Assessee should be prosecuted u/s 276(b) for failure to comply with the provisions of section 133(4). - Income Tax - 408/CBDT

INSTRUCTION NO. 408/CBDT Dated: April 24, 1972 Section(s) Referred: 133(4) ,276(b) Statute: Income - Tax Act, 1961 In a recent case which came to the notice of the Board the Income-tax Appellate Tribunal allowed as a deduction the major portion of the secret commission alleged to have been paid by a bookseller. In taking the view that secret commission was in fact paid, the Tribunal relied on the nature of the business, the high margin of profit earned by the assessee and the increase in the sales. The factors mentioned above are clearly in the nature of surmises and conjectures and are not inconsistent with the view that the secret commission was not paid. The decision has not been accepted and a reference has been filed on the ground that there was no material for the finding of fact recorded by the Tribunal is in the nature of conjectures and surmises the question of filing a reference should be considered. 2. Apart from the above action a more effective way of dealing with the situation would be to ascertain from the assessee in writing whether commission in excess of Rs. 400 was paid to any person. In case the assessee admits having paid commission in excess of Rs. 400 the assessee should be prosecuted u/s 276(b) for failure to comply with the provisions of section 133(4) in not disclosing the details of this commission in the return of income filed u/s 139. In case the assessee does not admit having paid commission in excess of Rs. 400, a specific notice u/s 133(4) should be issued to the assessee and if he fails to comply with this notice u/s 133(4) prosecution u/s 276(b) should be launched.