartered flight services were not availed for business purposes,disregarding the evidences filed by the appellant during the course of assessment/appellate proceedings. 2.2 That the CIT(A) erred in not appreciating that the expenditure was incurred in relation to travel of directors/executives of the appellant-company, which undoubtedly was a business expenditure incurred wholly and exclusively for the purposes of business. 2.3 Without prejudice, the C....
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....he assessee. The ld. CIT(A), however, rejected the grounds challenging issue of notice under section 148 observing as under: "4.3 Findings: The findings are as under:- 4.4 I have carefully considered the reasons recorded for issuing notice u/s 148, objections filed by the assessee before the A.O. and the objections dealt by the A.O., assessment order, written submissions, case laws relied upon and oral arguments of Ld. AR. The objections/arguments of the appellant are discussed as under:- (i) In the assessment proceedings, assessee filed the objections before the A.O. which has been disposed off vide letter dated 07.4.2014 and has been reproduced in the reassessment order dated 05.5.2014 at para 2 at page no. 1 to 4. (ii) In the assessment proceedings, A.O. has dealt all the objections raised against the action initiated u/s 148 and after considering the same, the objections were rejected. On perusal of the same, it is clear that reason to believe, is based on the fact that the alleged expenses of Rs. 11,00,000/-, has been claimed in the P & L account for hiring the unscheduled-chartered flights for travelling by the directors, which is found to be unusual for the busines....
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....0,000/- was incurred by the appellant in relation to travel by one of the director of the appellant company, for discharging certain business commitment. It has also been submitted that total expenditure aggregating to Rs. 326.21 lacs, is in respect of tour and travelling, which constitutes nearly 1.37% of the total turnover. (iii) In the appellate proceedings, it has also been submitted by the appellant that the A.O. has no corroborative evidence to support that the chartered flight service was not availed for business purposes and the A.O. has not held that the expenditure of Rs. 11,00,000/-, is excessive or unreasonable and therefore, the A.O. has wrongly given findings that expenditure under consideration has not been incurred wholly and exclusively for business purposes. (iv) During the appellate proceedings, the appellant was required to prove the business activity carried out at the places of destinations, travelled by chartered flight on 18.02.2011. In this regard, the appellant has submitted vide letter dated 30.10.2015, the tour reports dated 25.02.2011 only and for sake of clarity, the same is reproduced as under:- "TOUR REPORT With a view to improve Modi Arc Elec....
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.... alleged discussion/business related activities, carried out at Coimbatore and Tuticorin with customers, as claimed in the tour report. As per the tour report, 5 persons have travelled in the chartered plane on 18.02.2011, but neither exigency have been proved for hiring the chartered flight nor business activities carried out at the places of destinations. (v) Further, as per journal voucher filed at page 78 of the paper book, the narration has been mentioned as "EXPS. OF CEO BY JK LAKSHMI CEMENT FROM DEL- CJB-TCR-CJB-". However, the CEO in the tour report, is Shri Sanjay Bhatia, whereas no mention about other employees/directors of the appellant company. (vi) During the appellate proceedings, the appellant was also required to file details of sales made with 9 parties mentioned in the tour report for F.Y. 2010-11 to F.Y. 2012-13, to prove the benefits in the form of increase in the sales, as a result of alleged tour conducted for business purposes. In response to this, the appellant has filed details vide letter dated 26.4.2016 and same are reproduced as under:- YEARS SI. No. PARTY & ADDRESS 2010-11 2011-12 2012-13 Remarks ....
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....cess, secondary and higher education cess of Rs. 1,02,720/-. However, on perusal of Journal voucher, the total amount of Rs. 11,00,000/-, has been debited, under 4 different heads, which includes service tax, education cess, secondary and higher education cess of Rs. 1,02,720/- also. Therefore, claim of the appellant is wrong, since total invoice amount of Rs. 11,00,000/-, has been paid and claimed in P & L account. In view of the above, the alternate argument of the appellant, is not correct and accordingly, not acceptable. From the above, following facts emerged:- > During assessment proceedings, appellant failed to prove before the A.O. that the alleged expenditure of Rs. 11,00,000/-, on account of hiring of chartered flight, were incurred for business purposes. > During the appellate proceedings also the appellant was given adequate opportunity to substantiate its claim, by filing the documents of correspondence etc. prior to and/or subsequent to the date of travel to prove that tour to these destinations was exclusively for business purposes. However, only tour report dated 25.02.2011 was filed, in which it is claimed that the meeting was held on 18.02.2011 with 9 alle....
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....s Modi Industries Limited had availed the sendees of non-scheduled flights (chartered flights) as under: Date From - To Amount paid Date of payment Mode of payment Name of passenger 18.02.2011 DEL-CJB TCR-DEL Rs.l 1,00,000/- 04.03.2011 By cheque Mr. Modi It is also noticed that the above payment was made by the assessee company M/s Modi Industries Limited to M/s J.K. Lakshmi Cement Limited. This expense has been claimed as business expense by the assessee. It appears that the expenses in respect of such other non-chartered flights might have been claimed by the assessee company as business expenses in the profit and loss account which are not allowable under section 37 of the Income Tax Act, 1961. Besides above, enquiries in respect of other similar booked chartered flights may also have to be made in this case. In view of the above mentioned facts I have reason to believe that income in respect of which the above named assessee is assessable/chargeable to tax for the assessment year 2011-12 has escaped assessment within the meaning clause (c) of Explanation-2 of section 147 of the I.T. Act, 1961. I am therefore, satisfied that this is a fit case for re-....