Shri Basayya R Nandegol V. The Additional Commissioner of Income Tax, Range-2

ITA/367/2011

AI Insights

The case involves Shri Basayya R Nandegol, a civil contractor, who appealed against the orders of the Income Tax Appellate Tribunal, Panaji Bench, which confirmed the addition of Rs. 40,00,000 as unexplained cash credit to his income for the assessment year 2007-08. The appellant had claimed that he borrowed this amount from two individuals, S.G. Shahapur and Pundalik Lamby Parashuram, but failed to substantiate the claim regarding Pundalik Lamby Parashuram. The lower authorities did not accept the appellant's explanation, leading to the current appeal. The High Court dismissed the appeal, agreeing with the lower authorities' findings and imposing no costs.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 804574 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 28-08-2013
• Assessment Year: misc
• Other Referred Cases: Ashok Kumar Mittal Vs. Ram Kumar Gupta and Another, Sanjeev Kumar Jain Vs. Raghubir Saran Charitable Trust and Others
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: Y V RAVIRAJ
• Assessee Lawyers: A SHANKAR
• Keywords: Black money; Loan; Money laundering; Unexplained cash credit; White Money
• Section: 143(3); 143(1); 68; 260-A

Judgement Text

"® IN THE HIGH COURT OF KARNATAKA DHARWAD BENCH DATED THIS THE 28TH DAY OF AUGUST 2013 PRESENT THE HON’BLE MR. JUSTICE K. L. MANJUNATH AND THE HON’BLE MR. JUSTICE S.N. SATYANARAYANA I.T.A. No.367/2011 BETWEEN: Shri Basayya R Nandegol, Civil Contractor, Shastrinagar, Athni Road, Bijapur. - Appellant (by Sri A. Shankar, Advocate) And The Additional Commissioner of Income Tax, Range-2, Feroz Khimjibhai Commercial Complex, Dr. B.R. Ambedkar Road, Opp. District Civil Hospital, Belgaum-590 001. - Respondent (by Sri Y.V. Raviraj, Advocate) This appeal is filed u/S 260-A of the I.T. Act, 1961, arising out of order dated 09.06.2011 passed in ITA No.89/PNJ/2011 for the assessment year 2007-08 praying to allow the appeal and set aside the order passed by Income Tax Appellate Tribunal, Panaji Bench Goa in ITA No.89/PNJ/2011 dated 09.06.2011 and etc. This appeal coming for admission on this day, K.L.MANJUNATH, J, delivered the following:- : 2 : JUDGMENT 1. The concurrent findings of the Assessing Officer which has been confirmed by the Commissioner of Income Tax Appeals, Belgaum and further confirmed by the Income Tax Appellate Tribunal, Panaji Bench in ITA No. 89/PNJ/2011 dated 9.6.2011 is called in question in this appeal by the assessee in respect of the assessment dated 29.12.2009 for the assessment year 2007-08. 2. The assessee is a registered contractor engaged in the business of executing civil work of Public Works Department. For the assessment year 2007-08 return was filed by him on 31.10.2007 declaring a total income of Rs.40,94,690/-. The returns of income was processed u/S 143(1) of the Act and case of the appellant was selected for scrutiny and statutory notice was issued on the appellant directing the appellant to furnish the details. : 3 : 3. According to the appellant, the appellant had borrowed loan of Rs.40.00 lakhs out of which, Rs.20.00 lakhs from one S.G. Shahapur and another Rs.20.00 lakhs from Pundalik Lamby Parashuram. According to him the accountant instead of mentioning Pundalik Lamby Parashuram as creditor wrongly mentioned as G.K. Rathod. The Assessing Officer did not agree with the explanation offered by the appellant and by his order dated 29.12.2009 added a sum of Rs.40.00 lakhs as unexplained cash credit u/S 68 of the Act. Accordingly, an order u/S 143(3) of the Act was passed. 4. Aggrieved by the order passed by the Assessing officer an appeal came to be filed before the Commissioner of Income Tax Appeals, Bangalore. The Commissioner of Income Tax Appellate Tribunal dismissed the appeal on 27.12.2011 by confirming the order passed by the Assessing Officer. Aggrieved by the same an appeal came to be filed before the Income Tax : 4 : Appellate Tribunal, Belgaum. The Appellate Tribunal accepted the case of the assessee in regard to the loan advanced by S.G. Shahapur to an extent of Rs.20.00 lakhs and rejected the claim of the appellant for having borrowed Rs.20.00 lakhs from Pundalik Lamby Parashuram on the ground that the appellant has failed to establish the advancement of loan by Pundalik Lamby Parashuram. Therefore, the present appeal is filed. 5. We have heard Sri A. Shankar, learned counsel appearing for the appellant and Sri Y.V. Raviraj, learned counsel appearing for the Revenue. Having heard the counsel for both the parties we do not see any substantial questions of law arise in this appeal for the following reasons. 6. As per the books of accounts maintained by the assessee one Rathod has advanced loan of Rs.20.00 lakhs. When the assessee was called upon to explain by : 5 : producing books of account, he changed the version as if he borrowed loan from Pundalik Lamby Parashuram and his Accountant has wrongly mentioned the name of Rathod due to oversight and that Rs.20.00 lakhs has been borrowed by him Pundalik Lamby Parashuram. The statement of Pundalik Lamby Parashuram has also been recorded by the Assessing Officer. We have perused the statement of Pundalik Lamby Parashuram. According to his statement he does not possess any immovable property either in his name or in the name of his family. His family consists of his wife, 4 children, younger brother, his wife and 2 children, two widowed sisters and an aged mother. His father was a sweeper in the Municipality. He is no more. His father had six sons. According to the creditor he is supplying agricultural labourers and that he is also doing agriculture by taking the lands on lease. There are no documents produced to show that he has taken lands on lease and in view of the Karnataka Land Reforms Act : 6 : after 01.03.1974 no lease can be created in respect of agricultural lands and there is a statutory bar for anyone to give lands on lease. Even if it is accepted that he was doing agricultural operations by taking lands on lease, no material is produced to show that he was cultivating the lands as a tenant. He has not given details of the survey numbers or the village or the owner of the lands who have given the lands on lease. It is also difficult to accept the statement of Pundalik Lamby Parashuram because he has stated that income from the agricultural lands for the year 2005-06 and 2006-07 after excluding the family expenditure is Rs.4 to 5 lakhs. He further stated that all the income is received from the agricultural source. He has also stated that his father had given him jewels and by selling the jewels he advanced the loan to the appellant. No man of prudence can accept the explanation offered by the creditor in the background of his family. Admittedly, he is the son of a sweeper who had six sons apart from : 7 : daughters. He does not have a residential house of his own and he does not have any other movable or immovable property, whether such person could advance loan of Rs.20.00 lakhs has to be considered by this Court. 7. For the sake of arguments even if we consider the arguments that he had jewels and he sold the same and advanced the loan to the appellant, for having sold the jewels no document is produced. Therefore, it is difficult to believe the version of the creditor that he had gold worth Rs.20.00 lakhs to sell and even if he has produced any receipt for having sold the jewel. In the circumstances, we are of the view that no substantial question of law arises in this appeal for consideration. Accordingly, the appeal is dismissed without cost. SD/- JUDGE : 8 : Per SNSJ: This appeal by the assessee under Section 260A of the Income Tax Act, 1961, is rightly dismissed by the Senior Member of this Bench. I am in full agreement with the reasoning rendered for dismissal of this appeal filed by the assessee in challenging the concurrent finding of the assessing officer, appellate authority and as well as the Income Tax Appellate Tribunal in refusing to believe that he has borrowed a sum of Rs.20,00,000/- each as hand loan from one S.G.Shahapur and another Pundalik Lamby Parashuram and treating the same as income, escaped assessment. 2. After hearing the learned Counsel for the appellant, it is seen that the ingenious manner in which the appellant has tried to project a sum of Rs.40,00,000/- which is seen to be his unaccounted : 9 : income as loan, is nothing but an attempt to launder his black money into white money by projecting as if it is a loan, so that over a period of time he can somehow regularise it as his income. I am of the opinion that merely dismissing such frivolous appeal holding that there is no merit, would only render the procedure of the Court nothing short of a joke. If such act of money laundering to convert black money into white money is not viewed seriously, the frivolous assessee would continue to evolve similar tactic and may even succeed in hoodwinking the Court. Therefore, this kind of appeals should not be viewed lightly and such act of assessee also should not be ignored by dismissing the appeals without imposing any cost. It would be a futile exercise if the same is dismissed without imposing any punitive cost and may render repetition of such act, without any kind of check or control. Therefore, I am of the view that when the intention of assessee in filing this kind of appeal is to defraud the exchequer, the : 10 : Court will have to be serious in dealing with the same to curtail repetition of such acts in future. 3. Hence, in my considered opinion it is just and necessary to impose punitive cost on the appellant/assessee. Considering the fact that in this appeal the attempt of the assessee is to convert a sum of Rs.40,00,000/- from black money to white money, the enormity of the same would be lost if appeal is dismissed in casual manner. In the facts and circumstances of the case, it is just and necessary that heavy cost is required to be imposed on the assessee for wasting the time of the assessing authority, Income Tax appellate authority, Income Tax Appellate Tribunal and in addition to that the valuable time of this Court on this unscrupulous appeal. Accordingly, it is felt by me that cost of at least Rs.1,00,000/- is required to be imposed on the appellant. : 11 : 4. By expressing aforesaid view regarding cost and in agreement with the finding rendered by the Senior Member of this Bench in dismissing the appeal of the assessee, it is made clear that the appeal is dismissed by imposing cost of Rs.1,00,000/-, which the appellant- assessee shall deposit in the registry within three months from this day. SD/- JUDGE bvv : 12 : Per KLMJ 1. The appeal was dismissed at the stage of admission, my brother Justice S.N. Satyanarayana dictated a separate order agreeing with the findings of me, however, he has levied a cost of Rs.1,00,000/-. While dismissing the appeal I have not levied the cost because the appeal filed by the appellant is under Section 260-A of the Income Tax Act which is a statutory appeal. The learned counsel appearing for the appellant Mr. Shankar has only narrated the facts without wasting Court time. Since we did not find any substantial question of law, even without call upon the Advocate for the Revenue dismissed the appeal. 2. The Court cannot say that the litigant shall not exercise his right to file an appeal provided under the statute. A litigant will always be under the impression that he has a case on merits and it is for the Court to : 13 : decide the same. Whenever a statutory appeal is dismissed the Court is not expected to levy the cost. More so, in the present case because the arguments are concluded and judgment is also dictated within ten minutes. 3. The Hon’ble Supreme Court in the case of Ashok Kumar Mittal Vs. Ram Kumar Gupta and Another {(2009) 2 Supreme Court Cases 656} and also in (2012) 1 Supreme Court Cases (Sanjeev Kumar Jain Vs. Raghubir Saran Charitable Trust and Others) has considered the matter in detail how the Court shall levy cost. 4. In the circumstances, I am of the view that the matter has to be referred to Third Judge to decide whether the case in hand calls for dismissal without cost or with cost of Rs.1,00,000/-. Registry is directed : 14 : to place the matter before Hon’ble The Chief Justice for further orders. SD/- JUDGE bvv : 15 : KLMJ/SNSJ: ITA No.367 of 2011 10-4-2014 O R D E R In view of the opinion rendered by the third Judge, this appeal is dismissed without costs. Sd/- JUDGE Sd/- JUDGE *pjk "