1950 (5) TMI 39

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....t?" 2. The facts are very simple and are not disputed. The assessee Subhkaran Seksaria entered into an agreement with Kedarnath, who carried on extensive business under the name and style of Kedarnath Subhkaran, on 27th April 1940. Under this agreement the assessee undertook to secure contracts from the Government for Kedarnath Subhkaran and he was to be paid a remuneration of 5 per cent on the value of the goods, which were supplied to the Government, besides the travelling expenses. The assessee received a sum of Rs. 36,586-2-6 during the previous year and in the assessment year 1941-42 he showed the said amount as his total income from business. The Income Tax Officer, however, on 29th July 1942, passed the following order: "....

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....ot reasonable or necessary to pay com-mission at a rate higher than 1 per cent, though that was not a matter at all relevant to the assessment of Subhkaran. Kedarnath Subhkaran, however, appealed against the order of the Excess Profits Tax Officer dated 20th July 1942 and the matter ultimately came up before the Appellate Tribunal, who held that 5 per cent was not an unreasonable amount and added it back to the expenses incurred by Kedarnath Subhkaran. After that decision of 31st July 1943, the Income Tax Officer issued a notice under Section 34 to Subhkaran that as a result of definite information received by him he had reason to believe that a sum of Rs. 29,269 had escaped assessment. He held against the assessee and ultimately this matte....

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....nite information should have led to the discovery that income, profits and gains chargeable to income tax had escaped assessment or had been under-assessed or had been assessed at too low a rate or had been the subject of excessive relief. The Tribunal has said that it was not known to the Income Tax Officer that Subhkaran, the assessee, was "a qualified gentleman" payment of commission to whom at the rate of 5 per cent was not unreasonable. 6. If it had been the case that the Income Tax Officer had been told that Subhkaran, the assessee had been paid only Rs. 7317 and he had later discovered, as a result of the decision of the Appellate Tribunal, that the amount paid was Rs. 36,886, the case would clearly come under Section 34, but here....