Deputy Commissioner of Income Tax Central Circle-1(1), Bangalore V. Sri Chandrashekat Bhat , Bangalore

ITA 910/BANG/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 7725 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 10 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2020
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 23-03-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: MALAYA KUMAR PANDA
• Keywords: Unexplained investment; Document seized; Set aside
• Section: 201; 13; 12; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORESHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER ITA NO S . 909 & 91 0 / BANG / 20 1 8 ASSESSMENT YEAR S : 2 0 12 13 TO 201 4 1 5 DCIT, CENTRAL CIRCLE 1 (1), BANGALORE VS. SHRI CHANDRASEKHAR BHAT, NO. 70, 5 TH B CROSS, NARAYANAPPA LAYOUT, RT NAGAR, BANGALORE - 560032 P AN: A DOP B 9307L APPELLANT RESPONDENT A SSESSEE BY : SHRI MALAYA KUMAR PANDA , C. A. R EVENUE BY : MS. NEERA MALHOTRA, CIT (DR) DATE O F H E ARING : 18 . 1 2 .2019 DATE OF PRO NOUNCEMENT : 2 9 . 0 1 .20 20 O R D E R PER SHRI A. K. GARODIA, ACCOUNTANT MEMBER THESE TWO APPEALS ARE FILED BY THE REVENUE AND THESE ARE DIRECTED AGAINST TWO SEPARATE ORDERS OF LEARNED CIT (A) 11 BOTH DATED 29.12.2017. BOTH THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF THIS COMPOSITE ORDER FOR THE SAKE OF CONVENIENCE. 2. FIRST, WE TAKE UP THE APPEAL FOR A. Y. 2012 13. IN THIS YEAR, AS PER GROUND NOS. 1 TO 3, THIS IS THE GRIEVANCE OF THE REVENUE THAT THE CIT (A) IS NOT JUSTIFIED IN DELETING THE ADDITION OF RS. 1 CRORE MADE BY THE AO ON THE BASIS OF A DOCUMENT SEIZED FROM THE PREMISES OF THE ASSESSEES ASSOCIATE ROHINI R MANOHAR BEING AN AGREEMENT OF SALE BETWEEN TIMI REPRESENTED BY MR. SHAHEDULLA KHAN AS THE SELLER AND SHRI GURUDATH PRABHU, THE DRIVER OF THE ASSESSEE ON 10.11.2011. ITA NOS. 909 & 910/BANG/2018 PAGE 2 OF 16 3. IN COURSE OF HEARING, LEARNED DR OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER. SHE SUBMITTED THAT THE ORDER OF CIT (A) SHOULD BE REVERSED AND THAT OF THE AO SHOULD BE RESTORED. SHE ALSO SUBMITTED THAT ORDER OF CIT (A) IS CRYPTIC ALSO AND HENCE, EVEN IF HIS ORDER IS NOT REVERSED, IT SHOULD BE SET ASIDE AND THE MATTER BE RESTORED TO HIS FILE FOR A FRESH DECISION BY WAY OF A SPEAKING ORDER. SHE POINTED OUT THAT ON PAGE 2 OF THE ASSESSMENT ORDER, THE AO HAS NOTED THAT A QUESTIONNAIRE WAS ISSUED TO THE ASSESSEE ON 17.12.2015 IN WHICH IT WAS POINTED OUT THAT AS PER THE SEIZED DOCUMENT PAGES 1 8 OF A 1/RCB/1, AN INVESTMENT WAS MADE IN A PROPERTY IN THE NAME OF ASSESSEES DRIVER MR. M. GURUDATH PRABHU FOR AN AGREED VALUE OF RS. 3 CRORES WITH MR. SHAHEDULLA KHAN, OUT OF WHICH RS. 1 CRORE WAS ALREADY PAID. IT WAS ALSO STATED THEREIN THAT THE SAID DRIVER OF THE ASSESSEE HAS STATED UNDER OATH THAT HE HAS SIGNED THE DOCUMENTS BUT HAS NOT PAID THE AMOUNT OF RS. 1 CRORE. IT WAS ALSO STATED BY THE AO IN THAT QUESTIONNAIRE THAT THIS AGREEMENT IS BENAMI TRANSACTION IN THE NAME OF THE DRIVER AND THE ASSESSEE WAS ASKED TO SHOW CAUSE AS TO WHY THIS TRANSACTION SHALL NOT BE TREATED AS UNEXPLAINED INVESTMENT BY THE ASSESSEE. SHE POINTED OUT THAT THE ASSESSEE DID NOT REPLY TO THE SAME AND FURTHER OPPORTUNITIES WERE PROVIDED AND FINALLY, THE ASSESSEE FILED AN EXPLANATION REPRODUCED BY THE AO ON PAGES 3 AND 4 OF THE ASSESSMENT ORDER IN WHICH IT WAS EXPLAINED THAT SAID MR. SHAHEDULLA KHAN HAS ENTERED INTO MULTIPLE AGREEMENTS OF SALE FOR PROPERTY BELONGING TO TIMI WITH VARIOUS PEOPLES. IT WAS SUBMITTED THAT GENUINITY OF MR. SHAHEDULLA KHAN IS ALREADY PROVEN IN DEPARTMENT RECORDS AS NONE OF THE CORRESPONDENCE HAS BEEN RECEIVED BY HIM AND TIMI HAS DENIED ANY KIND OF RELATIONSHIP WITH MR. KHAN. IT WAS EXPLAINED THAT THIS AGREEMENT IS WITHOUT HIS KNOWLEDGE. IT WAS ALSO EXPLAINED THAT WHEN THE ASSESSEE CAME TO KNOW ABOUT IT, HE ASKED HIS DRIVER ABOUT IT AND THE DRIVER SAID THAT HE SIGNED THIS AGREEMENT BECAUSE MR. SHAHEDULLA KHAN GAVE AN ASSURANCE TO HIM THAT HE WILL BE PAID A LUMP SUM AMOUNT IF MR. KHAN IS ABLE TO CRACK SOME HANDSOME DEAL. THE ASSESSEE ALSO STATED THAT THE DRIVER MAY BE CALLED FOR A FRESH STATEMENT ALSO. IT WAS ALSO EXPLAINED THAT THE ASSESSEE CONFRONTED MR. KHAN WITH THE QUESTION THAT WHY HE HAD USED THE NAME OF HIS DRIVER, MR. KHAN STATED THAT HE DID SO TO ATTRACT SOME PROSPECTIVE BUYER IN THE KNOWN CIRCLE OF THE ASSESSEE. THE AO REPRODUCED SOME PORTION OF THE STATEMENT ITA NOS. 909 & 910/BANG/2018 PAGE 15 OF 16 BY MAKING FOLLOWING OBSERVATIONS ON PAGE 11 OF HIS ORDER WHICH ARE REPRODUCED HEREIN BLOW FOR READY REFERENCE:- 13. IN THE ABOVE PARAS, IT IS OBSERVED BY THE LEARNED CIT(A) THAT THIS WAS THE YEAR OF ASSEMBLY ELECTION IN KARNATAKA AND THE ASSESSEE HAS MULTIPLE CLIENTS WITH POLITICAL CONNECTION AND HENCE, THE PROBABLE RECEIPTS OF GOLD COINS AND BARS ARE JUSTIFIED. IT IS ALSO NOTED BY THE CIT (A) THAT THE NET PROFIT OF THE ASSESSEE IN THE PRESENT YEAR IS AROUND 50% OF PROFESSIONAL INCOME ALONE AND IT IS QUITE REASONABLE. BUT THIS IS ALSO TRUE THAT NO INDEPENDENT EVIDENCE REGARDING THIS EXPENDITURE OF RS.52,98,972/- COULD BE BROUGHT ON RECORD BY THE ASSESSEE AND HENCE, INFLATION OF EXPENSES CANNOT BE RULED OUT. THEREFORE, WE FEEL IT PROPER TO CONFIRM THE DISALLOWANCE TO THE EXTENT OF 25% OF SUCH EXPENDITURE INSTEAD OF 100% DISALLOWANCE MADE BY THE AO. ACCORDINGLY, WE CONFIRM THE DISALLOWANCE OF RS.13,24,743/- BEING 25% OF RS.52,98,972/- AND REGARDING DELETION OF THE BALANCE DISALLOWANCE, WE CONFIRM THE ORDER OF CIT(A). ACCORDINGLY, GROUNDS 6 AND 7 ARE PARTLY ALLOWED. 14. IN THE RESULT, APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 2014-15 IS PARTLY ALLOWED. ITA NOS. 909 & 910/BANG/2018 PAGE 16 OF 16 15. IN THE COMBINED RESULT, APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 2012-13 IS DISMISSED AND APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 2014-15 IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE. SD/- SD/- (BEENA PILLAI) (ARUN KUMAR GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 29 TH JANUARY, 2020. /MS/ COPY TO: 1. APPELLANT 4. CIT (A) 2. RESPONDENT 5. DR, ITAT, BANGALORE 3. CIT 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.