(a) Income Tax Ordinance (ICI of 1979)---

----S. 2(24)---"Income"--Connotation--Meaning of the term "income" elaborated.

(b) Income Tax Ordinance (XXXI of 1979)----

----S. 13(1)(a)---Unexplained investments ---Assessee had shown a certain amount as total net assets but was unable to explain the sources of investment---Nature of receipts and its source having not been satisfactorily explained by the assessee, which facts were generally within his peculiar knowledge, the Income-tax Officer could legitimately presume that the amount in question was an income of the assessee from an undisclosed source and same was thus liable to be taxed under S.13(1)(a) of the Ordinance.

Munir Ahmad Sheikh, D.R. for Appellant.

Nemo for Respondent.

Date of hearing: 16th August, 1989.

ORDER

FAKHARUDDIN SIDDIQUI (JUDICIAL MEMBER).---This further Departmental appeal is brought against the impugned order dated 3-12-1985 passed by the learned Appellate Assistant Commissioner of Income tax, Range-F, Lahore for the assessment year 1982-83 on the following grounds:

(i) That the AAC has erred to hold that the return qualified for self- assessment under section 1(b)(1) of the self-assessment scheme of the charge year 1982-83. The assessee had not paid tax in the garb of self- assessment scheme on fictitious ground that she is running a Poultry Farm and income derived from Poultry Farming is exempt from tax

(ii) That the AAC is not justified to observe that AR of the assessee protested vide letter dated 23-6-1985 against the proceedings under section 61. No such protest was made but to the contrary the AR joined the proceedings voluntarily.

(iii) That the return did not qualify for self-assessment scheme, therefore, the AAC is not justified to order to accept it under section 59(1).

2. Briefly recounted the facts giving rise to the instant appeal are that the respondent/assessee, being individual, declared income suo motu at Rs.45,000 under Self-Assessment Scheme of 1984-85. In the wealth statement the assessee had shown total net assets at Rs.1,00,000 but was unable to explain the sources of investment. The declared income was from poultry farm, which was claimed under exemption of tax. In compliance with the notice under section 61 of the Income-tax Ordinance Mr. Yousaf Ali, ITP, had explained the following facts: --

(i) Business of poultry farming is being conducted since 1970.

(ii) Return for 1982-83 was made for the first time to regularise the capital of Rs.1,00,000 tinder SAS.

(iii) The poultry farm is not owned by the assessee but she is paying rent.

(iv) Electricity/power expenses are also paid in the name of the owner of the land.

(v) No accounts whatsoever have been maintained. All figures reported in the computation chart are on estimate basis.

In absence of any supporting evidence in support of above admission of the assessee's counsel the case was not clear, therefore, it was marked to the Circle Inspector to make spot visit and to report whether this poultry farm physically existed or not. According to Circle Inspector's report it was ascertained that the business was looked after by the son and one servant of the assessee prior to 1984-85 and after that husband of the assessee was carrying on the business. The Inspector also reported that on spot verification it was transpired that there was no poultry farm in the name and style of Asad Poultry Farm, Raiwind Road, Lahore meaning thereby the assessee's husband is only dealing in purchase and sales of poultry product under the name and style of Asad Poultry Farm. This fact was also brought to the knowledge of the assessee but the Authorised Representative of the assessee failed to produce any evidence to establish existence of the Poultry Farm. No lease deed was produced. Electricity bills were only produced in respect of Ch. Anwar-ul-Haq Poultry Farm. When questioned that why the rent and electricity charges were not shown in the computation chart, it was stated that there is running a dispute among the assessee and the owner, therefore, no rent was paid and shown, but regarding electricity bills, he failed to give any explanation. The Income-tax Officer in the circumstances was compelled to say that according to .his mind the assessee's husband was carrying on business of purchase and sale of poultry product and not Poultry Farm. An attempt had been made to cover the unexplained investment of Rs. 1. lac in the garb of self-assessment scheme without paying a penny as tax to the Exchequer. The Income-tax Officer at last taxed the sum of Rs.1,00,000 as unexplained income under section 13(1)(a) of the Income-tax Ordinance of 1979 and finalized the impugned assessment.

3. The respondent/assessee felt seriously aggrieved and went up in first regular appeal before the learned Appellate Assistant Commissioner of Income Tax and challenged the impugned assessment before him. Before him the Authorised Representative of the appellant contended that the initial proceedings started under section 61 of the Income-tax Ordinance to finalize the assessment under section 62 which was illegal as the case of the assessee was patently qualified under Self-Assessment Scheme. The First Appellate Authority had gone through the whole record and heard the parties and finally came to the conclusion that the Income-tax Officer was not justified to process the case under normal law as he failed to make out a case of concealment. In any case, the return was filed by the appellant under the Self-Assessment Scheme as a new tax-payer as she could not explain his investment of Rs.1,00,000 and this is why she filed the return of income in accordance with formula laid in para. 1(b)(i) of the said Scheme. The learned First Appellate Authority also observed that the Income-tax Officer was not justified to complete assessment under the normal law when appellant's Authorised Representative had protested against the proceedings initiated under section 61 of the Income-tax Ordinance. Finally, the learned First Appellate Authority directed the Income-tax Officer to accept the income declared at Rs.45,000 which was admittedly increased in accordance with formula laid down in para. 1(b) (i) of the Self-Assessment Scheme meant for new tax payers. However, regarding taxability or otherwise of the income claimed to be exempted by the appellant, the Income-tax Officer was directed to decide after making fresh inquiry and affording proper opportunity to the appellant and finally disposed of the appeal.

4. At this stage the Department felt seriously aggrieved and came up in the instant appeal before the Tribunal on the grounds referred to above in para. 1 of this order. Mr. Munir Ahmad Sheikh, Departmental Representative had no record with him to argue the case properly. None was present on behalf of the respondent/assessee although proper notice was sent to his address well in time and the service was also got effected through the Income-tax Officer.

5. I have gone through the present available record before me and marked the Departmental Representative present only in the proceedings when he had nothing to say neither on merits nor in law especially in absence of the relevant material on record with him. It seems that the Department is reluctant to argue the case filed against the assessee.

6. To me the term "income" as used in Income-tax Ordinance 1979 is indeed, a term of wide significance and generally and ordinarily it connotes a periodical monetary return coming in with some sort of regularity or expected regularity from a definite source; but as multiplicity of forms which income may assume is beyond enumeration; and income need not necessarily be, the recurrent return from a definite source, though it is generally of that character. It may consist of a series of separate receipts, as for instant happened in the case of business like the present one. In the last analysis, the question whether a particular kind of receipt is income or not would depend for its answer on the peculiar facts and circumstances of the case. If the nature of receipts and its source are not satisfactorily explained by the assessee, facts which are generally 8 within his peculiar knowledge, the Income-tax Officer may legitimately presume that the amount in question is an income of the assessee from an undisclosed source. Such income is liable to be taxed. In the instant appeal two things are crystal clear that no one can ignore the admission made by the Authorised Representative of the assessee and consequently the inquiry conducted by the Income-tax Officer which proved the income legitimately and independently. The inference drawn by the learned First Appellate Authority is against the facts and circumstances of the case and wrongly concluded the whole aspects as envisaged in his impugned order. in fact the learned First Appellate Authority has actually erred in holding that the return qualified for Self-Assessment Scheme under section 1(b)(i) of the Self-Assessment Scheme of the charge year 1982-83 and similarly, he was also not justified to observe that the Authorised Representative of the assessee protested vide letter dated 23-6-1985 against proceedings under section 61. There was actually no occasion to qualify the return for Self-Assessment Scheme, therefore, learned First Appellate Authority was not justified to order to accept under section 59(1) of the In me-tax Ordinance. What is still more stultifying was that on the one hand the learned First Appellate Authority accepted the declared version of the respondent/assessee but on the same footing directed the Income-tax Officer to decide after making a fresh inquiry and affording proper opportunity to the respondent/assessee. I am of the considered opinion that the learned First Appellate Authority had misread and even non-read the relevant material and evidence and the inquiries made by the Income-tax Officer and therefore, the final order made by him is not sustainable under the law. In the amiss of these circumstances, the addition made by the Income-tax Officer under section 13(1)(a) of the Income-tax Ordinance of 1979, is therefore, upheld.

7. For the foregoing reasons and the law explained above, I do not feel any hesitation to accept the Departmental appeal and vacate the impugned order dated 3-12-1985 passed by the learned Appellate Assistant Commissioner of Income-tax, Range-F, Lahore accordingly.

M.BA./1737/T Appeal accepted.