2003 (5) TMI 210 - AT - Income Tax

Summary

Issues Involved:
1. Legitimacy of commission payments claimed by the assessee.
2. Compliance with the principles of natural justice.
3. Onus of proof regarding the genuineness of commission payments.

Summary:

1. Legitimacy of Commission Payments:
The assessee filed returns for assessment years 1981-82, 1982-83, and 1983-84, claiming commission payments to three companies: M/s. Excavators India (P.) Ltd. (EIP), M/s. Triveni International Products (P.) Ltd. (TIP), and M/s. Bahri & Co. (P.) Ltd. (BCP). The Revenue received information that these transactions were bogus, leading to proceedings u/s 148. Statements from Mr. M.K. Meattle, the common MD of the three companies, and Mr. A.K. Jhunjhunwala, a Chartered Accountant, indicated that the commissions were not genuine. The cheques were deposited and withdrawn, and the amounts were paid back to the assessee. The reassessment proceedings were completed on 29th March 1990, disallowing the commission charges.

2. Compliance with Principles of Natural Justice:
The assessee challenged the reassessment, claiming a lack of opportunity to cross-examine Mr. Meattle. The Tribunal restored the matter to the Assessing Officer to allow cross-examination. Despite efforts, Mr. Meattle could not be traced, and the assessee refused to cross-examine Mr. Jhunjhunwala, claiming he was a stranger to the transaction. The Tribunal held that the assessee had been given ample opportunity to cross-examine the witnesses but failed to do so. The Tribunal cited legal precedents, stating that refusal to cross-examine implies acceptance of the witness's testimony.

3. Onus of Proof:
The Tribunal emphasized that the onus of proving the genuineness of the commission payments was on the assessee. The assessee failed to demonstrate the nature of services rendered by the three companies. The Tribunal concluded that the assessee did not discharge the onus of proof and upheld the disallowance of the commission payments.

Conclusion:
The Tribunal dismissed the appeals, holding that the commission payments were not genuine, the principles of natural justice were not violated, and the assessee failed to discharge the onus of proof. The appeals were dismissed with costs, quantified at Rs. 5,000 for each appeal, to be recovered by the Revenue in accordance with the law.