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TMI Blog2017 (2) TMI 28X X X X Extracts X X X X X X X X Extracts X X X X ..... n travel expenses and local travel expenses merely on the basis of non-business purposes without making any enquiry. The assessee produced complete details i.e. the bills and vouchers relating to expenses incurred on foreign travelling and local travelling and claimed by the assessee for business purposes. The actual position in law is that merely because the assessee’s addition has been confirmed, that cannot automatically bring in levy of penalty for concealment. If the assessee offers an explanation, the Revenue authorities have to consider the acceptability of the explanation and pass necessary orders. In the present case, the Revenue has not rejected the explanation of the assessee and merely levied the penalty on the basis that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c traveling expenses amounting to ₹ 4,14,462/-. The assessee before AO claimed that the director has travelled foreign countries for the purpose of business i.e. exploring the market and in search for new business opportunities. According to AO nothing has been brought on record to show that the trip was undertaken to explore foreign market and in search for new business opportunities. Accordingly, he disallowed the entire foreign and conveyance expenses amounting to ₹ 21,19,584/-. Similarly, the AO required the assessee to explain the local travelling and conveyance expenses amounting to ₹ 4,14,462/-. It was claimed that these expenses relates to the local traveling expenses including that of the director. The assessee fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e authorities in this ground is also similar to the ground No.2 for the reason that the assessee failed to substantiate its claim that the expenditure incurred for the purpose of business. Therefore, in the same analogy we uphold the order of the CIT (A) in confirming the action of the AO in disallowing the claim of ₹ 4,14,462/- on account of visits to various cities in India. Even before us, the assessee failed to substantiate that the expenditure incurred to travel in India along with various persons for the purpose of the business. Thus, this ground of appeal of the assessee is also dismissed. 4. The AO started penalty proceedings u/s 271(1)(c) and levied the penalty for concealment of income by observing that the addition ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances of the case. We have gone through the assessment order, the order of Tribunal, whereby addition was confirmed. We have also gone through the penalty order and notice that the penalty in respect of foreign travelling expense as well as local travelling expenses was levied due to the reason that the assessee did not discharge basic onus to prove that the expenditure was incurred for the purpose of business. The CIT(A) observed since the assessee did not produce any documentary evidence of the Inland travelling undertaken by various persons in relation to the business of the assessee, the same cannot be held to be incurred wholly and exclusively for the purpose of business. But now before us, from the orders of the lower authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above facts it is clear that the expenditure is not in doubt but only the purpose is in doubt whether it is for business or for personal. But the AO has no were brought on record that this expenditure is personal in nature. In such circumstances, whether the explanation filed by the assessee is bonafide or not it is to be considered. We find that the assessee has filed complete particulars in regard to claim of foreign traveling expenses and inter city expenses and claimed deduction of the same. Assessee could produce all the bills and vouchers of the expenses and claimed the same as business expenses. Whether simpliciter disallowance of expenses attracts penalty or not, it is to be considered. Therefore, we are of the view that the mere fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and, if the state of affairs reveals a stage where one can positively reach a conclusion that the fact alleged is proved or disproved, the principle that mere rejection of explanation cannot result in levy of penalty will have no application. To reach this stage also, inquiry will have to be undertaken of the disclosure made in the return or in the statement annexed to the return and to arrive at a finding whether the particulars disclosed are truthful, or false or not proved to be satisfactory. In the first case, it would be a positive case of no concealment, in the second stage, it would be a positive case of concealment and in the third case, benefit of doubt will go in favour of assessee. But in either case, inquiry must proceed from th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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