I.TAS. NOS.1542/LB AND 2590/LB OF 1992-93, DECIDED ON 13TH SEPTEMBER, 1995. VS I.TAS. NOS.1542/LB AND 2590/LB OF 1992-93, DECIDED ON 13TH SEPTEMBER, 1995.
1996 P T D (Trib.) 226
[Income-tax Appellate Tribunal Pakistan]
Before Nasim Sikandar, Judicial Member and Khalid Mahmood, Accountant
Member
I.TAs. Nos.1542/LB and 2590/LB of 1992-93, decided on 13/09/1995.
(a) Income Tax Ordinance (XXXI of 1979)---
----S. 134---Appeal to Appellate Tribunal---Commissioner of Income-tax (A) had avoided decision without any cause though no further inquiry in the circumstances of the case was needed nor the reasons stated for the remand made any sense---Income Tax Appellate Tribunal proceeded to decide the issue involved on merits after vacating the partial remand order and the term recorded by the C.I.T.(A).
Shaikh Industries Limited, Karachi v. C.I.T., Central Karachi 1997 PTD 463 and 1983 PTD (Trib.) 278 ref.
(b) Income-tax--
----Venture in the nature of trade or business---Sale of immovable property- Federal Legislature is not competent to tax gains arising out of sale of immovable property---No bar, however, exists against taxability of such profit-if derived from a transaction or transactions in the nature of trade or business.
(c) Income-tax---
----Venture in the nature of trade or business---Stock in trade ---Assessee, an individual, though Director in a Private Limited Company, held a number of immovable properties of different characters---Assessee, in the relevant year sold three residential plots and purchased two more of similar types and also purchased agricultural land which at that time was considered to be the most attractive "business proposition" for real estate dealers ---Assessee, besides such six transactions of sale and purchase disposed of share's in three plots in an industrial estate ---Assessee, in spite of such sale and purchase, was still left with an inventory of one shop, one residential plot, two plots in a village and agricultural land, all of these being in addition to his big house in a big city of Pakistan---Held, properties disposed of by assessee during the relevant year could conveniently be termed as "sales" and those brought about during the period as "purchases" adding to the existing properties as "stock in trade"--- Nature and sizes and locations of these properties did not support the defence plea that properties were purchased to build the houses but the idea was dropped due to other compulsions--Sale and purchase by an assessee indicating following of a systematic pattern which is germane only to commercial practice could not be treated at par with a sole and isolated transaction.
[Case-law distinguished].
(d) Income-tax---
----Venture in the nature of trade or business---Taxability---Principles---Single transaction or more of them---Burden of proof---In the case of single transaction which is not in line of an assessee's business heavy burden lies upon the Revenue to tax the surplus arising out of it---Where, however, there are more of such transactions, six in a row in a year, both outgoing and incoming, with a number of other still being available on the shelf, an equally heavy burden lies upon the assessee to establish that these were not in the nature of trade---Failure of assessee to discharge such burden---Revenue, in such cases, has to bring home, that there is a systematic effort on the part of assessee to employ his capital in the pursuit of gain or profit---Where the Assessing Officer has discharged such burden it becomes necessary for the assessee to establish to the contrary that he never had an intention to involve himself in a regular or orderly conduct of activity to gain profit.
(e) Affidavit---
---- Evidentiary value---Affidavit is a piece of evidence which alongwith other material on record has to be taken in consideration before arriving at a finding---Where the affidavit in question was found to be against the facts emerging on record and even against the document admittedly executed between the parties, Tribunal refused to allow the affidavit any serious consideration.
Smt. Gunwatnibai Rabilal v. C.I.T., M.P. (1984) 146 TTR 140 ref.
(f) Income Tax Ordinance (XXXI of 1979)---
----S. 13---Deemed income---Addition---Approval---Where the assessee was amply allowed opportunities as contemplated under S. 13, Income Tax Ordinance, 1979, contention of absence of double approval was repelled.
1995 PTD (Trib.) 624 fol.
Zahid Pervaiz, LA. and Qaiser M. Yahya, D.R. for Appellant: Sikandar Hayat Khan for Respondent.
Date of hearing: 25th June, 1995.
ORDER
These cross-appeals arise out an order of C.I.T.(A), Zone-II, Lahore recorded on 9-8-1992.
2. The appellant in this case is an individual and a Director of a Private Limited Company. For the assessment year 1991-92 he returned income from salary at Rs.60,000. This was stated to have accrued from Messrs Khawaja Metal Private Limited, Lahore. The assessee claimed to have paid wealth tax to the tune of Rs.1,71,249. After adjustment of this amount his income fell below the taxable limit and, therefore, his case was taken up for Assessment under normal law. In the proceedings that ensued it was found that he has engaged himself, during the period under assessment, in regular real estate business. From the declared properties appearing on his wealth statement as on 30-6 1990 and the change that took place till 30-6-1991 the assessing officer found that the assessee had been dealing in properties as a business. During the period the assessee disposed of one plot at Karachi, 1 plot at Lahore, another plot at Karachi which was claimed to be the property of his wife and his shares in two Industrial plots at Ghadoon Amazai Industrial Estate of N.-W.F.P. Also during this period two residential plots were purchased by the 'assessee at Multan and 15 Kanals 9 Marlas land at Raiwind Road, Lahore. Local inquiries were conducted to probe the nature and volume of these transactions. This inter alia, revealed that the assessee himself was living in a palatial house constructed at an area of 8 Kanals in one of the best residential localities, New Garden Town, Lahore. In reply to notices the assessee pleaded that the plots at Karachi, self-owned and the other belonging to his wife were purchased with an idea of raising construction for personal residence but subsequently the idea was dropped due to law and order situation in that city. Somewhat similar contention was made about the industrial plots at N.W.F.P. that the intended projects could not be floated due to lack of official permission for the same None of these contentions having impressed the assessing officer The difference between the cost and sale price of these plots, No.140, Block-U, Phase II, Lahore Cantt. Cooperative Housing Society, Plots Nos.69 and 17/18 Faran Society, Karachi amounting to Rs.21,05,000 was brought to tax as income from business. Also an addition of Rs.4,75,000 was made under section 13(1)(c) being purchase price of a car found in possession of the assessee who denied its ownership. Another addition under section 13(1)(e) was made on account of inadequate household expenses declared to the Revenue. The assessee did not declare any salary in respect of household servants found working at his residence as Driver, Security Guard, Cook and Sweeper. The addition made in this respect amounted to Rs.66,000 being the salaries estimated in respect of these servants at Rs.2,000, Rs.1,400, Rs.1,200 and Rs.900 respectively. The additions when lumped with the declared income resulted in an estimate of income at Rs.26,55,500.
3. Before the first appellate authority by way of written arguments it was contended that the assessee never engaged himself professionally in real estate business; that at the time of purchase of these plots there was no intention for use of these plots for profit making in future; that properties/plots owned were never retained as "stock in trade"; that sale and purchase of properties being a provincial subject is exempt from levy of income-tax; that according to C.B.R. Circular No.10 of 1979 dated 1-10-1979 difference between sale and purchase of immovable property constitutes capital gains which the Federal Legislature had no authority to tax; that one plot sold during the period belonged to the wife of the assessee and that industrial plot was allotted to the assessee for raising an industrial unit but was cancelled during the period under review as the assessee could not obtain a licence to install the desired industry; that factually only two plots were sold during the period under review, namely one plot at Lahore Cantt. Cooperative Housing Society and the other in Faran Housing Society, Karachi and that a long gap between the sale and purchase of these properties indicated lack of intention on the part of the assessees to sell them for profit.
4. Learned first appellate authority found "some" merit in these contentions and also that the plot belonging to the wife could not be taken as benami because she was an independent tax-payer and that the assessing officer did not examine the possibility as to whether or not the assessee had purchased the properties/land as an investment. Thus relying upon the ratio of 1990 PTD 155 he set aside this aspect of the assessment order with the following remarks:--
"Keeping in view the various judgments of the Income Tax Appellate no Tribunal and the Honourable Supreme Court of Pakistan the order of the assessing officer is not tenable in view of the fact that he has not been able to establish unequivocally that the assessee was professionally engaged in the purchase and sale of land. The purchase and sale of land did indeed take place but the important issue is as to whether the same were investments or were purchases with the view to make quick profit and thus to be classified as an adventure in the nature of trade. 1, therefore, set aside the order with directions to the Assessing Officer that in view of the pronouncement of the higher Courts the Assessing Officer to make further probe to establish whether the assessee was an investor or a professional seller of property."
5. It may be added that before setting aside this part of the assessment order learned first appellate authority considered a number of reported decisions which were relied upon by the assessee. The cases and the ratio settled therein submitted in the form of written arguments included 1991 PTD (Trib.). 937, 1992 SCMR 250 = 1992 PTD 1, 1990 PTD 155 re: M/s. Eduljee Dinshaw Limited v. ITO, Karachi, 1990 PTD 345, (1976) 102 ITR 202, 40 Tax Cases 503, 38 Tax Cases 203, AIR 1965 SC 105, (1947) 15 ITR 50, 1979 PTD 465, 1980 PTD 322 re: PICIC v. CIT, 1985 SCMR 284 and 5 Tax Cases 159 re: Claifonia Copper Syndicate v. Harris. Besides, as stated above, reliance was also placed upon C.B.R. Circular No.10 of 1979 to claim that difference between sale and purchase of immovable properties constituted capital gains on which Federal legislature had no authority to tax.
6. Learned first appellate authority however confirmed the addition of Rs.4,75,000 made under section 13(1)(c) being the price of a car found in possession of the assessee but not declared to the Revenue. The other addition under section 13(1)(e) was also confirmed though partial relief was allowed after finding the adopted salaries of personal servants to be excessive.
7. Both the parties, though for polar reasons, assailed the remand order and the directions made in this regard as reproduced above. The assessee complains that the appellate authority was convinced that disposal of some properties out of total holding was not a venture in the nature of trade and that gains from such disposal being of capital nature could not be brought to tax net still he remanded the issue for which no justification existed. For the assessee it is further submitted that all relevant material being available, this Tribunal can decide the issue of capital gains alongwith rest of the two additions confirmed by the appellate authority. The Revenue on the other hand argues that none of the case-law relied upon or the submissions made in written arguments supported the claim made by the assessee and, therefore, the appellate authority ought to have confirmed the treatment meted out to the assessee. The Revenue also challenges the reduction allowed in addition under section 13(1)(e) while the assessee is aggrieved of the confirmation of both the additions made on account of ownership of a car as well as salaries of domestic servants.
8. Parties have been heard. Taking up the issue of remand first learned counsel for the assessee in support of his submissions and the prayer for a decision on merits with respect to the issue of capital gains places reliance upon 1991 PTD 463 re: Shehab Industries Limited, Karachi v C.I.T. Central, Karachi and 1983 PTD (Trib.) 278. In the first case a Division Bench of the Karachi High Court disapproved remanding of issues as a matter of source and found that "where there was no point on which any elucidation or determination afresh was required the Tribunal ought to have decided the case itself in accordance with law on merits instead of sending it back to I.T.O." In the second case this Tribunal in a similar situation where the C.I.T.(A) had set aside the assessment without exercising his powers properly vacated his order and proceeded to decide the appeal on merits on the basis of material available on record and the submissions made by the parties.
9. Learned D.R. also expresses similar complaint and argues that the appellate authority avoided decision without any cause as no further inquiry in the circumstances of the case was needed nor the reasons stated for the remand made any sense. Also claims that the appellate authority through remand order in a way directed the assessing officer - to reconsider his conclusions drawn from various admitted facts. This, according to the learned D.R. could not be done inasmuch as the appellate authority was competent to reach at any decision but not to suggest the assessing officer to draw an inference opposed to the one which has already been drawn in no uncertain terms.
10. Both the parties feel aggrieved of the remand order and since no factual inquiry is apparently needed to be conducted nor requested by any of them, we will agree with the submissions made in this regard which are otherwise supported by the aforesaid reported decisions. Accordingly we proceed to decide the issue involved on merits after vacating the abovesaid partial remand order and the terms recorded by the C.I.T.(A).
11. The issue of claimed capital gains needs to be dealt with first. The assessee statedly derives income from salary as a Director in the abovesaid Company and has never engaged himself in any other trade vocation or occupation nor he maintained any establishment for this purpose. According to the learned counsel for the assessee no business of the kind attributed to the assessee was undertaken by him who occasionally made "investment in properties". To him, not a single good reason that emerged in this case pointed out covertly or overtly that the transactions in question were ventures in the nature of trade. In support of his submissions he places reliance on the reported decisions which were earlier placed before the C.I.T.(A) in the form of written arguments. Since the ratio in all these cases were cited in extenso in the written arguments and reproduced in the impugned appellate order their repetition is not needed. Some of them alongwith other which have been cited before us, however, need specific mentioning.
12. In (1976) 102 TTR 202 re: Michal A Kallivaplil v. C.I.T., Karala six general principles were laid down to serve as guidelines while deciding whether a transaction of purchase and sale amounted to a venture in the nature of trade, the ratio settled in this case was based upon the consideration of a single transaction and, therefore, is not relevant to the facts before us. In (1965) 57 ITR 21 (SC) re: Jankee Ram Bahadar Ran! v. C.I.T., Calcutta a dealer in iron scrap and hardware purchased a Jute Pressing Factory on February 26, 1943. By a deed of conveyance executed on September 30, 1943 the factory was sold to an individual for a difference of Rs.2,24,864. The I.T.O. brought to tax the profit so earned. The assessee failed before the departmental authorities, the Tribunal confirmed and the High Court of judicature at Calcutta returned an affirmative answer to the question if the surplus received by the assessee as a result of the sale of jute press factory arose out of a venture in the nature of trade and was therefore rightly assessed to tax? The decision so recorded was reported as Janke Ram Bahadar Ram. v. C.I.T. (1963) 50 ITR 350. The Supreme Court of India reversed the decision and. held that "the profit motive in entering a transaction is not decisive for an accretion to capital does not become a taxable income merely because the asset was acquired in the expectation that it will be sold at a profit". Also that "the facts that the appellant made a profitable bargain when it purchased the property and that it had a desire to sell the property if a. favourable offer was forthcoming could not without other circumstances justify an inference that the appellant intended by purchasing the property to start venture in the nature of trade". In this case again a sole transaction was in question and the assessee had to become a party in the pending litigation before getting possession of the whole premises of the factory purchased by him. In re: 1990 PTD 345: C.I.T. v. Anandlal Becharlal & Co., a Division Bench of the Bombay High Court in somewhat general terms laid down -that "in the absence of any indicia the profit motive alone would not be sufficient to make the transaction an adventure in the nature of trade". In (1959) 37 I.T.R. 242 re: Saroj Kumar Mazumdar v. C.I.T., West Bangal the appellant was engaged in different kinds of business activity. With a view to acquire a plot of land for construction of a residential house and a workshop for him self he entered into an agreement to purchase a piece of land and made advance payment to a Housing Society. The land owned by the society was already requisitioned by the Government for defence purposes in connection with Second World War. One of the conditions of agreement to sell was that transaction of purchase would be completed within six months of the land being released from the Government occupation. Before this vocation could happen the assessee agreed to assign his rights to another person which were available to him by way of agreement to sell in the aforesaid piece of land. The assessee received a profit at Rs.74,485 and finally the plot was transferred by the Society in favour of the legal heirs of the other person after release took place and the development on site was completed. The profit earned by the assessee was brought to tax, inter alia, on the ground that the assessee had paid advance to the Society after taking a loan from the company of which he was a Director, that he had no means to pay the balance price nor he had the means to construct a house and that the site itself fetched no income thus showing that the appellants venture could not be an investment but only an excursion into the realm of trade. On special-appeal to the Supreme Court of India the decision of the Tribunal that the land was purchased with the intention of making profit was reversed. Their Lordships found that "where a transaction was not in line of business of the assessee but an isolated or single instance of a transaction the onus was on the department to prove that transaction was an adventure in the nature of trade". In 1980 PTD 322 re: Pakistan Industrial Credit and Investment Corporation v. C.I.T.; East Karachi a Full Bench of the Karachi High Court held that whether or not a transaction or transactions are in line of the assessee's trade depends on characters and circumstances of the transactions. Also that the answer to be given cannot be promised on single criterion. In (1989) 176 ITR 383 re: C.I.T. v. A Muhideen a Division Bench of the Madras High Court found that "in order to hold an activity as an adventure in the nature of trade there must be positive material to prove that the assessee intended to trade in such an activity and in absence of evidence the sale of immovable property consisting of land could give rise only to capital accretion". In that case the assessee purchased a large plot of land with a dilapidated building and sold after converting it into several plots. On facts it was found that there was no evidence that purchase of land had been made with the intention to re-sell, and therefore, the transaction was not in the nature of trade. In (1957) 31 ITR 987 re. Shri Ram Jha v. C.I.T., U.P. the profit realized on the sale of 100 inherited shares were held to be a capital receipt, and therefore, not assessable to income-tax. In (1992) 193 ITR 530 re: C.I.T. v. Mahavir Prasad R. Moraka a Division Bench of the Bombay High Court re-affirmed the principle that "the mere earning of the surplus or realization of profit is not equivalent to embarking upon an adventure in the nature of trade. It is not sufficient for the Revenue to succeed by merely showing that the transaction was entered into having in mind the possibility of making a profit. In addition to this aspect of the matter it must bear the indicia of trade". The Circular No.10 of 1979 reported in (1979) 40 Tax 194 (Statute) carries a word of caution for the assessing officers while determining profit on sale of property used for business per provisions contained in Rule 7 of the Third Schedule to the Ordinance. In the instructions contained it has been ' suggested that the Federal Government has no authority to tax capital gains. There is no cavil at it. It goes without saying that the Federal Legislature is not competent to tax gains arising out of sale of immovable property. However, as we will find in the later part of this order there appears no prohibition or bar against taxability of such profits if derived from a transaction or transactions in the nature of trade or as business.
13. Learned counsel for the assessee vehemently argues two points. First is that an immovable property can `never' be a stock in trade and second that capital gains or surplus acquired from the sale of immovable property cannot be brought to tax as income even if an assessee is held to be engaged in their sale and purchase as a regular business. This is stated to be the natural out come of the restriction contained in Item 50 of the Federal Legislative List, Part I, Fourth Schedule to the Constitution. It is further submitted that capital gains cannot be taxed under the Income Tax Ordinance under any of the six heads detailed in section 15 of the Ordinance. Reliance in this regard is. placed upon 1992 SCMA 250 = 1992 PTD 1 SC (Pak.) re: Julian Hoshang Dinshaw Trust and others v. I.T.O., Karachi and others PLD 1990 SC 399 = 1990 PTD 155 re: Eduljee Dinshaw Limited v ITO and (1989) 176 TTR 393 (Madras) (supra). In the first cited case capital gains on immovable property were held to be beyond the taxing power of the Federation: In the second case on facts the appellant company was held ~ not to have engaged itself in business of buying and selling properties. Therefore, the treatment in taxing the capital gains as income was disapproved. The third case re: C.I.T. v. A. Mohideen has already been discussed above. None of these cases lays down a bar that gains or surplus arising out of regular sale and purchase of immovable properties will not become income from business.
14. Coming to the other arguments of the learned counsel again we find that the preposition that immovable property can never be a stock in trade has not been supported by either a provision of law or a decision of a superior Court. The only case cited in this connection re: Michal Akallivapalil v. C.I.T., Kerala (supra) states that "if land has been purchased or a commodity which normally is not treated as a stock in trade has been purchased the presumption is that the intention was to make an investment and. not to indulge in an adventure in the 'nature of trade". In that case it may be repeated the transaction in question was only one by a big land owner who purchased a large chunk of land but subsequently sold a part of it while retaining with himself still a bulk of it.
15. The facts in hand are distinctively distinguishable from any of the cases which came up for consideration before the Courts in the abovecited cases. Here is an individual, though a Director in a Private Limited Company who holds a number of immovable properties of different characters. In the year under review he sold three residential plots and purchased two more of similar characters. Also he purchased 15 Kanals, 9 Marlas described as agricultural land at Raiwind Road, Lahore. This area has in recent time been most attractive "business preposition" for real estate dealers. Besides these six transactions of sale and purchase he disposed of shares in three plots at Ghadoon Amazai. Now what is left with him at the end of the year is his inventory. It includes one shop at Nishat Road, Multan, one residential plot in Ishrat Corporation, Karachi, two plots in a surrounding village of Lahore and 100 Kanals of agricultural land at Lahore. All of these being in addition to his (sic) 8 Kanals residential house at Lahore. The properties disposed of during the year can conveniently be termed as "sales" and those brought about during this period as "purchases" adding to the abovesaid properties as "stock in trade". The nature sizes and location of these properties do not support the first defence put up in reply, dated 30th May, 1992 that plots at Karachi were purchased within intention of building residential houses but the idea was dropped due to other compulsions.
16. The sale and purchase of properties by an assessee indicating following of a systematic pattern which is germane only to commercial practice cannot be treated at par with a, sole and isolated transaction. In reply to a query from the Bench learned counsel for the assessee hasitatingly says that the assessee had made "investments" simpliciter which are distinguishable from adventures in the nature of trade. This is nowhere nearer the truth. Even if we ignore the holding of various kinds of properties by the wife of the assessee, the statement that there has never been a conscious effort to employ capital in a manner that it will turnover and bring profit in such activity cannot be accepted. This Tribunal has recently considered a case of single transaction wherein the assessee purchased a site for construction of a hotel but had to sell the same on account of refusal of the financial institutions to provide funds. In that case reported as 1994 PTD (Trib.) 1034 most of the cases now relied upon by the assessee were considered these were found relevant in that case as almost all of them related to a situation where there was only one transaction. Here the position as explained above is totally different because of disposal of three plots and equal purchase or incoming of three properties, there still remaining a number of plots of various characters commercial, agricultural, industrial and residential in stock. That a single transaction may amount to venture in the nature of trade while a number of them may not is certainly established by now. However, in the case of single transaction which is not in line of an assessee's business heavy burden lays upon the Revenue to tax the surplus arising out of it but where there are more of them, six in a row in a year both outgoing and incoming with a number of other still being available on the shelf, an equally heavy burden lies upon the assessee to establish that these were not in the nature of trade. The assessee in this case has not been able to discharge the burden. In all such like cases what Revenue needs to bring home is a systematic effort on the part of the assessee to employ his capital in the pursuit of gain or profit. The assessing officer has successfully done it. No controverting evidence has been brought on record to say that purchase of properties was simply an investment made with an intention of earning income from rent etc. or that their disposal during the period was on account of some compulsion. No such defence was apparently possible in this case as simultaneously with the disposal of some of the stocks in trade an equal quantity, presumably lower in value was upholstered in a calculated manner. When a number of transactions are involved, as in this case, the initial burden on the Revenue is automatically discharged and it becomes necessary for the assessee to establish the contrary that he never had an intention to involve in a regular or orderly conduct of the activity to gain profit. In (1962) 44 ITR 362 re: Karanpura Development Company Limited v. CIT the Supreme Court of India held that where a company acquires properties it sells which itself or leases out with a view to acquiring other properties to be dealt with in the same manner, the company is not treating them as properties to be enjoyed in the shape of rents which they yield but as a kind of circulating capital leading to profits of business, which profits may be either enjoyed or be put back into the business to acquire more properties for further profitable exploitation. This case which was cited with favour in (1977) 35-74 re: CIT, Lahore Zone, Lahore v. Muhammad Allah Bukhsh also answers the contention of the learned counsel for the assessee that immovable properties can never be a stock in trade.
17. The assessee has complained against the inclusion of a plot allegedly belonging to his wife in the total gains assessed in his hands. The complaint is illogical as the assessee himself declared this plot in his wealth statement and the profit accrued on it as accretion to his wealth. Since the assessee has claimed and referred to the property owned by his wife it appears appropriate that the connection is seen in the background of the whole arrangement. After the assessee was issued a notice seeking his explanation to the transactions in question his wife hurriedly filed wealth tax returns at Multan for the, three years 1990-91 to 1992-93 and interestingly the W.T.O. Circle 2 accepted the declared wealth by way of a combined order dated 4-11-1992. In the returns so filed the wife of the assessee claimed ownership of different properties including the one, which was already claimed by the assessee in. his wealth statement. The other properties included a flat in a plaza at Lahore, two plots of total area of 9 Marlas at Gujranwala, three plots at Lahore in P.C.S. Staff Housing Society, one Kanal plot with boundary wall at Canal View Housing Society, 1/4th share in a shop, one plot in Cantt. Cooperative Housing Society, Lahore (allegedly disposed of during the period 1991-92) and an industrial plot in Ghadoon Amazai, N.-W.F.P. The return also indicated purchase of a one Kanal plot in Jauhar Town on the disposal of one plot of a similar area in the Cantt. Cooperative Housing Society The way these three returns were filed after service of notices on the assessee is understandable. However, framing of assessment by the concerned W.T.O. has surprised us. Combined assessment order dated 11-4-1992 leaves a number of questions unanswered. The properties were declared and accepted in a manner which is not usual to such proceedings. It appears that deliberately these properties were either vaguely reported or that the assessing officer had no time even to seek their proper identification, location and other qualifications required to be considered for their evaluation in terms of Rule 8(3) of the Wealth Tax Rules, 1963,
18. Next come two additions under section 13 of the Ordinance. As said above, the first addition under section 13(1)(c) was made when the assessee disowned a motor car which was found in his possession. The assessing officer conducted a regular inquiry and traced out the previous owner and successfully connected the sale between the parties for a total consideration of Rs.4,75,000. The delivery letter executed at the time of sale and also found which supported the factum of purchase by the assessee. Learned first appellate authority after going through the evidence on record upheld the rejection of explanation made in this behalf. Further, objections made at the time of first appeal were also repelled on the ground that the delivery letter duly singed by the assessee was available on record. The assessee has not been able to controvert the evidence at any stage of the proceedings. Before us the assessee has sought to introduce fresh evidence in ~ the form of an affidavit of the owner. According to this affidavit sworn on 18-8-1992 before an accredited Consular, Embassy of Pakistan in Kuwait the owner of the car Muhammad Mutee-ur-Rehman declared that he was still lawful owner of the car in question, which was entrusted to his close friend the assessee at the time he left for Kuwait. The reason for this bailment is stated to be expected misuse of car by his relation. At the same time the affidavit states that the deponent obtained a delivery receipt from his friend "as a matter of principle". As observed above, in reply to notices issued to the assessee in this connection he remained, vague and evasive. The affidavit now produced before- us has confirmed the inquiries conducted by the assessing officer that the assessee purchased a car belonging to an expatriate who fled from Kuwait on the occasion of its invasion and then returned back after normally prevailed there. The execution of delivery receipt having now been admitted it is for the assessee to contradict that it did not mean what it purported to indicate. i.e. the delivery of the vehicle for a consideration of Rs.4,75,000. This kind of defence it may be repeated was not taken at the earlier stage of the proceedings. If there was an iota of truth in the statement made in the affidavit the assessee could easily take the straight defence that has now been put up in the form of affidavit. What kept him silent for more than six months appears strange. As an old friend of the deponent he troubled have announced his disclaimer of the car on the day he was served with a notice. Execution of delivery receipt showing exchange of a consideration between the "old friends" also raises a number of questions that the assessee has not been able to answer. The only answer keeping in view the conduct of the -assessee is that he avoided a clear defence till he managed the aforesaid affidavit from the seller. The confirmation of delivery receipt, however, has back fired Neither the assessee nor the alleged old friend can be allowed to say against a document which both-of them accepted to have executed. The evidence brought on record by the assessing officer is more than sufficient to burden the assessee with the addition in question. An affidavit according to (1984) 146 ITR 140 re: State v. Gunwatnibai Rabilal v. C.I.T. M.P. is a piece of evidence which alongwith other material on record .has to be taken in consideration before arriving at a finding. The alleged affidavit being against the facts emerging on record and even .the document admittedly executed between the parties, we will refuse to allow. it any serious consideration.
19. The other addition made at Rs.66,000 under section 13(1)(e) was reduced by the appellate authority. He found the addition to be excessive. None of the parties has been able to convince us for an interference in this regard. The assessee did not declare any salary in respect of domestic servants found at his residence at the time of spot inquiry. The rates of pay included in his, income by the assessing officer were found excessive for various reasons and we found nothing wrong with the findings of the first appellate authority so recorded. The reduction in estimated salaries by the appellate authority appear closer to facts. The submissions made by both of the parties for an interference in this regard do not bear any weight. These are accordingly rejected.
20.--The contention of the assessee regarding absence of double approval also does not find support from the record. Even otherwise it is not available to the assessee as he was amply allowed opportunities as contemplated under the provisions of section 13 of the income Tax Ordinance. The view of the Tribunal with regard to double approval having since been dissented from vide 1995 PTD (Trib.) 624 and since word "prior" having already vanishes from the statute book the submissions made in this connection cannot be accepted.
21. No other aspect of the case has been argued at the Bar.
22. This being so the appeal filed by the assessee fails in toto while the departmental appeal succeeds in terms that the treatment meted out to the assessee at the assessment` stage with regard to income from sale of properties is upheld. The departmental grievance against reduction in domestic servant salaries, however, fails.
M.B.A./144/T
Order accordingly