ITA NO. 534/LB OF 1988-89 VS ITA NO. 534/LB OF 1988-89, 1994 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 1268 (1993)

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

----S.13(1)(d)(e)---Additions---No material was available on record to support the additions made by the Assessing Officer of the Appellate Authority---Mere general or personal observation of the Assessing Officer of high living standard of assessee or that income of the assessee was declared at ridiculously low figure after suppressing receipts could not be termed to be legal in circumstances.

1987 PTD (Trib.) 36 ref.

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

----S.13(1)(d)(e)---Additions---Construction of building---Declared cost by assessee was neither ridiculously low nor otherwise appeared unusual for the kind of construction and the stated covered area---Addition made was merely on conjecture and was without any basis whatsoever---Such addition was not legal in circumstances.

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

----S.13(1)(d)(e)---Additions---Assessee's contention was that he had agricultural income from the land which his father had earmarked for distribution of produce to him---Such contention was not unfounded or far fetched as practice was that land owners in Punjab did allocate some portions of their agricultural land holdings in their lifetime to their male issues.

Mian Ashiq Hussain for Appellant.

Shaukat Ali Sheikh, D.R. for Respondent.

Date of hearing: 28th June, 1993.

ORDER

This second appeal is directed against- a consolidated order of CIT (Appeals III), Lahore, dated 20-3-1989 rendered in respect of assessment years 1983-84 and 1984-85. This appeal however, pertains only to the assessment year 1983-84 as statedly the appellate authority did not dispose of the appeal in respect of the assessment year 1984-85 and that the assessee-appellant has already moved for rectification of the impugned order in respect of assessment year 1984-85.

2. The appellant is an individual and a practising lawyer. For the assessment year 1983-84 income was declared at Rs.12,000 which was rejected by the assessing officer. The claimed professional expenses at Rs.16,000 were disbelieved and, therefore, an addition of Rs.5,000. Likewise personal expenses at Rs.36,000 were not accepted and an addition of Rs.28,930 was made under section 13(1)(e) of the Income Tax Ordinance. The. declared cost of construction of a Balcony at Rs.17,000 was adopted at Rs.26,000 and, therefore, the addition of Rs.9,000 under section 13(1)(d) of the Ordinance. The assessee-appellant stated to have derived agricultural income at Rs.5,000 which was not accepted by the assessing officer and thus it was added back under section 13(1)(d) of the Ordinance towards his total income. Another addition of Rs.1,334 was made on account of interest income. Accordingly as against the declared income of Rs.12,000 the appellant was assessed at a total income of Rs.61,264 which is being agitated against through this appeal.

3. The parties have been heard. The learned counsel for the appellant has attempted to raise a preliminary objection against framing of the assessment which he duly raised before the first appellate authority. However, the same was rejected by the first appellate authority. And, in the circumstances of the case we find that the repelling of the contention is sufficiently supported by a Full Bench decision of this Tribunal cited as 1990 PTD (Trib.) 260. Therefore, the contention stands rejected.

4. Learned counsel has contested the aforesaid addition of Rs.9,000 made on account of estimated cost of construction on the ground that in the first instance the declared cost of construction was not too low to be dis believed. And, secondly, the assessing officer did not bring sufficient material on record to justify his estimation. In support of his contention that if the difference in the declared and the estimated value is nominal and the declared value is not too low, the provision of section 13(2) of the Ordinance will not be attracted, the learned counsel has relied upon a reported case of this Tribunal cited as 1991 PTD (Trib.) 294, decided on 15-9-1990.

5. The addition of Rs.28,930 under section 13(1)(e) for unexplained household expenses is also assailed on somewhat similar grounds. The addition of Rs.5,000 made against professional receipts out of the professional income declared is described to be in total vacuum. In this connection the observation of the appellate authority that keeping in view the life style of the appellant his determined income from profession at Rs.17,000 was not excessive is also assailed to be unfounded. Neither the assessing officer nor the appellate authority detailed at length any material to support this addition or the basis which could afford a clue for their aforesaid observations. A general or personal observation by the appellate authority that professional incomes are declared at ridiculously low figures after suppressing receipts can hardly be termed as charitable or otherwise attractable in the circumstances of the present case. To cap all this, none of the authorities below cared to go through the documents filed in support of the claimed agriculture income at Rs.5,000. A copy of Register `Haqdaran' for the year 1980-81 village Asu Metha, Tehsil and District Sialkot has been produced before us according to which the father of the appellant owns considerable agriculture land m the village which is under his self-cultivation. The addition made on account of interest income at Rs.1,334 is also agitated against on account of its being a result of a pre determined mind.

6. Learned D.R. has supported the orders of the authorities below as far the assessment year 1983-84 is concerned. However, he has not been able to bring home any distinguishing features between the case under discussion and the one decided by way of the abovesaid reported judgment of this Tribunal nor has been able to dislodge the abovesaid contentions as raised by the learned counsel for the appellant. The addition of Rs.9,000 is definitely a result of mere conjecture and is without any basis whatsoever. The nature of construction being merely a `balcony' the declared cost of Rs.17,000 in the year 1983-84 appears more than sufficient. The addition of Rs.9,000 does not make any sense as the declared cost was neither ridiculously low nor otherwise appeared unusual for the kind of construction and the stated covered area. The addition in declared professional income was again in a void and on the basis of wild allegation of its being low. The observations of the appellate authority, as detailed earlier, are also not supported by anything on record. This Tribunal has more than once declared the additions on the basis of general observations of high living standard etc. to be illegal. In this connection a reference can be made to a reported case cited as 1987 PTD (Trib.) 36. The declared income from agriculture is duly supported from the documents that has been produced for our perusal. In this connection the contention that land owners in Punjab do allocate some portions of their agriculture holdings in their lifetime to their male issues is supported by general practice. Therefore, the claim that the father of the appellant earmarked some of the land in favour of his son for the purpose of distribution of the produce of the land he himself cultivated cannot be termed as unfounded or far-fetched.

7. No other issue was pressed.

8. In view of what has been stated above we find that none of the additions discussed above was legitimately made and that its confirmation by the learned appellate authority on the basis of general observations was all the more impertinent. Therefore, all of them are striked out and the appeal succeeds accordingly.

M.B.A./48/T.T.Appeal allowed.