Bofors and Income Tax - Bofors Commission was received and is taxable!
THE evidence collected during investigation by the income Tax Authorities and other agencies reflected that the assessee, Mr. W. N. Chadha had received income in this Bofors gun deal more than what was disclosed in his returns of income. The Assessing Officer (AO), during the course of assessment proceedings, collected a lot of evidence, recorded the assessee’s statement and made additions along with other additions under the head House Property Income and made disallowance of business expenditure and other disallowances. The assessments were appealed against by the assessee. The CIT(A) confirmed the orders of the AO. Aggrieved, the present assessee has filed second appeals with the ITAT. It is pertinent to mention that the then assessee expired after the framing of the assessments and is represented by his son/legal heir Shri Hersh Chadha.
Material On Record and Evidence: The ITAT differentiated between the evidence and material available on record in the Evidence Act and in income tax proceedings. The Income Tax Act uses the words ‘material available on record and was prepared to accept the Swedish Audit Bureau’s report, JPC’s report, CBI’s charge sheet and photocopies of Hindu Newspaper as material on record reckoning preponderance of probabilities, human conduct and surrounding circumstances.
The ITAT confirmed the addition of commission to the assessee’s income by observing, “Keeping in consideration the rival contentions, all the facts, the material available on record, the probable normal human conduct, the surrounding circumstances, the preponderance of probabilities and the legal propositions, we have not hesitation to hold that assessee received the impugned commission as added by AO as his income for AYs 1987-88 and 1988-89”.