Income Tax Appellate Tribunal - Bangalore
Abdul Kareem Ladsab Telgi, Bangalore vs Assessee
IN THE INCOME TAX APPELLATE TRIBUNAL
BANGALORE 'B' BENCH, BANGALORE
BEFORE SHRI SHAILENDRA KUMAR YADAV, JM
AND
SHRI A. MOHAN ALANKAMONY, AM
ITA No.1474(Bang.)/2008
(Assessment Year : 1996-97)
Shri Abdul Kareem Ladsab Telgi,
(under custody) Appellant
Vs
The Assistant Commissioner of Income-tax ,
Central Circle(1),
Bangalore Respondent
Assessee by : Shri K.Y.Ningoji Rao
Revenue by : Smt. Swati S Patil
ORDER
PER SHAILENDRA KUMAR YADAV,JM:
This appeal has been filed by the assessee against the order of the CIT(A)-VI, Bangalore, wherein the following grounds were raised;
" 1. The impugned order of assessment is liable to set aside in so far as the same is illegal, unlawful, improper, irregular and opposed to law and fats and circumstances of the case.
2. That the ld. Respondent officer erred in assessing the sum of Rs.2,29,00,000/- being the amounts deposited in to the banking accounts of the appellant by treating the same as income of the appellant u/s 68 of the Income-tax Act with 2 ITA No.1474(B)/08 out appreciating the actual facts of the case and without taking cognizance of the funds available with the appellant and as such the same is liable to set aside.
3. That the ld. respondent officer erred in assessing the sum of Rs.11,17,500/- being the alleged unexplained expenditure u/s 69C of the IT act and conjuncture and as such the same is liable to set aside.
4. That the ld. Respondent officer erred in assessing the sum of Rs.1,35,00,000/-being the investment alleged to have made by the appellant in Alankar Lodge on the basis of the estimate arbitrarily made by him and without appreciating the actual facts of the case and without taking cognizance of funds available with the appellant and as such the same is liable to set aside".
2. The first issue is with regard to addition of a sum of Rs.2.29,00,000/- being the amount deposited to the bank accounts of the assessee. The AO has assessed the same being the amount deposited in the bank account of the assessee by treating the same as income of assessee u/s 68 of the IT Act. The same was confirmed by the CIT(A). The AO found that the assessee was maintaining bank account in SBI, Mumbai vide A/c No.01050, Bank of Baroda, Mumbai (A/c No.20129) and Citibank, A/c 3 ITA No.1474(B)/08 No.00703120128 respectively, wherein deposit of Rs.1,49,75,000/-, Rs.71,000/- and Rs.60,000/- totaling Rs.4,54,06,000/- were found. The assessee was questioned about the deposits and withdrawals. It was explained to the AO that the credits represented the receipts from stamp sale. AO found that stamp vending turnover was Rs.2.25 Crores only and therefore, he added the rest i.e Rs.2.29 Crores as unaccounted income from stamp vending. This also commensurated with conclusion of other investigating agencies that the assessee had earned huge unaccounted sum from the racket of counterfeit stamp papers. This was also found commensurated with the further conclusion that the assessee has paid huge amounts in cash to his aides representing cash withdrawals from the bank but not allowed under IT Act as "expenses for illegal purpose". The stand of the assessee is that the assessee was also engaged in the business of dealing in white kerosene. In AY: 1996-97, Rs.33,20,000/- litres of white kerosene was sold and the sale price was Rs.8/- per litre totaling Rs.2,65,60,000/- which is more than Rs.2.49 Crores added by the AO as unexplained credit. It was also pleaded that the receipt on sale of white kerosene explains the credit entries in bank accounts partly and the other part represents turnover from stamp vending. This contention was not accepted by the CIT(A) on the ground that this issue was not pleaded like that 4 ITA No.1474(B)/08 before the AO and it was found out that the business of white kerosene was fake and non-existence. Even before the CIT(A), no documents in the shape of license or correspondence from civil supply department, transportation of white kerosene to real vendors or from Government deposits or any other corroborating evidence was produced to prove the genuineness of business of white kerosene. In view of the above, the CIT(A) rightly concluded that such business was non-existence and it was only futile attempt to explain entries in the bank and the real source of which was only to sale of counterfeit stamp papers and for this year the amount of such unexplained income was quantified at Rs.2.29 Crores. The assessee cannot be allowed illegal expenses as explanation to sec.37(1) of the Act. It is settled legal preposition that person should come for justice with clean hand. CIT(A) is justified in upholding the addition in question. The same is upheld.
4. The next issue is with regards to disallowance of expenditure of Rs.11,17,500/- u/s 69C of the IT Act. For making this addition the AO has relied upon the statement of the assessee recorded u/s 131 of the IT Act on 11-03-2004 and 12-03-2004 rather than the returned details. In the statement the assessee states that he had spent about Rs.16,80,000/- on salary and conveyance which were not found satisfactory by the AO and 5 ITA No.1474(B)/08 improbable to earn an income of Rs.5,62,500/- from a turnover of Rs.2.25 Crores. Therefore, he added back excess amount of Rs.11,17,500/- as unexplained unaccounted expenditure which was confirmed by the CIT(A).
5. Before us, the stand of the assessee is that he had claimed expenses of Rs.33,30,000/- and Rs.1,96,875/- respectively on account of Kerosene business and stamp vending business showing net income therefrom at Rs.33,22,000/-and Rs.3,65,625/-. It was pleaded on behalf of assessee that the AO has not accepted the returned expenditure of Rs.19,06,875/- claimed to be incurred on stamp vending business but relied upon the statement of the assessee taken in prison. It was claimed that statement should not be relied upon because the environment and circumstances of recording of statement was not congenial. On the other hand, learned DR supported the order of AO on the issue.
6. After going through the material and rival submissions, we find that at the time of recording of statement, the assessee stated to be in improper and mental and physical state. It is not so which is evident from categorical answer that he was paying salary of Rs.5,000/- per person per month to 20 persons resulting in payment of salary of Rs.12 lakhs and Rs.40,000/- per person per annum as conveyance charges to 20 persons resulting in payments 6 ITA No.1474(B)/08 of conveyance charges of Rs.4.8 lakhs totaling Rs.16.8 lakhs. It shows that there was no consistency between the returned expenses and the expenses recorded in statement. Apart from this, the AR did not produce any books of account to corroborate the returned expenses. In view of the above, the lower authorities relying on the statement recorded on oath made the stand in question, the AO has given clear cut finding that the business of kerosene oil was fake and not carried out by the assessee as discussed above. So the AO has rightly added the same under the head "other sources". We uphold the same.
7. The next issue is with regards to addition of Rs.1,35,00,000/- as unexplained being investment claimed to have been made by the assessee for Alankar Lodge. The AO made this addition on the basis of report from DDIT(Inv.)Mumbai. The stand of the assessee is that only Rs.20,00,000/- were paid as pagadi and nothing more was invested. The AO during the course of assessment proceedings confronted the report of DDIT(Inv.) Mumbai to assessee. He could not substantiate its stand that only Rs.20.00 lakhs had been paid as pagadi for acquisition of Alankar Lodge. On the other hand, the Inspector o DDIT(Inv.) Mumbai had given comparative value instances of nearby localities of Ashok Shopping Centre and Fazal Shah Education Trust to arrive at the estimation 7 ITA No.1474(B)/08 of value of property at Rs.1.35 Crores. The stand of the AR of the assessee in this regard was that the above said documents relied on by the assessee were not confronted to assessee. Moreover, statement u/s 131, he has mentioned having paid Rs.20.00 lakhs as pagudi. Before us learned AR has filed an application under Rule of Appellate Rules 1967, wherein various documents have been filed with regard to above said property and the stand of the assessee is that the assessee was a tenant of above said Alankar Lodge property which was owned by Dawood Bhoy Fazalbhoy Muslim Educational Trust. In this regard, the attention was drawn towards the order of the Pune Court in RAE Suit No.46/70 of 2007 directing delivery of possession of Alankar Lodge property to its owner i.e Dawoodbhoy Fazalbhoy Muslim Educational Trust. These documents were filed before us and the issue goes to the root of the issue, so we admit the same. This does not helps assessee because case before us is with regards to quantum of pagri amount prevailing in market at relevant point of time. It is not case of revenue that the assessee was legal owner of the property in question. The question before us is with regards to investment by way of pagri for entering into property at nominal rent. Even if he is evicted by a court order or otherwise amount of pagri paid at relevant point of time cannot be disputed. In view of above, we are not inclined to interfere with the finding of 8 ITA No.1474(B)/08 CIT(A) who has upheld the reasoned addition in question. We uphold the same.
8. The next issue is regarding interest u/s 234A, 234B & 234C of the IT Act, which is consequential to the above said issue.
9. In the result, the appeal filed by the assessee is dismissed.
Order pronounced in the open court on
(A. MOHAN ALANKAMONY) (SHAILENDRA KUMAR YADAV)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Place: Bangalore
Dated:
am*
Copy to :
1. The Assessee
2. The Revenue
3. CIT(A)
4. CIT
5. DR
6. GF(B'lore)
7. GF(Delhi
AR, ITAT, Bangalore