INCOME TAX APPEAL NO. 68/LB OF 1988-89, DECIDED ON 3RD JANUARY, 1995 VS INCOME TAX APPEAL NO. 68/LB OF 1988-89, DECIDED ON 3RD JANUARY, 1995
1995 P T D (Trib.) 1245
[Income-tax Appellate Tribunal Pakistan]
Before Nasim Sikandar, Judicial Member and Khalid Mahmood, Accountant Member
Income Tax Appeal No. 68/LB of 1988-89, decided on 03/01/1995.
(a) Incometax----
----Assessment---Addition---Assessment order made on pure surmises and conjectures and without bringing any material evidence on record cannot be allowed to stand in law---Suspicion and grave doubt cannot take place of legal proof---Assessing Officer is not entitled to make an assessment without reference to any evidence or material; he is not even entitled to make any guess without any evidence.
Suleman Haji Umar v. Controller of Estate Duty, Karachi (1975) 31 Tax 132 ref.
(b) Income-tax---
----Assessment---Estimate of income---Pre-condition--Round addition-- Assessee, a legal practitioner---Bulk of receipts of professional fees were through cheques and a list of the cases conducted by the assessee during the relevant year, was provided by assessee---Assessing Officer, held, could not disbelieve the particulars provided by the assessee without probing the matter in depth or bringing additional material on record---Round addition in the estimated receipt was clearly improper and illegal---Where an estimate had to be made, it should be based upon the facts and circumstances of the case as obtaining on record and not on the basis of whims and desires---Where, however, pre-condition of availability of material or evidence to support an estimate did not exist nor any serious attempt appeared to have ever been made to bring one to light and Assessing Officer had failed to support his estimate of receipts by any evidence worth the name, Income Tax Appellate Tribunal directed that declared receipts by the assessee be accepted.
Suleman Haji Umar v. Controller of Estate Duty, Karachi (1975) 31 Tax 132 and Dawood Corporation v. CIT, Karachi 1989 PTD 177 ref.
Muhammad Saleem Chaudhary for Appellant.
Qaisar M. Yahya, D.R. for Respondent.
ORDER
NASIM SIKANDAR, JUDICIAL MEMBER.---This further appeal by a practising Advocate assails an order recorded by AAC, Range-E, Lahore on 10-4-1988.
2. The assessee returned an income of Rs.64,700 for the year 1982-83. On selection of his case for total audit declared receipts at Rs.117,000 were rejected and estimated at Rs.150,000. No proper books of accounts as required under law were, found to have been maintained. The assessing officer also found the shown household expenses at Rs.36,000 to be inadequate and opined that the assessee must have been meeting the expenses from sources not disclosed to the Revenue. Accordingly after making certain adjustments in the profit and loss account total income was assessed at Rs.111,900. Learned first appellate authority by way of the impugned order found the estimated receipts to be somewhat excessive and, therefore, ordered their reduction to Rs.130,000. It was found that out of returned receipts at Rs.117,000 bulk of them, at Rs.95,000 were through cheques and,, therefore, duly verifiable. In case of additions out of profit and loss account partial relief was also allowed. However, the assessee still feels dissatisfied and hence this further appeal.
3. Learned counsel for the assessee contends that the reasons weighing with the assessing officer qua inadequacy of the declared household expenses and alleged under statement of declared receipts were totally unfounded. Therefore, these could not form basis for estimate of the income of the assessee. It is also stated that the assessing officer was duly provided with a list of the cases conducted by the assessee and in case of any doubt he could have summoned any of the parties for his satisfaction regarding professional fee actually charged. Learned counsel further contends that almost 90% of the receipts being through cheques the assessing officer clearly erred in law in disbelieving the declared version and estimating the receipts. It is vehemently argued that the first appellate authority did not allow adequate relief after having found most of the receipts to be verifiable and also the estimate of receipts to be excessive and unjustified.
4. On legal plane it is contended that an assessment order, like the one in question before, us, made on pure surmises and conjectures and without bringing any material or evidence on record, cannot be allowed to stand in law. Reliance in this connection is placed on (1975) 31 Tax 132 re: Suleman Haji Umar v. Controller of Estate Duty, Karachi. It is further stated that by now it is well-settled that suspicion and grave doubts cannot take place of legal proof. Also, that an assessing officer is not entitled to make an assessment without reference to any evidence or material; he is not even entitled to make any guess without any evidence. It is, therefore, submitted that the estimate of income in the year under review being purely a result of guess, work cannot be sustained.
5. Learned D.R. on the other hard, submits that the assessee having already had sufficient relief from the first appellate authority, no scope exists for further interference by this Tribunal.
6. After hearing the parties, we are inclined to agree with the submissions made for the assessee. In the presence of list of the cases conducted by the assessee during the income year the assessing officer could not disbelieve the same without probing the matter in depth or bringing additional material on record. Bulk of the receipts being through cheques the round addition in the estimated receipts was clearly improper and illegal. The other reasons assigned for disbelieving the declared version also appear in appropriate. We ,have been informed that in the total family of six member including the assessee, two male adult sons are serving Government Officers. That means half of the family members were earning hands with a reasonable quantum of income. Therefore, an important reason for rejection of declared version, inadequacy of the household expenses, is also against facts. We have noticed that after that relief allowed by the first appellate authority the interference with the returned receipts amounts to mere tinkering with the declared version. The remainder round addition of Rs.13,000 in the receipts would mean nothing else. Their Lordships of the Karachi High Court found in re: Dawood Corporation v. CIT, Karachi, 1989 PTD 177 that even where an estimate has to be made, it should be based upon the facts and circumstances of the case as obtaining on record and not on the basis of whims and desires. It needs to repeat that such pre-condition of availability of material or evidence to support an estimate never existed in this case nor any serious attempt appears to have ever been made to bring one to light.
7. This being so, we find that the assessing officer failed to support his estimate of receipts by any evidence worth the name. Learned first appellate authority also stopped short of allowing adequate relief by maintaining a round addition of Rs.13,000 for which no justification existed at all.
8. The declared receipts, in the circumstances, are directed to be accepted.
9.No other issue has been pressed by any party.
10.Appeal succeeds to the extent stated above.
M.B.A./121/(Trib.)/Order accordingly.