SHAMS-UD-DIN VS MUHAMMAD SHARIF
1996 P T D (Trib.) 1094
[Income-tax Appellate Tribunal Pakistan]
Before Muhammad Zaman Khan, Judicial Member and Ashfaq Ahmed, Accountant Member
I.T.A. No. 179/LBI/DB of 1989-90, decided on 15/11/1995.
(a) Income-tax---
----Addition---Validity---Reasonable opportunity of being heard had beer provided to the assessee by the Assessing Officer---Requisite approval was also taken by the Assessing Officer from the higher authorities and it was thereafter that the addition was made ---Assessee was unable to point out any fatal defect in the procedure adopted by the Assessing Officer before the addition was finally ordered to be made---Addition, held, was made according to law in circumstances.
(b) Income Tax Ordinance (XXXI of 1979)---
----S.13(1)(d)---Addition---Validity---Purchase of property by assessee-- Assessing Officer found that assessee had understated the purchase price of the property---Nothing was available on record to show that the valuation disclosed in the registered deed was dishonestly understated or that the same was too low when compared with other transactions of sale in similar cases---No parallel cases were quoted by the Assessing Officer to this behalf---Assessment of price of property made by the Assessing Officer was based on surmises and conjectures---Effect---Held, where a property had been acquired through registered sale-deed, ordinarily the consideration evidenced by the sale-deed was to be accepted as the value of the property, unless department could prove that the consideration shown in the deed was too low and the assessee had acquired the property by expending more money---Once legal document like registered sale-deed had been provided to the department the same could not be thrown away on the pure whims of the Assessing Officer and in order to reject the deeds the department was bound to ensure that it had brought on the record some solid evidence to support its point of view---In the absence of any proof regarding the price being higher, department must abide by the legal documents which was a registered deed---Order passed by the Assessing Officer under S.13(1)(d), Income Tax Ordinance, 1979 could not sustain at law in circumstances.
(c) Income-tax---
----Addition---Validity---Assessee was found to be enjoying a higher standard of living and the declared household expenses did not commensurate with the said standard of living---Reasonable addition by department was not interfered with by the Tribunal.
ORDER
MUHAMMAD ZAMAN KHAN (JUDICIAL MEMBER). ---Through t,, . joint order we propose too dispose of captioned two cross-appeals which have arisen out of one and the same order, dated 8-8-1989 rendered by the then C.I.T.(A) Faisalabad. Earlier I.T.O. Companies Circle, Faisalabad had formulated assessment order in this case on 15-6-1989. The relevant assessment year is 1988-90. The assessee in this case is an individual who derives income from the salary as a Director of A.G. Corporation (Pvt.) Ltd. Faisalabad. The assessee also enjoys income from property.
2, The assessee had declared total income at Rs.2,12,521 in the following manner:---
| (1) Salary Income | Rs.2,04,000 |
| (2) Property Income | Rs.8,521 |
| Total: | Rs.2,12,521 |
3. The perusal of the wealth statement of the assessee revealed that the assessee had purchased 1/2 share of the House No. 127 Tariq Block, Garden Town, Lahore for a total consideration of Rs.1,95,000 including the registration charges. The assessing officer found that the price of the house was grossly understated.
4. The perusal of the expenditure statement revealed that the declared household and other expenses have also been grossly understated.
5. In view of understatement of the value of the house and household expenses the assessee was intimated by the I.T.O. about the said state of affairs and the I.T.O, called upon the assessee to explain as to why the value and expenses, as indicated above, have been grossly understated, the assessee was also informed that the I.T.O. intended to estimate the value of land of the house at Rs.40,000 per Marla and the value of construction at Rs.4,75,500 at the rate of Rs.150 sq. ft. In this way the total price of the house was computed at Rs.8,88,500 according to which the share of the assessee was worked out at Rs.4,44,250. As such addition in total income of the assessee was proposed to be made at Rs.2,69,250 and was subsequently ordered accordingly under section 13(1)(d) of Income Tax Ordinance, 1979.
6. In the similar circumstances the household expenses declared by the assessee at Rs.72,000 per year were found low and the same were estimated and confirmed at the rate of Rs.6,500 per month and thus an amount of Rs.6,000 "`'s also added towards total income of the assessee under section 13(1)(e) of the "'come Tax Ordinance, 1979 though in the first instance the I.T.O. intended to estimate the household expenses of the assessee at Rs.8,000 per month.
7. It was also found by the assessing officer that the assessee was not maintaining any car in his personal name and was using the Company's car for his personal purposes. An amount of Rs.2,400 was also added towards the total income of the assessee as prescribed under Rule 13(2) of the Income Tax Rules, 1982.
8. In the above circumstances, total income of the assessee for the year under consideration was assessed at Rs.4,90,171.
9. Dissatisfied with the treatment meted out to the assessee at the hands of the assessing officer the assessee had filed first appeal which, as explained above, was disposed off by the C.I.T.(A) Faisalabad on 8-8-1989. Vide the said order the C.I.T.(A) has deleted the addition made under section 13(1)(d) at Rs.2,69,250. However, the additions of Rs.6,000 and Rs.2,400 as indicated above, have not been disturbed by the C.I.T.(A).
10. Aggrieved by the order of the C.I.T.(A) the revenue has assailed his order by filing the second appeal in which it has been alleged that there was no justification for the C.I.T.(A) to delete the addition of Rs.2.69.250 and as such the order of the C.I.T.(A) may be vacated and the order passed by the Income Tax Ordinance in this behalf be restored.
11. On the contrary the assessee has also filed cross-appeal in which he has challenged the correctness of the order of the C.I.T.(A) stating that there was no justification for the C.I.T.(A) to uphold the additions made by the I.T.O. under household expenses amounting to Rs.6,000 and perquisites to the extent of Rs.2,400.
12. As indicated above, we are disposing off both the appeals through his consolidated order, as both the appeals are inter-linked.
13. We have heard the learned representatives of both the parties and have also gone through the orders, which have been rendered in this case by the authorities below.
14. The perusal of the order of the first appellate authority would indicate that the addition of Rs.2,69,250 has been deleted for three reasons namely that the assessee has not been provided reasonable opportunity of being heard as required under section 13 of the Income Tax Ordinance, that the assessing officer has not been able to place on the record any evidence to demolish the purchase price paid by the assessee through registered sale-deed in respect of the property under consideration and that the correct covered area of the house which was 2529 sq ft. has not been taken into consideration while computing the price of construction and that instead the covered area has been taken at 3150 sq. ft. which was not the correct position.
15. Learned D.R. has reiterated his submissions before us, as have been taken up in the grounds of appeal. In nutshell it has been submitted that all the regal obligation were fulfilled before the addition under section 13(1)(d) was made and the learned C.I.T.(A) as such has fell to error in holding that the assessee has not been properly heard and given a reasonable opportunity on that behalf on the contrary learned A.R. of the assessee has submitted that the order passed by the C.I.T.(A) in this respect was correct. We have critically examined the point at issue and find that before the addition of Rs.2,90,250 was made, reasonable opportunity of being heard was provided to the assessee and the I.T.O. had also confronted the assessee in the said regard. Requisite approval was also taken by the assessing officer from the higher authorities and it was thereafter that the addition was made, keeping in view the submissions made by the assessee on the point at issue. Learned A.R. of the assessee has not been able to point out any fatal defect in the procedure adopted by the assessing officer before the addition of Rs.2,69,250 was finally ordered to be made. We, therefore cannot endorse the view which has been taken by the C.I.T.(A) on this aspect of the matter. It is, therefore, held that the addition of Rs.2,69,250 has been made by the LT .O. in accordance with the Law.
16 It is an admitted fact between the parties that the assessee had purchased 1/2 share of the house in question through a registered sale deed. It has been observed by the C.I.T.(A) that the I.T.O. was bound to accept the valuation of the property as shown in the registered Deed unless he was in possession of a positive evidence to controvert the stated price of the property to the registered Deed. The C.I.T.(A) has also referred to various authorities in which the Tribunal has held so. The findings of the C.I:T.(A) in this regard do not suffer from any legal infirmity or flaw and he has correctly followed the Law on the point as has been decided by the Income Tax Appellate Tribunal in a number of cases. As is manifest there was nothing on the record before the assessing officer to show that the valuation closed in the registered Deed regarding the house in question was dishonestly understated or that the same was too low when compared with other transactions of sale in similar cases. It is also worth mentioning that no parallel cases were quoted by the assessing officer in this behalf and thus it has been rightly submitted on behalf of the assessee that the assessment made by the I.T.O. was based on surmises and conjectures. Besides relying upon the authorities as quoted in the order of the C.I.T.(A) learned A.R. of the assessee has also referred to the two recent authorities of the Tribunal in 1995 PTE) (Trib.) 1182 and 1995 PTD (Trib.) 1179 in which the view followed by the C.I.T.(A) on the point at issue has been taken. It has been held in the said authorities that where a property has been acquired by Registered Deed ordinarily the consideration evidenced by the sale-deed shall be accepted as the value of the property by the Tax Authorities unless they can prove that the consideration shown in the Deed was too low and the assessee had acquired the property by expending more money. The underlying idea is that once the legal. document like a Registered Deed has been provided to the department the same cannot tic thrown away on the pure whims by the assessing officer and in order to reject the same the department is bound to ensure that it brings on the record some solid evidence to support its point of view. It was observed in the said authorities that in the absence of any proof regarding the price being higher, one must abide by the legal documents, which is the Registered Deed and the declared valuation to be accepted.
17. The perusal of the facts and circumstances of the case in hand would indicate in unmistakable terms that the I.T.O. has rejected the version of the assessee in the said behalf without assigning any solid reasons or bringing on the record some cogent evidence to rebut the declared valuation.
18. In the above circumstances the order passed by the I.T:O. in regard to the addition made under section 13(1)(d) to the extent of Rs.2,69,250 could not be sustained at Law and thus the same has been rightly knocked off by the first appellate authority. As such the order passed by the C.I.T.(A) in deleting the addition of Rs.2,69,250 being legal and reasonable is hereby confirmed.
19. As a sequel to the above, the appeal filed by the revenue merits dismissal and we order accordingly.
20. As regards to cross-appeal, which has been filed by the assessee we find that the same is also devoid of any substance. It is manifest from the facts and circumstances of the case that the assessee was enjoying a higher standard of living and the declared household expenses do not commensurate with the said standard of living. In these state of affairs it has been rightly held by both the authorities below that the declared household expenses were understated. Besides this the addition of Rs.6,000 made in his regard in not on the higher side. It is rather reasonable and appropriate and thus deserves to be maintained.
21. The assessee was also admittedly not maintaining any personal car and thus he was using the Company's car for his personal purposes as well. Hence an amount of Rs.2,400 appears to have been correctly added towards the total income of the assessee as prescribed under the relevant Income Tax Rules of 1982. This addition as such does not deserve to be disturbed. The same is also upheld.
22. No other point has been agitated before us on behalf of the assessee, so far as the appeal of the assessee is concerned.
23. As a sequel to the above the appeal filed by the assessee also merits dismissal and the same is also dismissed.
24. Consequently both the cross-appeals are dismissed.
M.B.A./195/TribOrder accordingly.