I.T.A. NO. 554 (IB) OF 1988-89, DECIDED ON 13TH FEBRUARY 1991. VS I.T.A. NO. 554 (IB) OF 1988-89, DECIDED ON 13TH FEBRUARY 1991.
1991 P T D (Trib.) 802
[Income-tax Appellate Tribunal Pakistan]
Before Sayed Amjad Hussain Bukhari, Judicial Member and Junejo Muhammad
Iqbal, Accountant Member
I.T.A. No. 554 (IB) of 1988-89, decided on 13/02/1991.
(a) Income-tax---
----Departmental appeal before Tribunal---Ex parte proceedings---No one appeared on behalf of the assessee but an application for adjournment was received on the ground that main partner of the firm was not feeling well---Such application was not supported by any medical certificate and since there was no need of sifting of the facts as the first appellate authority had deleted the addition on purely legal grounds, Tribunal decided to proceed ex parte against the assessee and disposed of appeal on merits.
(b) Income Tux Ordinance (XXXI of 1979)---
----S. 13(1)(a)---Addition---In the absence of books of account no addition could be made under S. 13(1)(a) as said section presupposed the maintenance of accounts by the assessee.
Muhammad Jehangir Khan, D.R. for Appellant.
Date of hearing: 13th February, 1991.
ORDER
JUNEJO M. IQBAL (ACCOUNTANT MEMBER).---This departmental appeal relating to the assessment year 1987-88, contests the order of the !earned CIT(A), Sargodha, passed by him in Income-tax Appeal No. 1104; on ?3-1-198!3. deleting the addition of an amount of Rs.94,589 made under section 13(1)(a) of the Income-tax Ordinance, 1979 (hereinafter called the Ordinance') on the ground that admittedly the books of accounts were not maintained by the respondent firm, therefore, any addition under section 13(1)(a) of the Ordinance could not be legitimately made by the assessing officer.
2. Relevant facts leading to the present departmental appeal for the charge year 1987-88, are that a firm executing contracts, declared its income at Rs.48,000. As the respondent's case was picked up for total audit through computer, it was processed under the normal law. Since no books of accounts were maintained, the declared version was rejected and gross profit of 17 % was applied on the receipts estimated at Rs.4,53,454. During the course of assessment proceeding, the I.T.O. came across an amount of Rs.41,284 claimed to have been received from the creditors. Since the cash credits were not explained satisfactorily, the amount was added to the income from contracts. Further, amounts of Rs.43,205 and Rs.24,454 were unearthed. The former being the back account in United Bank Limited, and the latter being an account maintained in the National Savings Centre. After allowing the benefit of addition made to the trading account to the extent of Rs.14,354, the balance amount totalling Rs.94,589 was made under section 13(1)(a) of the Ordinance. On appeal, the learned C.I.T.(A) deleted all the addition made under section 13(1)(a) of the Ordinance on the ground that books of accounts were not maintained by the respondent firm, and therefore, any addition made under section 13(1)(a) was not sustainable in law. This time, it is the department which has taken exception to this decision and has contested the issue in further appeal before this Tribunal.
3 No one appeared on behalf of the respondent but an application for adjournment was received on the ground that the main partner was not feeling well. Since this is not supported by any medical certificate and since there was no need of sifting of the facts as the first appellate authority had deleted the addition on purely, legal grounds it was decided to proceed ex parte against the respondent and dispose of appeal on merits.
4. Mr. Muhammad Jehangir. Khan, the learned D.R. submitted that the bank statements and other documents submitted by the respondent firm constituted a part and parcel of the accounts of the firm. The learned C.I.T. (Appeals) was not justified in stating that books of accounts were not maintained. He fell into an error by holding that books of accounts were not maintained, and therefore, any addition under section 13(1)(a) of the Ordinance could not be sustained. The learned D.R. urged that the order of the lower appellate authority may be vacated and that of the I.T.O. restored.
5. It would be appropriate to refer to section 13(1)(a) of the Ordinance in order to judge the correct import of that provision which has a direct bearing on the decision of this appeal. For facility of ready reference, it is reproduced hereunder:--
13 (1)(a) of the Ordinance:
Unexplained investment etc. deemed to be income (1) where in the course of proceedings under this Ordinance;
(a) any sum is found to be credited in the books of an assessee maintained for any income year; or
(aa) ................................................
(b)...........................................................
(c)...........................................................
(d)............................................................
(e)...........................................................
and the assessee offers no explanation about the nature and source of such sum, investment, acquisition of the money or valuable article, excess amount or the money from which the expenditure was met, as the case may be or the explanation offered by him is not in the opinion of the Income Tax Office, satisfactory, the sum so credited, the value of the investment, the money or the value of the article, the excess amount or the amount of the expenditure as the case may be shall be deemed to be the income of the assessee of such income year chargeable to tax under this Ordinance:
Provided that in cases referred to is clauses (aa) to (e) such income shall not be chargeable to tax unless prior approval of the Inspecting Assistant Commissioner has been obtained.
6. A plain reading of the above provision of law clearly presupposes the maintenance of books of accounts by an assessee. Obviously, any such has to be credited not only to the cashbook but also in the relevant account of the ledger of an assessee. The learned C.I.T. (A), had therefore, correctly remarked that in the absence of books of account about which there was no dispute no addition could be made under section 13(1)(a) of the Ordinance. We have, therefore, no hesitation in upholding the order of the lower appellate, authority and dismissing the departmental appeal and so we order.
M.B.A./1190/T Appeal dismissed.