SRI K. MADHAVACHARY vs. ASST.COMMISSIONER OF IT(INV0,HYD

I IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD WEDNESDAY,THE TWENTY SIXTH DAY OF OCTOBER TWO THOUSAND AND TWENTY TWO PRESENT THE HON'BLE THE CHIEF JUSTICE UJJAL BHUYAN AND THE HON'BLE SRI JUSTICE C.V. BHASKAR REDDY INCOME TAX TRIBUNAL APPEAL NO: 105 OF 2004 Appeal Under Section 260A of the lncome Tax Act, 1961 against the order of the lncome Tax Appellate Tribunal, Hyderabad dated 31-12-2003 in l.T. (SS) A.No. 2391 Hydl1997 for the block period 01-04-1986 to 12-09-1996 preferred against the order of the Assistant Commissioner of lncome Tax, Circle -5 (2) , lNV, dated 30-09-1997 in GIR No. M-7'16 Between: Sri K. Madhavachary, Rl/o.1-3-6 Kalasiguda, Secunderabad. ...APPELLANT ...RESPONDENT Counsel for the Appellant: SRl. A.V. KRISHNA KOUNDINYA Senior Counsel for SRI CHALLA GUNARANJAN Counsel for the Respondent: SRI B. NARASIMHA SARMA, SC for l.T Department The Court delivered the following: JUDGMENT AND Asst.Commissioner of Income Tax ( lnv ) Circle 5(2) Hyderabad.

T T C AND TIIEI{ON'BLE SRI JUSTICE C.V.BHASKAR REDDY I.T.T.A.No. 105 of 2004 I\{EN1' (l'* rhc Hor'bh the Chief J*tice Ujal Bhryat) Heard Mr. AV.Krishna Koundinla, leamed Senior Counsel for the appellant and Nk. B.Narsimha Sarma, leamed Standing C-ounsel, Income Tax Depanment for the respondent. 2. This appeal has been filed under Section 260A of the Income Tax Act, 1961 (briefly'the Act' hereinafter) bythe assessee as the appellant against the order dated 31.122003 passed by the Income Tax Appellate Tribunal, Hyderabad Bench 'B', Hlderabad (briefly 'the Tribunal' hereinafter) in I.T.(SS)ANo.239/H-yd/1997 for the block penod 01.04.1986 to 12.09.1996. 3. On 25.04.2005, the appeal was admitted on the following three substantial questions of law: 1. Miether on the facts and in the ctcumstances of the case, the provisions relating to unexplained investments is appliceble to an assessment made under Chapter )OV of the Acr ? T

-l Rs.Z lakhs in the possession of I{r. J.B.Velsey and Mr. AVenkateswarlu, riders of the said scooter. On interrogation bythe police, theystated that the seized cash was given to them by the appellant to hand over the same ro one Sri lvlahendra Dubey, .'*rho was staying in a hotel in Secunderabad. They further stated before the police that an amount of Rs.3.88 lakhs and silver weighing about 30 lgs kept in two gunny bags were in the custody of the appellant at his residence. Subsequently, the police task force led by the above two persons wenr ro the residence of the appellant wherein cash to the extent oi the aforesaid amount and silver were found. Appellant did to produce any bills, documents or records with regard to possession of such cash and silver. 7. Following the aforesaid search and seizure, appellant was subjected to assessment for the block period from 01.04.1986 to 12.09.1996 whereafter, assessment order was passed on 30.09.1997 under Section 158 BC read with Section 1a3(3) of the Act. By the aforesaid order, the agsessing officer treated the amount of cash and silver found in the residence of the appellant as -

nndisclosed income which was quantified at Rs.37,37,L63.00 for the block period 01.04.1986 to 12.09.199 6. 8. Against the aforesaid order of assessment for the block period 01.04.1986 to 12.09.1996, appeliant preferred the related appeal before the Tribunal. Tribunal uide the order dated 31.12.2003, dismissed the appeal of the appellant. Aggrieved, the present appeal has been preferred bythe appellant/assessee. 9. According to leamed Senior Counsel for the appellant, in view of the report of the investigation wing of the Income Tax Department, Ahmedabad, it was a case of further/deeper investigation by the assessing officer to asceftain genuineness of the transactlon. Instead of further/deeper investigation, assessing officer passed the order of assessmenr. 10. Insofar the order of the Tribunal dated 31.12.2003 1S concemed, learned Senior Counsel submits that Tribunal fell in \ error in relying upon the presumption under Section 132 (4) of the Act. He submits that the said proviso does not provide lor any I ii4ii

such presumption that any books of account, documents,.money, bullion, jewellery. e/r., found in the possession or control of any person in the course of search may be presumed as belonging to such person. In fact, such presumption is traceable to sub-section (aA) of Section 132 of the Act. But the moot point according to him is that such presumption cannot be drawn in the course of regular assessment. It operates during search proceedings. In suppofi of such contention, leamed Senior Counsel has placed reliance on a decision of the Supreme C-oun in P.R.Metrani v. CITi. 11. On the contrary I\&. B.Nanimha Sarma, leamed Standing C-ounsel, Income Tax Depanment submits that it was a clear case of unexplained investment by the appellant. The nodas operandi of the appellant was clearlyset out bythe assessing officer. No other conclusion can be drawn on the basis of the admitted facts. Insofar .drawal of presumption under Section 132(4A) of the Act is concemed, he submits that the said presumption was not acted upon in the course of assessment proceedings as the assessing /l ' lzooel zv ITR 209 (sc) I ,// ::5:: t ,/

6 officer was clear that it was a case of unexplained investment. The case law cited by leamed Senior Crunsel is also distinguishable. 12. In the facts and circumstances of the case, leamed Standing C-ounsel submits that the questiorls framed cannot be said to be substantial questions of law inasmuch as there is no perversity in the findings recorded by the assessing officer as well as by the Tribunal. Therefore, the appeal is liable to be dismissed. 1.3. We have heard ieamed cor.msel for the parties and considered the rival submissions. 14. \fle may first deal with the order of assessment dated 30.09.1997 passed by the respondent for the block period 01.04.1986 to L2.09.1996. t5. The main issue before the assessing officer was the clandestine operation in silver ban and unexplained investment of the appellant. Assessing officer found that in addition to unexplained cash of Rs.10.88 iakhs, there was consignment of silver to the extent of +OO lgs which was construed to be investment

2 ,/ from r.rnexplained sources. In this regard, assessing' officer considered the r-eport of the investigation wing of the Income Tax Depanment and thereafter recorded as follows: CLANDESTINE OPERATION IN SILVER BARS AND UNEXPLAINED INVESTMENT IN THIS BUSINESS: At the outset, it is to be mentioned here that the assessee has never disputed the receipt of 4oo,l52 lgs. of silver from Ahmedabad. The modus operandi - of the dtpatch, the subsequent delivery at the residence of the assesses has already been cliscussed in detail in the preceding paras. The point in dispute however t the claim of the assessee that he had received the said silver on consignment basis from the Ahmed.ebad party for effecting corsignment sales locally at Hflenbad. He has claimed to have indulged in such corxignment sales rougtrly for one and half years prior to the date of the search. In his swom st2temenr dated 30-9-1996 he maintained that he ras eaming commission on the clandestine business of silver @ Rs.5 per lg. of silver from both sides i-e., from the purchaser and the seller. F{e has further stated that (during the course of his deposition on 30-9-1996), he was receiving and disposing 400 lgs. of silver per week on an average, which is rougtrly 20,800 kgs. or 20 tonnes of silver per annum. Except for stating as above, the assessee has ar no point of time been able to fumish any details regarding receipt of silver by him for sale on coruignment. Despite being given ample opponunities during the course of search proceedings as well as assessment proceedings, he had not been able to i:7::

8 fumish single address to whom he has sold sliver on consignment basis. F{e has no records regarding receipt and sale of silver ban for so-called consignment business. FIe has not been able to produce a single receipt evidencing receipt of silver by him on consignment bas; from any parry and similarly no documentary proof could be ever fumished by him regarding his claim of coruignment sale. Therefore the claim is rejected. On the contrary the assessee in unequivocal terms has admiued to have received 400.152 lgs. of silver on 77-9-1996 from I\4/s. GhanshJam Silver (Proprietor Mr. Mahesh alias Mr. Ravf , which is also evidenced by the Vay Bill and Cash Memo issued 6y W s. Gharuhlam Silver for the said transaction. To verify the claim of the assessee thar the receipt of the said silver From M/s.Ghanshlam Silver was on consignment basis, investigations were carried out by the ADI (IN\.f, Ahmedabad. The repon of ADI (Inv) after conducting necessary Investigations in the matter, which is reproduced in full as an Annexure to this order. nails the claim of the assessee. The ADI (nv) in his repofi has srared rhar rhe closing of stock of silver as per books of account maintained by M/s.Ghanshlam Silver. (Proprietor Mahesh P.Patel, alias N&. Mahesh alias lvlr.Ravf on 9-9-1996 was 576.953 kgs. out of which he had sent 400.152 lgs. of silver to the assessee. The ADI (Inv) has funher reponed that it was claimed by M/s.Ghanshyan Silver that the said amount of silver was sent to Sri K.Madhavachary on consignment basis and that too on crediq although it was admitted by the Proprietor zi.. Mr. Mahesh Patel that he does not send goods on credit to a

9 unknonn parties. These statements of Mr. Mahesh P.Patel, Proprietor of M/s.Ghansh1,am Silver claiming that the impugned silver was sent on credit on consignment to Sri K.tr4adhavachary are hard to swallow inasmuch as while funher examining the Sales fugisrer- at Page No.J8 it was noticed by the ADI that against bill No.4631 the name of Sri K.Nthdhavachary was introduced by erasing the rnme of somebody else. 'ff&en the fact of erasure was confronted to the assessee eliciting his explanation on rhe issue vide lener darcd 2i-8-1997 it was replied by him that what was stated by the Ahmedabad party did not concem him, funher adding that the Ahmedabad pafty has sent rhe silver to be sold on consignment basis only. Be that it nray, the claim of consignment trading by the assessee has already been rejected in view of detailed discussion made in the preceding paras. Even the claim of the supplier of the said silver i.e., M/s.Ghanshlam Silver by making an erasure in its bools and'entering the assessee's name just for the sake of indicating saie on consignmenr in no way gives any credence to the claim of the assessee, inasmuch as, to repeat the assessee has never been able to fumish any details with documentary evidence regarding his purchase and sale of silver bars on consignment basis. The inevitable conclusion thar can be drawn from a perusal of the facts of the case, detailed out above, and in the face of the failure on the pan of the assessee to adduce any corrobortrtive evidence regarding his claim of consignment silver transaction, is that the assessee has been clandestinely purchasing and selling silver bars. Since the assessee has not maintained any stock tr:rnsaction, it can be reasonably inferred that the investment

::10:: made by the assessee with regard to purchase of the said silver o{ 4A0J52 lgs. from rhe Ahmedabad parry v/as out of his unaccor.rnted sources , the value of which is k .29 ,41 ,ll7 / - (400.152 lgs. of silver X Rs.7,350/-). Reference may be made to the connected way bill and cash memo (Pages 54 & 55 of Annexure KMC/B/5). Even the claim of Sri Mahesh P.Parel of M/s. Ghanshi.am Silver that the said silver was sent to the assessee on credit basis is unacceptable as the assessee himself has stated several dmes during tlre course of his depositions dated 27-8-1997 that such transactions were a[wa1,s conducted by him in cash. Relevant excerpts are reproduced below: Qn.No.17: \X/hat is the mode of pal,rnent to the supplien? Ans: The business is mainly transacted in the form of cash. I have never paid anltody in the form of cheque or D.D. Qn.No.26: Mr.Dubey, driver of the jeep which brought 400 lgs. of silver from Ahmedabad, has stared in his swom statement that Trilokchand of Bombay instructed him to get a D.D and not cash for the said silver. \X/hat do 1ou have to say about this? Ans: I always paid in cash only. I have never given D.D. to any outsradon parry. .......... Qn.No.48: Do you confirm rhat ycu have never talren a D.D for lour business purposes to be paid to the supplier? Did ycu alwap pay lour supplien in cash? Ans: Yes. Thus, as per his own admission on oath, his entire clandestine fiansactions of purchase and sale of silver has been

: :11: : through the mode of cash palrnent only. Added to these swom a\rernenrs is also the fact that for the impugned tnnsaction of 4AO.$2lgs. of silver, the supplier 2.r.. Mahesh P.Patel, Proprietor M/s. Ghanshyam Silver, Ahmedabad has issued a cash memo in favour of the assessee z/e cash memo dated fi-9-1996 (Page 55 of Exhibir KMC/B/5). It is interesting to note that the saicl cash memo dated fi-9-96 was faxed ro rhe assessee on L2_9_76 2.e., on the date of the Search. To a related query (the shrcmenr of rhe assessee dated 18-9-96), he has replied as under: Qn. Please state when such copy has been received by you and the number on which fax message has been sent? Ans: I have received the copy (Fax) around 9 p.rn, on 72-9-96. I do not remember the fax number as it has been delivered at my residence by some unknov"rr persons and the same has been handed over to me by my daughter around the menrioned rime, Qr: Do you know any persons belonging/related to the Ahmedabad pary srarioned ar Hyderabad,/Sec,bad ? If not, how could y:u rely upon rhe Information received/given by unidentified/unl<nos.n parry-. Ans: I do not know any such parry. The Ahmedabad parq. after enquiring in the market has handed over the bill copy at my residence. BeJond that, I do not have anyhing ro say. Qn: Please refer to page Nos. 54 and 55 of annexure KMC/B/5 which are nothing but way bi.ll from Ghanshpm Silver of Ahmedabad dated 9_9_96 tt

tilzii and the cash memo faxed by M/s.Ghanshlam Silver on 12-9-96 ar 1420 t1$. dated t0-9-g6. How do 1ou explain their relation in the light of the post dated reference of cash memo (10-9 96) in a way bill dated 9-9-96. Ans: I cannot explain all these things. Ahmedabad party will be able to explain this as it was their resporuibiliry...... It may be specifically rnenrioned here that during the coune of post search enquiry conducted by the Investigation \[rng at Ahmedabad, it was conclusively proved by them that the said Ahmadabad p fiy had made interpolations in its boola of accounts to accommodate the assessee. (Please refer to the discussions made at Para-5.1 above). C-oupled with this is the fact that after the receipt of the impugned silver, the assessee has never made the pal,rnent for the said silver eidrer through cheque or Demand Dnft subsequently. Therefore, the mention of the words "Please send cheque/Dnft" on the way bill and mention of the words "Debit on lour accorurt" on the cash memo is norhing bur a deliberate atlempr by the assessee and the said Ahmedabad parLy to mislead the investigation that the impugned transacrion was not coiourable but was a normal accounted business tnnsaction. In view of the post dated nature of the faxed cash memo, the date of which contradicts with the date mentioned on the way bill, coupled with the findings of the investigation that the Ahmedabad party had made interpolations to accor4modare the assessee, coupled further with the admitted stand of the assessee that his entire uansactions of purchase and the sale of silver was alwap through the mode of cash it is but inevitable to conclude that the assessee had in fact purchased the,,. i , I \

::13:: impugned silver from the said Ahmedabad party out of his unaccounted cash. Keeping in view the discussions made above and evidence on record it is conclusively proved that the assessee had invested an amount of Rs.29,41.,L77 / - towards purchase of silver ban weighing 400.152 lgs. from Mahesh P.Patel, Proprietor N/s.Ghanshlam Silver, Ahmedabad. As the above cash tmrsaction not rooted through any books of account of the assessee the name is treated as unexplained investment and therefore as his undisclosed income for the period from l-4-\996 to l2-9-1796. On the date of the Search i.e. on 72-9-1996, the assessee was found to be in possession of only 135.05 lgs. of silver out of +a0.1.52 lgs. of silver purchased by him. On being confronted he has confessed to have sold out the balance of 264.092 kgs of silver to various pafiies. local enquiries made during the cor,rne of the assessment proceedings indicates that net profit in such a line of business is rougtrly around 5olo. Adopting the same rate the net profit eamed by the assessee fi'.cm sale of 264.a921gs. of silver is estimated atRs.97,053/ - (5'/. of 264.a921gs. X Rs./,350/-). It may be mentioned here that tle assessee was never able to prove the source of the cash found on the date of the search except for stating that the same was out of sale proceeds o[ silver. It is highly improbable that within three houn in the evening o1' 11-9-96 i.e., from the event of unloading of the impugned silver at the residence of the assessee upto the event of interception by the Police Task Force the assessee could realise cash of Rs.10 lakhs from purchasers panicularly when he has not named or identified anrcne as his customers. - ',/ ,

:i14:i Since, however, the entire invesrment in the impugned silver of 400 lgs. is held to have been made out of his undisclosed income no separate addition is proposed towards rhe explained cash of Rs.tO.O8 lakhs.,, 16. Thus the assessing officer held that the enrire rransactions reladng to alleged purchase of silver from one llfahesh p.patel, proprietor of M/s.Ghanshyam Silver, Ahmedabad were shady, oumide the boola of account and remained unexplained. Thus, those were treated as unexplained investments. Before the Tribunal, it was argued that assessing officer was not justified in making the addition of Rs..37,37,163.00 as undisclosed income. Flowever, Tribunal rejected rhe contenrion of the appellant in the following nunner: Heard both sides. Read all the papers on record and the orders of the authoriries below. The entire operation in this case, appear ro be dubious and clandestine. The assessee has not earlier conducted tnnsactions with either Mr. Trilokchand Jain or with Gharshlam Silver, Ahmedabad, as stated by him in reply to Question No. 15, at prge-4 of the depanmental paper book The facr that certain driven of the taxi-stand were engaged by these persons, called TriloLchand Jain as well as Mahesh Pratap Dubey alias Ravi of Ghanshlam Silver for carrying goods wonh about Rs.3O lakhs of mpees by road, throws a lot of suspicion as to the rype of activity carried on by the assessee. It is claimed that therc is a way bill issued by-_ a

:: l5:: Ghanshyam Silver. It is not known whether Mr. Madhavachari has sales t;rx registration etc. at Hydenbad or whether this Mahesh Pnuep Dubey alias Ravi of Ghanshyam Silver has CST Registration of branches at HJdenbad. \{,hen tr{adhar.achari is not a dealer under the Sales Tax Act at Hyderabad, we do not see how a way bill can be made out by Ghanshlam Silver in favour of N{adhavachari, on rhe ground that this is a consignment sale. An14row, rhis aspect has not been examined by the revenue authority and thus, we cannot come to an1, conclusion, though to our mind, this document appears to be colourable. The very fact that lakhs of rupees of goods are being sent by road, through some taxi driven, who are not regular emplolees that too, to unknown people, who have admittedly, not transacted or known each orher before, and also the fact that the entire sales are made in cash i.e. outside banking channels and also the stated fact that this huge amount of cash is to be handed over ro rhese taxi drivers for berrg taken back to Ahmedabad and to be handed over to the seller does create serious doubts on the genuineness, openness and they being regular business transactions. Admittedl,v, Shri Ivla.dhavachari, the assessee, never maintained regular bools of account reflecting these tnnsactions. No details of the purchasen of these silver are available. No receipts or invoices with valid sales tax numbers arr issued either by Ghanshlam Silver or by Madhavachari in favour of the purchases. Under rhese c;rcurnshnces, we are not convinced with the argument of the leamed counsel for the assessee that these transactions are regular transactions, which cannot be a matter of block assessmenr.

:: 16:: 18. Tribunal noted that the cash and the silver in question were found in the possession of the appellant during the course of the search and seizure. After taking note of the transactions, Tribunal observed that it was dubious and clandestine. The transactions were not reflected in the books of account; those were done through unknown taxi drivers, entire cash being handed over to them. Therefore, Tribunal re.iected the contention of the appellant that those were regular transactions. 19. Insofar presumption under Section fi2(a) of the Act is concemed, it is true that Section B2(a) ol the Act does not refer to such presumption which .is available in sub-section (aA) of Section 132 of the Acr. It is trite that wrong mentioning of a section would not invalidate an action in law if the power is traceable to a valid source. Tribunal noted that appellant did not lead any proper evidence to rebur the presumption that the silver belonged to him. This was also stated in the reporr of the investigation wing. Funher, contrary to what is being contended, reference to Section t32(+) (sic) of the Act was at the stage of (

:il1:: search and seizure and not during the Thereafter, Tribunal held as folloue: assessment proceeding. From these repons, it is evident that ]vlls Ghanshyam Silver tried ro accommodate the assessee by altering the books of account. Thus, it is very clear that but for these search operations, these transactions would have escaped and never have been brought to tax. 20.1) k is found by the revenue that the assessee has not maintained any books or vouchen in his business. 2) There is no name board whatsoever on the shop owned by him nor there is any trace of the business being conducted from the shop and that it is strange that for a penon having a tumover of Rs.15 crores per annum, btxiness could be carried out in such secretive and clandestine manner. 3) The details of the customers and supplier with full addresses and confirmations were not fumthed- - 4) Neither the details of purchases nor details of sales are recorded in rhe regular bools and that on the contrary, the endre derails of purchases and sales are wrinen down in a small book in a coded form, which is alwap in the penonal control of the assessee. 5) The way brll, dt. 9-9-"1996 for 400 Kgs of silver brought from Ahmedabad is not numbered and whereas the cash memo No. 4631 is dated 10-9_1996 i.e., one day after the issue of way bill. 6) No sales tax has been paid during the block period on the sale of silver and gold. Though the saremenrs of rhe taxi driven Ramasharan pal \*.. and lvlahendra Praup Dubeyas well as the swom staremenr of Sri K.Madhavachari point to rhe fact that the silver was in fact /

::18:: handed over by Ganshlam Silver i.e., by Mr. tr&hesh Patel alias Ravi at the instance of Shri Tnlokchand Jain, Bombay, there is no proof that these assets belong to Ghanshlain Silver nor to Trikchand Jain. AJterations and corrections in the boola of Ghanshlam Silver pointed our by the ADIT(Inv), Ahmedabad show that this might have been unaccounred stocls of silver and basing on the presumptions ,t/ s 132(a) ot the Act, we hold that the assessing officer was right in making an addition of Rs.29,41,177 in rhe hands of the assessee. The judgments relied upon by the leamed counsel for the assessee i.e. the case of Sunder Agencies supra, has no application to the facts of the case as we have held that this is a clandestine operation being conducted in a secretive man:rer and as the assessment is based on the material seized during the search. Thus, these grounds of the assessee are dismissed. 24. Tribtural noted that appellanr had not maintained any books or vouchers while carrying on his business which he claims to be his regular business. The premises from vrhere he stated that he had carried on his business did not have any name plate or any indication to show that the business of jeweilery y/as being conducted from the said premises by the appellant. Details of customerc and suppliers were not available with the appeilant. So also, details of purchases and sales. The way bill dated 09.A9.1,996 for bringing a00 lgs of silver from Ahmedabad was nor found to {

:: l9:: be numbered whereas the cash memo v/as issued a day after the issue of way bill. That apart, no sales rax was paid for any of the purchases made by the appellant during rhe block period 01.04.1986 to 12.09.1996. 20.1. Strangely enough, appeliant claimed that he had purchased the consignment from Ahmedabad but the consignee ar Ahmedabad appears to have senr the consignment to the appellant through unknown taxi driven from a taxi stand at Mumbai, that too, at the instance of one Sri Trilokchand Jain of Mumbai. Appellants paid the cash to such unl<nown taxi drivers. Such questionable transactions remain unanswered. 21. In the circumstances, we do not find any error or infinnity in the view taken by the Tribunal. Thar aparr, there is a clear finding of fact by rwo revenue authorities below. Such finding cannot be said to be conrraryto rhe record and thus perverse. Therefore, we ,do not find the present to be a fit case for exercising our jurisdicdon under Section 260A of the Acl No question of law I A I

t:201.1 arises out of the aforesaid order of the Tnbunal dared 31.12.2003, not to speak of anysubstantial question of law. 22. C-onsequently, the appeal is dismissed. No costs. As a sequel, miscellaneous petirions, pending if any, stand dismissed. SD/-B.S.CHIRAN EEVI JOINT REGI //TRUE COPYi/ SECTION OFFICER T 1 2 4 5 EDS o .- Th" In"orn" Tax Appellate Tribunal, B-Berch, Nyderabad . fi " Atiitt""tCori.rinissioner of lncome Tax, Ciicle -5-?)' Hvderabad' . o;; Cc1o -SRl. cHALLA GUNARANJAN, Aqvolqtg [oPUC] . 5i,Jrc t"lni 'e NARAsTM-HA bAnnae, si FoR lr DEPARTMENT [oPUc] . Two CD Copies I (r 1 *)

HIGH COURT DATED:2611012022 1 ORDER lTTA.No.105 of 2004 r,'! () \), s7 N = e, (-i * ,:l +' 1r n .r}. l DISMISSING THE ITTA WITHOUT COSTS I e .1, l-\