Shri. Abdul Kareem Ladsab Telgi, Bangalore v. ACIT, Bangalore

ITA 1474/BANG/2008 | 1996-1997
Pronouncement Date: 29-01-2010 | Result: Dismissed

Appeal Details

RSA Number 147421114 RSA 2008
Bench Bangalore
Appeal Number ITA 1474/BANG/2008
Duration Of Justice 1 year(s) 29 day(s)
Appellant Shri. Abdul Kareem Ladsab Telgi, Bangalore
Respondent ACIT, Bangalore
Appeal Type Income Tax Appeal
Pronouncement Date 29-01-2010
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 29-01-2010
Date Of Final Hearing 13-11-2009
Next Hearing Date 13-11-2009
Assessment Year 1996-1997
Appeal Filed On 30-12-2008
Judgment Text
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 O R D E R 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 GRO UNDS 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 ITA NO.1474(B)/08 2 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 TR EATING THE SAME AS INCOME OF ASSESSEE U/S 68 OF THE IT ACT. THE SA ME WAS CONFIRMED BY THE CIT(A). THE AO FOUND THAT THE ASSE SSEE WAS MAINTAINING BANK ACCOUNT IN SBI MUMBAI VIDE A/C NO .01050 BANK OF BARODA MUMBAI (A/C NO.20129) AND CITIBANK A/C ITA NO.1474(B)/08 3 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 REPRESE NTED THE RECEIPTS FROM STAMP SALE. AO FOUND THAT STAMP VENDING TURNOV ER WAS RS.2.25 CRORES ONLY AND THEREFORE HE ADDED THE RES T I.E RS.2.29 CRORES AS UNACCOUNTED INCOME FROM STAMP VENDING . THIS ALSO COMMENSURATED WITH CONCLUSION OF OTHER INVESTIGATIN G AGENCIES THAT THE ASSESSEE HAD EARNED HUGE UNACCOUNTED SUM FROM T HE RACKET OF COUNTERFEIT STAMP PAPERS. THIS WAS ALSO FOUND COMM ENSURATED WITH THE FURTHER CONCLUSION THAT THE ASSESSEE HAS PAID H UGE AMOUNTS IN CASH TO HIS AIDES REPRESENTING CASH WITHDRAWALS FRO M THE BANK BUT NOT ALLOWED UNDER IT ACT AS EXPENSES FOR ILLEGAL P URPOSE. THE STAND OF THE ASSESSEE IS THAT THE ASSESSEE WAS ALSO ENGAG ED IN THE BUSINESS OF DEALING IN WHITE KEROSENE. IN AY: 1996 -97 RS.33 20 000/- LITRES OF WHITE KEROSENE WAS SOLD AN D THE SALE PRICE WAS RS.8/- PER LITRE TOTALING RS.2 65 60 000/- WHIC H IS MORE THAN RS.2.49 CRORES ADDED BY THE AO AS UNEXPLAINED CREDI T. 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 N OT ACCEPTED BY THE CIT(A) ON THE GROUND THAT THIS ISSUE WAS NOT PL EADED LIKE THAT ITA NO.1474(B)/08 4 BEFORE THE AO AND IT WAS FOUND OUT THAT THE BUSINES S OF WHITE KEROSENE WAS FAKE AND NON-EXISTENCE. EVEN BEFORE T HE CIT(A) NO DOCUMENTS IN THE SHAPE OF LICENSE OR CORRESPONDENCE FROM CIVIL SUPPLY DEPARTMENT TRANSPORTATION OF WHITE KEROSEN E TO REAL VENDORS OR FROM GOVERNMENT DEPOSITS OR ANY OTHER CO RROBORATING EVIDENCE WAS PRODUCED TO PROVE THE GENUINENESS OF B USINESS OF WHITE KEROSENE. IN VIEW OF THE ABOVE THE CIT(A) R IGHTLY CONCLUDED THAT SUCH BUSINESS WAS NON-EXISTENCE AND IT WAS ONL Y FUTILE ATTEMPT TO EXPLAIN ENTRIES IN THE BANK AND THE REAL SOURCE OF WHICH WAS ONLY TO SALE OF COUNTERFEIT STAMP PAPERS AND FO R THIS YEAR THE AMOUNT OF SUCH UNEXPLAINED INCOME WAS QUANTIFIED AT RS.2.29 CRORES. THE ASSESSEE CANNOT BE ALLOWED ILLEGAL EXPE NSES 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. T HE 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 SA LARY AND CONVEYANCE WHICH WERE NOT FOUND SATISFACTORY BY THE AO AND ITA NO.1474(B)/08 5 IMPROBABLE TO EARN AN INCOME OF RS.5 62 500/- FROM A TURNOVER OF RS.2.25 CRORES. THEREFORE HE ADDED BACK EXCESS AM OUNT OF RS.11 17 500/- AS UNEXPLAINED UNACCOUNTED EXPENDITU RE 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/- RESPEC TIVELY ON ACCOUNT OF KEROSENE BUSINESS AND STAMP VENDING BUSI NESS SHOWING NET INCOME THEREFROM AT RS.33 22 000/-AND RS.3 65 6 25/-. IT WAS PLEADED ON BEHALF OF ASSESSEE THAT THE AO HAS NOT A CCEPTED THE RETURNED EXPENDITURE OF RS.19 06 875/- CLAIMED TO B E INCURRED ON STAMP VENDING BUSINESS BUT RELIED UPON THE STATEMEN T OF THE ASSESSEE TAKEN IN PRISON. IT WAS CLAIMED THAT STATE MENT SHOULD NOT BE RELIED UPON BECAUSE THE ENVIRONMENT AND CIRCUMST ANCES OF RECORDING OF STATEMENT WAS NOT CONGENIAL. ON THE O THER HAND LEARNED DR SUPPORTED THE ORDER OF AO ON THE ISSUE. 6. AFTER GOING THROUGH THE MATERIAL AND RIVAL SUBM ISSIONS WE FIND THAT AT THE TIME OF RECORDING OF STATEMENT TH E ASSESSEE STATED TO BE IN IMPROPER AND MENTAL AND PHYSICAL STATE. I T IS NOT SO WHICH IS EVIDENT FROM CATEGORICAL ANSWER THAT HE WAS PAYI NG SALARY OF RS.5 000/- PER PERSON PER MONTH TO 20 PERSONS RESUL TING IN PAYMENT OF SALARY OF RS.12 LAKHS AND RS.40 000/- PE R PERSON PER ANNUM AS CONVEYANCE CHARGES TO 20 PERSONS RESULTING IN PAYMENTS ITA NO.1474(B)/08 6 OF CONVEYANCE CHARGES OF RS.4.8 LAKHS TOTALING RS.1 6.8 LAKHS. IT SHOWS THAT THERE WAS NO CONSISTENCY BETWEEN THE RET URNED 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 AUTHORITI ES RELYING ON THE STATEMENT RECORDED ON OATH MADE THE STAND IN QUESTI ON THE AO HAS GIVEN CLEAR CUT FINDING THAT THE BUSINESS OF KEROSE NE OIL WAS FAKE AND NOT CARRIED OUT BY THE ASSESSEE AS DISCUSSED AB OVE. SO THE AO HAS RIGHTLY ADDED THE SAME UNDER THE HEAD OTHER SO URCES. WE UPHOLD THE SAME. 7. THE NEXT ISSUE IS WITH REGARDS TO ADDITION OF RS.1 35 00 000/- AS UNEXPLAINED BEING INVESTMENT CL AIMED TO HAVE BEEN MADE BY THE ASSESSEE FOR ALANKAR LODGE. THE A O MADE THIS ADDITION ON THE BASIS OF REPORT FROM DDIT(INV.)MUMB AI. THE STAND OF THE ASSESSEE IS THAT ONLY RS.20 00 000/- WERE PA ID AS PAGADI AND NOTHING MORE WAS INVESTED. THE AO DURING THE COURS E OF ASSESSMENT PROCEEDINGS CONFRONTED THE REPORT OF DDI T(INV.) MUMBAI TO ASSESSEE. HE COULD NOT SUBSTANTIATE ITS STAND T HAT ONLY RS.20.00 LAKHS HAD BEEN PAID AS PAGADI FOR ACQUISITION OF AL ANKAR LODGE. ON THE OTHER HAND THE INSPECTOR O DDIT(INV.) MUMBAI H AD GIVEN COMPARATIVE VALUE INSTANCES OF NEARBY LOCALITIES OF ASHOK SHOPPING CENTRE AND FAZAL SHAH EDUCATION TRUST TO ARRIVE AT THE ESTIMATION ITA NO.1474(B)/08 7 OF VALUE OF PROPERTY AT RS.1.35 CRORES. THE STAND O F THE AR OF THE ASSESSEE IN THIS REGARD WAS THAT THE ABOVE SAID D OCUMENTS 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 APPLI CATION 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 ALANKA R LODGE PROPERTY WHICH WAS OWNED BY DAWOOD BHOY FAZALBHOY MUSLIM EDU CATIONAL TRUST. IN THIS REGARD THE ATTENTION WAS DRAWN TOW ARDS THE ORDER OF THE PUNE COURT IN RAE SUIT NO.46/70 OF 2007 DIRECTI NG DELIVERY OF POSSESSION OF ALANKAR LODGE PROPERTY TO ITS OWNER I .E DAWOODBHOY FAZALBHOY MUSLIM EDUCATIONAL TRUST. THESE DOCUMENT S WERE FILED BEFORE US AND THE ISSUE GOES TO THE ROOT OF THE ISS UE SO WE ADMIT THE SAME. THIS DOES NOT HELPS ASSESSEE BECAUSE CASE BE FORE US IS WITH REGARDS TO QUANTUM OF PAGRI AMOUNT PREVAILING IN MA RKET AT RELEVANT POINT OF TIME. IT IS NOT CASE OF REVENUE THAT THE ASSESSEE WAS LEGAL OWNER OF THE PROPERTY IN QUESTION. THE QUESTION B EFORE 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 ORDE R OR OTHERWISE AMOUNT OF PAGRI PAID AT RELEVANT POINT OF TIME CANN OT BE DISPUTED. IN VIEW OF ABOVE WE ARE NOT INCLINED TO INTERFERE WITH THE FINDING OF ITA NO.1474(B)/08 8 CIT(A) WHO HAS UPHELD THE REASONED ADDITION IN QUES TION. 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(BLORE) 7. GF(DELHI AR ITAT BANGALORE