COMMISSIONER OF INCOME TAX Vs. MAHIM K

JUDGEMENT

(1.) ALL these cases relate to the assessments made on one K. Mahim, either under the Income -tax Act, 1961, or under the Wealth -tax Act, 1957. The references which are under Section 256(2) of the Income -tax Act, 1961, relate to the assessment years 1972 -73, 1974 -75, 1975 -76 and 1980 -81. For, the year 1972 -73, there are two references, Income -tax Reference No. 193 of 1988 at the instance of the assessee, and Income -tax Reference No. 200, of 1988, at the instance of the Revenue. The Tribunal followed its order for the year 1972 -73 for the subsequent years and this has given rise to the three references Income -tax References Nos. 197, 187 and 188 of 1988 for the years 1974 -75, 1975 -76 and 1980 -81. Similar orders were passed in relation to the reopened assessment for 1972 -73 and the assessments for 1973 -74, 1976 -77 to 1979 -80 and 1981 -82 to 1983 -84. The order for 1972 -73 also formed the basis of the decision in respect of the wealth -tax assessments on the assessee for the years 1976 -77 and 1977 -78. These orders have given rise to the original petitions to compel reference of certain questions of law arising out of the orders of the Tribunal, of which Original Petitions. Nos. 7282 of 1991 and 216 of 1992 relate to the wealth -tax assessments and the others to the income -tax assessments. We shall deal with Income -tax References Nos. 193 and 200 of 1988 in the first instance, as the proceedings for 1972 -73 form the basis of assessment for all the subsequent years.

(2.) 1972 -73 : An addition of Rs. 88,000 was made to the income returned by the assessee as income from undisclosed sources on the ground that he had not explained the source of investment for the purchase of a property in Mangalore under three documents in the names of three persons, K. Abdul Rahiman and K. Abdulla Kunhi, both of Udma village to which the assessee belongs, and K. P. Abdullah of Kara Village. The assessee appears to be a person who indulges in smuggling of contraband articles. He is a partner of a firm Kallatra Mahin and Co., Mangalore, of which, inter alia, one Mohammed Sali is a partner. The property aforesaid in Mangalore was purchased in the names of the three persons, the expenses for the purchases including the land value and the registration charges, aggregating to Rs. 44,000 in the case of Abdul Rahiman, Rs. 22,000 in the case of K. Abdulla Kunhi and Rs. 22,000 in the case of K. P. Abdulla. The Assessing Officer felt serious doubt about the purchases, which according to him must have been made by the assessee in the names of these three persons. He made enquiries and on the basis of the various circumstances and facts stated in the order of assessment, the Income -tax Officer came to the conclusion that the property had been purchased by the assessee in the names of the three persons aforesaid. Accordingly, he called upon the assessee to explain the source of the investment. The explanation was not satisfactory, the assessee contending that the properties belonged to the three named persons. Being not satisfied with the explanation, the Income -tax Officer made an addition of Rs. 88,000 to the income returned by the assessee while completing the assessment for the year 1972 -73.

(3.) THE assessee had purchased a property lor Rs. 1,82,000 for which he alleged he had taken loans, inter alia, from two persons, P. M. Mohammed Kunhi and M. Hassainar, of Rs. 10,000 each. The Income -tax Officer did not accept these credits as genuine and added this amount, amongst others, to the assessee's income under the head 'Other sources'.