- (1.) THE CIT, by this application under S. 256(2) of the INCOME TAX ACT, 1961, prays that the Tribunal be directed to state a case and refer the following three questions of law pertaining to the asst. year 1971 -72 for the opinion of this Court : " 1. Whether, on the facts and in the circumstances of the case, there was any evidence before the Tribunal to hold that the sum of Rs. 6,80,850 paid to six parties as commission was expended exclusively for the purpose of the business and was thus an allowable deduction under S. 37(1) of the IT Act ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal had erred in ignoring the material evidence on record, collected by the ITO during the course of the assessment proceedings, in coming to the conclusion that the commission payments made by the assessee to six parties represented genuine payment to these parties ? 3. Whether, on the facts and in the circumstances of the case, the finding of the Tribunal that the six parties had rendered services for earning commission is perverse having regard to the evidentiary material ?"
(2.) THE assessee is a public limited company engaged in the manufacture of certain electrical goods which it supplies mainly to the State Electricity Boards. It claimed certain deductions as commission payments. The ITO held that commission payments of Rs. 6,80,850 was not expended wholly and exclusively for the purpose of the business and as such were not deductible.
(3.) THE assessee appealed to the CIT and contended that the initiation of proceedings under S. 147 (a) of the IT Act, was invalid ; it also challenged the finding regarding disallowance of the sum of Rs. 6,80,850. The CIT held that the assessee had not disclosed fully and truly all material facts and as a result of the non -disclosure, income chargeable to tax had escaped assessment. Consequently, it upheld the initiation of proceedings under S. 147(a) of the IT Act. The CIT also confirmed the disallowance of the entire amount of Rs. 6,80,850.;