1982 (3) TMI 44 - HC - Income Tax

Summary

Issues Involved:
1. Material before the Tribunal regarding commission to R. S. Goenka and S. K. Goenka.
2. Basis of Tribunal's findings on conjectures, suspicion, and surmises.
3. Contemporaneity and motive behind evidence produced by the assessee.

Issue-Wise Detailed Analysis:

1. Material before the Tribunal regarding commission to R. S. Goenka and S. K. Goenka:

The Tribunal examined whether there was any material to justify the payment of commissions to R. S. Goenka and S. K. Goenka. The Tribunal concluded that the commissions were given not based on services rendered but because they were sons of A. L. Goenka, an influential executive. The Tribunal noted that the companies involved had dealings with the assessee even before 1956, and there was no evidence of services rendered by R. S. Goenka and S. K. Goenka. The Tribunal also observed that there was no written agreement or correspondence indicating that these individuals provided any services to the assessee.

2. Basis of Tribunal's findings on conjectures, suspicion, and surmises:

The Tribunal's findings were challenged as being based on conjectures, suspicion, and surmises. The Tribunal, however, justified its conclusions by stating that the evidence produced by the assessee was not contemporary and appeared to be obtained with a motive. The Tribunal relied on the fact that the assessee failed to produce any substantial evidence or written agreements to corroborate the claims of services rendered by R. S. Goenka and S. K. Goenka. The Tribunal emphasized that the payments appeared to be made for extra-commercial considerations due to the relationship between the parties involved.

3. Contemporaneity and motive behind evidence produced by the assessee:

The Tribunal scrutinized the evidence produced by the assessee, which included letters from various concerns confirming the services rendered by R. S. Goenka and S. K. Goenka. The Tribunal found that these letters were produced for the first time before the AAC and were dated much later than the relevant period. The Tribunal concluded that the letters were not contemporary evidence and were likely obtained with a motive to support the assessee's claims. The Tribunal thus did not give much weight to this evidence, considering it unreliable and motivated.

Conclusion:

The High Court upheld the Tribunal's findings, answering the referred questions in favor of the Revenue. The Court agreed that the Tribunal had sufficient grounds to conclude that the commissions were not based on services rendered but were influenced by the relationship with A. L. Goenka. The Court also supported the Tribunal's view that the findings were not based on conjectures or surmises but on a lack of credible evidence. The evidence produced by the assessee was deemed non-contemporary and motivated, further supporting the Tribunal's decision.

Judgment:

The High Court answered:
- Question No. 1 in the affirmative and in favor of the Revenue.
- Question No. 2 in the negative and in favor of the Revenue.
- Question No. 3 by stating that the Tribunal was right in not putting much weight on the subsequent letters produced before the AAC, also in favor of the Revenue.

Parties were directed to bear their own costs.