I.TAS. NOS.9897/LB OF 1991-92 AND 155/LB OF 1994, DECIDED ON 20TH DECEMBER, 1994. VS I.TAS. NOS.9897/LB OF 1991-92 AND 155/LB OF 1994, DECIDED ON 20TH DECEMBER, 1994., 1995 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 1369 (1994)

Per Nasim Sikandar, Judicial Member on difference between Abdul Rashid Qureshi, Judicial Member and Inam Elahi Sheikh, Accountant Member---

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

----Ss. 13(2) & 62---Addition---Deemed income ---Notice---Requirements-- Specific notice under S.13(2), Income Tax Ordinance, 1979 was required to be served and notice under S.62 of the Ordinance would not fulfil the legal requirement---Intention of law, however, will be served if an assessee is confronted with the function of the knowledge of the Revenue that any one or more of elements as detailed in S.13(1) of the Ordinance exist and its expression of intention that a particular sum or sums are to be taken as deemed income by determining or assigning a value on them---Reliance on principle of natural justice---Effect---[1994 PTD 123; I.TAs. Nos.449 to 451/IB of 1986-87 and (1981) 127 ITR 453 dissented from.].

A specific notice under section 13(2) of the Income Tax Ordinance, 1979 was required to be served and that the one issued under section 62 of the said Ordinance did not fulfil the legal requirement.

Provisions of section 13, Income Tax Ordinance, 1979 are not machinery provisions as such which speak only of seeking explanation in subsection (1) and of a reasonable opportunity under subsection (2). Whether or not a reasonable opportunity was allowed will largely depend upon facts of every case. It is however, clear that mentioning of section 13 or its sub-clauses as title of a notice or notices is not at all required. The intention of law will be served if any assessee is confronted with the factum of the knowledge of the Revenue that any one or more of elements as detailed in subsection (1) of section 13 of the Ordinance exist and its expression of intention that a particular sum or sums are to be taken as deemed income by determining or assigning a value on them.

Where reliance is placed only on natural justice or audi alteram partem, then if at one stage or the other the aggrieved person had been given a fair opportunity of representing his view point the defect in the initial order may be deemed to have been cured. If the statutory provision for notice be of mandatory nature then the order would be wholly void. But if there be no such provision or the provision be of directory nature then wherever a violation of this principle of natural justice is alleged, the Court may call upon the party alleging the same to prove prejudice before it sets aside the order. The provisions of section 13 of the Ordinance, only require seeking of an explanation of the assessee qua existence of all or any of the facts stated in subsection (1)(a) to (e) of the said section and to assign a value, where so required after allowing the assessee a reasonable opportunity in this behalf.

1994 PTD 123; I.TAs. Nos.449 to 451/113 of 1986-87, dated 5th October, 1987 and (1981) 127ITR 453 dissented from.

(1970) 75 ITR 33 fol.

1971 SCMR 681 distinguished.

(b)Affidavit---

----Value---Presumption of truth cannot be attached to an affidavit---Affidavit is a piece of evidence which alongwith other material on record can be taken into consideration before arriving at a finding---Official functionary, however, is not supposed to file counter-affidavit of the facts which are necessarily personal to an individual deponent.

Affidavits are statements on oath made before a person legally competent to administer them. These statements could be about matters not in dispute and are made only in order to confirm or deny a fact e.g. a person may declare his domicile by filing an affidavit to that effect. Till that fact is disputed, such declaration can be taken as a piece of evidence of his domicile on the ground that a wrong statement on oath can lead to a prosecution. A counter affidavit is equally a confirmation denial or declaration and its veracity or truth can only be reached if both the deponents are made to stand the test of cross- examination. Generally speaking, affidavits cannot be taken into account or accepted as a proof when the fact sought to be confirmed, denied or declared can be verified, confirmed or established by other available evidence. After all, an affidavit is nothing more than a one-sided declaration of a fact made by a person with a limitation that if proved incorrect, he could be prosecuted ` besides drawing of an adverse inference against the matter deposed. Therefore, a presumption of truth cannot be attached to an affidavit. Legal presumptions both rebut table and rebut table can only be created by statutes and no such presumption in law exists in favour of an affidavit. Where law creates a presumption and also declares it to be rebut able then the burden to dislodge such presumption rests on the party who challenges it. Till such time an adversary has successfully discharged the burden to rebut, law will presume a fact or set of facts to be existent in the manner it presumes by legal fiction. To say that a presumption of truth attaches to facts stated in an affidavit means that law will take these facts to be correct unless the other party proves them to be incorrect. This proposition is not at all acceptable in law. That an affidavit can be made or received in support of a fact till disputed, is totally different from saying that a presumption of truth attaches to it. Therefore, where a deponent is not produced for cross-examination, his affidavit loses all its force as probative piece of evidence. There is accordingly no question of attachment of an element of correctness or presumption of truth. A party against whom an affidavit has been filed will have a right to have the deponent in the dock for cross-examination. It is a piece of evidence which alongwith other material on record can be taken into consideration before arriving at a finding. A statement i by a deponent could be held to be unreliable by the Tribunal either on the basis of cross-examination of the deponent or by reference to other material on record leading to the inference that the statement made in the affidavit could not be held to be true.

An official functionary is not supposed to file a counter-affidavit of the facts which are necessarily personal to an individual deponent.

1991 PTD 217; 1989 PTD 1233; 1987 PTD 300 and (1966) 59 TTR 120 ref.

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

----Ss. 13 & 4---Qanun-e-Shahadat (10 of 1984), Art.59---Addition---Deemed income---Allegation of understatement of cost of construction of building by assessee---Expert's opinion---Value---Opinion of expert only assists a Court or a decision-maker in reaching a conclusion and is never of binding nature without regard to the expertise and excellence of knowledge or experience of the expert---Where the assessee obtained an estimation of cost from a person who had neither been designated as value under S.4 of the Income Tax Ordinance, 1979 nor his qualification or experience was brought on record; the report by him did not disclose the basis of estimation; the covered area of the construction determined by him with classification of construction was in a complete void and no request was ever made to examine the expert---Report submitted by such expert, held, could not be taken into account at all in circumstances.

An expert according to Article 59 of the Qanun-e-Shahadat, 1984 is a person specially skilled in foreign law, science or art or identity of handwriting or finger-impressions. An expert is one who is knowledgeable in specialized field that knowledge being obtained from either education or personal experience.

The opinion of experts are admissible in evidence on certain conditions. Mere fact that a person holds some position in a Development Agency will not make him an expert in any faculty till his qualifications and experience are brought to the notice of the Court or the official functionary who is to form an opinion upon a particular point. Opinions of experts have a weight age when it comes to decide a matter that involves ascertainment of a fact by or through scientific interpretations. However, expert opinions only assist a Court or decision-maker in reaching a conclusion and are never of binding nature without regard to the expertise and excellence of knowledge or experience of the expert.

In the present case the assessee obtained an estimation of cost from a person who had neither been designated as value under section 4 of the Ordinance, nor his qualifications or experience were brought on record. The report did not disclose the basis of estimation of values assigned to various building material. The covered area determined at 4502 sq. ft. and the classification, of construction as "D" Class was also in a complete void. No request was ever made to examine the alleged expert and therefore, the report submitted in this behalf could not be taken into account at all.

1989 PTD (Trib.) 39 and (1981) 127 ITR 453 distinguished.

(1975) 99 ITR 470 ref.

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

----Ss. 132(1)(a)(i) & 65---Decision in appeal---Remand---Additional assessment---Reassessment---Procedure---Appellate Authority can make directions while setting aside an assessment in whole or in part only---Such directions are binding upon an Assessing Officer but subject to their substantial compliance, an Assessing Officer is competent to conduct proceedings on remand as original assessment---Where an assessment is confirmed or upheld in part, that portion cannot be touched in re-assessment proceedings and appeal effect shall be given to such portion without interfering in them in any manner---Where, however, in the opinion of an Assessing Officer a case is made out for interference on account of under-assessment concealment or unexplained investments etc. with reference to the confirmed or modified portion,, he can proceed under S.65, Income Tax Ordinance, 1979 in the same manner as in a case of complete assessment---Such action will be subject to all restrictions and conditions inbuilt in S.65, Income Tax Ordinance, 1979 including bar of limitation for giving appeal effect to such portion is only a ministerial act as the assessment order to that extent already stands merged in the appellate order---Assessment set aside in toto irrespective of the grounds on which it was set aside or the directions contained in the remand order, the assessment proceedings became pending once again and the fresh assessment shall be completed in like manner an original assessment is made after complying with the directions contained in the remand---In such a case a source of income which was not included in the original assessment or was not subject-matter of appeal before the Appellate Authority may very well be included as in any original assessment proceedings.

The question to be considered is the use of word "or" as it appears in the provisions 132(1)(a)(i) of the Income Tax Ordinance. It has the significance and means equivalent to the word "and" implying conjunction and not disjunction. Assigning of such meaning to word "or" means that an Assessing Officer shall not shut his eyes to the facts that happen around him or come to his notice in the proceedings conducted after remand of an assessment. Although word "or" is normally used in disconjunctive sense, intention-of the legislature may be to read "or" and "and" one for the other. Total impact of the provision therefore, is that power of a first appellate authority to make a remand with directions is co-existent with the competency of an Assessing Officer to frame reassessment keeping in view the facts of every case. These powers are not mutually exclusive. Mention of both of them appears to be with an intention to clear ambiguity or doubt which could result from absence of any of them. The reason is simple. Remand of a matter carries with it a peculiar significance that the assessment proceedings are to be conducted afresh. The other orders an Appellate Authority can pass are definite in nature because proceedings come to an end so far as the First Appellate Authority is concerned. To confirm, reduce, enhance or annul an assessment entails termination of first appellate proceedings both for the Revenue as well as the assessee. However, in case of setting aside, the matter is left open wholly or partially depending upon the issue involved in first appeal and the terms of remand. It is very much legal for the First Appellate Authority to confirm part of the assessment order and to require the Assessing Officer to look afresh into a particular fact or aspect. To the extent an assessment order is upheld, both the First Appellate Authority as well as the Assessing Officer become function officio and cannot thereafter touch that portion of the assessment order, which stands confirmed. The remanding of a part of assessment order or setting aside whole of the assessment for a fresh or de novo proceedings are not one and the same thing. The scope of exercise in total re-assessment is wider while in case of partial remand, it will become restricted as the confirmed portion of the order will not be touched. An obvious instance of such situation can be confirmation or upholding or modification of trading results but setting aside some or all of profit and loss expenses. In such case even if the appellate order does not contain a direction to that effect, the message would clearly be that the Assessing Officer shall not directly or indirectly meddle with the trading account results.

The statute, it can safely be said, has not restricted the power, of an Assessing Officer on remand. Where the first appellate order contains no directions the Assessing Officer is on his own to steer the re-assessment proceedings. And where the order also makes certain directions these are, without an iota of doubt, binding upon the Assessing Officer. However, after complying with the directions in letter and spirit, the Assessing Officer is still left with the discretion to move at will in order to determine the real income or loss in a case. Limiting the Assessing Officer to only the words of remand would not always be possible. Also the authority and discretion allowed under the Ordinance to an Assessing Officer can neither be curtailed nor abridged by an Appellate Authority directly or indirectly. The scope of an inquiry after remand can very well be outlined by an appellate order without materially affecting his powers and functions under the Ordinance. All kinds of directions in the remanding appellate orders are binding guidelines aimed only to facilitate and not to frustrate re-assessment proceedings. Where in an appeal or assessment the A.A.C. sets aside the assessment and directs the I.T.O. to make a fresh assessment, the I.T.O. is bound by the directions of the Appellate Authority in making the fresh assessment but subject to such directions the I.T.O. has the same powers in fresh assessment as he had original, in making the assessment.

On remand, with or without a direction, there is no absolute bar on introduction of a new source of income or making of additions, which were neither made in the original assessment nor those were a subject-matter of appeal or had found mention in the directions accompanying remand.

The real test in such situation would not only be the directions contained in the remand order but also the fact whether or not a portion of the assessment order was confirmed, expressly or impliedly. Where an assessment is totally set aside, there is no question of confirmation of any part of it and hence the issue becomes wide open. For, on total remand an assessment becomes pending once again and therefore, there can hardly arise a question of escapement of assessment or invocation of the escapement provisions under section 65 of the Income Tax Ordinance.

Once a return becomes pending on account of the assessment having been set aside there is no assessment in the field capable of execution. The assessee is free to take up fresh defence and new pleas to the objections of an Assessing Officer. The proceedings in the original assessment order are not relevant from the stage the assessment order has been set aside except in so far as these are expressly adopted by an assessee or the Assessing Officer refers to them to bring out approbation and reprobation, contradictions or mutually destructive pleas. Also, the arguments on the basis of which an assessment is set aside cannot be held to be of any significance in fresh assessment proceedings. These do form basis of the directions in a remand order where there are any. It would, therefore, be advisable for an Assessing Officer to keep them in mind while framing fresh assessment in order to meet objections contained in them. Otherwise these arguments do not in any manner control the jurisdiction of an Assessing Officer to enable one to contend that a particular matter was or was not in issue before the Appellate Authority.

An Appellate Authority can make directions while setting aside an assessment in whole or in part only. These directions are binding upon an Assessing Officer but subject to their substantial compliance an Assessing Officer is competent to conduct proceedings on remand as in original assessment. Where an assessment is confirmed or upheld in part, that portion cannot be touched in re-assessment proceedings and appeal effect shall be given to such portion without interfering in them in any manner: However, where in the opinion of an Assessing Officer a case is made out for interference on account of under assessment, concealment or unexplained investment etc. with reference to the confirmed or modified portion, he can proceed under section 65 of the Ordinance in the same manner as in a case of completed assessment. Such action will be subject to all restrictions and conditions inbuilt in section 65 including bar of limitation because giving appeal effect to such portion is only a ministerial act as the assessment order to that extent already stands merged in the appellate order. An assessment set aside in toto irrespective of the grounds on which it was set aside or the directions contained in the remand order the assessment proceedings became pending once again and the fresh assessment shall be completed in like manner an original assessment is made after complying with the directions contained in the remand. In such case a source of income which was not included in the original assessment or was not subject-matter of appeal before the Appellate Authority may very well be included as in any original assessment proceedings.

In the present case, the assessment order was set aside in its entirety and therefore, the Assessing Officer was not required to proceed under section 65 of the Ordinance in order to make the impugned addition. Same will be the conclusion even if the Assessing Officer is restricted to the words of remand inasmuch as the Appellate Authority desired close scrutiny of books wherefrom the Assessing Officer found that investment in construction of factory building had been grossly understated.

Salehon and others v. The State PLD 1969 SC 217; B.P. Biscuit Factory v. W.T.O., Karachi 1981 PTD 217; Rambilas Chandram v. C.I.T. (1985) 156 ITR 344; C.I.T. v. Seth Mankilal Fomra (1975) 99 ITR 470; C.I.T. Bandaru Sanyasi Raju (1981) 127 ITR 453; Pulpati Subbarao & Co. v. A.A) . (1959) 35 ITR 673; Cawnpure Chemical Works Limited v. C.I.T. 1993 P'1' d Note 280 at p. 374 = 197 ITR 296; Kartar Singh v. C.I.T., Amritsar (1979) 40 Tax 205; Sri Gajalakshmi Ginning Factory Limited v. C.I.T. (1952) 22 ITR 502; (1960) 29 ITR 265; (1975) 99 ITR 236; (1977) 106 ITR 84; Naganathei Iyer v. C.I.T. (1960) 60 ITR 647; (1992). PTD 709; (1960) 2 Tax 429 (Trib.); (1964) 10 Tax 122 (Trib.) and Sir Rajindranath Mukerjee v. C.I.T. (1934) 2 ITR 71 ref.

(f) Words and phrases---

---"And" and "or"---Disjunctive and conjunctive uses.

Sikandar Hayat and Malik Abdul Latif for Appellant.

Mrs. Sabiha Mujahid, D.R. for Respondent.

Date of hearing: 1st June 1994.

ORDER

A registered firm deriving income as commission agents of hides and skins had filed these two appeals against two separate orders one dated 18-1-1992 recorded by the learned C.I.T.(A), Zone 2, Multan and the other dated 19-12-1993 recorded by the learned C.I.T.(A), Zone 1, Multan. The first appeal bearing I.T.A. No.9897/LB/1991-92 was withdrawn by the learned counsel of the assessee at the time of hearing of these appeals and the same is dismissed as withdrawn.

2. The order of the learned C.I.T.(A) dated 19-12-1993 has been agitated on various grounds to challenge the rejection of the declared version, an addition made in the Arhat Account and an addition made under section 13(1)(d) of the Income Tax Ordinance, 1979 (hereinafter called the Ordinance). The assessee has also agitated formulation of the assessment pending the decision of the Tribunal of the earlier appeal already filed against the setting aside of the assessment. The assessee has also agitated various add back in the P&L expenses.

3. The relevant facts in brief are that the assessee filed a return to. declare income of Rs.1,40,807 which was assessed at Rs.2,52,300 vide order under section 62 of the Ordinance dated 27-2-1989. The assessee had declared the gross commission receipt at Rs.4,69,248 and the expenses at Rs.3,28,440. The assessing officer rejected the declared version and made an addition of Rs.50,000 in the commission receipts and the add backs in the P&L expenses included, inter alia, an addition of Rs.40,000 in the Kat Account claimed at Rs.149,369. This assessment was set aside by the learned C.I.T.(A), Multan vide the order dated 10-12-1989. It appears that no further appeal was filed against the order, dated 10-12-1989. The reassessment was made on 26-5-1990 at an income of Rs.2,59,807 after making the additions in the Arhat receipts at 50,000 and Mazdoor Khata and Salt Khata at Rs.55,000. Additions in the P&L expenses included an addition of Rs.20,000 in the Kat Account. This assessment was again set aside by the learned C.I.T.(A), Zone 2, Multan vide order dated 18-1-1992 which was decided alongwith an appeal for the year 1989-90. The assessee filed a further appeal against such setting aside which was registered with I.TA. No.9897/LB/1991-92 with the Tribunal and has now been withdrawn by the assessee. After the setting aside of the assessment by the learned C.I.T.(A) vide order, dated 18-1-1992, the assessing officer started reassessment proceedings and subjected the books of accounts to close scrutiny. The assessing officer found that the assessee had invested certain amounts on construction of a tannery in the Industrial Estate, Multan. The assessee had declared the cost of the same at Rs.82,768.70 in the balance-sheet as on 30-6-1988 which was considered to be low. The assessee was asked to explain the investment on the tannery building. The assessee took the plea that the building of the tannery was old one and he produced a completion certificate dated 12-1-1988, which was said to have been obtained before the completion of the building to avoid penalty proceedings. Spot visits were made and a committee was constituted by the IA.C. Range I, Multan. The visit was made on 7-1-1993 and the results were confronted to the assessee by issuance of a notice under section 62 of the Ordinance: The cost of construction was estimated at Rs.8,34,600. The assessing officer proposed to adopt the cost of construction of 9,786 sq. ft. at Rs.85 per sq. ft. to arrive at the total investment of Rs.8,31,810. It was found that out of the declared cost of Rs.82,768, the assessee had made payments of Rs.43,794 on account of land, thus leaving an amount of Rs.38,975 on account of construction of factory. Thus, the assessing officer proposed to make an addition of Rs.7,92,835 (Rs.8,31,810 - Rs.38,975) under section 13 of the Ordinance.

4.In response the assessee took the plea that the building had not been completed up to 30-6-1988 or even up to 30-6-1989. It was submitted that the completion certificate had been obtained to avoid penalties and that only 4502 sq. ft. had been constructed up to 30-6-1988. The rate of bricks adopted by the Committee was also disputed. The estimate of construction cost made by the Committee was disputed as excessive on various counts and also it was submitted that two boundary walls did not belong to the assessee. The assessee also submitted an estimate of cost of construction prepared by the XEN of Operation and Maintenance Division II WASA/MDA, Multan and also an affidavit of one of the partners to depose that he had completed the factory after taking over the same from the firm after 30-6-1989. This reply was not found satisfactory and the estimate of the Deputy Director as well as the affidavit were held to be after-thoughts. Thus, an addition of Rs.7,92,835 was made under section 13(1)(d) of the Ordinance. The drawings of the partners were also found to be low. Kat was found to be allowed to unverifiable parties. Thus, the assessing officer made an addition of Rs.40,000 in the Commission Receipts and an addition of Rs.5,000 was made in the Labour/Salt Account. In the P&L expenses the additions included an amount of Rs.20,000 in the Kat. Thus, total income was determined at Rs.1,016,642. The learned C.I.T.(A) maintained this treatment and dismissed the assessee's appeal.

5. The learned counsel of the assessee-appellant Mr. Sikandar Hayat Khan has attacked the impugned orders on various grounds. The rejection of the declared version was seriously attacked by the learned counsel with the plea that the assessing officer had not pointed out any specific defects although the first appellate authority had directed the assessing officer to do so in the two earlier orders when the assessments were set aside. The learned counsel of the assessee also submitted that the low drawings of the partners was not a sufficient ground to reject the declared version. The learned counsel relied on the following decisions to support the contention:--

(a) (1970) 75 ITR 33.

(b) 1994 PTD 123.

(c) I.TAs. Nos.449 to 451/IB/1986-87, dated 5-10-1987.

On the issue of the addition under section 13(1)(d) of the Ordinance, the learned counsel of the assessee strong argued that the assessing officer had no jurisdiction to travel beyond the directions of the learned C.I.T.(A) to make a new addition of income. The learned counsel relied on an Indian decision reported as (1981) 127 ITR 453 to support this contention. It was further argued by the learned counsel that the assessee had already faithfully disclosed the construction cost in the balance-sheet. It was also argued that no specific notice under section 13 of the Ordinance had been issued before making the addition. As per the learned counsel of the assessee a notice issued under section 62 of the Ordinance, as done in this case, could not be equated with the notice under section 13(2) of the Ordinance. Thus, the plea of the learned counsel of the assessee was that the assessee had not been allowed a reasonable opportunity before the addition was made. The learned counsel relied on the following decision to support this contention:--

(a) 1971 SCMR 681.

(b) 1991 PTD217.

(c) 1989 PTD 1233.

(d) 1987 PTD 300.

The counsel of the assessee further argued that the approval of the IA.C. had not been obtained properly and he disputed the observations of the learned C.I.T.(A) at page 8 of the impugned order, according to which the permission had duly been accorded by the IA.C. Range-I, Multau. On the quantum of addition the learned counsel of the assessee strongly disputed that the area covered adopted by the Committee was wrong and had no basis. The learned counsel also disputed the valuation adopted at Rs.85 per sq. ft. as against the valuation made by an expert i.e. Deputy Director of WASA. The learned counsel of the assessee submitted that the valuation made by a Committee comprising of IA.C., an I.T.O. and two Inspectors could not be considered more favour ably as against the report of the Deputy Director who is an expert. The learned counsel of the assessee' referred to the provisions of section 45 of the Evidence Act. The learned counsel of the assessee also submitted that the IA.C. had directed the assessing officer to adopt the valuation at Rs.85 per sq. ft. which according to him was not proper. The learned counsel relied on a decision reported as (1966) 59 ITR 120 to support this contention. The learned counsel also submitted that the inquiry was conducted on 5-1-1992 and thus the Committee could not give certain finding that the building had been constructed up to 30-6-1988 to cover an area of 7,986 sq. ft. The learned counsel further reiterated that in the reassessment proceedings income from another source could not be assessed. Reliance was placed on a decision reported as (1979) 40 Tax 205 in addition to the decision reported as (1981) 127 ITR 453 already referred to above. On the issue of P&L expenses the learned counsel of the assessee argued that the additions had been made without any defects and reliance was placed on a decision reported as 1989 PTD (Trib.) 39. On the issue of Labour/Salt Account, it was pointed out that the assessing officer has not mentioned the amount of claim and thus the addition was disputed.

6.The learned D.R. on the other hand, supported the orders of the departmental officers with the contention that the assessing officer had received the information from the official quarters that the building had been completed by December 1987 and thus that information was authentic. With this argument the learned D.R. supported the addition made under section 13 of the Ordinance. The learned D.R. also submitted that there was no requirement to give a specific notice under section 13 of the Ordinance. It was submitted that the law requires only the provision of a proper opportunity, which had been allowed in this case. It was also submitted that the assessee never raised any, objection with regard to the issuance of a notice under section 13 of the Ordinance or section 62 of the Ordinance at the time of assessment. It was also submitted that the assessing officer had duly confronted the assessee with the proposed valuation of Rs.85 per sq. ft. and that the I.A.C. had only suggested the amount of Rs.86 per sq. ft. It was further submitted by the learned D.R. that the I.A.C.'s approval for valuation as well as an addition had been obtained on 13-6-1993 whereas the assessment had been made on 21-6-1993. The learned D.R. further submitted that the assessee had been duly confronted with the proposed additions on Arhat and Kat vide notice dated 14-10-1992. With these submissions the learned D.R. supported the orders of the departmental officials.

7.The arguments of both the parties have been considered and relevant orders perused. We find a lot of force in the submissions of the learned counsel of the assessee on the issue of rejection of trading results. However, we may mention here that the assessee has not prepared the accounts, i.e. balance sheet and trading and profit and loss account on the traditional method whereby the trading items and P&L items are segregated or various categories of assets and liabilities i.e. fixed assets, current assets and capital and liabilities are usually segregated. On the credit side of the P&L account, the assessee has shown only the commission receipts whereas on the debit side, all the expenses including Kat, shop expenses, labour charges etc. had been recorded. In the balance-sheet all the assets are listed on one side starting from the bank balances and ending with the amounts due from various parties. The fixed assets i.e. scooter and the tannery construction are also appearing in between these two major expenses in the balance-sheet. However, the fixed assets had not been shown separately to attract the attention. On the liability side the capital of the partners as well as the creditors had been listed without segregation. In these circumstances, we feel that the assessing officer should have scrutinized the commission receipts, as directed by the learned C.I.T.(A) in the earlier two accounts and the major expenses to verify them. The assessing officer has not pointed out any unverifiable items in commission receipts or Kat account although he was directed to do so by the first appellate authority in the earlier two rounds. The add backs in the P&L expenses had been made without pointing out any specific defects. In these circumstances, we direct that the declared trading results should be accepted in this year and thus no addition could be made in the business income.

8. We, are however, not greatly convinced by the arguments of the learned counsel on the issue of addition under section 13(1)(d) of the Ordinance although he has very ably argued the case for the assessee appellant. The contention of the assessee is that he had constructed only 4502 sq. ft. and the total cost of such construction as well as land has been declared at Rs.82,768. After deducting the cost of land, the total cost of construction comes to Rs.38,975 and this cost is too low even for the admitted covered area. The learned counsel has filed a copy of the estimation of cost of office and tanning shed as prepared by the Deputy Collector of WASA. However, this estimation itself is not dated and it is not clear as to how he has ascertained these figures given in the certificate. The affidavit of a partner of the firm has rightly been refuted as he is not an independent person. The assessee has not produced any reliable evidence to show that the building has not been completed by 30-6-1988. In the presence of a completion certificate the assessee should have come up with some concrete evidence to show that the building was not complete up to 30-6-1988. The construction cost adopted at Rs.85 per sq. ft. does not appear to be excessive. However, the plea of the assessee with regard to two walls of boundary requires consideration. The assessing officer has adopted the total cost of construction of boundary wall at Rs.80,000 In view of the assessee's plea, this estimate should have been halved to Rs.40,000 In these circumstances the addition made under section 13(1)(d) of the Ordinance may be reduced by Rs.40,000.

9. We are not convinced by the arguments of the learned counsel of the assessee with regard to the opportunity given to the assessee as there is no requirement of the law that a specific notice under section 13 of the Ordinance has to be given. The assessee has been given proper opportunity and a specific notice was issued under section 62 of the Ordinance. The approval of the IA.C has also been obtained as recorded by the learned C.I.T.(A). There is also no force in the arguments of the learned counsel of the assessee that the assessing officer could not introduce a new source of income at this stage. In the case reported as (1981) 127 ITR 453 the Andhra Pradesh High Court has refused to adjudicate this question as the same was not before them. However, in the same judgment another decision of Madras High Court reported as (1975) 99 ITR 470 has been discussed wherein it was held that the assessing officer could consider the matter afresh after the assessment was set aside. It may be mentioned here that in the first round of litigation when the assessment was set aside, by the learned C.I.T.(A) the assessing officer was directed to subject the accounts books to close scrutiny. It may be useful to reproduce the relevant part of the order of the learned C.I.T.(A), dated 10-12-1989 which reads as follows:--

"In this case as has been pointed out above only one regular assessment was made i.e. for the assessment year 1978-79 which incidentally is for the first year of the business and now constitutes remote history of the case. Ever since the assessment year 1979-80, assessment has been made under section 59(1). The I.T.O. should have subjected the account book to close scrutiny, he ought to have been attempted to verify the discount paid and the parties on whose behalf sales of hide and skin has been effected Normally the addresses given in the books are complete and without actual attempt of verification these cannot be held to be fake. Hence the assessment is set aside to be made de novo after examination of account books in the light of above instructions."

In the second round again the learned C.I.T.(A), Zone-2, Multan vide order, dated 18-1-1992 directed the assessing officer to implement the decision of the learned C.I.T.(A) in her order dated 10-12-1989. Thus, two orders of the learned C.I.T.(A) have become binding on the parties now.

10. As a result the assessee's appeal succeed to the extent that the business income declared is directed to be accepted whereas the addition under section 13(1)(d) of the Ordinance is reduced by Rs.40,000.

(Sd.)

Inam Elahi Sheikh, Accountant Member.

11. ABDUL RASHID QURESHI (JUDICIAL MEMBER).--- Having carefully read the proposed order of my learned colleague I readily agree with him for accepting trading result relating to business income of the assessee and also deletion of Rs.40,000 from the cost of construction of a shed. However, I am reluctant, nay have strong reservation, for maintaining proposed balance addition representing cost of construction of a shed as determined by the I.T.O. In reaching this conclusion I have relied on certain legal and factual grounds, which though ably articulated by learned counsel of the assessee, did not receive due recognition although my learned colleague has stated in para. 8 that learned counsel of the assessee has very ably argued case for the assessee. Therefore, I am taking up these very legal and factual grounds, which I believe, will clinch the issue in favour of the assessee.

12.One basic thing to be highlighted here is that in this case first assessment was made on 27-2-1989 on net income of Rs.253307 which however was set aside by learned C.I.T.(A) vide order dated 10-12-1989. Thereafter reassessment was made on net income of Rs.259807 vide order dated 26-5-1990, and this assessment was also set aside by learned C.I.T.(A) on the basis of order, dated 18-1-1992. Against this order an appeal was filed before the learned Tribunal on 20-5-1992. While this appeal was still pending the I.T.O. made an assessment for the third time by virtue of order, dated 21-6-1993 on net income of Rs.1016642. This time quantum of income was upheld vide learned C.I.T. (Appeals) order, dated 19-12-1993. Learned counsel of the assessee having withdrawn first appeal against order of learned C.I.T. (Appeals) the present appeal bearing I.TA. No.155/LB/1994 is now before me. On the basis of the facts and documentary material available on record there is no manner of doubt that first assessment was set aside for a close scrutiny of books of account, and in stating so I have relied on the relevant part of learned C.I.T.(A) order, dated 10-12-1989 which reads that, "the I.T.O. should have subjected the account books to close scrutiny, he ought to have attempted to verify the discount paid and the parties on whose behalf sales of hides and skins had been affected". In the second round learned C.I.T.(A) vide order dated 18-1-.1992, directed the assessing officer to implement the decision of learned . C.I.T.(A) recorded in order dated 10-12-1989. From this evidence on record and the observations of my learned colleague on bottom of page 8, I am fully justified to state that no direction was passed by any of the C.I.T.(A), to make a probe with regard to cost of construction of the shed at a time when the assessee was involved in a vicious circle of reassessment. With this relevant finding, I now proceed to examine whether the assessment 'in hand on the basis of learned C.I.T.'s (A) order dated 18-1-1992, was at large for reassessment or had to be made in accordance with specific directions already given to the I.T.O. vide learned C.I.T.(A) order dated 10-12-1989. This is purely a legal question and is dealt with accordingly.

13. The first case which comes to my mind is that of Pulipati Subbarao & Company v. Appellate Assistant Commissioner of Income-tax, reported as (1959) 35 ITR 673 (AP). In this case the petitioner firm, which was previously assessed in the status of a registered firm, was assessed for the year 1952-53 as an unregistered firm, on the ground that it did not file an application for registration. The petitioner appealed to the Appellate Assistant Commissioner not on the actual assessment but only with regard to the refusal of the Income Tax Officer to treat the firm as a registered firm. The Appellate Assistant Commissioner was satisfied that there was an application for registration. He, therefore, set aside the assessment and directed the Income Tax Officer to receive a duplicate application and to deal with it according to law. The Income Tax Officer called upon the petitioner to produce its Account Books to make a fresh assessment. The petitioner applied to High Court for the issue of a writ of prohibition restraining the Income Tax Officer from making a de novo assessment. Held, that the order of the Appellate Assistant Commissioner did not contain a direction that the Income Tax Officer should proceed to make a fresh assessment such as was envisaged under section 31(3)(b) of the Income Tax Act, the order was specific and all that the Appellate Assistant Commissioner directed the officer to do was to receive a duplicate copy of the application for registration and dispose of it according to law, and therefore, it was not open to the Officer to conduct a fresh enquiry and proceed to make a fresh assessment:

14. In another case cited as (1981) 127 ITR 453 (AP), it, was held that while disposing of an appeal the learned Appellate Assistant Commissioner is within his jurisdiction to allow the appeal partly and remand partially with certain directions and the Income Tax Officer is bound to complete the assessment in accordance with the directions given therein.

15. Division Bench of the Tribunal in I.TAs. Nos.145-146(IB)/85-86, dated 26-6-1986 considered the limitation under which the Income Tax Officer is placed while making reassessment and has pointed out in para. 17, that "where an assessment is set aside by the Appellate Tribunal and remanded to the Income Tax Officer, it is not open to him to introduce into the assessment new sources of income so as to enhance the assessment. Any power to enhance is confined to the old sources of income which was subject-matter of appeal to the Appellate Tribunal". This was held in (1979) 40 Tax 205 (H.C. India). Similar position was taken in (1977) 106 ITR 84, wherein it was held that, "the learned Appellate Assistant Commissioner was not competent to direct assessment in respect of income from other sources which were not considered by the Income Tax Officer nor on the basis of material which had not been considered by him". This view was also endorsed in (1979) 40 Tax '205 (P&H).

16. In view of the above authorities, I have no hesitation in my mind that the Income Tax Officer while making assessment for the third time was legally debarred to make any probe with regard to another issue for which he did not receive any directions from learned C.I.T.(A). There is thus no legal justification to sustain the balance impugned addition worth Rs.7,52,835.

17. On going through the evidence available on record I find that addition under section 13(1)(d) was proposed on the basis of a notice under section 62 served on the assessee bearing No.3,03, dated 25-10-1992. Subsequently after adjusting cost of construction shown by the assessee, a sum of Rs.7,92,835 was charged to tax under section 13(1)(d). An interesting legal question for consideration here, therefore is, whether a notice under section 62 can be equated with that of section 13(1)(d). This question was examined by the Tribunal in 1989 PTD (Trib.) 1233. In this case on page 1239, the Tribunal while relying on a decision cited as I.TAs. Nos.6292, 6293, 1258 and 1257/LB of 1987-88, dated 31-7-1988 had quoted from it as under:--

"Notice under section 62 of the Ordinance could not be considered as a substitute of requirement of section 13 of the Ordinance. Though in the language used in the section 13 of the Ordinance no specific, notice has been provided but the provision after giving a reasonable opportunity to the assessee of being heard as added by Finance Ordinance, 1980 in subsection (2) of section 13 of the Ordinance leaves us in no doubt that reasonable opportunity is to be afforded to the assessee on specific issue of addition as deemed income under any sub-clause of section 13 of the Ordinance and that can be only in the form of a notice. Under section 62 of the Ordinance before assessing the total income of an assessee, the I.T.O. has been empowered to call fir the evidence on specific points. The word `other evidence' as mentioned in the language of section 62 of the Ordinance is relevant four the purposes of determination of quantum of assessment of income. It cannot be considered to be inclusive of income to be assessed under section 13 of the Ordinance as deemed income."

18. The order of Tribunal reported as (1989) PTD (Trib.) 1233, case was heard and disposed of by Mian Abdul Khaliq J.M. Lahore and Mr. Inam Elahi Sheikh, Accountant Member, Lahore. I do appreciate, that although this case was cited with a lot of emphasis by learned counsel of the assessee and even my learned colleague was signatory to it, yet he has not even referred to it. In this scenario I am more than confident to conclude that in the absence of a specific notice under section 13(1)(d) the impugned addition is illegal.

19. I now turn to support my finding on the basis of some other cases, one of them being 1989 PTD 308 (Trib.) In this case a Division Bench of the Tribunal has quoted with advantage from a case reported as 1971 SCMR 681, wherein it was held by the Supreme Court that where notice required to be given by the statute is mandatory notice, then the failure to comply with such mandatory requirement of the statute would render the act void ab initio as being an acts performed in the disregard of the provisions of the statute. Furthermore, any further action taken on the basis of such a void order would also be vitiated and the default at the initial stage would be incurable by hearing at a subsequent stage. Before proceeding further I may further add that the impugned addition was not made in accordance with law and in stating so reliance is placed on cases mentioned hereafter, such as 1989 PTD 150 (Trib.), (1987) PTD 300 (Trib.), 1991 PTD 758 (Trib.) Reputed cases just mentioned do not support the conclusion of my learned colleague.

20. On the basis of evidence available on record, I have noted that cost of construction of shed under consideration was found by a Committee headed by the Inspecting Additional Commissioner, of which the Income Tax Officer was also a Member. This Committee, the members of which were subordinate to the IA.C. could not have made a decision with regard to the cost of construction against his views, and therefore, in this exercise the I.T.O. was not a free agent. Such computation of cost of construction, was therefore, devoid of any rationality and in stating so I have drawn strength from a case reported as 1990 PTD 974 (Karachi High Court) wherein it was held that, "in arriving at his decision the Officer should not be influenced by any person, be he his superior officer or any one else".

21. In support of the above conclusion, I have also relied on 1991 PTD 217 wherein Saleem Akhtar, J. speaking for the Court has stated that "although the Income Tax Officer is required to seek prior approval for framing an assessment under section 65, yet he is under no obligation to eek approval of the assessment that he proposes to make".

22. Summing up this point, it may be stated that since computation of cost of construction of the shed was not the result of an independent approach, my learned colleague was not justified to have approved the estimates of the authorities below. While there can be an administrative approval of the conduct of the Income Tax Officer yet in the completion of assessment such a conduct cannot be approved nor the consequential income which is subjected to tax.

23. Now it is my duty to examine, whether under the circumstances of this case, cost of construction of the shed which was classified as D-class and was valued at Rs.78,163 could be discarded by the Income Tax Officer as also an affidavit of a partner. Taking up the first issue, it is worthwhile to put up on record, that report of an expert would carry greater weight in comparison to the report prepared by a committee headed by the I.A.C. In saying so reliance has been placed on section 45 of the Evidence Act, 1872 and 1982 PTD (Trib.) 15. In this case the Tribunal relied on a case 1976 PCr.LJ 918, wherein it was held that the opinion of the qualified experts being more exhaustive and logical merited acceptance. The assessing officer did not assign any reason for concurring with the opinion of the F.I.A. expert."

24. Last point, which has been dealt with by my learned colleague refers to the non-acceptance of an affidavit by a partner of the firm. In my opinion an affidavit has a presumption of truth attached to it, unless it is disproved by the other party against, whom it may be used. In respect of the case before me no exercise was carried out by the Income Tax Officer to demolish affidavit of the partner nor was such an attempt made on the appellate stages. Even a counter affidavit from the Income Tax Officer was not requisitioned to demolish stand of the assessee. In consequence thereof present affidavit has got to be accepted as a piece of evidence against the Revenue.

25. The above discussion would support the view that on the basis of legal flaws built in the assessment and the appellate orders, the impugned addition representing cost of construction needs to be struck down on the basis of being ab initio illegal. It also needs to be struck down on the alternative reasons as well. Therefore, in a nutshell the position is that by disagreeing respectfully with the order of my learned colleague, I hereby order deletion of the impugned addition worth Rs.7,52,835.

(Sd.)

Abdul Rashid Qureshi

Judicial Member

Since a difference of opinion has arisen between me and my learned colleague the learned Chairman is requested to exercise his powers under section 33(7) of the Income tax Ordinance, 1979 to resolve the following question of law-

"Whether on the far and in the circumstances of this case balance addition amounting to Rs.7,52,835 representing cost of construction of a shed can be legally maintained?'

(Sd.)

Abdul Rashid Qureshi,

Judicial Member.

(Sd.)

Inam Ellahi Sheikh."

Accountant Member

.

26. NASIM SIKANDAR (JUDICIAL MEMBER).--The above question has been referred to me under section 133(7) of the Income Tax Ordinance, 1979 (for short the Ordinance) on account of difference of opinion between the learned Division Bench, Mr. Inam Ellahi Sheikh, Accountant Member and Mr. Abdul Rashid Qureshi, Judicial Member.

27.The question as framed has both legal as well as factual dimensions. The legal aspect includes competency of the assessing officer to make addition under section 13(1)(d) of the Ordinance after remand of case when to the earlier two rounds the issues before the assessing officer and the appellate forum related only to trading and profit and loss additions; the legal status of inspection committee constituted and headed by the concerned IA.C. and the value of the report vis-a-vis the one made by an alleged engineer; the probative value of the affidavit submitted by an ex partner of the firm Mr. Javed Tariq and the absence of a specific notice allegedly required before making of an addition under section 13(1)(d) of the Ordinance. The factual aspects relate to the nature and extent of building constructed during the period relevant to the assessment year in question ending on 30-6-1989 as well as absence of a notice under section 13 of the Ordinance and according to approval by IA.C..' as a matter of fact.

28.Learned Accountant Member per order recorded above rejected the report obtained from a Deputy Director of a development agency giving estimates of the constructed area as well as the affidavit submitted by the said ex partners. It was also found that no specific notice under section 13 of the Ordinance was required and the one issued under section 62 of the Ordinance fulfilled the legal requirements. On the issue of introduction of a new source of income after remand, learned Accountant Member disagreed with the preposition advanced by the assessee. In this connection difference between the findings recorded by the two Indian High Courts was pointed out. Apparently learned Accountant Member also impliedly held that the remand order directing scrutiny of books permitted the kind of exercise undertaken by the assessing officer and the resultant addition.

29.Learned Judicial Member on the other hand accepted both of the above two legal objections--

(i) that a specific notice under section 13 was required and its absence had resulted into denial of proper opportunity, and

(ii) that the assessing officer was not competent to introduce a new source of income after remand. In favour of the first objection he held the ratio settled in cases relied upon by the assessee to be clearly applicable. These cases are, 1971 SCMR 681 re: Collector, Sahiwal v. Muhammad Akhtar, 1991 PTD 217, 1989 PTD (Trib.) 1233 and 19 PTD (Trib.) 300. In favour of second issue reliance was placed upon (1959) 35 ITR 673 (AP), (1981) 127 ITR 453 (AP), (1977) 106 ITR 84 and (1979) 40 Tax 205.

Learned Judicial Member was also of the opinion that formation of Inspection Committee with the IA.C. heading it caused an illegal bias in favour of the report submitted by that Committee and in a way influenced the independent and free mind of the assessing officer. The cost estimation of the construction in question by an engineer was also favoured on the expertise of the reporter qua the one submitted by a non-technical departmental Committee. The discarding of said affidavit by the authorities below and the learned Accountant Member was also disagreed. Hence his view that the impugned addition representing cost of construction needed to be struck down in its totality.

30. Taking up first legal objection that a specific notice under section 13(2) of the Ordinance was required to be served and that the one issued under section 62 did not fulfil the legal requirement, I find myself in total agreement with the findings recorded by learned Accountant Member. This issue has recently been considered by a larger Bench of this Tribunal. In that case reported as 1995 PTD (Trib.) 624 = (1995) 71 Tax 269 all the objections raised before the learned Division Bench in this case were considered. Also whole of the case-law relied upon by the assessee in favour of the objections was considered and repelled. Learned Chairman, Mr. Muhammad Mujib Ullah Siddiqui, speaking for the Bench concluded that:--

"It requires no emphasis that in either situation the assessing officer shall provide necessary time as required according to the circumstances of each case to adduce evidence if any, and produce documentary evidence or other material as deemed fit by an assessee. It means that the reasonable opportunity of being heard is to be provided in both the eventualities and that will serve the requirements of law and the principles of natural justice."

31. The larger Bench decision can be summed up by saying that provisions of section 13 are not machinery provisions as such which speak only of seeking explanation in subsection (1) and of a reasonable opportunity under subsection (2). Whether or not a reasonable opportunity was allowed will largely depend upon facts of every case. It is however, clear that mentioning of section 13 or its sub-clauses as title of a notice or notices is not at all required. The intention of law will be served if any assessee is confronted with the factum of the knowledge of the Revenue that any one or more of elements as detailed in subsection (1) of section 13 of the Ordinance exist and its expression of intention that a particular sum or sums are to be taken as deemed income by determining or assigning a value on them. The volley of notices one after the other and incorporation therein of mystical reasons as detailed in 1987 PTD 300, 1989 PTD 150, 1989 PTD 1233 and (1991) 63 Tax 113 and some other cases on the subject having already been dissented from in the said larger Bench judgment, I will respectfully differ with finding recorded by learned Judicial Member in para. 19 ante. Particularly after going through the contents of notice served upon the assessee under section 62 of the Ordinance as detailed and reproduced in the assessment order. This notice has all the information required by law to be made available to the assessee before burdening him with an addition under provisions of section 13. The ratio of the case cited as 1971 SCMR 681 (Collector Sahiwal v. Muhammad Akhtar) (supra) is not attracted to the facts of this case as thought by learned Judicial Member. In that landmark case the Supreme Court laid down requirements of notice to a party to the proceedings in the context of natural justice. It was held that where service of notice is mandatory, its non-service is fatal and such defect cannot be cured. However, where reliance is placed only on natural justice or audi alteram partem, then if at some stage or the other the aggrieve person had been given a fair opportunity of representing his view point, the defect in the initial order may be deemed to have been cured. If the statutory provision for notice be of mandatory nature then the order would be wholly void. But if there be no such provision or the provision be of directory nature then wherever a violation of this principle of natural justice is alleged, the Court may call upon the party alleging the same to prove prejudice before it sets aside the order. The provisions of section 13 of the Ordinance, as explained earlier only require seeking of an explanation of the assessee qua existence of all or any of the facts stated in subsection (1)(a) to (e) and to assign a value, where so required after allowing the assessee a reasonable opportunity in this behalf. Since the year 1992 the requirement of "prior approval has also been dispensed with and therefore, all the reported decisions referred to by learned Judicial Member have lost their relevance to the making of an addition under section 13 of the Ordinance. No contention having been made at the Bar that notices served upon the assessee under section 62 before and after spot inspection which were duly replied by the assessee and his defence adequately considered by the assessing officer, did not fulfil the requirements of reasonable opportunity or those of natural justice, the objection is rejected. The submission made by the Revenue and recorded by learned Accountant Member in para. 6 ante that required approval of I.A.C. was obtained on 13-6-1993 has not been controverted as a fact by the assessee before me. Therefore, the second objection against procedural infirmity also failed.

32. The next objection is against rejection of affidavit filed by the said expartner of the firm. Affidavits are statements on the made before a person legally competent to administer them. These statements could be about matters not in dispute and are made only in order to confirm or deny a fact e.g. a person may declare his domicile by filing an affidavit to that effect. Till that fact is disputed, such declaration can be taken as a piece of evidence of his domicile on the ground that a wrong statement on oath can lead to a prosecution. A counter-affidavit is equally a confirmation, denial or declaration p and its veracity or truth can only be reached if both the deponents are made to stand the test of cross-examination. Generally speaking, affidavits cannot be taken into account or accepted as a proof when the fact sought to be confirmed, denied or declared can be verified, confirmed or established by other available evidence. After all an affidavit is nothing more than a one sided declaration of a fact made by a person with a limitation that if proved incorrect, he could be prosecuted besides drawing of an adverse inference against the matter deposed. Therefore, the opinion expressed by learned Judicial Member that to an affidavit, a presumption of truth attaches cannot be subscribed. Legal presumptions both rebut able and rebut able can only be created by statutes and no such presumption in law exists in favour of an affidavit. Where law creates a presumption and also declares it to be rebut able then the burden to dislodge such presumption rests on the party who challenges it. Till such time an adversary has successfully discharged the burden to rebut, law will presume a fact or set of facts to be existent in the manner it presumes by legal fiction. To say that a presumption of truth attaches to facts stated in an affidavit means that law will take these facts to be correct unless the other party proves them to be incorrect. This proposition is not at all acceptable in law. That an affidavit can be made or received in support. of a fact till disputed, is totally different from saying that a presumption of truth attaches to it. Therefore, where a deponent is not produced for cross-examination, his affidavit loses all its force as probative piece of evidence per PLD 1993 Kar. 775 (re: Zafar Mirza v. Mst. Naushina Amir Ali). There is accordingly no question of attachment of an element of p correctness or presumption of truth.

33. In PLD 1994 SC 236 (re: Attaullah Malik v. Custodian, Evacuee Properties) it was further settled that a party against whom an affidavit has been filed will have a right to have the deponent in the dock for cross examination. Similar findings were later reached by Supreme Court in PLD 1971 SC 585 (In re: The President v. Sheikh Shaukat All). The settled law with regard to an affidavit appears to be that it is a piece of evidence which alongwith other material on record can be taken into consideration before arriving at a finding. This is how their Lordships viewed the matter in (1984) 146 ITR 140 (re: Smt. Gunwantibai Rabilal v. C.I.T., M.P.) wherein it was also held that a statement by a deponent could be held to be unreliable by the Tribunal either on the basis of cross-examination of the deponent or by reference to other material on record leading to the inference that the statement made in the affidavit could not be held to be true. In the case before us, the assessee submitted an affidavit from an ex-partner deposing that as on 30-6-1989 when he parted with the firm only 4502 sq. ft. covered area was ready and that rest of it he completed from his own pocket. The assessing officer rejected both the report of the alleged expert Deputy Director/XEN WASA Multan and the affidavit on account of their being a second thought. He was justified in doing so inasmuch as the other evidence available on record contradicted the deposition made in the affidavit. The completion certificate issued by an independent semi-official agency, Punjab, Small Industries Corporation clearly certified completion of the whole building earlier to the period stated by the ex-partner. Also, the assessee as against the averment contained in the affidavit that the deponent himself completed the building after taking it over with a constructed area of 4502 sq. ft. as on 30-6-1989 claimed before the assessing officer that rest of building was constructed by it in subsequent years not relevant the assessment years in question. In presence of these facts, supported by the said certificate and the contradictory written defence made by the assessee, the affidavit of the ex-partner became totally irrelevant and therefore, the assessing officer could ignore it. And, in the situation neither a counter-affidavit was required to be filed by the assessing officer before the first appellate authority nor the summoning of the deponent for the purpose of cross-examination as remarked by learned judicial Member. For, at best the deponent could confirm his declarations made in the affidavit, which already stood belied by other evidence available on record. It may further be noted that an official functionary is not supposed to file a counter-affidavit of the facts, which are necessarily personal to an individual deponent as in this case the ex-partner. In this respect, therefore, I do not subscribe the findings recorded by learned Judicial Member.

34. The next objection is against the Inspection Committee and its report. According to the assessee constitution of an Inspection Committee was illegal as the I.A.C. being the controller officer headed the same and therefore, it was not possible for the assessing officer to act as a free agent in analyzing it. Further, that the report of the non-technical committee was given precedence over the report submitted by an Engineer, Deputy Director/XEN, Operation and Maintenance WASA (MDA), Multan and that this fact also supported his plea of bias in favour of the Committee Report. On the other hand per assessment order, after the Circle Inspector had submitted his report suggesting value of the construction cost at Rs.8,92,232, the assessee made a request on 5-1-1993 for personal inspection by the I.A.C. On this a committee comprising the I.A.C. as Chairman, the assessing officer and both Inspectors of the IA.C. and that of the assessing officer was constituted which visited the factory premises on 7-1-1993. The committee estimated the cost which was ultimately added as addition after allowing credit for the declared sum in the balance-sheet. The report was duly confronted to the assessee though the controlling partner was present at the time of inspection. On being served with the report for explanation, the assessee submitted a counter-report allegedly made by the said officer estimating total cost at Rs.78,163 for the constructed area of 4502 sq. ft. The assessing officer rejected this estimate and the aforesaid affidavit of the ex-partner on the ground that these were mere afterthought and that the committee had itself been constituted at the request of the assessee. First appellate authority confirmed this rejection by adding that the report of the alleged expert being undated, it was not clear when it was made. Learned Accountant Member rejected the objections against acceptance of the report of the committee. As regards the report of the alleged expert, he remarked that "it is not clear as to how he ascertained these figures given in the certificate". Learned Judicial Member vide dissenting note in para. 20 remarked: "This committee, the members of which were subordinate to the IA.C. could not have made a decision with regard to the cost of construction against his views, and therefore, in this exercise the I.T.O. was not a free agent. Such computation of cost of construction, was therefore, devoid of any rationality and in stating so I have drawn strength from a case reported as 1990 PTD 974 (Karachi High Court) wherein it was held that "in arriving at his decision the officer should not be influenced by any person, be he his superior officer or any one else". Learned Judicial Member also referred to and relied upon the ratio of a reported decision of the Karachi High Court 1991 PTD 217 (re: H.M. Abdullah v. I.T.O. Circle-V, Karachi).

35. After considering the rival arguments and going through the divergent observations of the learned Bench, I am of the view that assessee itself having requested the formation of the committee or even only personal visit of the I.A.C., cannot be allowed to resile and pick faults in its constitution. Leaving aside the value of the report submitted by the committee which comprised of departmental officers only, the assessee appears to have rather received a fair deal at the hands of the controlling officer, IA.C., whom he approached against the report made by the Circle Inspector. The allegation of bias or receiving any kind of direction from I.A.C. is not at all established from the record nor any attempt was made to make out a point in this respect. It is true that in the case referred by learned Judicial Member (re: H.M. Abdullah (supra)) a Division Bench of Karachi High Court disapproved seeking of assistance or guidance by any assessing officer from I.A.C., his controlling officer, yet that case is not relevant because no such direction was sought or made in the facts before us. In that case the assessing officer sought guidance of his I.A.C. proposing that proceedings initiated against the assessee be allowed to be dropped. The I.A.C. did not agree and directed the assessing officer to proceed with the assessment. The High Court held the assessment framed in pursuant to such direction to be of no legal effect. The assessee thereupon approached the Supreme Court as the learned Division Bench had declared the notice issued to the assessee under section 65 of the Ordinance to be legal and proper. The Supreme Court in re: H.M. Abdullah v. I.T.O., Karachi 1993 SCMR 1195 reversed the findings and remarks made by the Division Bench against seeking of guidance by an assessing officer from his IA.C., the controlling officer on administrative side. The said decision of the Karachi High Court on this point as relied upon in para. 21 ante, therefore, is no more a correct statement of law. The other case, cited in para. 20 ante 1990 PTD 974 (re: Messrs Mustafa Prestressed R.C.C. Pipe v. Commissioner Sales Tax) is also distinguishable. In that case the Sales Tax Officer submitted a draft order to Commissioner of Income Tax for approval. A Division Bench of the Karachi High Court disapproved such submission for approval and held the assessment order as passed to be bad in law although the C.I.T. had returned the proposed order without making any addition or excision. No such situation arose in facts before us as not only the inspection committee was constituted at the request of the assessee but also it comprised the assessing officer as we'll as his Circle Inspector who had himself made the first report. Therefore, the assessee cannot claim that any prejudice was caused to him or that the report was tainted in any manner only for the reason of the I.A.C. concerned being there. If we see the constitution of the committee in the light of the decision made by Supreme Court in re: H.M. Abdullah, the whole argument collapses.

The preference allowed to the report of alleged expert by learned Judicial Member again appears unwarranted. In the first place the qualifications of the maker of the report are not discernible from the record. No basis has been given by him to classify the structure as "D" class construction. The finding of learned Accountant Member is cogent that from the undated report it could not be seen as to how these estimates had been arrived at. It is also interesting to note that as against the construction cost that finally emerged from the balance sheet of the assessee-company at Rs.38,975, the reporter made the estimate for the same covered area at Rs.78,163. In fact it appears to have been made to support the declared cost by the assessee at Rs.87,768 without realizing that out of this sum admittedly a sum of Rs.43,794 was paid as lease money and development charges to Messrs Punjab Small Industries Corporation leaving a balance of Rs.38,975 only towards construction cost.

36. Treating the report of a Deputy Director of a Development Agency who was not required by a departmental authority to make such report, to be an expert opinion is again not supported by any legal provision. An expert according to Article 59 of the Qanun-e-Shahadat, 1984 is a person specially skilled in foreign law, science or art or identity of handwriting or finger impressions. Black's Law Dictionary, 5th Edition describes an expert to be "one who is knowledgeable in specialized field, that knowledge being obtained from either education or personal experience".

37. The opinions of experts are admissible in evidence on certain conditions out of which none seems present in this case. For, .the qualification and experience of the alleged expert is not available on record. Mere fact that a person holds some position in a Development Agency will not make him an expert in any faculty till his qualifications and experience are brought to the notice of the Court or the official functionary who is to form an opinion upon a particular point. I will readily agree that opinions of experts have a weight age when it comes to decide a matter that involves ascertainment of a fact by or through scientific interpretations. However, expert opinions only assist a Court or decision-maker in reaching a conclusion and are never of binding nature without regard to the expertise and excellence of knowledge or experience of the expert.

38. The assessee obtained an estimation of cost from a person who had neither been designated as value under section 4 of the Ordinance, nor, as said above his qualifications or experience were brought on record. The report did nut disclose the basis of estimation of values assigned to various building material. The covered area determined at 4502 sq. ft. and the classification of construction as "D" Class is also in a complete void. No request was ever made to examine the alleged expert and therefore, the report submitted in this behalf could not be taken into account at all. The findings of learned Judicial Member in para. 23 ante cannot therefore, be endorsed.

39. And finally the contention that impugned addition could not be made by going outside the directions contained in the remand order. A first appellate authority under the Income Tax Ordinance, 1979 derives its remand powers qua an assessment from section 132(1)(a)(i) of the Ordinance. It reads:

"132. Decision in a Deal.--(1) In disposing of an appeal, the Appellate Additional Commissioner may--

(a)in case of an order of assessment: (i) set aside the assessment and direct theassessment to be made afresh after making such further inquiry as the Appellate Additional Commissioner may direct or the Deputy Commissioner thinks fit; (ii)

confirm, reduce, enhance or annul the assessment;

(b).................................................................................

(c).................................................................................

(2).................................................................................

(3).................................................................................

(4).................................................................................

(5).................................................................................

(6).................................................................................

This power was contained in subsection (6)(b) of section 31 of the late Income tax Act of 1922 in the following words:--

31.Hearing of appeal.---

(1).................................................................................

(2).................................................................................

(3 ..

(4).................................................................................

( 5)................................................................................

(6) The Appellate Assistant Commissioner may, in case of an order of assessment--

(a).................................................................................

(b) set aside the assessment and direct the Income Tax Officer to make a fresh assessment after making such further enquiry as the Income Tax Officer thinks fit or the Appellate Assistant Commissioner may direct, and the Income Tax Officer shall thereupon proceed to make such fresh assessment and determine where necessary the amount of tax payable on the basis of such fresh assessment."

40.Both of these provisions, it will be seen, are not materially different from each other. The competency of the first appellate authority to make a remand with or without directions is not controverted. The question to be considered is the use of word "or" as it appears in the aforesaid provisions 132(1)(a)(i) of the Ordinance. To me it has the significance and means equivalent to the word "and" implying conjunction and not disjunction. Assigning of such meaning to word "or" means that an Assessing Officer shall not shut his eyes to the facts that happen around him or come to his notice in the proceedings conducted after remand of an assessment. Although word or" is normally used in disconjunctive sense, intention of the legislature may be to read "or" and "and" one for the other. If an authority is needed, one may refer to PLD 1969 SC 267 (re: Salehon and others v. The State) followed in 1981 PTD 217 re: B.P. Biscuit Factory v. W.T.O. (Karachi). Total impact of the provision therefore, is that power of a first appellate authority to make a remand with directions is co-existent with the competency of an Assessing Officer to frame reassessment keeping in view the facts of every case. These powers are not mutually exclusive. Mention of both of them appears to be with an intention to clear ambiguity or doubt which could result from absence of any of them. The reason is simple. Remand of a matter carries with it a peculiar significance that the assessment proceedings are to be conducted afresh. The other orders an Appellate Authority can pass are definite in nature because proceedings come to an end so far as the First Appellate Authority is concerned. To confirm, reduce, enhance or annul an assessment entails termination of first appellate proceedings both for the Revenue as well as the assessee. However, in case of setting aside,) the matter is left open wholly or partially depending upon the issue involved in first. appeal and the terms of remand. It is very much legal for the First Appellate Authority to confirm part of the assessment order and to require the Assessing Officer to look afresh into a particular fact or aspect. To the extent an assessment order is upheld, both the First Appellate Authority as well as the Assessing Officer become function officio and cannot thereafter touch that portion of the assessment order which stands confirmed. The remanding of a part of assessment order or setting aside whole of the assessment for a fresh or de novo proceedings are not one and the same thing. The scope of exercise in total re-assessment is wider while in case of partial remand, it will become restricted as the confirmed portion of the order will not be touched. An obvious instance of such situation can be confirmation or upholding or modification of trading results but setting aside some or all of profit and loss expenses. In such case even if the appellate order does not contain a direction to that effect, the message would clearly be that the Assessing Officer shall not directly or indirectly meddle with the trading account results.

41. The statute, it can safely be said, has not restricted the powers, of an Assessing Officer on remand. Where the first appellate -order contains no directions the Assessing Officer is at his own to steer the re-assessment proceedings. And where the order also makes certain directions these are, without an iota of doubt, binding upon the Assessing Officer. However, after complying with the directions in letter and spirit, the Assessing Officer is still left with the discretion to move at will in order to determine the real income or loss in a case. Limiting the Assessing Officer to only the words of remand would not always be possible. Also the authority and discretion allowed under the Ordinance to an Assessing Officer can neither be curtailed nor abridged by an Appellate. Authority directly or indirectly. The scope of an inquiry after remand can very well be outlined by an appellate order without materially affecting his powers and functions under the Ordinance. All kinds of directions in the remanding appellate orders are binding guidelines aimed only to facilitate and not to frustrate re-assessment proceeding. In (1985) 156 TTR 344 Rambilas Chandram v. C.I.T. it was held that where in an appeal or assessment the A.A.C. sets aside the assessment and directs the I.T.O. to make a fresh assessment, the I.T.O. is bound by the directions of the Appellate Authority in making the fresh assessment but subject to such directions the I.T.O. has the same powers in fresh assessment as he had originally in making the assessment.

42. Framing of re-assessment after remand wherein a new source of income has been introduced is altogether a different matter. At least the pronouncements of superior Courts look at the issue with this angle. These views interestingly swing like a pendulum from one extreme to the other. In (1975) 99 ITR 470 (CIT v. Seth Mankilal Fomra) the Madras High Court even doubted if an appellate authority could by any direction limit the scope of re assessment -proceedings. The Bench observed "once the order of assessment is set aside it is open to the Income Tax Officer to consider the entire matter afresh and neither the order of the Appellate Assistant Commissioner in terms restricts the Income Tax Officer to consider the issue relating to the estimation of the income alone nor there is any warrant for reading such a restriction of the power either under section 251(1)(a) or under section 143(3) under which the Income Tax Officer makes a fresh assessment. In fact we doubt very much as to whether the Appellate Assistant Commissioner could restrict the power of the Income Tax Officer while setting aside the assessment order itself and directing him to make a fresh assessment order."

In the context of the question confronted by us, their Lordships observed:--

Once the order of assessment is set aside and the matter comes up for fresh assessment before the Income Tax Officer, we are of opinion that the powers will have to be decided with reference to the provisions under section 143(3) and not with reference to any observations made by the Appellate Assistant Commissioner in his order ..

This view was not accepted by the Andhra Pradesh High Court in CIT v. Bandaru Sanyasi Raju (1981) 127 ITR 453. Their Lordships with reference to an earlier decision of the Court in Pulpati Subbarao & Co. v. AAC (1959) 35 ITR 673 remarked that "once it is recognized that section 251(1)(a) authorizes the AAC to issue directions, it should follow that the ITO cannot act contrary to these directions". Learned Judges however observed that it could be debated whether the ITO could go outside the directions to do something under section 143(3) of the Act not covered by the directions of AAC. Both of these decisions of the Andhara Pradesh High Court have been relied upon by the assessee in support of his contention that the assessing officer could not go beyond the directions as contained in the appellate order, dated 10-12-1989 and reproduced in para. 9 ante by the learned Accountant Member.

43. These decisions, however, are not relevant to the controversy before us. In Pulpati Subbarao (supra) the petitioner firm, was previously assessed in the status of a registered firm. In the year 1952-53, the assessee approached the AAC in first appeal not on the actual assessment but only with regard to the refusal of the ITO to treat the firm as a registered firm. The AAC on being satisfied that an application was actually moved (but presumably lost in ITO office) set aside the assessment and directed the ITO to receive a duplicate application and to deal with it according to law. On remand the ITO called upon the petitioner to produce books of accounts to make a fresh assessment. The assessee applied for issuance of a Writ whereupon a Single Bench of the Andhara Pradesh High Court held that order of AAC was specific in directing the ITO to receive a fresh application for registration and therefore it was not open to the ITO to conduct a fresh inquiry and, to proceed to examine books of accounts to make a fresh assessment. At page 674 of the report learned Judge noted the fact that in appeal before AAC the assessee made no grievance against the assessment. Therefore, in my humble submission, the actual assessment order, stood confirmed and only the question of refusal of registration being before the AAC, the direction was held good only to the extent of reconsideration of registration. This decision; alongwith the second one re: C.I.T., A.P. v. Bandaru Sanyasi Raju (supra) in which it was followed hardly gives support to the contention of the assessee. It may be noted that in the second case the question before the Division Bench of the Andhra Pradesh High Court was "whether in the facts .and circumstances of the case the Tribunal was correct in holding that AAC has got power to set aside the assessment partially". To this proposition I will nod in affirmative as their Lordships did. Here again the matter challenged before the Court was confirmation of some of additions and setting aside of rest of them for reconsideration by the ITO. The question before us as to whether new sources of income could be introduced after remand was neither raised in any of the two cases nor adjudicated upon.

44. The Allahabad High Court in Cawnpure Chemical Works kited v. CIT 1993 PTD Note 280 at p. 374 = 197 ITR 296 considered the question in reverse from the angle of effect of remand on an assessment. It was found that disallowance of commission in original assessment was upheld but the case was set aide on other grounds with specific directions. In the fresh assessment made on remand the commission was again disallowed. The assessee appealed against the assessment and contended that the disallowance was not justified. The Tribunal held that the matter could not be considered by AAC. On reference the High Court held that the ITO was bound by the directions given in the order of AAC setting aside the original assessment. Accordingly, the disallowance of commission could not be contested as the assessee had not pursued the matter further after first appeal. It was therefore held that the disallowance of commission could neither be contested nor considered in appeal filed against the fresh assessment order.

45.In (1979) 40 Tax 205 (re: Kartar Singh v. CIT Amritsar) a Division Bench of Punjab and Haryana High Court followed Madras High Court decision in Sri Gajalakshmi Ginning Factory Limited v. CIT (1952) 22 ITR 502 wherein it was observed that "it would not be open to the Appellate Assistant Commissioner to introduce into the assessment new sources as his power of enhancement was restricted only to the income which was the subject matter of consideration for purposes of assessment by the Income Tax Officer". It was thus held that "on remand by the Income Tax Appellate Tribunal, it was not open to the Income Tax Officer to introduce into the assessment new sources of income so as to enhance the assessment. His power to enhance if it existed, was confined to the old sources of income which were the subject matter of the appeal to the Income Tax Appellate Tribunal". In the case before the Punjab and Haryana High Court, it may be explained, the assessment was set aside by Appellate Tribunal and the matter was remanded to the assessing officer. After remand, the ITO while holding that the income of the assessee from its business of plying trucks was at Rs.99,494 made an addition of Rs.54,075 as income from "unexplained investment". Their Lordships with utmost respect it is submitted, equated the scope of powers of enhancement of assessment as vested in an appellate authority with the powers of an assessing officer while making re-assessment. The power and scope of enhancement and framing of an assessment being two totally different matters I will respectfully disagree with the findings recorded by the learned Bench in re: Kartar Singh. The jurisdiction of an appellate authority rests on a total different plane and in this connection it would be useful to refer to a case of Allahabad High Court in (1960).29 ITR 265 wherein it remarked that "the power of the learned AAC under section 31(3) of the Income Tax Act to record a finding was limited to matters he was called upon to decide when passing an order in appeal in conformity with the details laid down under section 31(3). An order passed by him which was beyond the scope of section 31(3) would be an order beyond jurisdiction and similarly, any finding recorded by him which was not necessary for the purpose of making an order covered by section 31(3) would be a finding without justification".

46.Similar are the findings recorded in (1975) 99 ITR 236: "It is not permissible for the Appellate Assistant Commissioner while exercising his jurisdiction either under the 1922 Act or under the 1961 Act to travel beyond the subject-matter of the assessment". Therefore, the ratio settled in re: Kartar Singh does not appear to be a correct statement of law. Equally inapplicable is the ratio of the case relied upon by the assessee (1977) 106 ITR 84 wherein it was found that an AAC is not legally competent to direct an ITO to make assessment in respect of income from other sources which were not considered by the ITO nor these emerged from the material which was considered by the ITO in assessment proceeding. According to another reported decision of the Madras High Court in re: Naganathei Iyer v. CIT (1960) 60 ITR 647 (Mad.) a direction cannot be given by an AAC in exercise of his powers under section 31 which goes to the extent of conferring jurisdiction on the Income Tax Officer where he is not lawfully seized of jurisdiction. The opposite of the ratio that an appellate authority cannot take away or restrict the jurisdiction legally vested in an assessing officer by making a direction in a remand order needs to be accepted with equal vehemence.

47. The matter in issue before us was recently considered by a Liaison Bench of the Karachi High Court in re: CIT, Central Zone, Karachi v. National Cement Industries cited as (1992) PTD 709. In that case original assessment order for the year 1970-71 was challenged before this Tribunal directly as per law providing for first appeal to the Tribunal. The assessment order was set aside on two points namely, disallowance of administrative expenses and fixed capital expenditure. Appeals for the years 1971-72 to 1974-75 were filed by the assessee before IAC as by hat time first appellate authority was changed from Tribunal to AAC. The Appellate Assistant Commissioner following the order of the Tribunal in respect of the year 1970-71 set aside the assessment by passing similar orders. On remand the assessing officer made additions of various sums in all the five years under section 10(2-A) (which is equivalent to section 25 of the Ordinance) of the late Act of 1922. The appeal before CIT practically failed who confirmed the additions with reference to sub-clause (iii) of section 10 (2-A) (equivalent to section 25(c) of the Ordinance). Further appeal before the Tribunal succeeded and the additions were deleted on the ground that the assessing officer acted beyond his jurisdiction in making additions under the aforesaid provisions of the Act while giving effect to previous appellate orders. The Revenue sought reference under section 136(1) of the Ordinance which was refused and therefore the Karachi High Court was approached under section 136(2) of the Ordinance seeking answer to the question "whether the learned Income Tax Tribunal was justified in deleting the additions made under section-10(2-A) during the course of appeal effect by the Income Tax Officer under section 33 holding that no addition can be made at the time of giving appeal effect?" The Court agreed with the submissions made for the assessee that "as the orders had restricted the Income Tax Officer to the two points mentioned earlier the ITO while dealing with the case on remand could not make additions under section 10(2-A) of the repealed Income-tax Act, 1922 without first following the procedure provided under section 34 of the repealed Income-tax Act; 1922". The Court on recording a finding of fact that no such notice was admittedly given in the case after remand, held that without following the procedure provided under section 34 of the Act the additions under section 10(2-A) could not have been made.

48. The view adopted by the learned Division Bench of the Karachi High Court appears suggesting a middle course between the two extraneous represented by the decisions in re: Kartar Singh (supra) and re: Seth Mankilal Fomra. The first going for an implementation of remand directions in the strictest possible terms and therefore an absolute bar against introduction of a new source of income after remand. The other expressing doubt if an Appellate Assistant Commissioner could at all restrict the powers of ITO while setting aside assessment order. As a general proposition as to the value and the force of directions contained in a remand order I will prefer the view adopted by Rajistan High Court in re: Rambilas Chandram (supra). To the pivotal point before us, the decision of the Karachi High Court rightly answers that on remand, with or without a direction, there is no absolute bar on introduction of a new source; of income or making of additions which were neither made in the original assessment nor these were a subject-matter of appeal or had found mention in the directions accompanying remand. The phrase "during the course of appeal effect by the ITO under section 33" in the question before the Division Bench needs to be noted. Also their Lordships repeatedly mentioned the fact that remand order had restricted the assessing officer only to two additions and that the Revenue failed to establish that the orders remanding the cases to the ITO were not without limitations or restrictions. The discussion of facts and the earlier proceedings till the Tribunal level again indicates that the original assessments were upheld except for the two disallowances of administrative expenses and fixed capital expenditure. It is in this back ground that their Lordships agreed with the contention that no addition under section 10 (2-A) could be made without following the procedure described in section 34.

49. In my humble view, the real test in such situation would not only be the directions contained in the remand order but also the fact whether or not a portion of the assessment order was confirmed, expressly or impliedly. Where an assessment is totally set aside, there is no question of confirmation of any part of it and hence the issue becomes wide open. For, on total remand an assessment becomes pending once again and therefore, there can hardly arise a question of escapement of assessment or invocation of the escapement provisions under section 65 of the Income Tax Ordinance (comparable section 34 of the late Act of 1922). Since the decision in 1960 PTD (Trib. followed in (1964) 10 Tax 122 (Trib.) this Tribunal has all along favoured the conclusion reached in Sir Rajindranath Mukerjee v. CIT (1934) 2 ITR 71 that where a return filed by an assessee is still pending, there is no question of escapement of income. The submission made by the learned counsel for the assessee that in cases of setting aside of assessment to the assessing officer cannot go beyond the directions contained in remand order in a way suggests that in such situation the assessing officer would complete an assessment as per directions and will then go for action under section 65 even if during the proceedings on remand he comes across a concealment, escapement of income or unexplained investment etc. This would be anomalous. Once a return becomes pending on account of the assessment having been set aside there is no assessment in the field capable of execution. The assessee is free to take up fresh defence and new pleas to the objections of an Assessing Officer. The proceedings in the original assessment order are not relevant from the stagethe assessment order has been set aside except in so far as these are expressly adopted by an assessee or the Assessing Officer refers to them to bring out approbation and reprobation, contradictions or mutually destructive pleas. Also, the arguments on the basis of which an assessment is set aside cannot be held to be of any significance in fresh assessment proceedings. These do form basis of the directions in a remand order where there are any. It would, therefore, be advisable for an Assessing Officer to keep them in mind while framing fresh assessment in order to meet objections contained in them. Otherwise these arguments do not in any manner control the jurisdiction of an Assessing Officer or to enable one to contend that a particular matter was orwas not in issue before the Appellate Authority.

50.The legal position on the question before us, therefore, can be summed up in these words. An Appellate Authority can make directions while setting aside an assessment in whole or in part only. These directions are binding upon an Assessing Officer but subject to their substantial compliance an Assessing Officer is competent to conduct proceedings on remand as in original assessment. Where an assessment is confirmed or upheld in part, that portion cannot be touched in re-assessment proceedings and appeal effect shall be given to such portion without interfering in them in any manner. However, where in the opinion of an Assessing Officer a case is made out for interference on account of under assessment, concealment or unexplained investment etc. with reference to the confirmed or modified portion, he can proceed under section 65 of the Ordinance in the same manner as in a case of completed assessment. Such action will be subject to all restrictions and conditions inbuilt in section 65 including bar of limitation because giving appeal effect to such portion is only a ministerial act as the assessment order to that extent already stands merged in the appellate order. An assessment set aside in toto irrespective of the grounds on which it was set aside or the directions contained in the remand order the assessment proceedings became pending once again and the fresh assessment shall be completed in like manner an original assessment is made after complying with the directions contained in the remand. In such case a source of income which was not included in the original assessment or was not subject-matter of appeal before the Appellate Authority may very well be included as in any original assessment proceedings.

51. In the case before me the assessment order was set aside in its entirety and therefore, the Assessing Officer was not required to proceed under section 65 of the Ordinance in order to make the impugned addition. Same will be my conclusion even if the Assessing Officer is restricted to the words of remand as reproduced by the learned Accountant Member in para. 9 inasmuch as the Appellate Authority desired close scrutiny of books wherefrom the Assessing Officer found that investment in construction of factory building had been grossly understated. In this aspect and to this extent I agree with the result arrived at by the learned Accountant Member.

52.On facts however, I feel that the total addition at Rs.7,92,835 is not well based. This is my feeling, in spite of my having disapproved the estimate obtained from the aforesaid officer of a development authority described by the assessee as an expert. The estimate of cost and quality of construction including the nature of material used has been just like the report of alleged expert. The committee made it without any reference to a basis, market rates or a parallel case. Since the Committee was constituted on the request of the assessee, an expert or qualified engineer ought to have been associated at the cost of the assessee. The fact of the matter is that the Committee appears to have adopted the report of the Circle Inspector who had earlier suggested the cost at Rs.8,91,232 and against which the assessee made an application/request on 5-1-1993 to IAC to make a personal visit to the premises. The report of the Committee indicates that construction at site was of B class and built with girders, wooden Balas and Kana instead of T. Iron, Tiles etc. as reported by the Inspector. In spite of this the Committee estimated the cost which is quite closer to the one made by the Circle Inspector. It appears to me that cost of material used was pre-conceived in order to reach a particular rate per sq. ft. i.e. Rs.85 for the constructed area of 9786 sq. ft. In this aspect also the report of the Committee is not materially different or better from the guess made by the said expert. Therefore, I will hold 'that the addition made under section 13(1)(d) shall be restring teed to a reasonable value. The construction in question is predominately a shed type hall, small stores and an office. No delicate or fine artistry appears involved. The kind of construction as can be seen through the record would only be of "C" Class. For such nature of, structure, in the facts and circumstances of case, a rate of Rs.50 per sq. ft. will be reasonable. The Assessing Officer shall calculate the final figure for the constructed area determined by the Committee at 9786 sq. ft.

53.Accordingly, I will answer the legal aspect of the question in affirmative that the impugned addition could be made after remand of the case and also that there was no other procedural infirmity in the addition made. However, as said in last para. the balance addition needs to be slashed on facts and to that extent, on facts my answer is in the negative.

54.The appeal succeeds partly as allowed in the penultimate para.

M.BA./130/TAppeal partly allowed.