Income Tax Appellate Tribunal - Hyderabad
Dr. G. Mitra vs Income-Tax Officer on 25 February, 1994
Equivalent citations: [1994]51ITD498(HYD)
ORDER
T.V. Rajagopala Rao, Judicial Member
1. This is an assessee's appeal for assessment year 1982-83 filed against the order of the Commissioner of Income-tax (Appeals)-II, Hyderabad dated 26-12-1989.
2. The addition of Rs. 45,000 in the hands of the assessee as net income from brokerage is the sole point of contest in this appeal. The facts leading to the present appeal may briefly be stated as follows.
3. The assessee derived income from profession as a Practitioner in Homeo medicines and Acupuncture Therapy. He also did real estate business in purchase and sale of land. He did not maintain any regular books of account for his profession. With regard to commission or brokerage, in real estate business, the assessee was examined by the Income-tax Officer both on 12-2-1985 and 16-2-1985 whereas one B. Janardhan was examined on 6-2-1985. The examination of the assessee as well as Shri B. Janardhan established the following facts.
4. The assessee was a party to a tripartite agreement between his friend Shri S. Metturam Reddy, Shri B. Janardhan representing M/s. Radha Soami Co-operative Housing Society Limited, Mossarambagh, Hyderabad and the assessee. In the accounting year in question which ended by 31-3-1982, Shri Metturam Reddy along with his three sons was the owner of 14 acres 8 guntas of land situated in Survey No. 155 of Thokatta Village, Secunderabad Taluq, Hyderabad District which is within the Cantonment limits. The said land fell to the share of Shri S. Mettu Ram Reddy by means of a family settlement deed dated 11th December 1939 which was subsequently upheld by the High Court in its judgment passed in C.S. No. 19 of 1958 and O.S.A. No. 3 of 1960. In another suit O.S. No. 76 of 1972 on the file of the Addl. Chief Judge, City Civil Court, Hyderabad the total extent of 14 acres 8 guntas was allotted to the four vendors as follows :
Acres Guntas Vendor No. 1 (B. Mettu Rama Reddy) 0 34 Vendor No. 2 (B.V. Ramesh Reddy) 7 06 Vendor No. 3 (B.V. Suresh Reddy) 4 00 Vendor No. 4 (B.V. Satyanarayana Reddy) 2 08 Total 14 08 They have executed an agreement of sale with regard to portions of the said land to several persons. One of the persons in whose favour they have executed an agreement was M/s. Railway Employees Co-operative House Building Society Limited. When they have failed to perform their part of the contract, the Railway Employees Co-operative House Building Society Limited filed suit for specific performance in O.S. No. 1232 of 1981 on the file of Fifth Additional Judge, City Civil Court, Hyderabad. The four vendors mentioned above were defendants 1 to 4 in that suit. The fifth defendent was M/s. Jyothi Enterprises. The sixth defendant was one Murthy Co-operative Housing Society Limited and the seventh defendant was one M/s. Radhasoami Co-operative Housing Society Limited. After some contest, the suit was compromised between the parties and a compromise decree dated 24-4-1982 was passed. Copy of the compromise decree was furnished to me at pages 17 to 24 of the paper book filed on behalf of the assessee. Under the terms of the compromise defendants 1 to 4 have to sell 5 acres 28 guntas and 56 sq. yds. equivalent to 27,644 sq.yds. at a revised or enhanced rate of Rs. 1,01,640 per acre. The compromise petition dated 24-2-1982 filed in O.S. No. 1232 of 1981 on the file of the Fifth Addl. Judge, City Civil Court, Hyderabad was furnished at pages 17 to 24 of the paper compilation filed on behalf of the assessee. Clause 1 of the compromise decree, inter alia, provides that the plaintiff society is entitled to purchase to the extent of 7 1/2 acres out of the suit land at the revised rate of Rs. 81,000 per acre and defendants 1 to 4 were directed to execute the sale deed in favour of the plaintiff society and defendant No. 7 on receipt of the entire sale consideration within 6 months from the date of receipt of permission from the competent authority at the society's expenses. In case the defendants 1 to 4 fail to execute the sale deed, the plaintiff society is at liberty to get the sale deed registered through Court. Clause 1 of the compromise decree, inter alia, also provides that excluding 7 1/2 acres from the total extent of the suit land, the remaining land should be kept by defendants 1 to 4 and defendant No. 7. Defendants 1 to 4 shall retain 1,000 sq. metres each i.e., 4,000 sq.metres in total according to their choice of site constituting one compact block and the remaining land shall be sold to the defendant No. 7 society. Defendant No. 7 in the suit is M/s. Radhasoami Co-operative Housing Society Limited. Defendants 1 to 4 are Shri B. Metturam Reddy and his three sons.
5. The case of the revenue is that Shri B. Metturam Reddy is a thick friend of the assessee. The assessee acted as a mediator in the sale transaction between Metturam Reddy and M/s. Radhasoami Co-operative Housing Society Limited. For conducting mediation, the stipulation was that the assessee should be entitled to Rs. 12.50 per sq.yd. from M/s. Radhasoami Co-operative Housing Society. On 17-9-1981, a sum of Rs. 1,00,000 was paid to the assessee on behalf of M/s. Radhasoami Co-operative Housing Society out of which the assessee refunded a sum of Rs. 32,000. The receipt which is later marked as G-9 was issued by the assessee on 17-9-1981 to the said effect. The assessee gave an account of how he spent the whole of Rs. 1 lakh given to him in his own hand in a small piece of paper later marked as G-l on 3-11-1981. G-1 and G-9 were admittedly in the handwriting of the assessee. The assessee had been carrying on the business in purchase and sale of plots for a number of years. He acquired definite skill and efficiency in acting as a broker in land deals. The assessee admitted that a sum of Rs. 1 lakh was brought to his house by Shri B. Janardhan in connection with the agreement of transfer of land from Shri B. Metturam Reddy to M/s. Radhasoami Co-operative Housing Society Limited. G-1 was admittedly written by the assessee which spells out the disbursement of Rs. 1 lakh received. A month and a half after the date of receipt of the amount, on 17-9-1981, the assessee had given in his own hand how he had spent the sum of Rs. 1 lakh in a small piece of paper which is market as G-9. In that paper it is noted as under :
Gross receipt Rs. 1,00,000
Less : 1. Amount returned to
Shri B. Janardhan Rs. 32,000
2. Expenditure for the Delhi Rs. 68,000
Trip (The Delhi Trip was
to be undertaken to secure
permission from Cantonment
Board as land of Shri B.
Metturam Reddy at issue was
Within the limits of the Cant-
Onment Board) as given in G-1 Rs. 18,000
Rs. 50,000
3. Other incidental expenses Rs. 5,000
Net income from brokerage Rs. 45,000
The Income-tax Officer included the sum of Rs. 45,000 as part of the income of the assessee. Thus as against the returned income of Rs. 23,490 the total income of the assessee was arrived at Rs. 69,460 as per the assessment order dated 21-2-1985. Aggrieved mainly about the inclusion of Rs. 45,000 in his hands, the assessee went in appeal before the Commissioner of Income-tax (Appeals).
6. When the matter came up for hearing before the Commissioner (Appeals) an affidavit of Shri B. Janardhan was sought to be admitted as additional evidence before him. The learned Commissioner (Appeals) refused to admit the said document as additional evidence. The learned Commissioner (Appeals) observed that the said affidavit runs contrary to the paper identified as G-1 and the statement of Shri B. Janardhan given on oath during the course of assessment proceedings. The learned Commissioner (Appeals) further held that Shri B. Janardhan in his sworn statement dated 6-2 1985 given before the Assessing Officer admitted that he had paid Rs. 1,00,000 to the assessee on 17-9-1981 on behalf of the Co-operative Society in connection with the purchase of land from Shri B. Metturam Reddy. Though under the original agreement between the parties 15 acres were to be transferred, ultimately only 4 acres of land were transferred and out of a sum of Rs. 1 lakh, Rs. 32,000 was returned in October 1981 but the balance was not returned. The contents of this statement was made known to the assessee. Although the assessee denied knowledge of the tripartite agreement, the learned Commissioner (Appeals) held that his involvement in the deal contemplated therein was admitted. The deal as contemplated was gone through although in a small measure and in that connection, the assessee was paid certain amounts. The learned Commissioner (Appeals) also held that the application of the sum of Rs. 1 lakh has been authenticated by the assessee on two different occasions on which statements have been recorded from him. The learned Commissioner (Appeals) held that during the course of assessment proceedings both the material sought to be relied on for assessment as well as the subject-matter of enquiry were within full knowledge of the assessee. If really the material likely to be relied upon by the revenue for completing the assessment ran contrary to the actual state of affairs, then the assessee had ample time at his disposal to come forward with any such contrary material in his possession. However, no such material was ever produced by the assessee and that was the reason why the learned Commissioner (Appeals) refused to admit the affidavit of Shri B. Janardhan which was sought to be admitted as additional evidence. The learned Commissioner (Appeals) also held that the manner of utilisation of the sum of Rs. 1 lakh as recorded in the document marked G-1 has been affirmed by the assessee. Shri B. Janardhan, the person who had given the sum of Rs. 1 lakh had stated that a sum of Rs. 32,000 was refunded and the balance was not paid back. He went on to say that the Co-operative Society has returned the balance sum by adjusting against purchase consideration of 4 acres of land through a resolution passed by the Society. All these pieces of evidence clearly show according to the Commissioner (Appeals), that the assessee had in fact received Rs. 68,000 by way of commission from out of which he had spent Rs. 18,000 on travelling. Possible other expenses have been estimated at Rs. 5,000 by the Assessing Officer which appears to be reasonable. Thus the addition of Rs. 45,000 was confirmed by the Commissioner (Appeals). Aggrieved against the sustained addition of Rs. 45,000 the assessee came up in second appeal before this Tribunal.
7. I have heard Shri B. Ravindra, the learned advocate for the assessee and Shri C.V. Surya Prakash Rao, the learned Departmental Representative. The affidavit of Shri B. Janardhan dated 30-6-1987 is sought to be produced as additional evidence along with a petition filed under Rule 29 of the I.T.A.T. Rules, 1963. The only additional factor found in the said affidavit was that it is affirmed therein that a sum of Rs. 45,000 was taken by Shri B. Janardhan towards court expenses. Thus in effect, the whole of Rs. 1 lakh once given to the assessee was wholly taken away either for one purpose or the other. It is no doubt true that this affidavit is sought to be produced before the Commissioner (Appeals) who refused to admit it and, therefore, it was filed along with the petition to admit the same before the Tribunal. I do not find any difficulty in admitting the said affidavit as evidence. But simply because there is evidence in the form of an affidavit it need not be believed. The belief such affidavit evokes would depend upon the facts and circumstances of each case. Shri B. Janardhan was examined by the Assessing Officer on 6-2-1985 itself. If it is a fact that the whole of Rs. 1 lakh was taken away on one pretext or the other from the assessee, he would have stated so in his deposition on 6-2-1985. However, he did not do so. In his deposition Shri B. Janardhan had clearly stated that the sum of Rs. 32,000 only was refunded and the balance was not paid back. He also went on to say that the Co-operative Society has written off the balance by adjusting against the purchase consideration for 4 acres of land through a resolution passed by the society. From this evidence, the learned Commissioner (Appeals) deduced that it would clearly shew that the assessee had in effect received Rs. 68,000 by way of commission from out of which he had spent Rs. 18,000 on travelling and deducting Rs. 5,000 towards estimated possible expenses, Rs. 45,000 remained as the commission received by him. When that is the inescapable conclusion which one can reach on the strength of the evidence given by Shri B. Janardhan himself on 6-2-1985, simply because in 1987 which is two years after his examination by the Income-tax Officer he gives an affidavit, does it carry any weight is the question. In this connection, the decision of the Allahabad High Court in Sri Krishna v. CIT [1983] 142 ITR 618 appears to be very instructive. In that case, the plea that the demand, notices were never served against the assessee was taken for the first time in 1963 though the recovery proceedings for income-tax dues for assessment years 1949-50 and 1950-51 were started in January 1956 and the house was also attached. The question before their Lordships of the Allahabad High Court was what is the value which can be attached to the affidavit filed by the assessee in 1963. Their Lordships held that this assertion came for the first time from the assessee after a gap of 15 years or more. The said assertion is a self-serving one and 'the mere fact that the assertion has been supported by the karta by an affidavit is of no consequence. The karta was a highly interested person and, therefore, his statement on oath can have no greater value than his belated assertion'.
Their Lordship further stated the following at page 623 of the reported judgment :
It is neither a rule of prudence nor a rule of law that the statements made in an affidavit which remains uncontroverted, must invariably be accepted as true and reliable. Ordinarily, in the absence of denial, the statements may be accepted as true but if there are circumstances which suggest that the statements on affidavit should not be accepted as true, the absence of denial by the other side, would not by itself be sufficient to clothe the statements on affidavit with truthfulness and reliability.
The learned Commissioner (Appeals) found that the statement of Shri B. Janardhan given on oath before the Income-tax Officer on 6-2-1985 and the statements of the assessee himself before the Income-tax Officer dated 12-2-1985 were very much relied upon for assessment as well as for the subject-matter of enquiry and, therefore, they were within the full knowledge of the assessee. This categorical finding of the Commissioner (Appeals) was never attempted to be dislodged by the assessee and, therefore, I agree with the learned Commissioner (Appeals) that all the statements recorded by the Income-tax Officer were in effect used in the assessment proceedings and so the assessee must have been well aware of those statements. However, at pages 7 to 14 of the paper book a copy of the deposition dated 1-2-1985 recorded by the Inspecting Asstt. Commissioner, Range-11, Hyderabad from the assessee was provided. Had it been a fact that he had given away the impugned amount of Rs. 45,000 also towards court expenses, he would be the first person to come forth with the said version. On the other hand, question Nos. 6, 7, 8 & 9 and the answers given thereunder which are very crucial are as follows :
Q. 6. Please explain the entry 'to Delhi Rs. 18,000'.
Ans. This must be the expenditure for going to Delhi for obtaining permission from Cantonment Board for the land of Shri B. Metturam Reddy.
Q. 7. The next entry is 'kept Rs. 30,000'. This entry was scored off. Please explain.
Ans. I cannot say what this is.
Q. 8. The next entry is 'so far taken Rs. 66,000'. Will you please explain.
Ans. I do not know.
Q. 9. On the other side of the paper the entries are
To be taken Rs. 1,80,000
Rs. 66,000
Later Rs. 1,14,000
Please explain
Ans. I do not know.
The answers given by the assessee would clearly show that he must have received some commission and he definitely acted as a mediator who undertook the Delhi trip incurring an expenditure of Rs. 18,000 in that trip for getting clearance from Cantonment Board. Had it been a fact that Rs. 45,000 was taken away towards court expenses, he could have definitely come forth with a clear answer to that effect. The very fact that no such answer is given at any time during his examination coupled with the fact that to so many questions he replied that he does not know, would clearly give an impression that he must be in receipt of commission of Rs. 45,000. Even the entries referred to in question No. 9 would clearly show by implication that the assessee must be in receipt of commission. The assessee did not explain satisfactorily as to why G-1 and G-9 must exist in his handwriting, unless and until he is a commission agent in the land deal. Admittedly he was a commission agent in land deals and he has returned income from his business as commission agent. Even though the assessee denied that tripartite agreement was executed, the fact that such agreement was existing would give credence to the revenue's story. Though it did not bear the signature of the parties, G-9 lends support to the revenue's version. In view of the admitted fact that G-1 and G-9 were in the hand-writing of the assessee he had admitted the receipt of Rs. 1,00,000 by him. In any view of the matter, he was not able to explain satisfactorily how he disposed of or how he had spent the sum of Rs. 50,000 from out of Rs. 1 lakh. When once he admitted to be in possession of Rs. 1 lakh, the burden is on him to prove how he had disbursed the whole of Rs. 1 lakh. However, in this case, he was able to account for Rs. 50,000 only and was not able to account for the balance of the money. All these would lead me to conclude that the lower authorities had correctly considered Rs. 45,000 as commission received by the assessee. I fail to see any merit in the assessee's appeal. The case law cited on behalf of the assessee was beside the point and hence it is not discussed one after the other.
8. In the result, the appeal fails and is dismissed.