ALI RAZA ASAD ABADI VS WASIM SAJJAD, 1993 PTD-LAHORE-HIGH-COURT-LAHORE 1198 (1992)

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

----S.136(2)---Reference---Question of fact---Question whether addition should have been deleted or not was essentially a question of fact---Mere fact that the finding of the Income Tax Appellate Tribunal as well as that of Assistant Appellate Commissioner was contrary to the finding rendered by the I.T.O. would not by itself convert the factual controversy into one of law.

Muhammad Ilyas Khan for Petitioner.

Muhammad Amin Butt for Respondent

Date of hearing: 15th December, 1992.

JUDGMENT

IRSHAD HASAN KHAN, J.---This application under section 136(2) of the Income Tax Ordinance, 1979 prays for consideration and decision of the following question:---

"Whether on the facts and circumstances of the case, the Tribunal was justified in upholding the order of the Appellate Assistant Commissioner, resulting in deletion of addition of Rs. 7,00,000 made by the Income Tax Officer under section 4(2-A) of the Repealed Act on the basis of definite material and evidence cited by the latter in the assessment order and contradictory, shifting and conflicting stands taken by the assessee to suppress the concealment of income detected by the Income Tax Officer?"

2. The statement of facts as given in the petition is that the respondent, a registered firm known as M/s. Sh. Muhammad Saeed and Brothers, Lahore, derived income from the sale and supplies of motor vehicle tyres and tubes. For the assessment year 1977-78 return was filed showing income of Rs.63,757 which was later revised to Rs.3,00,172.

3. The Income Tax Officer asked the respondent to show the basis on which the revised statements were filed. The case of the respondent before the Income Tax Officer was that two bank accounts that is to say Muslim Commercial Bank No.920 and United Bank Limited No. 223 had not been mentioned at the time of filing the original return. The Income Tax officer, however, did not accept the revised version and rejected the trading account and the contention of the respondent. He computed the income as follows:---

This happened on 9-5-1979.

3. The respondent challenged the order, dated 9-5-1979 of the Income Tax Officer before the Assistant Appellate Commissioner, Lahore, who, after re-appreciating the evidence on record, came to the conclusion among others that addition of Rs.7,00,000 by the Income Tax Officer was not justified vide order, dated 23-6-1979. The relevant portion of the order reads thus:---

"As far as the addition of Rs.7,00,000 from the fictitious credit of Mian Ghulam Rasul/Kabul Khan, the ITO has again erred and has not been able to properly appreciate the facts. The appellant proved that these credits in the books of accounts came from the bank accounts, which were originally concealed. The ITO did not accept this for the reasons that credits in the books of accounts were not on the same date as in the bank account. One thing is obvious that bulk of all these credits were incorporated in the books after the amounts had been withdrawn from the banks although there was a difference of some days between the amounts withdrawn and the credit entry made in the books of accounts. When it has been accepted by the appellant that he had two bank accounts, which were not mentioned in the account version it is rather preposterous to expect that the date will tally exactly. After all the amounts withdrawn from the Bank must have been utilized and the ITO has nowhere given the finding that the amounts withdrawn from those accounts were used for any other purpose. So one is forced to conclude tat they were also used for, business purposes and the discrepancy in date is not that serious offence as to come to such a conclusion. Thus, this addition of Rs.7,00,000 is deleted, because bulk of it is explained as withdrawal from the bank and the balance remaining unexplained at Rs.2,06,500 is covered by the addition made in the trading account results."

4. The respondent as well as the Income Tax Department filed two separate appeals before the Income Tax Appellate Tribunal, Lahore Bench, Lahore and the same were disposed of through a consolidated order, dated 27-9-1982. The decision regarding deletion by the Assistant Appellate Commissioner of the sum of rupees seven lacs was, however, upheld with the following observations, vide para. 9:---

"We now take up the issue regarding deletion by the learned AAC of Rs.7 lac added by the ITO under section 4(2-A) of the repealed I.T. Act. The details as also the reasons for which the ITO made the addition of unexplained cash credit have been discussed in detail in paragraph No.2 of this order. The learned AA.C., however, observed that the respondent submitted that the credits in the books of account came from the two bank accounts which was originally concealed. The ITO did not accept this explanation for the main reason that the credits in the books of account did not appear on the same date on which withdrawals are made from the banks, as most of these credits were shown credited in the books after some days of their withdrawal from the banks. The learned AAC was of the opinion that a difference of a few days in the dates of withdrawals and credits could not be considered a good reason for discarding the respondent's explanation because the ITO otherwise failed to record a finding that the aforesaid withdrawals from the two banks were utilized by the respondent for any other purpose. With these observations the learned AAC gave a finding that the discrepancy in dates could not be considered serious offence so as to discard the explanation offered by the respondent and hence he deleted the addition made by the ITO. As regards the balance amount of Rs.2,06,500 which remained unexplained the learned AAC observed that-it already stood covered by the addition made in the trading account."

5. The Income Tax Department remained unsuccessful in obtaining an order of reference from the Tribunal to this Court vide its order, dated 14-7-1986 on their application under subsection (1) of section 36 of the Income Tax Ordinance, 1979. The Tribunal, after discussing evidence on record, came to the conclusion that the controversy raised before it was concluded by a finding of fact and no question of law was involved therein. The plea raised by the appellant that the discrepancy in the dates was material defect was repelled by holding that the evidence on record clearly suggested that on each occasion, the respondent made the withdrawal and thereafter the amounts were credited in the books. It was further held that the position would have been different if the credit entries were prior in time and withdrawals had succeeded the same. The gap between withdrawals and appearance of credit in the books was held to be nominal for the reason that " ....Learned AAC's observation in this regard could not be completely discarded because the department failed to make out case that the withdrawals were otherwise used in making purchase or in incurring some expenses".

6. Learned counsel for the petitioner has argued that the-question raised by the petitioner is a question of law and finding to the contrary by the Tribunal cannot be sustained. We find" no force in the submission of learned counsel for the petitioner. The Assistant Appellate Commissioner, as well as, the Income Tax Appellate Tribunal, after thoroughly considering the judgment/order of the Income Tax Officer came to a finding concurrently different from that of the Income Tax Officer. This was within their competence. The question whether in the facts and circumstances of this case, the addition of the disputed amount of rupees seven lacs should have been deleted or not is essentially a question of fact and the mere fact that the finding of the Tribunal as well as that of the Assistant Appellate Commissioner was contrary to the finding rendered by the Income Tax Officer, would not by itself convert the factual controversy into one of law. It is not established on record that any bit of evidence has been misread by the Assistant Appellate Commissioner and the Tribunal. We find that all the transactions evidenced by the Bank Accounts of the respondent were correctly reproduced in the judgments of the AAC and the Tribunal and so are the reasons advanced by them in arriving at the conclusion that the same were justified in to far as the dates of withdrawal and their subsequent finding mention in the books of account are concerned. No other point was raised.

In view of the above, this reference has no merit and is hereby dismissed, but there shall be no order as to costs.

M.BA./C-22/L???????????????????????????????????????????????????????????????????????????????????? Reference answered.