2015 (12) TMI 1020 - AT - Income Tax

Penalty u/s. 271(1)(c) - disallowance of Exhibitor Promotion expenses - Held that - Assessing Officer had given a specific show cause notice and examined the relevant invoices for Exhibit Promotion expenses and thereafter found that invoices for Euro 36993.45 were actually meant for Chinese exhibitions and as such were not related to the exhibition/fairs organized by the assessee. The disallowance was accordingly made to the equivalent amount in Rupees amounting to ₹ 24,96,318/-. This is not a case where disallowance originated due to difference of opinion as tried to be convinced by the assessee. The explanation of the assessee was that by mistake invoice to that extent relating to exhibition in India were sent by the parent company to China and that way tired to explain that the expenses debited in the Profit & Loss Account were actually incurred and there was no concealment and assessee had not furnished any incorrect particulars of income. If that was so, then the assessee had ample opportunity to get those invoices from its counterpart and/or could have obtained copy thereof from the parent company itself and submitted to the Assessing Officer at least during the penalty proceedings. Unfortunately, no such evidence was filed neither before the Assessing Officer nor even before the CIT(A) in the appellate proceedings. In view of the above the CIT(A) was justified in upholding the order of the Assessing Officer wherein he has held that the assessee has concealed its income by filing inaccurate particulars. Therefore he rightly imposed penalty under section 271(1)(c). - Decided against assessee.

Summary

Issues:
- Confirmation of penalty under section 271(1)(c) by CIT(A) for disallowance of Exhibitor Promotion expenses.

Analysis:
The appeal was filed against the CIT(A)'s decision confirming the penalty under section 271(1)(c) for disallowance of Exhibitor Promotion expenses amounting to Rs. 24,96,318. The Assessing Officer imposed the penalty after disallowing the said amount during assessment proceedings for the A.Y. 2009-10. The assessee, a company engaged in organizing trade fairs, exhibitions, and conferences, claimed expenditure related to Exhibitor Promotion expenses. The Assessing Officer disallowed a portion of this expenditure, alleging it was not related to the business operations in India. The penalty of Rs. 8,48,499 was levied under section 271(1)(c) based on this disallowance.

During the proceedings, the assessee contended that the penalty was unjustified as all details regarding the expenses were provided to the Assessing Officer. However, the Assessing Officer found that a portion of the expenses related to exhibitions in China, not India. The CIT(A) upheld the penalty, stating that the assessee concealed income by filing inaccurate particulars. The CIT(A) reasoned that the assessee failed to provide evidence to support their claim that the expenses were genuinely incurred for Indian activities. The CIT(A) concluded that the penalty under section 271(1)(c) was warranted.

The Tribunal found that the Assessing Officer's decision to impose the penalty was justified as the assessee failed to substantiate their claim regarding the expenses. The Tribunal upheld the CIT(A)'s decision, emphasizing that the assessee did not provide evidence to support their explanation. The Tribunal noted that the burden of proof lies with the assessee, and in this case, the explanation provided was not found to be bonafide. Therefore, the Tribunal dismissed the appeal, affirming the penalty under section 271(1)(c) for the disallowed expenses related to Exhibitor Promotion.