I.T.A. NO.4032-A/LB OF 1991-92 VS I.T.A. NO.4032-A/LB OF 1991-92
1997 P T D (Trib.) 2322
[Income-tax Appellate Tribunal Pakistan]
Before Abdul Rashid Qureshi, Judicial Member and Ashfaq Ahmad, Accountant Member
I.T.A. No.4032-A/LB of 1991-92, decided on 01/02/1996.
Income Tax Ordinance (XXXI of 1979)
----Ss. 13(1)(d) & 67---Addition---Validity---Sale-deed---Assessee purchased house---Declared value was rejected by Assessing Officer---Addition was made ---C.I.T. (A) set aside assessment on technical ground of not fulfilling provisions of S.13(1) & (2) of Income Tax Ordinance and case was referred to Valuer under S.67 of the Ordinance---Assessing Officer, basing his order on evaluation, Inspector's report and disbelieving registered deed, assessed cost of house at higher value and made addition ---C.I.T.(A) confirmed same as being reasonable---Held, onus of rejection of sale-deed squarely rested on department by showing it to be undervalued by bringing cogent and convincing proof on record---In absence of strong and weighty evidence to the contrary it would not be possible to dislodge appellant's contention and draw adverse inference---Value of land was adopted as per registered deed-- Assessee produced no evidence in support of cost of constructions, therefore, it stood confirmed as adopted by Authorities below.
I.T.As. Nos.6051/LB and 6052/LB of 1991-92; NTR 1995 (Trib.) 100; NTR 1995 (Trib.) 109; M.A. Stay No.253/LB of 1986-87; NTR 1996 (Trib.) 45 and NTR 1995 (Trib.) 11 ref.
Muhammad Saleem for Appellant.
Abdul Rauf, D.R. for Respondent
Date of hearing: 1st February, 1996.
ORDER
ASHFAQ AHMAD (ACCOUNTANT MEMBER).---The appeal is directed against the order of the CIT(A) for the Assessment Year 1987-88, the appellant is aggrieved on account of addition under section 13(1)(d).
2. The brief facts of the case are that the original assessments made were set aside by the learned CIT(A). The appellant had purchased house at Model Town, Lahore for Rs.4 lac on a total area of 2 Kanals, 1 Marla. The declared value was found to be low by the I. T. O. who marked the case to a evaluator who estimated the value of the property as under:----
| Total covered area | 5845 sq. ft. |
| Rate of construction | Rs.150 per sq. ft. |
| Total cost of construction | Rs.876,750 |
| Cost of external service | 100 000 |
| Total:- | 976,750 |
Consequently addition under section 13(1)(d) was made at Rs.820,000 being the estimated cost of land and at Rs.576,750 being the unexplained investment on account of cost of construction. The learned CIT(A) upheld both the additions which in his opinion were reasonable.
3. During the course of the hearing the learned A.R. of the assessee vehemently agitated that the cost of land adopted by the I.T.O. Rs.820,000 thus, making an addition of Rs.4,00,000 to the declared value was totally unwarranted, illegal and against the facts and circumstances of the case. It was stated that the plot in question was in Model Town Extention and was purchased in 1986 when the value of land in that area was not very high. It was argued that the Tribunal had agitated in a number of cases that the registered deed provided to the department should not be rejected without sufficient reason and if there was no solid proof with the department the same should be accepted. He further argued that the Inspector's Report referred to by the assessing officer in the body of his order cannot be construed as definite information with the department. The learned A.R, stated that the adoption of cost of construction at Rs. 150 per sq. ft. is highly excessive and cost of construction declared by the appellant was quite reasonable and should have been accepted by the department. In support of his contentions he cited a number of cases a summary of which is reproduced below:---
(i) In I. T. As. Nos. 6051/LB and 6052/LB of 1991-92 (Assessment Year 1985-86), decided on 7-8-1993 it was held that report of the Inspector could not be treated as definite information as it had not been put to further trial by supporting material.
(ii) In NTR. 1995 Trib, 100, it was held that where an acquisition of property is made by registered deed ordinarily the consideration evidenced by the sale-deed should be accepted as the value of the property by the tax authorities unless they can prove that the construction shown in the deed is too low and the assessee had acquired the property by expending more money.
(iii) In NTR. 1995 Trib. 109 it was held once a legal document like a registered deed has been provided to the Department the same cannot be thrown away on the pure whines of the assessing officer but to reject the same, the department should ensure that it brings on record sold evidence to support its point of view-in the absence of any proof regarding the price being higher, one must abide by the legal document which is registered deed and the declared valuation be accepted.
(iv) In M.A. Stay No.253/LB of 1986-87 etc. The Chairman ITAT held that in view of the discussion above, we find force in the appeals filed by the appellant and the appeals filed by the Department are devoid of any merits. The appeals filed by the appellant are, therefore, allowed and the I.T.O. is directed to accept the valuation of the registered sale-deed as declared by him.
(v) In NTR. 1995 Trib. 45 it was held that estimation of the value of any asset based on information collected from various property dealers is not justified and the value declared by the assessee may be accepted.
(vi) In NTR. 1995 Trib. 11 it was held that the mere fact that the market value of an asset is allegedly higher than the price the assessee paid for its acquisition does not justify addition under section 13(1)(d) of the Income Tax Ordinance.
4. The learned D.R. stated that the original order passed by the I.T.O. was contested before the CIT(A) who had upheld the value of land adopted by the I.T.O. but had set aside the order on the point of the cost of construction. Besides he argued that the value of land and the cost of construction adopted by the I.T.O. and confirmed by the CIT (A) as reasonable and calls for no interference.
5. We have examined the submission put forth by the D.R. It is pertinent to bring on record that the D.R s. objection cited above is mis conceived. In the first order of the CIT(A) the learned CIT(A) has merely stated in the year 1987-88 the value of land was not more than 5,00,000 per Kanal and now in 1989 the value per Kanal is not less than Rs.12,00,000 However, that is besides the point and the value adopted at Rs.4,00,000 per Kanal is reasonable". However, in the later part of the order the CIT(A) stated:-
"While making addition under section 13(1)(d) in this instant case, the I.T.O. failed to follow the proper procedure as laid down in section 13(1)(2) of the Income Tax Ordinance, 1979. The correct procedure is that after issuing a notice under section 13(2) with show-cause notice under section 62 that is to say why the value of the property should be estimated at Rs.2,140,000 determined under section 13(2) of the Ordinance the I.T.O. to issue notice under section 13 (1) of the Ordinance so as to call for the explanation of the appellant to explain the nature and source of the investment. This has not been done by the I.T.O. Since the provisions of section 13(1)(2) have not been fulfilled properly, the assessment order is set aside with the direction to the I.T.O. to proceed in accordance with the law."
6. The second order of the CIT(A) again belies the contention of the D.R. and the very first sentence of the order states:-
"This appeal has been mainly filed contesting the addition under section 13(1)(d) amounting to Rs.820,000 and Rs.576,750."
7. A perusal of the foregoing facts shows that in the first appellate order the CIT(A) has set aside the order on technical grounds that is to say that the provisions of sections 13(1) and 13(2) have not been properly adhered to and the second order CIT(A) has adjudication on both the values i.e. of land and value of house. We therefore, proceed to decide the case on merit.
8. Before rejecting sale-deed the onus rested squarely on the departmental authorities to establish it positively to be undervalued by bringing cogent and convincing proof on record. It, thus, goes without saying that in the absence of strong and weighty evidence to the contrary it would not be possible to dislodge the appellant's contention and draw inference adverse to his interests. The case laws cited by the learned A.R. make it abundantly clear that the sale-deed produced by the assessee was not defective in any nature and the department has not placed any solid or cogent reason to disbelieve the registered deed produced by the assessee. The value of land, therefore, to be adopted at Rs.420,000 as it appears on the sale-deed produced by the assessee. However, there is no merit in the appellant's contention with regard to the cost of construction adopted by the I.T.O. as he has given no evidence that a lower rate of cost of construction should have been applied. The cost of construction adopted by the officers below stands confirmed.
9. The appeal succeeds to the extent indicated above.
C.M.S./328/Trib.Order accordingly.