SANJAY TRADE CORPORATION, MUMBAI v. ACIT 13(3), MUMBAI

ITA 3864/MUM/2010 | 2003-2004
Pronouncement Date: 15-07-2011 | Result: Dismissed

Appeal Details

RSA Number 386419914 RSA 2010
Assessee PAN AAAFS4078E
Bench Mumbai
Appeal Number ITA 3864/MUM/2010
Duration Of Justice 1 year(s) 2 month(s) 2 day(s)
Appellant SANJAY TRADE CORPORATION, MUMBAI
Respondent ACIT 13(3), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 15-07-2011
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted E
Tribunal Order Date 15-07-2011
Date Of Final Hearing 07-07-2011
Next Hearing Date 07-07-2011
Assessment Year 2003-2004
Appeal Filed On 13-05-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E BEFORE SHRI PRAMOD KUMAR ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO JUDICIAL MEMBER ITA NO.3864/MUM/10 (ASSESSMENT YEAR : 2003-04) M/S. SANJAY TRADE CORPORATION 407 ADAMJI BUILDING 413 N.N. STREET MUMBAI-400 009 PAN AAAFS4078E VS. ASST. COMMISSIONER OF INCOME TAX 13(3) MUMBAI. APPELLANT. RESPONDENT. ITA NO.4429/MUM/10 (ASSESSMENT YEAR : 2003-04) ASST. COMMISSIONER OF INCOME TAX 13(3) MUMBAI. VS. M/S. SANJAY TRADE CORPORATION N.N. STREET MUMBAI-400 009 APPELLANT. RESPONDENT. ASSESSEE BY : H.S. PARIKH. REVENUE BY : SHRI G.P. TRIVEDI. O R D E R PER PRAMOD KUMAR : 1. THESE CROSS APPEALS ARE DIRECTED AGAINST CIT(A) S ORDER DT.10.03.2010 IN THE MATTER OF PENALTY U/S.271(1)(C) OF THE INCOM E TAX ACT 1961 FOR THE ASSESSMENT YEAR 2003-04. AS THESE APPEALS ALL INTO QUESTION CORRECTNESS OF THE SAME CIT(A)S ORDER AND AS THESE APPEALS WERE HEARD TOGETHER BOTH OF THESE APPEALS ARE BEING DISPOSED OF BY THIS COMMON ORDER. 2. GRIEVANCE RAISED IN REVENUES APPEALS IS AS FOLL OWS : ITA NOS.3864 & 4429/MUM/10 - 2 - 1(A) THE LEARNED CIT(A) ON THE FACTS AND CIRCUMST ANCES OF THE CASE AND IN LAW ERRED IN DELETING PENALTY U/S.271(1)(C) LEVIED ON AMOUNT OF RS.86 80 915 PERTAINS TO ADDITION ON ACCOUNT OF INT EREST FREE LOAN AND ADVANCES IGNORING THE FACT THAT ASSESSEE HAS FAILED TO PROVE THE COMMERCIAL EXPEDIENCY. (B) THE LEARNED CIT(A) ON THE FACTS AND IN THE CI RCUMSTANCES OF THE CASE AND IN LAW ERRED IN DELETING THE PENALTY U/S. 271(1)(C) LEVIED AN AMOUNT OF RS.16 44 563 PERTAINS TO ADDITION ON ACCO UNT OF DISALLOWANCE OF BAD DEBT WITHOUT APPRECIATING THE F ACT THAT ASSESSEE FAILED TO PROVE THE DEBT AS BAD DEBT. 3. LEARNED REPRESENTATIVES FINALLY AGREE THAT THE R ELATED QUANTUM ADDITIONS HAVE BEEN DELETED BY A CO-ORDINATE BENCH VIDE ORDE R DATED 13.08.2010 AND A COPY OF THE SAID ORDER IS ALSO PLACED ON RECORD. I N VIEW OF THE FACT THAT QUANTUM ADDITION ITSELF IS DELETED THE VERY FOUNDATION OF IMPUGNED PENALTIES CEASES TO EXIST. UNDER THESE CIRCUMSTANCES WE UPHOLD THE CI T(A)S ACTION OF DELETING THE RELATED PENALTY AND DECLINE TO INTERFERE IN TH E MATTER. 4. THE APPEAL FILED BY THE REVENUE IS THEREFORE D ISMISSED. 5. IN ASSESSEES APPEAL THE GRIEVANCES RAISED ARE AS FOLLOWS : 1. THE LEARNED CIT(A)-24 MUMBAI (THE LEARNED A. O.) ERRED IN CONFIRMING THE PENALTY IMPOSED ON ACCOUNT OF DISALL OWANCE OF TRAVEL CONVEYANCE OF RS.8 73 192 WITHOUT ASSIGNING ANY COGENT REASON. 1.1 ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) OUGHT TO HAVE DELETED THE PENALTY IMPOSED ON ACCOUNT OF DISALLOWANCE OF TRAVEL CONVEYANCE OF RS.8 73 192. 1.2 YOUR APPELLANT HAS ALREADY GIVEN THE FULL DE TAILS OF TRAVEL EXPENSES TO THE LEARNED A.O. HOWEVER THE LEARNED A.O. HAS DISALLOWED THE TRAVEL EXPENSES OF RS.8 73 192. IT CANNOT BE STATED ITA NOS.3864 & 4429/MUM/10 - 3 - THAT THE DISALLOWANCE MADE BY THE LEARNED A.O. ATTR ACTS THE PENALTY PROCEEDINGS. 1.3 YOUR APPELLANT SUBMITS THAT THE LEARNED CIT( A) OUGHT TO HAVE CONSIDERED THIS AND OUGHT NOT TO HAVE CONFIRMED THE PENALTY LEVIED ON DISALLOWANCE OF RS.8 73 192 ON TRAVEL CONVEYANCE . 2. YOUR APPELLANT CRAVES LEAVE TO ADD ALTER AMEND WITHDRAW OR SUBSTITUTE ALL OR ANY OF THE GROUNDS OF APPEAL AS T HE CIRCUMSTANCES OF THE APPEAL MAY REQUIRE. 6. BRIEFLY STATED THE RELEVANT MATERIAL FACTS ARE AS FOLLOWS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFF ICER NOTICED THAT THE ASSESSEE HAS CLAIMED TRAVELLING EXPENSES AMOUNTING TO RS.11 17 061 OUT OF WHICH FOREIGN TRAVEL EXPENSES OF RS.8 73 192 PERTAI N TO FOREIGN TRIPS OF UMESH MEHTA AND JITENDRA SHAH. IN RESPONSE TO ASSESSING OFFICERS REQUISITIONS IT WAS SUBMITTED THAT THE TRIPS WERE UNDERTAKEN TO VIS IT USA FOR DEVELOPMENT OF ASSESSEES BUSINESS. BEYOND THESE VAGUE SUBMISSION S THE ASSESSEE COULD NOT SUBSTANTIATE THE CLAIM THAT THESE FOREIGN TRIPS FOR LEGITIMATE BUSINESS EXPEDIENCIES. ON THESE FACTS ASSESSING OFFICER DIS ALLOWED THE CLAIM OF FOREIGN TRAVEL EXPENSES AMOUNTING TO RS.8 73 193. THE APPE ALS BEFORE CIT(A) AND THE TRIBUNAL DID NOT YIELD ANY SUCCESS EITHER. A CO- ORDINATE BENCH OF THIS TRIBUNAL CONFIRMED THE DISALLOWANCE INTER ALIA OBSERVING A S UNDER : BEFORE US LEARNED COUNSEL FOR THE ASSESSEE REITE RATED THE SUBMISSIONS MADE BY THE ASSESSING OFFICER. HE HAS NOT FILED ANY EVIDENCE TO SHOW THAT FOREIGN TRAVELING EXPENSES WE RE INCURRED IN CONNECTION WITH THE BUSINESS OF THE ASSESSEE. AS R IGHTLY HELD BY THE ASSESSING OFFICER EXPLANATION AND JUSTIFICATION GIV EN BY THE ASSESSEE IS VERY VAGUE AND IT CANNOT BE ACCEPTED IN THE ABSE NCE OF ANY ITA NOS.3864 & 4429/MUM/10 - 4 - RELIABLE EVIDENCE. THE BURDEN LIES ON THE ASSESSEE TO ESTABLISH THAT EXPENSES CLAIMED AS DEDUCTION IS WHOLLY AND EXCLUSI VELY INCURRED FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE. IN THESE CIRCUMSTANCES WE CONFIRM THE ORDER OF THE LEARNED CIT(A) AND DISMISS GROUND NO.2 RAISED BY THE ASSESSEE. 7. IT IS IN RESPECT OF THIS QUANTUM ADDITION THAT THE PENALTY IMPUGNED IN ASSESSEES APPEAL WAS LEVIED BY THE ASSESSING OFFIC ER BY OBSERVING THAT THE FACT THAT THE ASSESSEE FAILED TO PROVIDE ANY EVIDEN CE REGARDING THE BUSINESS PURPOSE OF FOREIGN TRAVEL DESPITE NUMEROUS OPPORTUN ITIES GIVEN TO IT PROVES THAT IT HAS WILLFULLY FILED INACCURATE PARTICULARS OF IN COME IN RESPECT OF TRAVELLING EXPENSES. IN APPEAL CIT(A) CONFIRMED THE PENALTY ON THE GROUND THAT THE ASSESSEE HAS FAILED TO SUBSTANTIATE THE CLAIM THAT EXPENSES WERE INCURRED FOR BUSINESS PURPOSE. THE ASSESSEE IS NOT SATISFIED AN D IS IN FURTHER APPEAL BEFORE US. 8. WE HAVE HEARD THE RIVAL CONTENTIONS PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTUAL MATRIX OF THE CASE AS ALSO THE APPLICABLE LEGAL POSITION. 9. WE HAVE NOTED THAT THE FOREIGN TRIPS FOR WHICH THE EXPENSES ARE CLAIMED AS DEDUCTION INCLUDE TRIPS TO LONDON NEW YORK JOH ANESBURG CAPE TOWN MOROCCO PARIS CASABLANCA AND OTHER LOCATIONS BUT THERE IS NO JUSTIFICATION WHATSOEVER FOR THESE TRIPS SAVE AND EXCEPT FOR A GENERAL SUBMISSION THAT THESE TRIPS TO PROMOTE BUSINESS OF THE ASSESSEE. THERE A RE NO DOCUMENTS OR EVIDENCES ITA NOS.3864 & 4429/MUM/10 - 5 - TO SUPPORT THAT ANY BUSINESS WORK WAS DONE ON THESE TRIPS. UNDER THESE CIRCUMSTANCES THE CLAIM MADE BY THE ASSESSEE APPEA RS TO BE A FRIVILIOUS CLAIM DEVOID OF ANY LEGALLY SUSTAINABLE MERITS AT ALL AN D THE EXPLANATION GIVEN BY THE ASSESSEE HAS BEEN RIGHTLY REJECTED BY THE AUTHORITI ES BELOW. THE EXPENDITURE FOR ASSESSEES HAVING MADE THIS CLAIM IS NOT SUPPORTED BY THE FACTS ON RECORD OR THE LEGAL POSITION. NO DOUBT A MERE MAKING OF LEGAL CL AIM CANNOT BE VISITED BY PENAL CONSEQUENCES U/S.271(1)(C) BUT RIGHT NOW WE ARE DEALING WITH A SITUATION IN WHICH A CLAIM IS MADE FOR SOME EXPENSES AND THER E ARE NO FACTUAL OR LEGAL CONTENTIONS IN SUPPORT OF THE SAME BEFORE US. SO FAR AS THE QUESTION OF PENALTY IS CONCERNED WE HAVE TO EXAMINE AS TO WHAT IS THE EXPLANATION OF THE ASSESSEE FOR HAVING MADE THIS CLAIM. THE EXPLANATION OF THE ASSESSEE IS THAT IT WAS FOR BUSINESS PURPOSES THAT THESE TRIPS WERE UNDERTAKEN. HAVING REGARD TO THE FACT THAT THE ASSESSEE IS IN SHIP BREAKING BUSINESS THA T ASSESSEE DOES NOT HAVE BUSINESS AT THESE PLACES AND THAT NOT EVEN BASIC DE TAILS OF WORK DONE AT THESE PLACES ARE ON RECORD THE EXPLANATION OF THE ASSES SEE STANDS REJECTED. THE INCOME REPRESENTED BY THIS FRIVILIOUS CLAIM IS TO B E DEEMED TO BE CONCEALED INCOME WITHIN MEANING OF EXPLANATION 1 TO SECTION 2 71(1)(C) OF THE ACT. WE THEREFORE UPHOLD THE ACTION OF THE CIT(A) IN CONFI RMING THE PENALTY IN RESPECT OF CLAIM OF DEDUCTION OF RS.8 73 193 ON ACCOUNT OF FOREIGN TRAVEL EXPENSES. NO INTERFERENCE IS CALLED FOR. ITA NOS.3864 & 4429/MUM/10 - 6 - 10. THE APPEAL FILED BY THE ASSESSEE IS ALSO THERE FORE DISMISSED. 11. TO SUM UP BOTH THE APPEALS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 15.07.2011. SD/- SD/- (VIJAY PAL RAO) (PRAMOD KUMAR) JUDICIAL MEMBER ACC OUNTANT MEMBER MUMBAI DT.15.07.2011. *GPR TRUE COPY COPY TO : 1. THE ASSESSEE. 2. THE ASSESSING OFFICER. 3. CIT(APPEALS) 4. CIT 5. DEPARTMENTAL REPRESENTATIVE ITAT MUMBAI. 6. GUARD FILE. BY ORDER DY./ASST.REGISTRAR ITAT MUMBAI