I.T.A. NO.9828/LB OF 1992-93 VS I.T.A. NO.9828/LB OF 1992-93, 1994 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 371 (1993)

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

----Ss.13 & 63---Best judgment assessment---Unexplained investment---Ex parte proceedings ---Assessee who absents himself after putting in an appearance cannot be allowed to wriggle out of the mischief of default by seeking help from procedure technicalities for that would amount to allow assessee premium on his default---Action of Assessing Officer in proceeding ex parte and making addition on failure of the assessee to reconcile his net wealth was justified in circumstances.

Asmar A. Sheikh for Appellant

Agha Sarwar Qazilbash D.R. for Respondent.

Date of hearing: 17th November, 1993.

ORDER

NASIM SIKANDAR (JUDICIAL MEMBER).---This second appeal pertains to the assessment year 1989-90 and assails an order of CIT (A), Lahore dated 20-6-1993 whereby the learned first appellate authority dismissed the appeal filed by the present appellant-assessee.

2. The facts of the case in a nutshell are; that the assessee, an individual, deriving income from dealings in jewellery was served with a notice under section 56 of the Ordinance to file a return for the assessment year 1989-90. In response a duplicate return declaring income at Rs.30,201 was filed with the contention that original had already been filed in Circle 10, Zone A, Lahore. Since the assessee could not come with an evidence confirming filing of original return as alleged the assessing officer proceeded to frame an assessment after serving upon a notice under section 61 of the Ordinance. -On 28-12-1992 the assessee was represented by Mr. Raza Ali Sheikh, ITP who sought an adjournment, which was allowed for 3-1-1993. However, on that date none appeared to represent the assessee and, therefore, an assessment under section 63 of the Ordinance was framed on 6-2-1993 to the best judgment of the assessing officer at a total sum of Rs.1,530,201. In the process the assessing officer, besides accepting the declared income at Rs.30,201 made two additions at Rs.1,162,500 and Rs.337,500 respectively under section 13(1)(a) and section 13(1)(a) and (aa) of the Ordinance. The assessing officer found that Shop No. 286 purchased by the assessee in Panorama Centre, Lahore on 30-6-1989 for a consideration of Rs.3 lac and declared at Rs.337,500 in the wealth statement was low.. The cost of shop in question measuring 151.40 sq. ft. was confronted on the basis of a parallel case detailed in the body of the assessment order. The assesssee was served with a notice under section 13(2) of the Ordinance asking him as to why the value of the demised Shop should not be adopted at Rs.15 lacs. However, in spite of proper service of notice none appeared for the assessee and, therefore, the above-said addition of Rs.1,162,500 on account of difference between price declared and the one estimated by the assessing officer on the basis of the parallel case referred to above. The other addition of Rs.3,37,500 resulted when the assessing officer found that the net wealth declared at Rs593,870 was not properly reconciled as even the declared value of shop to the extent of Rs337,500 also remained unexplained. It has also been recorded in the assessment order that in spite of service of notice no explanation or reconciliation of the wealth was provided. Before the first appellate authority framing of ex parte assessment was challenged but without any success. In spite of the reliance of the assessee on a reported case cited as (1982) 45-Tax-44 re: C.I.T. v. Sakhi Contractors & Engineers, Multan the learned first appellate authority not only confirmed the ex parte order but also both of the abovesaid additions. It was ultimately observed by the appellate authority that the assessee had been allowed adequate opportunity, which it failed to avail.

3. Learned counsel for the appellant again assails the framing of assessment under section 63 of the Ordinance on the strength of the aforesaid reported case. However, he does not deny the factum of appearance of Mr. Raza Ali Sheikh, I.T.P. before the assessing officer on 28-12-1992. Again the fact of seeking the adjournment and allowing of the same for 3-1-1993 is not denied. Therefore, we are afraid that the case relied upon by the learned counsel is not relevant in the circumstances of this case. In that case the assessee was served through a registered letter, which was received back undelivered with the postal remarks "refuse to take delivery". The assessing officer framed ex parte assessment under section 23(4) of the Income Tax Act, 1922 on 15-12-1971 while the said notice sent through registered post and received undelivered was issued for 2-12-1971. Their Lordships observed that the assessee had a right of audience on the adjourned date i.e. 15-12-1971 but the same was denied to him by the I.T.O. while proceedings under section 23(4) of the Act who, therefore, acted in an illegal manner. As detailed above the assessee in this case was properly represented and the matter was adjourned at his request. Further the fact that no return was filed in this case and the one filed after being served with a notice under section 56 of the Ordinance was described to be a duplicate one contending that the original had already been filed with another assessing officer in Circle 10, Zone A, Lahore also speaks of the unwholesome conduct of the assessee. Before us the fact that the assessing officer issued further notice under section 13(1) of the Ordinance on 9-1-1993 and his observation as recorded in the assessment order that it was properly served upon the assessee has not been challenged. The finding of the appellate authority that assessment order could not be framed on the day for which the notice was served, as prior approval of IAC was required in the circumstances of the case also appears relevant and cogent. The other contention of the learned counsel for the appellant as also stated in the memo of appeal that provisions of Order 5, Rule 17, C.P.C. were not adhered to is again inappropriate. As observed earlier in this case the assessee was duly represented and the matter was adjourned at his request. Therefore, no question of observance of the procedure prescribed under Order 5, Rule 17, C.P.C. could arise at all.

4. The contentions of the appellant, therefore, when seen in the perspective of the above discussion do not bear any merit. An assessee who absents himself after putting in an appearance cannot be allowed to wriggle out of the mischief of default by seeking help from nice procedural technicalities. For that would amount to allow him premium for his default. Therefore, framing of assessment under section 63 of the Ordinance is upheld.

5. On merits the learned counsel for the appellant has contended that in parallel cases the assessees who had purchased shops in the same shopping centre and located next to the shop in question the revenue either accepted or agreed to much lower cost as against the one determined in his case. One of such parallel cases at NTN 1675731/17 of one of Mr. Abdul Qayyum Butt has been specifically referred to who purchased, Shop No.230-G, Panorama Centre, Lahore during the year 1991-92. In this case the department, on the basis of another case falling at NTN-05-17-1189288 of M/s. Al-Venus Zari House who had purchased Shops Nos.9-G and 10-G at Panorama Centre, Lahore, determined the value at Rs.7,000 per sq. ft. It may be added that the assessee M/s. Al-Venus Zari House, Kanari Bazar, Lahore purchaser of two Shops No.9-G and 10-G in the same shopping centre had agreed with the department to be assessed at this rate. In the parallel case relied upon by the assessing officer statedly the value of Shop No.250 was adopted by the department at Rs.13,000 per sq. ft. in the assessment year 1991-92. Learned counsel for the appellant has stressed that the shop purchased by the assessee is located at the extreme corner and, therefore, is comparatively less attractive for business purposes: He states that in the parallel case relied upon by the assessing officer the shop in question was located on the front and was definitely a better commercial attraction. Learned D.R., however, supports the order of the assessing officer on the basis of the parallel case as also other grounds as stated in the assessment order.

6. After hearing the parties we find a lot of force in the contentions as made by the learned counsel for the appellant qua the valuation of the shop in question. And, therefore, will order that the cost of the shop per sq. ft. shall be determined at Rs.7,000.

7. No argument has been advanced as far the addition under section 13(1)(aa) of the Ordinance at Rs.337,500 is concerned. We have already upheld the action of the assessing officer in proceeding ex parte. Therefore, we find that the addition made in this regard on failure of the assessee to reconcile his net wealth cannot be disturbed.

8. The appeal succeeds to the extent of reduction in the estimated value of the shop purchased by the assessee as aforesaid.

M.B.A./8/T.T?????????????????????????????????????????????????????????????????????????????????????? Order accordingly.