I.T.A. NO.561/LB OF 1990-91 VS I.T.A. NO.561/LB OF 1990-91
1997 P T D (Trib.) 2011
[Income-tax Appellate Tribunal Pakistan]
Before Shariq Mahmood, Accountant Member and Nasim Sikandar, Judicial Member
T.A. No.561 /LB of 1990-91, decided on 16/12/1996.
Income Tax Ordinance (XXXI of 1979)---
---S.22 -Income from business ---Assessee, an individual, returned sales and income---Assessing Officer, disbelieving assessee's version and basing his estimation on local enquiry, estimated income at higher rate---First Appellate Authority, disagreeing with the conclusion of Assessing Officer gave relief to the assessee---Department, being aggrieved, went into appeal against the said order---Assessing Officer was not able to bring on record any material to support his action, his estimates were based on conjectures and surmises and as such revenue had not been able to advance plausible reasons for enhancement of income---Assessing Officer disbelieved the assessee's explanation without any cogent reason---Department had failed to establish its case, appeal was dismissed.
Shahbaz Hassan, D.R. for Appellant.
Raja Farooq, I.T.P. for Respondent.
Date of hearing: 28th January, 1996.
ORDER
SHARIQ MAHMOOD (ACCOUNTANT MEMBER).---In the assessment year 1989-90 return was filed by an individual declaring an income of Rs.39,300. The same had been derived as under:---
| Income from business | Rs.36,000 |
| Income from property | Rs.3,000 |
| Total | Rs.39,000 |
2. The I.T.O.A. observed that the above bore no comparison to the declared and assessed income for the immediately preceding year (shown at Rs.145,000 and agreed at Rs:200,000. He accordingly examined the case, conducted a spot enquiry and confronted the assessee with its contents. It was gathered that the assessee's explanation that the business of assembling-sale of sewing machines had been discontinued and the business premises had been given on lease at Rs.3,000 per month was not tenable. Based on the spot findings that the same business was being carried on at the same premises where the former employees of the assessee was running the shop with the same facilities of telephone, electricity connection etc. it was concluded that this arrangement had been made to "avoid proper incidence of taxation". The explanation of the assessee that he had been forced to discontinue business owing to heart trouble and had shifted to Islamabad was not accepted. The declared results having been discarded assessment was framed at an income of Rs.203,405 wherein income from business was determined at Rs.200,000. Appeal before the CIT(A) FSD.
3. The assessee went into appeal before the CIT(A) Faisalabad who vide his order, dated 31-10-1990 did not agree either with the approach the finding and the conclusions drawn by the I.T.O. In a detailed order the First Appellate Authority concluded that the action of the I.T.O. was based on strong suspicion, mere conjectures and surmises. The conclusion drawn by the I.T.O., it was observed the CIT(A), had no strength or force. The starting and concluding point in the assessment framed was the report of the Area Inspector whose entire findings revolved around the "local enquiries"; which had no supporting evidence, material or proof. The First Appellate Authority considered the facts on record, which included the assessee not only leaving the business but also the city. In support of his treatment the CIT(A) placed reliance on a number of decisions of the superior Courts (pages 4 and 5 of the impugned order).
4. The revenue now feels that the action in accepting the declared income by the CIT(A) was not justified. The learned D.R. in support of the issues raised, mostly relied upon the findings and reasoning thereof by the I.T.O. as reflected in the assessment order. The D.R. was of the opinion that this was an effort on the part of the assessee to avoid proper taxation as he had already been charged to tax at a higher amount in the immediately preceding year. It was, therefore, pleaded that the order of the CIT(A) should be vacated and that of the I.T.O. restored.
5. The representative of the assessee supports the actions and findings of the CIT(A) and pleads for the maintenance of the impugned order. Mainly referring to and relying upon the conclusion drawn by the First Appellate Authority it was submitted that the I.T.O. had not brought on record any evidence or material to support its treatment. The explanation of the assessee, the A.R. maintained, had not been accepted and assessment had been framed merely on conjectures and surmises:-
6. The points of view of the two parties have been considered and examined. The revenue has not been able to convince us that the impugned order is erroneous. The Assessing Authority disbelieved the explanation of the tax-payer without any cogent reasons. After disbelieving the explanation regarding the business arrangement the I.T.O. was not able to bring on record any fact or material, which would support his action. Proceedings on conjectures and surmises he framed the assessment order. We concur with the findings of the learned CIT(A) as the revenue has not been able to convince us with any plausible or justifiable reason which would support its grounds of appeal. The department fails and the appeal is dismissed.
C.M.S./368/Trib????????????????????????????????????????????????????????????????????????????????? Appeal dismissed.