COMMISSIONER OF INCOME TAX vs DHANPAT RAI and SONS.

N. K. SODHI, J. :

This order will dispose of twelve Income Tax Cases Nos. 175 to 179 of 1993, 37, 38, 84, 96, 179, 181 and 182 of 1994 in which common questions of law and fact arise. Since arguments were addressed in IT Case No. 176 of 1993, facts are being taken from this case.

These petitions have been filed by the Revenue under s. 256(2) of the IT Act, 1961 or a direction to the Tribunal for referring the following questions of law to this Court for its opinion :

"(i) Whether, on the facts and in the circumstances of the case, the learned Tribunal is right in law in deleting the additions made by the AO and enhancement made by the CIT(A) under the heads commission account and specimen account, in view of the fact that assessees claim of expenditure under these heads, is unvouched and not supported by the evidence ?

(ii) Whether, on the facts and in the circumstances of the case, the learned Tribunal is right in law in holding that the first appellate authority is not justified in initiating the proceedings under s. 271(1)(c) of the IT Act in view of the fact that the assessee furnished inaccurate particulars of his income making claim under heads commission account and specimen account which is not supported by the evidence ?"

The assessee is a publisher and seller of books/guides. The Departmental authorities made some additions out of the amounts which the assessee had debited in its books under the head Commission account and Specimen account on the ground that the expenses as claimed were not supported by any documentary evidence in the form of vouchers. Second appeal filed by the assessee was allowed by the Tribunal and the additions made by the AO were deleted. The Tribunal observed that it was not the case of the Revenue that no commission had been paid or that no specimen copy has been distributed. It may be mentioned that the AO while making the additions had allowed a part of the deductions as claimed by the assessee holding that the balance amount was highly excessive though the entire amount claimed was not supported by any voucher or other documentary evidence. While allowing the appeal of the assessee, the Tribunal on a consideration of the evidence took the view that the expenditure claimed by the assessee was reasonable under both the heads, i.e., Commission account and Specimen account. In other words, the factum of expenditure having been incurred by the assessee had not been disputed by the Departmental authorities and the only dispute was with regard to the quantum of deductions claimed and allowed. The AO as well as the CIT(A) accepted the position that the expenditure even though not vouched and supported by any evidence had to be allowed within reasonable limits. As already observed, the Tribunal in appeal found that the entire amount claimed by the assessee was reasonable. This finding of the Tribunal is a pure finding of fact. We are thus, of the considered opinion that no referable question of law arises.

In the result, the petitions are dismissed.