I.TA. NO.739/LB OF 1988-89, DECIDED ON 16TH DECEMBER, 1990. VS I.TA. NO.739/LB OF 1988-89, DECIDED ON 16TH DECEMBER, 1990.
1991 P T D (Trib.) 541
[Income-tax Appellate Tribunal Pakistan]
Before Mian Abdul Khaliq, Judicial Member and Inam Ellahi Sheikh, Accountant
Member
I.TA. No.739/LB of 1988-89, decided on 16/12/1990.
Income Tax Ordinance (XXXI of 1979)---
----S.56---Action initiated by issuance of notice under S.56 ended by filing of proceedings---Filing of proceedings, held, tantamounted to an assessment and thereafter new proceedings could not be initiated by issuance of another notice under S.56, even by giving a separate NTN or address of the same assessee.
M. Nawaz Khan, I.T.P. for Appellant.
Aftab Iqbal Lone, D.R. for Respondent.
Date of hearing: 3rd September, 1990.
ORDER
MIAN ABDUL KHALIQ (JUDICIAL MEMBER).---This further appeal relating to charge year 1984-85, filed by an assessee, is led against the order of the learned C.I.T.(A)-III, Lahore dated 15-1-1989.
2. The facts of the case are that during the course of assessment proceedings of an AOP styled as M/s. Royal Flying Coach, Lahore, the I.T.O. discovered that the assessee being a member of that AOP, had purchased two Flying Coaches during the period relevant to the charge year 1984-85. Those two coaches were found to have been leased out to the aforesaid AOP. As per assessment order, notice issued under section 56 of the I.T. Ordinance, 1979 (hereinafter called the Ordinance) was served on the assessee who is turn filed return declaring net loss at Rs.94,563. The declared loss was arrived at on lease rent from flying coaches at Rs.1,20,000 less interest/bank charges at Rs.70,563 and depreciation @ 20% at Rs.1,44,000. In response to the ITO's notice, the assessee's A.R. furnished wealth statement as on 30-6-1984 with the following details:-
| Investment in Royal Flying Coach | Rs.9,55,000 |
| Furniture | Rs.2,00,000 |
| Gold Value | Rs.2,00,000 |
| Value | Rs.2,00,000 |
| Tube-well/equipments | Rs.2,00,000 |
| Cash in hand | Rs.2.00.000 |
| Total: | Rs.20.90.000 |
On the ITO's asking the assessee stated that entire assets were raised out of the bank loan and the agricultural income. The I.T.O. recorded in the assessment order that on his query, the concerned bank did not reply on the issue of raising of loan and as such the assessee's plea remained un-established. The I.T.O. was of the view that sources of investment in purchase of flying coaches for Rs.9,55,000 remained explained. He made addition of Rs.16,69,563 under section 13(1)(aa) of the Ordinance on account of unexplained bank charges at Rs.70,563 with addition of Rs.9,55,000 as unexplained investment in purchase of two flying coaches and sum of Rs.5,00,000 shown as cash in the wealth statement. After deducting the declared loss at Rs.94,563, the assessee's total income was determined at Rs.15,75,000. This assessment was set aside by the learned CJ.T.(A) for de novo decision by the I.T.O. after proper inquiry.
3. The assessee's A.R. contended that the assessment made by the I.T.O. on 31-7-1988 being ab initio void, is untenable in law. It was stated that the assessee was not an existing assessee and for the first time, notice under section 56 of the Ordinance was issued on 25-11-1984 for the year under review mentioning NTN 06-02-1658509. This notice was issued to the assessee on the following address:--
Muhammad Khalid Malik,
C/o Flying Coach,
Asia Hotel, Lahore.
The original notice was produced for placing on the appellate record. The case of the assessee's A.R. was that in response to that notice, no return was filed and the I.T.O. filed the assessment proceedings vide DCR entry dated 30-6-1987.
The assessee's A.R. further contended that on 24-4-1985, the I.T.O. issued another notice under section 56 of the Ordinance to the assessee at his residential address and therein NTN 1677026 was recorded. On receipt of that notice, the assessee's A.R. informed the I.T.O. on 26-5-1988 that in this very case notice under section 56 of the Ordinance was issued on 24-4-1985 and time limit for completion of assessment having already expired, fresh proceedings initiated by issuance of second notice under section 56 of the Ordinance be filed. Alongwith the reply copies of earlier notices issued under sections 56 and 61 of the Ordinance were also annexed. On receipt of the assessee's reply, the I.T.O., Circle-02, Zone-B, Lahore informed the assessee on 29-5-1988 that the earlier notice was issued to the assessee with different NTN and proceedings therein were filed on 30-6-1987, but the fresh notice has been issued vide a separate NTN on the basis of survey report. Copy of the I.T.O.'s reply bearing No.B/Ol/1658509 dated 29-5-1988 was produced and placed on record. In the light of these facts, the assessee's A.R. pleaded that filing of proceedings by the I.T.O. on 30-6-1987 amounted to completion of assessment and subsequently, the I.T.O. had no lawful authority to initiate fresh proceedings by issuing another notice under section 56 of the Ordinance to the same assessee and from the same source of income vide separate allocated NTN. The Departmental Representative in his turn reiterated the reasons advanced by the I.T.O. in the letter dated 29-5-1988.
4. We have-heard the arguments of the representatives of the parties at considerable length. On examining the original notice issued by the I.T.O. under section 56 of the Ordinance on 25-11-1984 vide NTN 06-02-1658509 alongwith the I.T.O: s reply dated 29-5-1988, we feel that action initiated by issuance of notice under section 56 of the Ordinance ended by filing of proceedings on 30-6-1987. Filing of proceedings tantamounted to an assessment and thereafter new proceedings could not be initiated by issuance of another notice under section 56 of the Ordinance, even by giving a separate NTN or address of the same assessee. The fact of filing of proceedings by the I.T.O. on 30-6-1987 being fully established from the I.T.O.'s letter dated 29-5-1988, the proceedings initiated thereafter on 24-4-1985 and assessment made in consequence thereof on 31-7-1988 was ab initio void. In these circumstances, the assessment made on 31-7-1988 and the appellate order passed by the learned C.I.T.(A) on 15-1-1989 stand annulled. The assessee's appeal succeeds accordingly.
M.BA./1178/T Appeal allowed.