I.T.AS. NOS. 3607/LB OF 1986-87, 3608/LB OF 1989-90, 3609/LB OF 1990-91 AND 3610/LB OF 1991-92 VS I.T.AS. NOS. 3607/LB OF 1986-87, 3608/LB OF 1989-90, 3609/LB OF 1990-91 AND 3610/LB OF 1991-92
1997 P T D (Trib.) 1095
[Income-tax Appellate Tribunal Pakistan]
Before Iftikhar Ahmad Bajwa, Accountant Member and Malik Muhammad Tauqir Afzal, Judicial Member
I.T.Os. Nos. 3607/LB of 1986-87, 3608/LB of 1989-90, 3609/LB of 1990-91 and 3610/LB of 1991-92, decided on 29/01/1996.
(a) Income Tax Ordinance (XXXI of 1979)---
----S.13(1)(d)---Addition---Validity---Assesseepurchasedproperty, consideration of which was settled about 10 years earlier and transaction was completed subsequently---Addition was made on basis of current prevailing market price ---Assessee produced necessary evidence in his support but Assessing Officer ignoring the same made addition which was confirmed by First Appellate Authority---Held, assumption about investment was not based on material on record and evidence supporting declared value was not rebutted---Addition was not sustainable in circumstances.
(b) Income Tax Ordinance (XXXI of 1979)---
----S.13(1)(e)---Additions---Validity---Declared household expenses by assessee was rejected and were adopted at higher level by Assessing Officer---Additions, however, were made with routine observation---Held, in the absence of specific evidence, additions based on estimate of expenses were unsustainable.
Kh. Muhammad Iqbal and Fazal Mahmood, F.C.A. for Appellant.
Zafar Ahmad, D.R. for Respondent.
Date of hearing: 29th January, 1996.
ORDER
Appellant derives income as salary from Messrs National Feeds Lahore. In the four appeals relating to Assessment years 1986-87 and 1989 -90 to 1991-92 additions under sections 13(l)(d) and 13(1)(e) are being contested. The four appeals are disposed of in this order.
3. For Assessment year 1986-87 addition of Rs.1,32,000 under section 13(1)(d) is in question. Appellant had shown purchase of a plot measuring about 10 Marlas in Gulshan-e-Ravi, Lahore for Rs.18.000 which was estimated by the I.T.O. at Rs.1,50,000 and thus the difference of Rs.1,32,000 was deemed as income under section 13(1)(d) of the Income Tax Ordinance. According to the appellant, the transaction had been agreed upon in 1976 when the consideration was settled and, therefore, addition or the basis of the, prevailing market rate during Assessment year 1986-87 was unjustified. It was contended that necessary evidence had- been furnished to the I.T.O. also that she had made the addition totally ignoring the factual position of the transaction.
3. Appellant's contention is borne out by records. The best order sheet entry prior to the assessment reads as under:---
"Present Mr. Dr. Riaz Ahmad Bhatti stated that the plot was purchased in 1976 for a consideration of Rs.6,000 and Rs. 12,500 were deposited with the L.D.A., through the seller as fee for development charges. The plot was purchased out of an exempted land of measuring 104 Kanals in the name of Mr. Meraj Din, Muhammad Sharif, Gawar Din and Muhammad Hatif. The plot of 10 Marlas was purchased out of the share falling to Mr. Meraj Din The development charges were paid by him to the owners of the land who paid the same alongwith the charges for their own total land to the L.D.A.
The registration was made in 1985 for a consideration of Rs.18,000. Required to submit the dates/intimation by the LDA when plotting of the land was made and produce the seller for statement on compliance by 20-3-1993."
The next entry dated 18-5-1993 records the assessment and issuance of demand notice. A letter from the appellant dated 18-3-1993 duly initiated by the I.T.O. is lying in the file. It is mentioned in the letter that affidavit of the seller confirming the circumstances of the sale of the plot in question is also being submitted. The affidavit initialed by the I.T.O. is also lying in the file. As mentioned earlier, no proceedings for 20-3-1993 to which date the case had been adjourned were recorded by the I.T.O. The I.T.O. did not bother to mention these facts in the assessment order dated 18-5-1993 and sufficed to observe that reply submitted by the assessee was not plausible as the value was determined at Rs.1,50,000 considering rates of land declared by the Commissioner, Lahore Division, Lahore, The addition was obviously contrary to facts on record. Appellant vide his letter dated 28-12-1993 had requested the I.T.O. to call the seller under section 148 to verify the consideration of the plot and subsequently the affidavit of the seller was filed alongwith the letter dated 18-5-1993. The assumption that appellant had made an investment of Rs.1,50,000 was not based on any material. Appellant, on the other hand, had furnished evidence in support of the declared value which as mentioned earlier, was not rebutted. The addition under section 13(1)(d) was, therefore, unjustified.
4. The C.I.T. Appeals also held the estimate of value of plot at Rs.1,50,000 as quite reasonable "because the value declared by the appellant at Rs.18,000 for a 10 Marlas plot in Gulshan-e-Ravi was quite low". Although, it had been mentioned in an earlier part of the order that assessment record has been perused by him, the C.I.T. (Appeals) totally ignored the circumstances of the transaction brought on record by the appellant. The order relating to Assessment Year 1986-87 mainly related to the objection that issuance of notice under sections 56 and 58(1) for Assessment Year 1986-87 was without jurisdiction and this objection was rejected after discussion in some detail but only a passing reference to the question of unexplained investment and addition under section 13(1)(d) was made. Copy of grounds of appeal before the. C. I. T. (A) do not contain any objection on the point of jurisdiction. Out of the four grounds the first ground is a general objection against the assessment order while the next three grounds specifically question the estimate of purchase price of plot at Rs.1,50,000 and the addition under section 13(1)(d). The C.I.T. (Appeals) had failed to properly adjudicate the issue raised before him and dealt in more detail an issue which had not even been raised, before him. On the basis of facts on record, the orders of the Revenue Authorities are unsustainable. The addition is, therefore, deleted.
5. For Assessment Years 1989-90 to 1991-92, personal expenses of the appellant were estimated at Rs.60,000 for each year as against the declared amount of Rs.31,627, Rs.27,512 and Rs.33,812 respectively. The additions were made with routine observation that household expenses declared by the assessee were on the lower side and assessee's reply to the show-cause notice was not satisfactory. In the absence of specific evidence that appellant had suppressed his household expenses the additions based on estimate of expenses by the I.T.O. were obviously unsustainable and are hereby deleted.
6. The four appeals succeed as above.
C.M.S./254/Trib. Order accordingly.