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Income Tax Appellate Tribunal, AHMEDABAD “C” BENCH
Before: SHRI PRADIP KUMAR KEDIA & SHRI MAHAVIR PRASAD
PER MAHAVIR PRASAD, JUDICIAL MEMBER
This appeal filed by the Assessee is directed against the order of the Ld. CIT(A)-8, Ahmedabad dated 30.06.2017 pertaining to A.Y. 2010-11 against the 2 . A.Y. 2010-11 confirming penalty levied by the Assessing Officer u/s 271(1)(c) relating to disallowance of foreign travel expenses.
Facts of the case are that the Assessing Officer at para 6 of his order has observed that the assessee company has claimed foreign travel expenditure of Rs. 2,38,675/- incurred by one of the company’s employee Mr. Pradip C. Patel. It was further observed that assessee has not submitted the purpose and proof that such foreign tour was undertaken for the purpose of business. In case case, assessee filed reply dated 4.12.2012 wherein detailed explanation was offered. However, the explanation offered by the assessee could not convince. The ld. Assessing Officer and expenses of Rs. 2,38,675/- was disallowed and subsequently initiated penalty proceedings u/s 271(1)(c) of the Act.
Against the penalty order, assessee filed an appeal before the ld. CIT(A) who confirmed the action of the Assessing Officer. On the ground that appellant has only presented simple narration regarding the journey made by one of the employee to South Africa and has not given any evidence regarding foreign travel expenses of Rs. 2,38,675/-.
Now assessee has come before us against the order of the ld. CIT(A) for confirming penalty.
We have gone through the relevant record and impugned order and heard both the parties. In this case, one of the employee of the assessee visited South Africa and expenses were borne by the assessee company and purpose of the said visit was duly explained by the assessee to lower authorities. But same could not convince the lower authorities. It is the case where Managing 3 . A.Y. 2010-11 Director or Director or their family member have visited South Africa. On the contrary, an employee of the assessee company visited the foreign company. It is the prerogative and discretion of the company that in the interest of the business expediency such decision can be taken by the assessee company and Revenue cannot question such foreign visit particularly when purpose of the foreign visit duly explained to the lower authorities.
In support of its contention, ld. A.R. cited an order of ITAT Lucknow Bench in the matter of Ashok Grih Udyog Kendra Pvt. Ltd. vs. ACIT (2009) 120 ITD 151 (Lucknow) wherein in similar facts and circumstances, relief was granted to the assessee by the ITAT and with following observation:
“Section 271(1)(c) of the Income-tax Act, 1961 - Penalty - For concealment of income - Assessment year 2000-01 - For relevant assessment year, assessee-company filed its return wherein it claimed deduction of Rs. 2.37 lakhs as LTC paid to an employee - Assessing Officer rejected assessee's claim holding that aforesaid expenditure was not incurred for purpose of business of assessee-company - Assessing Officer also imposed penalty on assessee on account of claiming wrong deduction - Commissioner (Appeals) confirmed levy of penalty - On instant appeal, it was seen that revenue had not doubted genuineness of expenditure incurred and it was a mere case of difference of opinion between assessee and department as to whether amount-in-question had been incurred for purpose of business or not - Furthermore, assessee's explanation in respect of entries in books was found to be bona fide - Whether, on facts, it could be concluded that it was only a case of assessee's failure to establish its claim in quantum proceedings, but that would not automatically become a case for levy of penalty for concealment of furnishing accurate particulars - Held, yes - Whether, therefore, penalty levied by authorities below was to be cancelled - Held, yes”
4 . A.Y. 2010-11 7. In our considered opinion, this is fit case where relief sought against imposition of penalty should be granted to the assessee. Thus, appeal of the Assessee is allowed.
In the result, appeal filed by the Assessee is allowed.
Order pronounced in Open Court on 09- 10- 2019