Income Tax Ordinance (XXXI of 1979)---

----S.13(2)---Cost of construction declared by assessee---Addition---If the difference in the declared value and the determined value is nominal or is not too low, the provisions of S.13(2), Income Tax Ordinance, 1979 would not be attracted.

1991 PTD (Trib.) 294 ref.

Ashiq Hussain for Appellant.

Haji Ahmad, D.R. for Respondent.

Date of hearing: 29th January, 1994.

ORDER

NASIM SIKANDAR (JUDICIAL MEMBER): --The assessee in this case is an individual and seeks indulgence of this Tribunal against the impugned order rendered by the CIT (Appeals-I1), Lahore on 7-9-1987.

2. This appeal was heard alongwith another Appeal ITA No.188/LB of 1988-89 (assessment year 1986-87) and disposed of by this Tribunal through its order, dated 20-4-1991. A miscellaneous application was subsequently made to assert that this Tribunal failed to dispose the grievance of the assessee against addition at Rs.45,175 made by the assessing officer under section 13(1)(d) of the Income Tax Ordinance. This application registered as MA No.104/LB of 1991-92 (assessment year 1986-87) was decided by this Tribunal through its order, dated 20-5-1993. A Division Bench ordered recalling of the aforesaid consolidated order in respect of two pleas which could not be disposed of through the aforesaid order. The first was that the Tribunal did not consider the addition of Rs.45,175 under the aforesaid provision of law and the second that the provisions of section 13(2) of the Income Tax Ordinance were not attracted in the circumstances of the case.

3. Learned counsel for the applicant contends that the assessing officer found the declared construction cost of a house at Rs.160 per sq. ft. to be on the lower side and, therefore, he added the difference between the declared value of the construction and the value determined by the assessing officer at Rs.45,175. It may be added that out of a total sum of IZs.525,175 declared on account of construction of house a sum of Rs.480,000 was considered to have been accounted for. Learned counsel for the applicant placing reliance upon a reported case of this Tribunal cited as 1991 PTD (Trib.) 294 contends that no addition in this case was warranted as the difference between the declared and adopted value was only 9% while in the above said reported case this Tribunal held the provisions of section 13 to be inapplicable where the difference between the declared and accepted amount fell around 13%. Learned D.R. on the other hand, contends that the assessee having declared cost of construction at Rs.160 per sq. ft only the assessing officer was justified in determining the same at Rs.175 per sq. ft. According to the Revenue the difference of Rs.45,175 was rightly considered as demand income as the assessee failed to establish the source of investment of the total sum calculated in this behalf.

4. After hearing the parties the contention put forth by the assessee when seen in the perspective of the aforesaid reported case of this Tribunal does bear weight. In that case a Single Bench of this Tribunal held that if the difference in the declared value and the determined value is nominal or is not too low", the provisions of section 13(2) were not attracted. Although the above said decision was rendered while judging the merits qua existence of circumstances to reopen the case yet by analogy the contention made for the applicant in this case also finds strength from this decision. In this case the difference between the declared and adopted value being only of a sum of Rs.15 per sq. ft. we will agree. with the submissions made at the Bar. And, therefore, will order that the aforesaid decision of this Tribunal shall be amended to the extent of deletion of the addition at Rs.45,175 made under section 13(1)(d) read with section 13(2) of the Income Tax Ordinance.

5. The other ground referred to above which we considered at the time of recalling of part of the earlier order is more of an argument rather than being an independent ground. The contention or argument is fructified when we have deleted the aforesaid amount.

6. The consolidated order rendered on 20-4-1991 in ITA No.884/LB of 1987-88 (assessment year 1986-87) and ITA No. 188/LB of 1989-90 (assessment year 1986-87) stands amended to the extent of deletion of addition under section 13(1)(d) at Rs.45,175.

M.BA./34/T ???

Order accordingly.