I.T.A. NO.658/LB OF 1996 VS I.T.A. NO.658/LB OF 1996
1997 P T D (Trib.) 2026
[Income-tax Appellate Tribunal Pakistan]
Before Abdul Rashid Qureshi, Judicial Member and Ashfaq Ahmed, Accountant Member
I.T.A. No.658/LB of 1996, decided on 02/10/1996.
Income Tax Ordinance (XXXI of 1979)---
----Ss.13 (1) (aa) & 65---Unexplained investment---Re-opening of assessment- Genuineness of documents certificates ---Assessee was originally assessed under Self-Assessment Scheme---Later on Assessing Officer got information about purchase and registration of an expensive car in the name of assessee-- Proceedings under S.65, Income Tax Ordinance, 1979 were initiated and as a consequence, add-backs were made---First Appellate Authority upheld the action taken by Assessing Officer, despite the fact that assessee did his best to prove his version of sale of car by producing affidavit of the buyer, transfer letter and other requisite documents before the Revenue Authorities but no heed was paid---Held, that presumption of truth was attached to documents attested by Government functionaries unless proved otherwise-- No attempt was made by department to verify cash in possession of assessee on the day when car was purchased and no attempt was made about the genuineness of affidavit---Assessment was set aside and remitted back for de novo decision in circumstances by the Tribunal.
1996 PTD (Trib.) 226; 1993 SCMR 1108; 1993 PTD 766; I.T.As. Nos.5333 to 5337/LB and I.T.A. No.6040/LB of 1995 ref.
Rana Zia-ul-Haq and M. Anwar Mehdi for Appellant.
Shaukat Ali Sh., D.R. for Respondent.
Date of hearing: 17th April, 1996.
ORDER
ABDUL RASHID QURESHI, JUDICIAL MEMBER---This is a further appeal pertaining to the assessment year 1991-92 filed at the instance of the assessee in which both the impugned orders passed by the learned Commissioner of Income Tax (Appeals) Bahawalpur as well as the learned Deputy Commissioner of Income Tax Bahawalpur on 8-11-1995 and 19-4-1995 respectively have been challenged.
2. Learned representatives of both the parties are present.
3. Relevant facts of the case are that the assessee a registered firm deriving income from sale/purchase of wheat at grain market, Bahawalpur filed return for assessment year 1991-92 declaring net income at Rs.121,285 under Self-Assessment Scheme. As per information collected from Excise and Taxation Office Bahawalpur, it was revealed that the assessee had purchased Pajero Car Model 1991 and got it registered on 6-4-1991, No. BRD-111. Examination of assessment records revealed that the assessee had not declared value of the vehicle mentioned above in the balance sheet as on 30-6-1991. Show-cause notice was issued to the assessee and proceedings under section 65 of the Income Tax Ordinance, 1979 were initiated against him. Declared version of the assessee was not accepted sales were estimated at Rs.7,20,00,000 with the application of G.P. at the rate of 3% made add-backs out of P&L account expenses under the heads of Commissioner supply expenses, telephone and telex, mark-up/financial charges and miscellaneous expenses and levied an addition under section 13(1)(aa) of Rs.12 lac by the learned Deputy Commissioner of Income Tax vide his order dated 19-4-1995.
4. Aggrieved by the impugned order, the assessee preferred an appeal before the learned Commissioner of Income Tax (Appeals) Bahawalpur which was dismissed vide order dated 8-11-1995. Hence the instant appeal.
5. The learned counsel of the assessee submits that the assumption of jurisdiction under section 65 of the Income Tax Ordinance, 1979 was without law full authority. He contends that the Pajero car was purchased by the assessee on 26-3-1991 which was got registered in his same on 6-4-1991 and sold it to Mr. Sultan Ghulam Jillani son of Muhammad Amin on 3-4-1991. He further contends that the following documents were. presented before the Assessing Authority which were placed on record:
(1) Affidavit dated 8-4-1991 of Sultan Ghulam Jillani.
(2) Transfer letter dated 8-4-1991.
(3) Delivery Note dated 8-4-1991.
(4) Receipt for Rs.8,60,000 dated 8-4-1991.
(5) Copies of the ledger account of car purchase and sales/account.
(6) Copies of cash book entries of purchase acid sales.
(7) Intimation on 10-6-1991 to Excise and Taxation Department about the sale of vehicle by seller/assessee.
6. He contends that the abovementioned documents were also filed with the Excise and Taxation Department Bahawalpur but the car was not transferred in layout of the buyer. Ire vehemently contends that under Sales of Goods Act, the ownership is transferred immediately after the delivery of the goods. It is a general practice in the market that the papers of sale/purchase are got signed by both the parties. Open transfer letters is received and in the registration book transfer is not made. The learned counsel relied upon a case-law reported in 1996 PTD (Trib.) 226 wherein the person who possessed the car was taxed. He further submits that there was no definite information in terms of section 65 of the Income Tax Ordinance for lawful assumption of jurisdiction for re-opening the assessment. He contends that the affidavit given by the buyer as well as the certified copy of intimation to Excise and Taxation Department Bahawalpur dated 10-6-1991 were summarily rejected without cross-examination or introduction of counter Ordinance. A reliance was placed on a decision of the Supreme Court of India cited as 30 ITB 181 where it was held that rejection of statement of affidavit without cross-examination was unjustified. Another decision of the Lahore High Court cited as (1976) 34 TA 31 (L.H.C.) was referred where it was held that rejection of certificates without verifications was whimsical and void. It was argued that the learned Assessing Authority built up his case on doubts and suspicions, which is prohibited by law. Reliance was placed on the decision of the Lahore High Court cited as 1988 PTD 1014 where it was held that burden to show that within the meaning of section 65, the income escaped assessment .... lies on the Department. Reliance was also placed on the department. Reliance was also placed on the decision of Supreme Court of Pakistan to substantiate the concept of we definite information" which is the foundation stone of any action under section 65 of the Ordinance:---
1993 SCMR 1108.
(1993) PTD 766 (S.S. of Pakistan)
7. The learned counsel of the assessee (appellant) also relied upon the order passed by this Tribunal containing I.T.As. Nos.5333 to 5337/LB of 1995 I.T.A. No.6040/LB of 1995 (Assessment years 1989-90 to 1993-94) on 10-1-1996.
8. The learned D.R. contends that the assessee on the basis of self made story, prepared all the documents and this was all afterthought story.
He further contends that the assessee has not shown the transaction of the matter under question in its Account Books as well as in the balance sheet for the assessment year 1991-92.
9. We have heard both the parties and perused the record available before us. It is essential to reproduce subsection (2) of section 65 of the Income Tax Ordinance, 1979 because the instant appeal revolves around the assumption of jurisdiction by the learned Assessing Authority under this section:---
"No proceedings under subsection (1) shall be initiated unless definite information has come into the possession of the Income Tax Officer (and) he has obtained the previous approval of the Inspecting Assistant Commissioner of Income Tax in writing to do so."
10. Keeping in view the arguments advanced by both the parties and facts of the case that the proceedings under section 65 of Income Tax Ordinance, 1979 were lawfully initiated by the learned Assessing Authority for the year in question and rightly maintained by the learned First Appellate Authority which do not call for our interference.
11. The learned CIT(A) has failed to adjudicate on the assessee's plea that the I.T.O. was informed about the sale of vehicle on 10-6-1991 and not on 14-12-1994 as alleged in the body of his order. This point was agitated by the learned A.R. and is deflated on page 5 of his order.
12. Delivery letter and transfer letter dated 8-4-1991 had been filed by the assessee and have been countersigned by the S.T.O. It is pertinent to mention here that higher Courts have adjudicated that presumption of truth is attached to documents/certificates etc. attested by Government functionaries unless proved otherwise.
13. No attempt has been made to verify from the books of account whether the assessee was in possession of cash on the day when the car was purchased by him. No attempt has also been made to verify whether the affidavit filed by the purchaser is genuine or otherwise. The stamp paper on which affidavit of Hazrat Ghulam Jillani produced before us is dated 8-4-1991 and has been attested by the Oath Commissioner on the same date. No scrutiny has been carried out regarding the genuineness or otherwise of this affidavit.
14. In the wheat account G.P. rate of 3% appears to be without any basis as no parallel case has been cited either by the Assessing Officer or the learned CIT(A).
15. Arguments advanced by the learned counsel for the assessee are forceful. The upshot of the above discussion is that the assessment in dispute is set aside and the case is remitted back to the learned I.P.O. for de novo decision.
16. The instant appeal filed by the assessee succeeds in the manner as indicated above.
M.S./370/Trib.Order accordingly.