TMI Blog1972 (12) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... s and send them along with the application for licence. During the assessment year 1958-59 corresponding to the accounting year ending October 23, 1957, the assessee had sold 198 motors out of the said imports. It submitted a return of its income for that year showing its total income as Rs. 93,484. The Income-tax Officer, in the course of the assessment proceedings wanted to find out whether the imported motors had in fact been sold to the concerned agriculturists for the price mentioned in the relative bills. He, therefore, sent letters to 24 persons to whom the assessee had claimed to have sold the motors. Of these, the letters addressed to 9 persons were returned by the postal authorities as " not found ". 11 persons replied to the effect that they had not been supplied with any electric motors. Two persons stated that they had paid extra money over and above the amount shown in the bills issued by the assessee. Two others confirmed the transaction with the assessee. As a result of the said enquiry the Income-tax Officer entertained a doubt as to the genuineness of the bills issued by the assessee. He, therefore, sent a letter to the assessee on February 6, 1960, setting out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 000 as the extra amount collected by the assessee outside the books on the sale of the 111 motors. The assessee had claimed to have paid the following amounts to three persons for securing the necessary requisitions from agriculturists for the supply of motors and claimed deduction of the said amount. Rs. Thangavelu 2,500 R. S. S. Mani 2,500 Kabir 2,850 During the assessment proceedings the Income-tax Officer examined the said three persons. Thangavelu stated that he purchased for one of his friends one electric motor and received a commission of Rs. 25. He stoutly denied that he had received a sum of Rs. 2,500 as commission and that he had passed on a voucher for the said sum. R. S. S. Mani stated that he did not book any orders from the agriculturists and that he did not receive any commission therefor. Kabir stated that through the influence of his brother, a police inspector in Chingleput District, he booked 100 orders from the ryots in Madurantakam taluk for the supply of pump-sets and those orders were handed over to the assessee and that he received a sum of Rs. 2,500 as commission for the work done by him. The assessee was given statements of these three persons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Income-tax Appellate Tribunal. Before the Tribunal the assessee contended that the commission of Rs. 7,850 paid to the three persons by names, Thangavelu, Mani and Kabir, should have been allowed as an expenditure incurred by the assessee for securing the requisite applications from the agriculturists for the supply of motors which is prerequisite for making an application for an import licence. The Tribunal, however, took into account the statements given by those persons as also the judgment of the Civil Court granting a decree to Venkatakrishna Reddiar for commission for procuring the applications from the agriculturists and also the letter dated August 29, 1956, sent by the assessee to Venkatakrishna Reddiar even before the import licence was granted showing that the assessee should have been assisted by Venkatakrishna Reddiar in procuring the applications from the ryots, and came to the conclusion that no commission had been paid to the said three persons. It, therefore, upheld the rejection of the claim for deduction by the Income-tax Officer. As regards the addition of a sum of Rs. 50,000 as undisclosed profits from the sale of imported motors, the Tribunal felt tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Income-tax Officer to offer them for cross-examination if he wants to rely on their statements for the purpose of assessment. The materials gathered by the Income-tax Officer are in the form of letters by a number of ryots and of statements given by the three persons to whom the assessee claims to have paid the commission. In some of the letters it has been stated that the parties paid Rs. 100 to Rs. 150 in excess of the billed amount. In some of the other letters it has been stated that they applied for certain electric motors and placed orders with the assessee through Venkatakrishna Reddiar but that the electric motors had not been supplied at all. One of the materials is a letter written by the assessee to Venkatakrishna Reddiar and this has not been disowned by the assessee. This letter shows that one person had been made to sign two or three applications for electric motors in different names on the suggestion of the assessee. Further, one of the bills has been issued in the name of one N. Sundararamanujam for an electric motor of 25 H.P. The said party had sent a reply to the query by the Income-tax Officer that he had not been supplied with any motor. On a further enqui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f any person makes a return but fails to satisfy the Income-tax Officer that the return filed by him is correct and complete, the Income-tax Officer shall make the assessment to the best of his judgment. Therefore, once the Income-tax Officer entertains a doubt as to the truth and correctness of the return, it is for the assessee to satisfy him by producing the necessary materials. The assessee cannot say that its obligation stops once it files the return and that the Income-tax Officer is bound to accept its return as it is. In the event of an assessee failing to establish the truth and correctness of the return, it is open to the Income-tax Officer to reject the return. The power to reject the return and the evidence in support thereof is inherent and implied in the Income-tax Officer's power to enquire into the total income of the assessee. In this case the Income-tax Officer's enquiry showed that the return filed by the assessee could not be true and correct. Therefore, he called upon the assessee to substantiate the truth and correctness of the return by cross-examining the persons who gave replies to the Income-tax Officer adverse to the assessee. But the assessee did not ava ..... X X X X Extracts X X X X X X X X Extracts X X X X
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