The assessee was a public sector bank. The employees of the assessee availed of leave travel concession and their claims were fully reimbursed by the assessee without deduction of tax at source under section 192(1) of the Income-tax Act, 1961. Pursuant to a spot verification, the Assessing Officer took the view that the employees of the assessee had travelled not just within India but that their journey involved a foreign leg as well, and it was also not by the shortest route, that this was in violation of section 10(5) of the Act read with rule 2B of the Income-tax Rules, 1962 and hence the payment made to its employees by the assessee could not be exempted under section 10(5), and the assessee ought to have deducted tax at source, while making payment of the leave travel concession. The assessee’s contention that no payment was made for the foreign travel though a foreign leg was a part of the itinerary undertaken by these employees was rejected and the Assessing Officer held the assessee an “assessee-in-default” under section 201. This was affirmed by the Commissioner (Appeals), the Tribunal and the High Court. On appeal dismissing the appeal the Court held  that there were two violations of the leave travel concession rules : the employee did not travel only to a domestic destination but to a foreign country as well, and the employees had admittedly not taken the shortest possible route between the two destinations. The provisions of law prescribed that the air fare between the two points, within India would be given and the leave travel concession given would be of the shortest route between these two places, which had to be within India. A conjoint reading of these provisions with the facts of this case did not sustain the argument of the assessee that the travel of its employees was within India and no payments were made for any foreign leg involved. The contentions of the assessee that there was no specific bar under section 10(5) on foreign travel as long as the starting and destination points remained within India and that payments made to these employees was of the shortest route of their actual travel, were not tenable.Court also held that   many of the employees of the assessees had undertaken travel to Port Blair via Malaysia, Singapore or Port Blair via Bangkok, Malaysia or Rameswaram via Mauritius or Madurai via Dubai, Thailand and Port Blair via Europe. The assessee could not claim ignorance about the travel plans of its employees as during settlement of their leave travel concession bills the complete facts were available before the assessee about the details of their employees’ travels. Therefore, it could not be a case of bona fide mistake since all the relevant documents and material were before the assessee-employer at the relevant time and the assessee, therefore ought to have applied its mind and deducted tax at source as was its statutory duty under section 192(1) of the Act. (AY.2013-14)