1998 (5) TMI 17 - HC - Income Tax

Issues Involved:
1. Validity of rejection of the assessee's offer under the amnesty scheme.
2. Determination of the assessee's income, including the addition of "on money."
3. Disallowance of commission payments to various parties.
4. Deduction of freight and demurrage expenses.
5. Levy of interest under sections 215 and 216.

Detailed Analysis:

1. Validity of Rejection of the Assessee's Offer under the Amnesty Scheme:
The Tribunal was tasked with determining whether the rejection of the assessee's amnesty offer was valid. The assessee had filed a revised return under the amnesty scheme, declaring an additional income of Rs. 30 lakhs. The Tribunal noted that the assessee admitted to earning this additional income and did not retract this admission. Therefore, the Tribunal held that the income could not be assessed lower than what was declared in the revised return. The Tribunal found the Revenue's plea untenable as the additional income represented the assessee's business income, not from a different source.

2. Determination of the Assessee's Income, Including the Addition of "On Money":
The Assessing Officer (AO) had made several additions to the assessee's income, including Rs. 19,79,240 and Rs. 21,88,320, based on the alleged charging of "on money" on cement sales. The Commissioner of Income-tax (Appeals) deleted these additions, but the Tribunal reversed this decision, stating that the evidence on record established that the assessee was receiving "on money" over and above the accounted price. The Tribunal found the kacha cash day book to be a fabricated document and upheld the AO's findings of unaccounted cash receipts.

3. Disallowance of Commission Payments to Various Parties:
The Tribunal reviewed the disallowance of commission payments to several parties:
- Fort William Co. Ltd. (FWCL): The Tribunal found that FWCL did not play an active role in the cement transactions and reversed the Commissioner of Income-tax (Appeals)'s deletion of the addition of Rs. 16,52,629 and Rs. 47,20,000.
- Ashirwad: The Tribunal allowed the deduction of Rs. 2,20,000, finding the payments genuine for services rendered.
- Moradabad Syntex Ltd. (MSL): The Tribunal upheld the disallowance of Rs. 6,84,000, stating that mere production of documents was insufficient proof of services rendered.
- Various Other Parties: The Tribunal allowed deductions for some commission payments but disallowed others, based on the lack of evidence for services rendered.

4. Deduction of Freight and Demurrage Expenses:
The assessee claimed deductions for freight (Rs. 19,28,327) and demurrage (Rs. 40,83,445). The Tribunal allowed the freight deduction, directing the AO to verify if it had been allowed in subsequent years. For demurrage, the Tribunal found that the liability was not contingent and directed the AO to allow the deduction based on arbitration awards and agreements. The Tribunal restored the matter of demurrage for "Wanda" and "Kherea" to the AO for determination based on shipping documents and arbitration proceedings.

5. Levy of Interest under Sections 215 and 216:
The Tribunal upheld the levy of interest under sections 215 and 216, finding it correctly invoked in the fresh assessment.

Conclusion:
The Tribunal directed the Income-tax Appellate Tribunal to refer three questions of law to the High Court for its opinion, while declining to refer a factual question. The petition was disposed of with no order as to costs.

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