I.T.A. NO-488/HQ OF 1989-90 VS I.T.A. NO-488/HQ OF 1989-90
1997 P T D 1850
[Income-tax Appellate Tribunal Pakistan]
Before Muhammad Mujibullah Siddiqui, Chairman and Nazeer Ahmed Saleemi, Accountant Member
I.T.A. No.488/HQ of 1989-90, decided on 19/05/1997.
Income Tax Ordinance (XXXI of 1979)---
----S. 13(1)(e)---Addition---No addition can be made to the total income of an assessee and no expenditure can be presumed merely on the basis of surmises and conjectures---Department has to collect the evidence and cite the instances of expenditure or bring on record such circumstances in which no inference can be drawn other than expenditure of particular amount-- Onus of proof squarely lies on the department and until and unless this onus is discharged no addition can be made.
No addition can be made to the total income of an assessee and no expenditure can be presumed merely on the basis of surmises and conjectures. No addition can be made under section 13(1)(e) with the use of stock phrases that an assessee is living in a posh locality or is leading a high standard of living. It is incumbent on the department for the purpose of making such addition to collect the evidence and cite the instances of expenditure or bring on record such circumstances in which no inference can be drawn other than expenditure of particular amount. For the purpose of making addition under section 13(l)(e) on account of any expenditure, which is not admitted by an assessee, the onus of proof squarely lies on the department and until and unless this onus is discharged no addition can be made.
1987 PTD (Trib.) 300 ref.
Ali Nasir Bukhari, D.R. for Appellant.
Arif Muhammad Khan for Respondent.
Date of hearing: 16th May, 1997.
ORDER
This appeal at the instance of department is directed against the order, dated 16-8-1989 by the learned C.I.T.(A), Zone-VII, Karachi in I.T.A. No. 667 of 1987-88. The sole objection raised on behalf of the department is to the deletion of addition, at Rs.38,298 made under section 13(1)(e) of the Income Tax Ordinance, 1979.
2. Heard Mr. Ali Nasir Bukhari, learned representative for the department and Mr. Arif Muhammad Khan, Advocate for the respondent. The learned D.R. has submitted that the C.I.T.(A) deleted addition for the reason that two approvals were not obtained as required vide Tribunal's order reported as 1987 PTD (Trib.) 300. He has submitted that on factual plane the observation is incorrect as both the approvals have been obtained and on legal plane the ruling reported as 1987 PTD (Trib.) 300 has been subsequently overruled by a Larger Bench of this Tribunal wherein it has been held that two approvals are not required to be taken under the law. We asked the learned D.R. to address arguments on the merits of the addition as well. He has submitted that the respondent/assessee is leading high standard of living. He is residing in P.E.C.H.S., Karachi and his declared drawing is Rs.2,643 per month only which do not commensurate to the standard of living, therefore, the declared drawings being low and addition was justified. He has submitted that the Assessing Officer estimated the drawings at Rs.5,000 per month which is quite fair and ought to have been maintained. On the other hand, Mr. Arif Muhammad Khan has submitted that the appellant furnished explanation that father, mother, brother and sister-in-law of the appellant were also earning members and all of them were contributing towards the household expenses which amounted to Rs.1,71,208. He has further submitted that the appellant and all other family members are employed in company which has provided the vehicles to them and the maintenance is also provided by the company. He has further submitted that utility bills are also paid by the company and, therefore, in these circumstances the declared household expenses of Rs.1,71,208 for a family of five members is very reasonable.
3. We have considered the contentions raised on behalf of the learned representaties for the parties. A perusal of the assessment order shows that the Assessing Officer has observed that the appellant is member of Karachi Gymkhana Club where elite of the city have social get together whose spending on social activities are normally very high. The Assessing Officer has further observed that the appellant undertook the foreign tour, expenses whereof were made by the company. However, the element of personal expenditure on shopping cannot be ignored. We find that these observations are merely presumptions not supported with any iota of evidence. It is established principle of law that no addition can be made to the total income of an assessee and no expenditure can be presumed merely on the basis of surmises and conjectures. In large number of cases it has been observed that no addition can be made under section 13(1)(e) with the use of stock phrases that an assessee is living in a posh locality or is leading a high standard of living It is incumbent on the department for the purpose of making such addition to collect the evidence and cite the instances of expenditure or bring on record such circumstances in which no inference can be drawn other than expenditure of particular amount. For the purpose of making addition under section 13(1)(e) on account of any expenditure which is not admitted by an assessee, the onus of proof squarely lies on the department and until and unless this onus is discharged no addition can be made. Thus, we confirm the deletion of addition by the learned C.I.T.(A) but not for the reasons assigned by him. The addition is deleted because it is not sustainable in fact and law.
4. The appeal stands dismissed accordingly.
M.B.A:/358/Trib.Appeal dismissed.