TaxTMI 
TaxTMI 
1985 (5) TMI 83
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.... 30,000 ------------ 41,875 ------------ The ITO required the assessee to explain as to what was the special commission and the supporting bills and vouchers in respect of the above payment may be produced before him. The assessee replied to the ITO stating, inter alia, as follows : "The commissions of Rs. 11,875 and Rs. 30,000 were paid to Mr. A.N. Shukla and Sunder Electric Mart by account payee cheques. The commissions were paid for securing orders procured by them." The assessee did not produce before the ITO either supporting evidence or details regarding the nature of orders procured by the above two parties in support of the above claim. The ITO, therefore, inferred that the above amount could not be accepted as a legitimate deduction from the total income in the absence of any details in support thereof. The above order of the ITO was upheld in appeal both by the Commissioner (Appeals) and the Tribunal. The Commissioner (Appeals) made the following observations while upholding the order of the ITO : "The only justification for paying these amounts has been given as a board's resolution authorising these payments. Regarding the nature of the payment, the only evidence....
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....se, the assessee has failed to produce any evidence about the necessity or justification for payment of any commission to the parties concerned. Mere authorisation by the board of directors or payment by cheque does not prove the genuineness of claim for special commission. Nor can it be said to constitute the service rendered. Allowability or otherwise of the claim for special commission depends on question of fact and no point of law is involved therein. As the assessee has failed to produce any evidence regarding the justification or necessity for payment of special commission, I am of the opinion that it was not a genuine business expenditure and that the assessee could not entertain a bona fide belief that it was so. The assessee has failed to substantiate the explanation offered in support of the claim and this amount is deemed to represent the income in respect of which particulars have been concealed within the meaning of Explanation 1 to section 271(1)(c). I, therefore, hold that with regard to this claim for expenses of Rs. 41,875 on account of special commission (as alleged), the assessee is guilty of concealment of particulars of income in the matter of reducing its in....
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....added or disallowed in computing the total income of such person as a result thereof shall, for the purposes of clause (c) of this sub-section, be deemed to represent the income in respect of which particulars have been concealed." It is the contention of the learned departmental representative that with the aforesaid change in the law, with effect from 1-4-1976, the onus of proving the mens rea no more lay with the ITO as presumed by the learned Commissioner (Appeals). The ITO had merely to show that in respect of any facts material to the computation of total income of the assessee, the explanation offered by the assessee could not be substantiated by him. An explanation is substantiated by leading cogent evidence. When there is no evidence in support of an explanation, it cannot be said that the fact has been proved or substantiated. Once the ITO was able to show that the assessee did not substantiate the explanation given by him, the assessee was caught within the aforesaid Explanation and it had to be presumed by the fiction of law that there was concealment of income. It is upon the assessee to show in terms of the aforesaid proviso that the explanation given by the assessee....
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....resentative pointed out that the aforesaid decisions of the Hon'ble Gujarat High Court and the Hon'ble Orissa High Court were not relevant as they did not deal with the amended law. They were dealing with the law as stood prior to 1-4-1976 and, therefore, no guidance could be had from the aforesaid decisions, which were in the context of the Explanation to section 271(1)(c), as it stood up to 31-3-1976. 8. We have given a careful consideration to the facts of the case and the rival submissions. In our opinion, there is merit in the contention of the learned departmental representative. Every payment is not an expenditure and in order to show that certain payment was expenditure, the onus lay on the assessee. In the present case, the assessee has not been able to substantiate his explanation that the aforesaid amounts were paid by the assessee for services rendered to the persons mentioned above. Neither the assessee has been able to indicate the details of the sales, the orders of which were procured by the aforesaid persons, nor the assessee has been able to indicate the names of the parties to whom the sales in question were made. The assessee did not disclose what was the actua....