I.T.AS. NOS. 1162/LB AND 1396/LB OF 1987-88, I.T.A. NO. 140/1,13 OF 1988-89 VS I.T.AS. NOS. 1162/LB AND 1396/LB OF 1987-88, I.T.A. NO. 140/1,13 OF 1988-89
1997 P T D (Trib) 1093
[Income-tax Appellate Tribunal Pakistan]
Before Malik Muhammad Tauqir Afzal, Judicial Member
I.T.As. Nos. 1162/LB and 1396/LB of 1987-88, I.T.A. No. 140/LB of 1988-89, decided on 10/12/1995.
(a) Income Tax Ordinance (XXXI of 1979)---
----S.13(1)(d)---Addition---Validity---Purchase of property by assessee-- Comparison with other property in same locality ---Assessee declared purchase price of property---Assessing Officer considering same to be too low, enhanced purchased price by making comparison with other property in same locality---Held: It was unfair to compare purchase price of property located on narrow lane, away from main road with property located on the main road---Addition made on such comparison was not sustainable.
(b) Income Tax Ordinance (XXXI of 1979)---
----S.13(1)(d)---Purchase of property by assessee---Addition---Validity-- Incontrovertible evidence---Held: Incontrovertible evidence must be placed on record for rejection of declared price, even if rate was fixed by Provincial Registration Authority. [p. 1094] A
(c) Income Tax Ordinance (XXXI of 1979)---
----Ss.13(1)(d) & 111---Penalty---Deletion---Addition made was deleted-- Tribunal also deleted penalty imposed under S.111 in consequence of deletion of addition made under S.13(1)(d) of the Ordinance.
Muhammad Shuja Khan for Appellant.
Mrs. Talat Altaf Khan, DR for Respondent.
Date of hearing: 10th December, 1995.
ORDER
The assessee as well as the Department have filed cross-appeals on the point of addition under section 13(1)(d) in respect of Assessment year 1986-87. At the same time, penalty under section 111 in consequence of the addition under section 13(1)(d) is also being contested by the assessee. The three appeals are disposed of in this order.
2. The assessee, an individual, deriving income as a partner of a Registered .Firm had shown purchase price of 1/2 share in Property No.SE-9-R-46/8, Brandreth Road, Lahore at Rs.20,000, but the I.T.O. considered the declared price to be too low. After fulfilling the statutory requirements the I.T.O. went on to estimate the value of property at Rs.3,00,000 and on account of purchase of 1/2 share of the property by the assessee an addition of Rs.1,30,000 was made under section 13(1)(d) of the Ordinance. The C.I.T. (Appeals) fixed the purchase price of the property at Rs.2,40,000 assessee's 1/2 share being Rs.1,20,000 and thus the addition was reduced from Rs.1,30,000 to Rs.1,00,000. The purchase price of the property had been considered to be too low on the basis of value of Shop No.40, Brandreth Road, Lahore which had been assessed at Rs.3,40,000 by the Capital Gain Tax Authority. The I.T.O. had mentioned that Shop No.40, Brandreth Road, Lahore had a covered area of 240 sq. ft. and was located on the main road whereas shop purchased by the assessee had a covered area of 232 sq. ft. and was located in a lane of Brandreth Road, Lahore. For the dissimilar location of the two properties, the price of the shop purchased by the assessee was pitched at Rs.3,00,000. The C.I.T. (Appeals) did not discuss the merits of the contentions of the appellant but "taking a lenient view" the purchase price of the shop was fixed at Rs.2,40,000.
3. The treatment meted out by the Assessing Authority and the first appellate authority was vehemently contested by appellant's Authorized Representative. It was contended that the I.T.O. was not justified in comparing the price of a shop located on the Brandreth Road, with shop located in a 3 feet wide lane away from the main road. Covered area of the shop was also shown to have been wrongly taken at 232 sq. ft. It was pointed out that assessee had purchased a property covering 203 sq.ft. as was evident from the registered deed. It was further explained that provincial registration authorities had fixed the sale rates of this area during the relevant period at Rs.50,000 per Marla from properties on the front and Rs.30,000 per Marla for properties at the back. The declared purchase price of a property which was less than 1 Marla at ks.40,000 was thus claimed to be quite reasonable. Lastly, it was argued that no notice under section 13(1) had been issued for explaining the source of investment which rendered the addition as illegal.
4. The DR was unable to rebut the contentions of the appellant. It was indeed unfair to compare the purchase price of property located in a 3 feet wide lane at about 35 feet away from the main Brandreth Road with a property located on Brandreth Road. The addition based on such comparison was apparently unsustainable. In any case the declared price being in accordance with the rates fixed by the Provincial Registration Authorities, the same could be rejected only by placing the incontrovertible evidence on record. In the absence of any such material, the addition must be deleted.
5. The Departmental appeal questioning the relief allowed by the first appellate authority would fail in view of our finding on assessee's appeal.
6. Penalty under section 111 in consequence of the addition under section 13(1)(d) would be deleted in view of our findings on the addition.
7. The three appeals are disposed of as above
C.M.S./263/Trib. Order accordingly.