FACT IMPEX P.LTD, MUMBAI V. ACIT (OSD) 2(1), MUMBAI

ITA 1683/MUM/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83946 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 7 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2007-2008
• Appeal Filed On: 01-03-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SACHCHIDANAND DUBEY
• Keywords: Onus to prove

Judgement Text

, INCOME TAX APPELLATE TRIBUNAL,MUMBAI - F BENCH. , ,, , ! ! ! ! '# '# '# '# , ' ' ' ' ! ! ! ! BEFORE S/SH. VIJAY PAL RAO,JUDICIAL MEMBER & RAJEND RA,ACCOUNTANT MEMBER /. ITA NO.1683/MUM/2011 , $ $ $ $ % % % % / ASSESSMENT YEAR-2007-08 FACT IMPEX PVT. LTD. 302, 3 RD FLOOR, SO LUCKY CORNER, ANDHERI KURLA ROAD, CHAKALA, ANDHERI -EAST MUMBAI 400 099 ACIT (OSD) 2(1) MUMBAI PAN: AAACF1715A &' ( ' &' ( ' &' ( ' &' ( ' / / / / APPELLANT BY : NONE *+&' , ( ' / RESPONDENT BY :SH. SACHCHIDANAND DUBEY $ , -. $ , -. $ , -. $ , -. / // / DATE OF HEARING :27/10/2014 /0% , -. / DATE OF PRONOUNCEMENT :27/10/2014 $ $ $ $ , 1961 1961 1961 1961 , , , , 254 254 254 254( (( (1 11 1) )) )' -9- ': ' -9- ': ' -9- ': ' -9- ': ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA, AM: CHALLENGING THE ORDER DT.09.02.2011OF THE CIT(A)-4, MUMBAI, ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1.ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED ASSESSING OFFICER WAS NOT JUSTIFIED IN DISALLOWING FOREIGN TRAVELING EXPE NSES OF RS.8,11,446/-. 2. THE APPELLANT CRAVES A LEAVE TO ADD, TO ALTER AN D/OR TO AMEND ANY OF THE GROUNDS OF APPEAL ON OR BEFORE THE DATE OF HEARING OF APPEAL. 2. ASSESSEE-COMPANY,ENGAGED IN THE BUSINESS OF TRADING IN COMPUTER HARDWARE/ COMPUTER SOFTWARE ETC. FILED ITS RETURN OF INCOME ON 25.10.2007 DECLA RING TOTAL INCOME OF RS.32,22,150/-. ASSESSING OFFICER (AO) FINALISED ASSESSMENT U/S.143(3) OF THE ACT ON 04.12.2009 DETERMINING THE INCOME OF THE ASSESSEE AT RS.42,05,772/-, 3 . THE ONLY EFFECTIVE GROUND OF APPEAL IS ABOUT TRAV ELING EXPENDITURE AMOUNTING TO RS.8.11 LACS. DURING THE ASSESSMENT PROCEEDINGS THE AO FOUND THAT THE ASSESSEE DEBITED AN AMOUNT OF RS.8,11,446/- TO THE P&L ACCOUNT OF TRAVELING EXPEN SES, THAT SAID AMOUNT WAS PAID TO ZUARI FOREX LTD. FOR CONVERSION OF INR FOR TRAVELING. HE DIRECT ED THE ASSESSEE TO FURNISH THE PURPOSES OF FOREIGN TRAVELING, NO. OF PERSONS VISITED AND SUPPO RTING DOCUMENTS. THE ASSESSEE, VIDE ITS LETTER DATED 04.09.2009, SUBMITTED ITS EXPLANATION AND STA TED THAT FOREIGN TRAVELING EXPENDITURE WAS 2 ITA.NO. 1683/M/2011 INCURRED FOR MR. NINTIN MANDAVKAR AND OTHERS, THAT THEY WERE EXPLORING BUSINESS PROPOSES. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, AO HEL D THAT THE ASSESSEE HAD NOT FURNISHED TRAVELING DETAILS OF PERSONS VISITED, PURPOSE OF VISIT AND SU PPORTING EVIDENCES OF MEETINGS HELD AND NAME AND ADDRESS OF PERSONS MET ETC. THAT IT HAD NOT FUR NISHED EVEN THE COPIES OF AIR TICKETS, THAT IT HAD FAILED TO JUSTIFY THE NATURE OF FOREIGN TOUR, THAT THE INCURRENCE OF FOREIGN TRAVEL EXPENDITURE WAS N OT WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS, THAT IT HAD FAILED TO SUBSTANTIATE THE CLAIM WITH SUPPORTING DOCUMENTARY EVIDENCES. FINALLY, HE DISAL LOWED THE AMOUNT OF RS.8.11 LACS AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 4. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE PREF ERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY (FAA). IT WAS SUBMITTED BEFORE HIM THAT E XPENSES WAS INCURRED BY THE ASSESSEE BOTH FOREIGN TRAVEL & INLAND TRAVEL. THAT THE MAJOR PORT ION OF RS.8.08 LACS WAS INCURRED ON FOREIGN TRAVEL, THAT THE AIR TICKET EXPENSES WAS NOT BORNE BY THE COMPANY, THAT THE TRAVEL EXPENSES WERE BORNE BY THE COMPANY SINCE THE SERVICES OF THE PERS ONS WERE USED FOR NEGOTIATING WITH THE FOREIGN SUPPLIERS, THAT AS A RESULT OF THEIR VISIT, THE COM PANY COULD ESTABLISH A RELIABLE AND DEPENDABLE SOURCE OF SUPPLY OF GOODS, THAT TRAVEL EXPENSES INC URRED BY THE COMPANY WERE SUBJECT TO FRINGE BENEFIT TAX(FBT), THAT THE COMPANY HAD PAID APPLICA BLE FBT AND RETURN FILED BY THE COMPANY HAD BEEN ACCEPTED BY THE DEPARTMENT, THAT EXPENSES WERE INCURRED IN THE COURSE OF AND FOR THE PURPOSE OF BUSINESS. AFTER CONSIDERING ASSESSMENT ORDER AND SUBMISSIONS MADE BY THE ASSESSEE, THE FAA HELD THAT IT WAS NOT CLEAR AS TO WHY THE ASSESSEE H AD PAID FOREIGN TRAVEL EXPENSES OF A PERSON WHO WAS NOT EVEN AN EMPLOYEE, THAT WHY IT HAD PAID FBT ON THE EXPENSES INCURRED BY THE COMPANY ON THE FOREIGN TRAVEL OF AN OUTSIDER, THAT AIR TICKET WERE BORNE BY SOMEBODY ELSE, THAT THERE WAS NO FORCE IN THE ARGUMENT OF THE ASSESSEE THAT THE EXPE NDITURE INCURRED FOR THE BUSINESS OF THE ASSSSEE, THAT NO INDIRECT BENEFIT OCCURRED TO THE COMPANY BE CAUSE OF THE SAID EXPENDITURE, THAT THERE WAS NO FORMAL AGREEMENT BETWEEN THE ASSESSEE AND THE PARTY WHOSE FOREIGN TRAVEL EXPENSES WERE BORNE BY IT, THAT THERE WAS NO DOCUMENTARY EVIDENCE ON RECOR D TO SHOW THAT THE IMPORT OF GOODS AND EASY CREDIT TERMS WERE THE RESULT OF FOREIGN TRAVEL OF A N OUTSIDER. FINALLY, HE CONFIRMED THE DISALLOWANCE MADE BY THE AO. 5 .AS STATED EARLIER, NOBODY APPEARED BEFORE US, ON B EHALF OF THE ASSESSEE, NOR WAS ANY APPLICATION FILED BY HIM TO ADJOURN THE CASE. IT WAS FOUND THAT THE LETTER SENT BY THE REGISTRY,ON THE ADDRESS GIVEN BY THE ASSESSEE IN FORM NO.36,HAD BEEN RETURN ED BY THE POSTAL AUTHORITIES WITH OBSERVATION LEFT. WE FIND THAT THE ASSESSEE HAD NOT COMMUNICA TED ITS NEW ADDRESS,IF ANY,TO THE REGISTRY. IN THESE CIRCUMSTANCES WE ARE DECIDING THE APPEAL ON T HE BASIS OF THE AVAILABLE MATERIAL. DEPARTMENTAL REPRESENTATIVE(DR) SUPPORTED THE ORDER OF THE AO AN D THE FAA. 6 . WE FIND THAT ASSESSEE HAD CLAIMED EXPENDITURE OF RS.8.11 LACS UNDER THE HEAD FOREIGN TRAVEL EXPENSES,THAT IT HAD CLAIMED THAT NITIN MANDVAKAR H AD TRAVELLED OUTSIDE INDIA, THAT BECAUSE OF HIS JOURNEY IT COULD IMPORT CERTAIN ITEMS AND COULD GET CREDIT FACILITIES,THAT IT DID NOT PRODUCE ANY DOCUMENTARY EVIDENCES ABOUT CLAIM MADE BY IT BEFORE THE AO OR THE FAA. THE ASSESSEE DID NOT REVEAL AS TO HOW TRAVEL BY NITIN MANDVAKAR BENEFITT ED IT.IN SHORT,WE FURTHER FIND THAT THE ASSESSEE HAD NOT PRODUCED ANY EVIDENCE TO SHOW THAT GOODS I MPORT OR CREDIT FACILITIES AVAILED BY IT WERE THE RESULT OF NEGOTIATIONS DONE BY NITIN MANDVEKAR. AS PER ESTABLISHED PRINCIPLES TAXATION JURISPRUDENCE FOR CLAIMING ANY EXPENDITURE AND ASSE SSEE HAS TO ESTABLISH THAT THE EXPENDITURE WAS INCURRED WHOLLY AND EXCLUSIVELY FOR ITS BUSINESS. T HE PRIMARY ONUS AND BURDEN OF PROOF ALWAYS IS ON THE ASSESSEE. WE FIND IN THE CASE UNDER CONSIDER ATION THE ASSESSEE HAS FAILED TO PRODUCE ANY DOCUMENTARY EVIDENCE IN ITS SUPPORT.THEREFORE, IN O UR OPINION 3 ITA.NO. 1683/M/2011 THE ORDER OF THE FAA DOES SUFFER FROM ANY FACTUAL O R LEGAL INFIRMITY. UPHOLDING HIS ORDER,WE DECIDE EFFECTIVE GROUND OF APPEAL AGAINST THE ASSES SEE COMPANY. AS A RESULT,APPEA L FILED BY THE ASSESSEE STANDS DISMISSED. ; !< $ ;- , ; , - => ORDER PRONOUNCED IN THE OPEN CO URT ON 27 TH OCTOBER, 2014 . SD/- SD/- ( / VIJAY PAL RAO ) ( '# '# '# '# / RAJENDRA) ! /JUDICIAL MEMBER ' ' ' ' ! ! ! ! /ACCOUNTANT MEMBER / MUMBAI, ? $ /DATE: 27.10.2014 A.K.PATEL ': ': ': ': , ,, , *- *- *- *- @'%- @'%- @'%- @'%- / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / &' 2. RESPONDENT / *+&' 3. THE CONCERNED CIT(A)/ A B , 4. THE CONCERNED CIT / A B 5. DR D BENCH, ITAT, MUMBAI / C9 *-$ . . , . . . 6. GUARD FILE/ 9 +- *- //TRUE COPY// ':$ / BY ORDER, D / = DY./ASST. REGISTRAR , /ITAT, MUMBAI .