Law:

Section:

Section 143 of the Income-tax Act, 1961 [Corresponding to section 23 of the Indian Income-tax Act, 1922] - Assessment - Additions to income - Assessment years 1944-45 and 1945-46 - Assessee-company made certain payments - Tribunal found that three persons to whom payments had been made were benamidars of company 'RS', that assessee knew that he was dealing with 'RS' and not with said individuals, and that these individuals were men of straw - Tribunal, accordingly, concluded that said amounts were profits of assessee and, therefore, assessable in its hands - Whether 1922 Act did not contain any provision which permit taxing department to include in income of assessee income of some one else because assessee has helped that some one else to evade payment of tax on that income - Held, yes - Whether since there was evidence on record that payments made to aforesaid three persons were fictitious and that said persons did not exist, it could be said that those amounts were paid to assessee himself and constituted profits of assessee - Held, yes FACTS The assessee was a broker and effected various transactions in cotton. The ITO came to a conclusion that certain payments made by the assessee during the relevant previous year were not genuine payments of profit and, therefore, he included those profits in the assessment of the assessee. On appeal, the AAC confirmed the assessment order. On further appeal, the Tribunal remanded the matter to the ITO. The ITO submitted a remand report on the basis of which the Tribunal held that it stood established beyond any doubt that 3 persons to whom payments were made, were the benamidars of 'RS' company; that the assessee knew that he was dealing with 'RS' and not with aforesaid individuals; that those individuals were men of straw and it was impossible to believe that the assessee would deal with them for such large amounts and further that the assessee was party to concealing the fact that those profits represented the income of 'RS'. Therefore, the Tribunal held with regard to those payments that they were the income of the assessee and that the assessee was liable to tax. As regards those 3 persons, the Tribunal held that…

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