2014 (4) TMI 965 - AT - Income Tax

Disallowance of foreign travelling expenses Held that - The assessee company had filed a details chart before the FAA about the foreign visits by the officers of the company - Details furnished by the assessee with regard to foreign travel expenses were also available to the FAA - it cannot be held that assessee had not produced any documentary evidence before him - Assessee had taken specific plea in the statement of facts, filed along with the Form No. 35, that AO had not called for any evidence from the assessee-company and passed the order on very next day of the submissions made by the assessee - FAA should have considered all the material before him before arriving at any conclusion - he has not passed the reasoned order the matter needs further verification by the FAA thus, the matter is remitted back to the FAA for verification Decided in favour of Assessee.

Summary

Issues:
1. Disallowance of foreign travelling expenses
2. General grounds for appeal

Analysis:

Issue 1: Disallowance of foreign travelling expenses
The assessee, a company engaged in manufacturing and trading, filed its return of income declaring total income. During assessment, the Assessing Officer (AO) disallowed a sum of Rs. 27,97,007/- claimed as foreign travel expenses by the assessee. The AO found that the assessee failed to provide evidence that the foreign travels were solely for business purposes. The AO noted that expenses included the travel of the Chairman's wife, which was not considered a business expense. The First Appellate Authority (FAA) upheld the AO's decision, stating that the assessee did not substantiate its claim with new evidence. The FAA found no merit in the arguments presented and upheld the disallowance. However, the Appellate Tribunal found that the FAA did not consider all the material before him and did not pass a reasoned order. The Tribunal directed the FAA to re-examine the issue, considering the documentary evidence provided by the assessee and previous Tribunal orders for other years.

Issue 2: General grounds for appeal
The assessee also raised general grounds for appeal, seeking to modify or add to the grounds stated. The Tribunal allowed the appeal in part, directing the FAA to reconsider the disallowance of foreign travel expenses. The Tribunal emphasized the need for a thorough examination of all evidence and previous Tribunal decisions before reaching a conclusion. The matter was remanded back to the FAA for a fresh decision after affording a reasonable opportunity of hearing to the assessee.

In conclusion, the Tribunal partially allowed the appeal, highlighting the importance of a comprehensive review of evidence and previous decisions in tax matters. The case underscores the significance of substantiating business expenses with concrete evidence to support claims and the need for appellate authorities to provide reasoned decisions based on all available material.