MONJULA BOSE, J.

(1) IN this reference under Section 256 (2) of the Income-tax Act, 1961, the Tribunal, as directed, has referred the following question of law for the opinion of this court:

"whether, on the facts and in the circumstances of the case, the Tribunals finding that the assessee has failed to discharge the onus of establishing the identification of C. B. Singh and Vandana Sales Corporation to whom commission was alleged to have been paid is contrary to the evidence on record or is otherwise unreasonable. "

(2) THE facts which are material and the proceedings leading up to this reference are as follows :

(3) MATHER and Platt (India) Ltd. , the assessee, carries on the business of manufacture and supply of, inter alia, food processing and other machinery. In the year 1974, the assessee sold and supplied to the Punjab State Co-operative Supply and Marketing Federation Ltd. , M/s. Canners (India) Ltd. and the United Co-operative Distillery Ltd. certain machinery. The said transactions were effected by the assessee, respectively, through three commission agents, viz. , Mintop Corporation of New Delhi, C. B. Singh of Lucknow and Vandana Sales Corporation of Bombay. The assessee paid commission to the said commission agents. The Mintop Corporation was paid Rs. 1,89,980, C. B. Singh was paid Rs. 20,038 and Vandana Sales Corporation was paid Rs. 17,832.

(4) FOR the assessment year 1975-76, the accounting year ending on December 31, 1974, the assessee was assessed to income-tax. In its assessment, the assessee claimed deduction of the said amounts paid to the commission agents. The Inspecting Assistant Commissioner who made the assessment examined in detail the said three transactions the assessee had through the commission agents. Summonses under Section 131 of the Income-tax Act, 1961, were issued to each of the said commission agents calling upon them to confirm the payments of the said commission and the details of the services rendered by them. All the summonses came back with the remark " not known " from the postal authorities. The Inspecting Assistant Commissioner thereafter called upon the assessee to explain the payments in respect of such commission with evidence. The assessee submitted its explanation in writing and filed the relevant correspondence and records.

(5) IN respect of the commission paid to Mintop Corporation, it was held by the Inspecting Assistant Commissioner that the assessee had engaged Mintop Corporation with the object of exercising influence on the co-operative which was an undertaking of the Punjab Government. The said contract between the assessee and the Mintop Corporation was held to be opposed to public policy and illegal and on that ground the Inspecting Assistant Commissioner disallowed the deduction of the commission paid.

(6) IN respect of commission paid to C. B. Singh and Vandana Sales Corporation, it was held by the Inspecting Assistant Commissioner that as the assessee had failed to trace them, the correspondence filed by the assessee was not sufficient to establish the genuineness of the payments. It was noted that the income-tax file numbers of the said two agents had not been disclosed and, therefore, the assessee had failed to discharge its primary onus of establishing the identity of the agents or the genuineness of the payments. He disallowed the deduction also of the amounts paid to the said two agents by way of commission.

(7) BEING aggrieved, the assessee preferred an appeal before the Commissioner of Income-tax (Appeals) from the order of the Inspecting Assistant Commissioner. The Commissioner (Appeals) held that the contract with the Mintop Corporation was not void or illegal and as such the commission paid to the said Mintop Corporation was allowable as a deduction. In respect of the commission paid to C. B. Singh and Vandana Sales Corporation, the Commissioner (Appeals) noted that the payments had been made in the case of the former by a bank draft on the State Bank of India, Lucknow, and in the case of the latter by an account payee cheque which was encashed through a bank account of the commission agent. He also noted that the assessee had furnished the addresses of the said two commission agents from its records. The contentions of the assessee in respect of the said two commission agents were also accepted and the deduction as claimed by the assessee was allowed.

(8) BEING aggrieved, the Revenue preferred a further appeal before the Income-tax Appellate Tribunal. The Tribunal accepted the case of the assessee so far as the payment of commission to Mintop Corporation was concerned. The Tribunal held that the assessee had entered into a contract with the said State Co-operative on the basis of an open tender. It was held that the transaction was purely commercial and it could not be said that it had been brought about by undue influence. The decision of the Commissioner (Appeals) was confirmed. The Tribunal noted that the Inspecting Assistant Commissioner was otherwise satisfied that the Mintop Corporation was an existing organisation and had proceeded on that basis.

(9) IN respect of C. B. Singh and Vandana Sales Corporation, the Tribunal noted that the Inspecting Assistant Commissioner had found that the said two commission agents were not in existence and the assessee had not discharged the burden of proving their identities. The Tribunal held that in order to claim deduction of the commission paid to the said agents, the assessee was required to establish their identity and that mere payment by an account payee cheque could not establish such identity. The Tribunal set aside the order of the Commissioner (Appeals) and restored the order of the Inspecting Assistant Commissioner in respect of the said commission agents disallowing the deduction of the commission paid to them.

(10) AT the hearing, learned advocate for the assessee submitted that the assessee had brought on record sufficient evidence to establish the identity of the said two commission agents as also the genuineness of the payments. He submitted that the transactions in respect of which commission had been paid were not disputed by the Revenue and the same had been taken into account in making the assessment. The assessee had also established its practice of effecting transactions through commission agents on payment of commission. Contemporaneous correspondence had been produced by the assessee to show that the said two commission agents were in existence. Payments had been made by a bank draft to C. B. Singh * and by an account payee cheque to Vandana Sales Corporation. The cheque had been encashed through the bank account of the commission agent.

(11) THE mere fact that the summonses under Section 131 were returned unserved in 1978 when the assessment was being made did not establish that the said two commission agents were not in existence in 1974 when the transactions took place. He submitted that summons had come back unserved also in the case of Mintop Corporation but on that ground, the genuineness of Mintop Corporation had not been questioned.

(12) LEARNED advocate for the assessee submitted further that considering the volume of the business of the assessee which showed in its return an annual income of over Rs. 37 lakhs, there was no reason to doubt the genuineness of the two payments of commission amounting only to about Rs. 37,000.

(13) IN support of his contentions, learned advocate for the assessee cited S. Hastimal v. CIT, [1963] 49 ITR 273 (Mad) [LQ/MadHC/1962/416] . In this case, the assessee was called upon to explain the source of an amount credited in his books. The assessee contended that he had borrowed the amount from a party at Bikaner which had been paid by the agent of the creditor by a bank draft. The assessee supported his explanation by other documentary evidence. The explanation of the assessee was rejected by the Tribunal on the ground that the draft was not sent by the creditor but by some other person and it had not been possible to contact either the creditor or his agent.

(14) ON these facts, it was held by the Madras High Court that the assessee had established the source of the said amount of credit and its explanation could not be rejected on the ground of disability of the Revenue to ascertain further facts. There was no evidence to hold that the said amount of credit was the assessees income from undisclosed sources.

(15) ADDL. CIT v. Bahri Bros. P. Ltd. , [1985] 154 ITR 244 (Pat) was also cited. In this case, two deposits in the account of the assessee were claimed to have been obtained on loan. The assessee established that the amount had been paid by account payee cheques. The assessee also established that it had repaid the amounts also by account payee cheques with interest and brokerage. Subsequent letters addressed to the creditors for confirmation came back with the postal remark " addressee left ".

(16) ON these facts, the Patna High Court upheld the order of the Tribunal and laid down that in the facts, the assessee had discharged its primary onus by disclosing the identity of the creditors and also the source of income. The onus shifted thereafter to the Revenue to verify. As the alleged advance had been paid and repaid through a bank account, it could not be said that the creditors were fictitious persons.

(17) JHA J. observed in his judgment that as all the transactions were had through account payee cheques, the question of identity of the creditors became irrelevant.

(18) LEARNED advocate for the Revenue contended to the contrary and submitted that it was for the assessee to establish the identity of its commission agents. In the facts, it was submitted that the assessee had failed to discharge the primary onus cast upon it.

(19) ON a consideration of the facts and circumstances, it appears to us that by taking an overall view, it is found that the assessee had been entering into transactions in its regular course of business through commission agents and paying the agents commission on the basis of the transactions had. In respect of commission paid to the two commission agents which are in dispute, the assessee had established that in 1974 the assessee was in correspondence with the said agents. The assessee had entered into the transactions through the said agents and the assessee had paid commission to the said agents, in one case by bank draft and in the other case by an account payee cheque which was encashed through a a bank account of the agent. It stands established that at the material time at least one of the commission agents was maintaining a bank account.

(20) THE only fact on which the Tribunal has proceeded is that four years after the transactions, summonses served on the commission agents had come back unserved. On the entirety of the evidence, it cannot be held that if a person is not found in an address after four years, he is nonexistent. In our view, the assessee has discharged its primary onus and established the identities of the said two commission agents and no evidence had been brought on record by the Revenue to rebut the case of the assessee. On the entirety of the evidence, it would be unreasonable to hold that the assessee had failed to establish the identity of the said two commission agents and that payments to the said commission agents were not genuine.

(21) FOR the reasons as above, we answer the question referred in the affirmative and in favour of the assessee. There will be no order as to costs.