1. For the assessment years in question, the assessee had made deduction of payments said to have been made to doctors towards MRI Commission, CT Scan and USG Commission, Pathology Collection Commission and CT Commission (National Hospital). However, the assessing officer disallowed the said claims on the ground that the assessee had not produced the vouchers. Assessing officer had also taken note of the contention of the assessee that there is no practice of keeping the vouchers. It was also the case of the assessee that the payees of the assessees are against disclosing their names.
2. However, the First Appellate Authority in Annexure B order, referred to the orders passed by the assessing officer in certain previous years and allowed 10% of the commissions paid. Revenue challenged the order of the First Appellate Authority before the Tribunal and Tribunal dismissed the appeals by Annexure C order holding that it was the practice followed in the business and that the assessee had been following the same consistently. The Tribunal also held that in its opinion the payments made were not opposed to public policy. It is in these circumstances that the Revenue has filed these appeals and the common question of law framed for the consideration of this court are the following:–
“1. Whether, on the facts and in the circumstances of the case and also in view of the fact that both payments and receipts were unaccounted the Tribunal is right in law allowing a percentage of the total collections as an expenditure? And is not the conclusion of the ITAT perverse and illegal?
2. Whether, on the facts and in the circumstances of the case is not order of the Tribunal encouraging illegal economy and against public policy?”
3. We heard the Senior Counsel for the Revenue and the learned counsel for the assessee.
4. Admittedly, on facts, it is clear that though the assessee had claimed deduction of amounts allegedly paid to doctors towards commissions, the assessee did not produce the vouchers or any other supporting documents to substantiate the claim. The assessee did not even disclose the names of the recipients. In other words, these are cases where the assessee had miserably failed to substantiate the claim of having made the payments.
5. In such circumstances, even if it is true that in the previous years similar claims were allowed by the assessing officer, in so far as the assessment year in question is concerned since the assessee has miserably failed to substantiate the claim, we feel that the First Appellate Authority ought not have interfered with the assessment order. For the same reason, we are also inclined to think that the Tribunal ought not have upheld the order of the First Appellate Authority holding that it was the practice followed in the business. Therefore, the orders passed by the First Appellate Authority and the Tribunal are set aside.
Appeals are disposed of restoring the assessment order and answering the question of law in favour of the Revenue.
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