Kania, J.:— The question referred to us for determination in this reference under s. 256(1) of the I.T Act, 1961 (hereinafter referred to as “the said Act”) runs as under:

“Whether, on the facts and in the circumstances of the case, the Tribunal was justified in rejecting the claim of the assessee for the deduction of Rs. 1,07,113, Rs. 1,19,624, Rs. 1,10,019, Rs. 1,15,979, Rs. 1,23,957 and Rs. 1,41,227 for the assessment years 1963-64 to 1968-69, respectively?”

2. The assessee is a company carrying on the business of manufacturing and selling paints, varnishes, pigments and so on.

3. The assessment years to which this reference relates are 1963-64, 1964-65, 1965-66, 1966-67, 1967-68 and 1968-69. In the previous years relevant to the said assessment years, the assessee claimed deductions out of their income in respect of the aforesaid sums as selling expenses. These selling expenses were claimed on the footing that they were commissions paid to the employees of certain purchasers in order to promote the sales of the assessee's products. Although demanded, the assessee did not furnish any details whatever regarding the names and addresses of the parties to whom such commissions had been paid. In respect of the assessment year 1963-64, the ITO allowed one half of the selling expenses as a deduction, but that order was subsequently set aside by the Commissioner of Income-tax by his order dated 23rd May, 1968, under s. 263 of the said Act, on the ground that that order was prejudicial to the revenue. In respect of the remaining assessment years, the ITO concerned disallowed the entire selling expenses which were claimed as deductions by the assessee. He pointed out that the assessee had not furnished any details regarding names and addresses of the parties to whom such commissions had been allegedly paid and he relied upon the provisions of s. 133 of the said Act, which, inter alia, lays down that the assessee is bound, under law, to furnish a statement of the names and addresses of all persons to whom commissions are alleged to have been paid. The ITO held that, in these circumstances, the assessee had failed to discharge the onus of proving that the said expenditure, claimed as deduction, was actually made, in the sense that the payments were actually made for the purposes of the business of the assessee as claimed by the assessee. In respect of the assessment years 1964-65 to 1968-69, the assessee preferred appeals to the AAC. The AAC concerned confirmed the disallowance made by the ITO in respect of assessment years 1964-65 to 1967-68. In respect of assessment year 1968-69, the AAC concerned, who was different from the one who passed the order just referred to, disallowed only one-half of the selling expenses claimed by the assessee and allowed the remaining half as a deduction. The assessee preferred appeals before the Income-tax Appellate Tribunal from the aforesaid order of the Commissioner in respect of the assessment year 1963-64, and from the orders of the AAC in respect of the assessment years 1964-65 to 1967-68. The department filed an appeal from the order of the AAC in respect of the assessment year 1968-69. Before the Tribunal, the contention of the assessee was that these selling expenses were payments made to keep the customers' employees at various levels happy. It was urged by the assessee that these payments were made by the assessee in cash to its salesmen in charge of particular industrial accounts, who acknowledged the receipt of the amount, and that these salesmen disbursed these amounts as commissions to the employees of the purchasers. The Tribunal pointed out that these payments were nothing but secret commissions and were actually described by the assessee as such. The Tribunal held that the assessee was not entitled to claim any deduction in respect of such secret commissions as claimed by the assessee. It is clear, on a perusal of the order of the Tribunal, that this conclusion has been based by the Tribunal on two grounds; in the first place, the Tribunal has taken the view that such secret commissions, which are paid to the employees of the customers, would be liable to be taxed in the hands of the recipients and it would be against public policy to allow the recipients to escape proper tax, as would necessarily result, if the assessees were permitted to get the deductions in respect of such commissions without disclosing the names and addresses of the persons to whom the same were alleged to have been paid. Secondly, the Tribunal has taken the view that, in the absence of the names and addresses of the recipients of the commissions in question, it is not possible to hold that expenditure in question was laid out wholly and exclusively for the purposes of the business of the assessee-company, which would necessarily mean that, in the view of the Tribunal, the assessee could not be said to have discharged the burden of proving that the expenses claimed to have been paid as secret commissions were, in fact, paid as such, in the absence of the names and addresses of the parties to whom they were alleged to have been paid. This is clear from the observations made by the Tribunal in para. 8 of its order and the reliance placed by the Tribunal on the judgment of another Bench of the Tribunal as can be seen from para. 9 of its order. We may mention here that the Tribunal disposed of all the aforesaid appeals by a common judgment from which this reference arises. The submission of Mr. Patil, the learned counsel for the assessee, is that, in the nature of things, it was not possible for the assessee to disclose to the ITO the names of the parties to whom secret commissions had been paid, because that might land such parties in difficulties with their own employers. It was urged by him that, in this case, once the amounts were paid by the assessee to its salesmen for giving secret commissions to the employees of the purchasers, it was no longer open to the department to insist upon it being proved that they had, in fact, been expended by way of secret commissions to the employees of the purchasers. In support of this contention, Mr. Patil placed strong reliance on the decision of a Division Bench of this court in Ciba Dyes Ltd. v. CIT, [1954] 25 ITR 102. We are afraid that the reliance placed by Mr. Patil on this judgment appears to be misplaced. In that case, the assessee-company was carrying on business of importing dyestuffs and chemicals and it had agreed to pay to its representative, whose business it was to push the sales of the products, a commission of 12½ per cent, on net sales. Subsequently, this commission was split up and the assessee wrote to the representative that 5 per cent, of the commission was allowed to him to meet contingency expenses which consisted of commissions to dyeing masters and so on, which had to be paid by the representative for the purposes of canvassing business. In the relevant assessment year, the assessee paid to its representative a certain amount representing this 5 per cent, commission and claimed it as a permissible allowance under s. 10(2)(xv) of the Indian I.T Act, 1922, which, it may be mentioned, corresponds to s. 37 of the said Act. The ITO disallowed the claim solely on the ground that it had not been proved that the representatives had, in fact, expended the sum for the purposes for which the the same was paid to him. It was held that the proof of actual payment by the representative was not necessary and the assessee was, therefore, entitled to the deduction under s. 10(2)(xv) of that Act. Now, we may point out that there is a significant difference in the facts of that case and those in the case before us. In that case, the assessee paid to its representative, apart from general commission, a commission of 5 per cent, for contingency expenses under an agreement. That agreement was not challenged as not genuine or bona fide. It was not suggested that the payment of 5 per cent, commission to the representatives was not made for the purposes of contingency expenses; and the disallowance by the ITO was based only on the ground that it had not been proved that the representative had, in fact, expended the amount of such commission for the purposes claimed by the assessee. It may be pointed out that, on these facts, it was proved by the assessee that, as far as the assessee was concerned, it had actually expended the amount represented by 5 per cent, commission by paying the same to its representative for the purposes of meeting contingency expenses as aforesaid. In the present 6ase, on the other hand, the claim for deduction has been made by the assessee on an altogether different footing. It has been made by the assessee on the footing that these selling expenses represent commissions paid by the assessee to the employees of certain customers through its salesmen. The claim of the assessee-company, in this case, therefore, is that the commissions were paid by the assessee and its salesman came into the picture merely as the agents through whom the commissions were paid by the assessee. In these circumstances, we fail to see how it could be said that the Tribunal was in error in holding that the burden of proving that the amounts were actually expended lay on the assessee. Section 37 of the said Act, inter alia, clearly provides that the expenditure claimed by way of deduction should be laid out or expended wholly and exclusively for the purposes of business or profession and we totally fail to see how it could be said that the assessee was not bound to prove that the said amounts claimed to have been paid as secret commissions were actually laid out or expended as secret commissions before becoming entitled to deduction under s. 37. As the assessee refused to furnish the names and addresses of the parties to whom such secret commissions had been paid, it was perfectly open to the Tribunal not to accept that the assessee had, in fact, paid those amounts by way of secret commissions. It was for the Tribunal to decide, as the final judge of facts, as to whether the case of the assessee that these amounts were actually paid by way of secret commissions, should be believed or not, in the absence of the names and addresses of the persons to whom secret commissions were alleged to have been paid. In the present case, the Tribunal has disbelieved this claim of the assessee and we do not see why we should interfere or how we can interfere with that conclusion. We may also refer to s. 133(4) of the said Act which clearly requires that the names and addresses of the persons to whom commissions are alleged to be paid, must be disclosed to the ITO on demand. Where such disclosure is not made and the ITO or the Tribunal disbelieves the case that such commissions were paid as claimed by the, assessee, we fail to see how it can be said that the Tribunal has gone wrong.

4. In the result, the question referred to us is answered in the affirmative and against the assessee. The assessee to pay to the Commissioner the costs of the reference.