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1962 (9) TMI 94

spondent JUDGMENT Tambe, J. On a direction given by this court under sub-section (2) of section 66 of the Income-tax Act, the Income-tax Appellate Tribunal has referred to us the following two questions: "1. Whether on the facts of the case the observations made in the Tribunal's appellate order relating to the assessment years 1949-50 to 1952-53 amounted to information in the possession of the Income-tax Officer within the meaning of section 34(1)(b) to entitle the Income-tax Officer to reopen the assessment for the tax years 1949-50 to 1952-53 under the said section ? and 2. Whether on the facts and in the circumstances of the case the Appellate Tribunal was justified in not allowing the commission paid to Mr. B. M. Desai as an admissible expense under section 10(2)(xv) ?" We are here concerned with the four assessment years 1949-50 to 1952-53 the relevant account years being the calendar years 1948 to 1951. The question in substance that arises for consideration is whether the assessment orders, in which certain amounts paid to one B.M. Desai by way of commission were allowed to the assessee, are liable to be reopened under section 34(1)(b) of the Act, in consequen .....

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facts were established : "The payment of the amount was not made to him for any services rendered by him "and that" the amount represented secret commission in the nature of illegal gratification which had to be passed on to others in the course of securing orders." Now, even though these facts were established, the Tribunal only rejected the claim of the assessee for the balance. In respect of the allowance of ₹ 3,000 the Tribunal in its appellate order observed ; "The Appellate Assistant Commissioner appears to have been reasonable in allowing the claim to the extent of ₹ 3,000" It would be pertinent to mention that this appeal was disposed of by the Judicial Member, Mr. M.B. Samarth, and the Accountant Member, Mr. P.C. Malhotra. This order of the Tribunal is of date November 27, 1950. Now in the assessment year 1949-50, the assessee claimed a deduction of the amount of ₹ 12,112. The statement of the case does not show that any fresh statement was made before the Income-tax Officer at this stage. On the basis of the order of the Appellate Assistant Commissioner for 1948-49, the Income-tax Officer allowed deduction to the extent of .....

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peal to the Tribunal. Now, all these appeals were heard by the Accountant Member, Mr. Dalai, and the Judicial Member, Mr. Aggarwal, on December 1, 1953. Dealing with the case of the assessee for the year 1949-50, for the disallowance of ₹ 9,112 out of ₹ 12,112 claimed by the assessee as deduction on account of the commission paid to B. M. Desai, the Tribunal observed : "B.M. Desai who is working as an accountant, it is admitted, does not canvass for the company's goods; he is not a salesman and it was also admitted that this sum of ₹ 12,112 was secret commission paid by the company, through him, to outsiders. No names and addresses of the persons who received this commission have been supplied and, in our opinion, the Income-tax Officer should not have allowed even ₹ 3,000, which is also part of the secret commission. ₹ 9,112 have been rightly disallowed." In respect of similar claims made by the assessee for the remaining three assessment years, the Tribunal rejected them on the same ground as the one given for rejection of the appeal for 1949-50. Now, on the basis of the observations made by the Tribunal in this order that the Income-ta .....

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that there was no fresh information which was not there before the income-tax authorities when they made the assessment for the years 1949-50 to 1952-53, and which has come to the knowledge of the Income-tax Officer in consequence of the Appellate Tribunal's order of date December 1, 1953. All that has happened is that on the same set of facts which were before the income-tax authorities, the Tribunal has taken a different view of the matter at different times. Mr. Mehta further contends that the observations also are merely obiter. In the assessments for the years 1049-50, 1951-52 and 1952-53 certain amounts were allowed as deductions by the Income-tax Officer himself, and the allowance was affirmed by the Appellate Assistant Commissioner in appeals. In 1950-51, though the Income-tax Officer had rejected the assessee's claim in toto, the Appellate Assistant Commissioner had allowed the deduction to the extent of ₹ 2,963. Only the assessee had taken appeal against the disallowance of the balance of his claim. No appeal was taken by the Income-tax Officer against the order of the Appellate Assistant Commissioner and, therefore, the amounts already allowed by the Incom .....

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d observations of the Tribunal in its order of December 1, 1953, are based. Now, the statement of Desai that payment of amount was not made to him for any services rendered by him and that the amount represented secret commission, in the nature of illegal gratification which had to be passed on 10 others in the course of securing orders, was made, as paragraph 5 of the statement of the case shows, in the course of hearing of the appeal before the Tribunal for the assessment year 1948-49. That appeal was decided by the Tribunal, as paragraph 3 of the statement of the case would show, on November 27, 1950. That statement also has been incorporated by the Tribunal in its order dated November 27, 1950. In paragraph 2 of the order, it is observed : "Mr. Desai who was present before us admitted that the payment of the amount was not made to him for any services rendered by him, but that, in fact, the amount represented secret commission in the nature of illegal gratification which had to be passed on to others in the course of securing orders. In the first instance, therefore, the payment is not made to Mr. Desai for any services rendered by him. Secondly, the. company has not been .....

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