2002 (4) TMI 21 - HC - Income Tax

Duty of tribunal - 1. Whether, the Tribunal was justified in ignoring the material collected by the Commissioner of Income-tax (Appeals) under section 250(4) of the Act and reversing the finding of the Commissioner of Income-tax (Appeals) based on such material solely on the ground that material so collected by the Commissioner of Income-tax (Appeals) was inadmissible? - 2. Whether there is any material to hold that higher commission paid on bulk sales amounts to diversion of profit? - Commissioner of Income-tax (Appeals) without confronting the documents to the Income-tax Officer read those documents for the benefit of the assessee. The Income-tax Appellate Tribunal excluded those documents from consideration and held that the assessee had paid a discount at the rate of eight per cent. to its sister concerns while it had paid commission at the rate of three per cent. only to the other sister concerns which rendered the same services to the assessee. The Tribunal, therefore, held that there was no justification for paying discount to the two sister concerns by the assessee at the rate of exceeding three per cent. In view of the finding, the Tribunal set aside the order of the Commissioner of Income-tax (Appeals) and restored the order of the Income-tax Officer. - in our opinion, the Tribunal was not justified in ignoring the matter placed before the Commissioner of Income-tax (Appeals) without giving an opportunity of hearing to the assessee.

Summary

The High Court of Rajasthan accepted a reference application under the Income-tax Act, 1961. The Tribunal was criticized for ignoring material collected by the Commissioner of Income-tax (Appeals) and reversing findings based on inadmissible material. The Tribunal's decision to exclude certain documents without giving the assessee an opportunity to be heard was deemed unjustified. The matter should have been remitted to the Commissioner of Income-tax (Appeals). The reference was decided in favor of the assessee against the Revenue.