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TMI Blog2009 (12) TMI 712X X X X Extracts X X X X X X X X Extracts X X X X ..... sment was taken in first appeal before the Commissioner of Income-tax (Appeals). In the said quantum appeal, the Commissioner of Income-tax (Appeals) has confirmed the following additions made by the assessing authority: (i) Unpaid SEBI registration fee Rs. 3,45,006 (ii) Travelling expenses Rs. 2,67,478 (iii) LIC premia Rs. 15,268 The above additions were again agitated before the Appellate Tribunal, but the Tribunal has also upheld the additions and the second quantum appeal filed by the assessee was dismissed. Meanwhile, after giving effect to the order of the Commissioner of Income-tax (Appeals), the initiated proceedings under section 271(1)(c) proposing lev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... siness carried on by it and exclusively for the purpose of the said business. It is the contention that the foreign travel expenses were incurred by the directors of the assessee-company, who had gone abroad to prospect business from NRI clients. Therefore, the travelling expenditure should be treated as part of the prospecting expenses of the assessee. He further explained that the foreign trip has earned substantial NRI business for the assessee-company which justifies the incurring of the expenditure. He therefore submitted that the disallowance of the said expenditure does not amount either to concealment of income or to furnishing of inaccurate particulars so as to attract the penal provisions of section 271(1)(c) of the Act. In respec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee-company in the luxury liner have generated any fresh NRI business for the assessee-company. The Assessing Officer has also mentioned that certain foreign exchange purchase bills revealed that there were purchases by the wife of one of the directors. The learned Additional Commissioner explained that the conduct of the directors of the assessee-company in undertaking the foreign trips in a tourist package is a speaking testimony to support the stand taken by the assessing authority that these foreign trips were only pleasure trips and not business trips as canvassed by the assessee-company. Regarding the LIC premia payments, the learned Additional Commissioner explained that the assessee-company has not produced any material ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are not usually undertaken in such tourist programme. Even if an extreme case is conceived that the directors were more confident that they could generate NRI business even in a voyage in luxury liner meant for tourism destinations, the assessee should have brought on record some particulars of their activities which justifies that they had actually made endeavour to generate NRI business for the assessee-company. Even though the assessee-company has brought certain details of NRI clients, those details do not have any sort of proximity or nexus to the luxury voyage undertaken by the directors of the assessee-company. As already stated elsewhere in the order, the conduct of an assessee is very important in appreciating the true nature of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re in the nature of business expenses. Even if not very much called for, we have examined the factual background of additions sustained by the Commissioner of Income-tax (Appeals) which paved way for the imposition of penalty. We have agreed with the Commissioner of Income-tax (Appeals) that the disallowances have been rightly made by the assessing authority as those expenses could not be treated as expenses incurred for the business carried on by the assessee. Now the question is whether those disallowances justify imposition of penalty under section 271(1)(c). The answer to the question is whether the assessee has concealed any income liable for taxation or has furnished inaccurate particulars of income. When we examined the nature of d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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