Case Note & Summary
The appellant, Vijay Narayandas Rizwani, was an assessee carrying on business of distribution of country liquor. For the assessment year 1994-95, he filed a return showing total sales of Rs. 6.17 Crores. The Assessing Officer, after inspection, noticed that actual sales were Rs. 6.37 Crores and that the assessee had also received Rs. 5.55 Lacs as Hamali receipts not disclosed. The assessee claimed to have paid Rs. 25.46 Lacs as commission to sales agents, but instead of showing it as an expenditure, he deducted it from gross sales and showed only the net figure. The Assessing Officer added back the Rs. 25.46 Lacs to income. Additionally, the assessee showed deposits of Rs. 11.74 Lacs from various persons, including sales agents, and claimed interest of Rs. 1.49 Lacs. The Assessing Officer found that only deposits of Rs. 4.24 Lacs were genuine and added the balance of Rs. 7.50 Lacs along with interest to income. The assessee appealed to the Commissioner of Income Tax (Appeals), who partly allowed the appeal, but the Income Tax Appellate Tribunal confirmed the additions. The assessee then filed two tax appeals under Section 260A of the Income Tax Act, 1961, raising two questions: whether the Tribunal was right in disallowing the commission as deductible expenditure, and whether it was right in confirming the addition of Rs. 7,50,000 as income from deposits. The High Court held that both questions were pure findings of fact and did not give rise to any substantial question of law. Consequently, the appeals were dismissed.
Headnote
A) Income Tax - Deductibility of Commission - Section 260A of the Income Tax Act, 1961 - The assessee deducted commission from gross sales without showing it as expenditure in books of accounts. The Assessing Officer added back the amount. The Tribunal confirmed the addition. The High Court held that the finding was a pure finding of fact and no substantial question of law arose. (Paras 3-5) B) Income Tax - Genuineness of Deposits - Section 260A of the Income Tax Act, 1961 - The assessee claimed deposits from various persons, but the Assessing Officer found only part genuine and added the balance as income. The Tribunal confirmed. The High Court held that the finding was a pure finding of fact and no substantial question of law arose. (Paras 3-6)
Issue of Consideration
Whether the Income Tax Appellate Tribunal was right in disallowing commission paid to sales agent as deductible expenditure and in confirming addition of Rs. 7,50,000 as income from deposits.
Final Decision
Both tax appeals are dismissed. No substantial question of law arises.
Law Points
- Findings of fact cannot be interfered with under Section 260A of the Income Tax Act
- 1961
- unless perverse
- commission paid to sales agent not shown as expenditure in books of accounts
- deposits not proved as genuine treated as income.
