COMMISSIONER OF INCOME TAX COIMBATORE Vs. OFFICIAL LIQUIDATOR

JUDGEMENT

(1.) THE assessee's assessment order in respect of the assessment year 1975-76 has been revised more than once in order to give effect to the order of the Commissioner of Income-tax (Appeals) and Appellate Tribunal and also further modified on rectification of the mistakes. The amount claimed as a deduction in a sum of Rs. 3,00,034/- on account of commission paid to one P. M. Traders was rejected. The assessee claimed that the commissions were paid for sale of wood pulp and purchase of caustic soda from National Rayon Corporation Limited. The Assessing Officer verified the assessment records of both recipients of the commission and also made enquiries through National Rayon Corporation Limited, who denied having any middle man to the business. The assessing officer accordingly disallowed the payment of commission treating it as bogus. On appeal, the Commissioner of Income-tax (Appeals) upheld disallowance with respect to the payment to P. M. Traders. The assessee filed an appeal against the order of the Commissioner of Income-tax (Appeals) to the Income-tax Appellate Tribunal. The Tribunal has allowed the appeal on the ground that the receipt of commission has been accepted by the recipient by its letter and in the absence of any method to discard the admission the deduction should have been granted. Aggrieved by the said order of the Appellate Tribunal, the revenue filed this appeal and the appeal was admitted on the following substantial questions of law:

(2.) THE learned counsel appearing for the revenue vehemently contended that the reasoning given by the assessing officer, which is confirmed by the Commissioner of Income-tax (Appeals) are unassailable reasons. The other fact that the National Rayon Corporation has given a statement that no middle men were engaged by them in the transaction would also go to prove the bogus claim of the assessee that finding would not have been reversed by the Tribunal.

(3.) ON the contrary, the learned counsel appearing for the respondent Company, which is under liquidation, has submitted that the Tribunal has passed an order after taking note of the statement given by the person to whom the commission has been given. The Tribunal further taken into consideration of the fact that earlier the Tribunal has passed an order of remittal with a direction to the assessing officer to enquire the person i. e. , P. M. Traders to whom the commission has been paid. That direction has not been complied with by the assessing officer. On the contrary, the assessing officer has enquired some of the officers of the National Rayon Corporation, which is not a direction given by the Tribunal. He further contended that in respect of the subsequent assessment years, the Tribunal has taken the same view as taken in the present case, which has not been agitated by the Department, rather it is accepted by the Department. When that being the position, for the present assessment year, they cannot take a different view.