I.T.A. NO.331/HQB OF 1989-90, DECIDED ON 28TH JUNE, 1997. VS I.T.A. NO.331/HQB OF 1989-90, DECIDED ON 28TH JUNE, 1997., 1998 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 1391 (1997)

Income Tax Ordinance (XXXI of 1979)---

----S.65---Re-opening of assessment---Change of opinion---Validity---Sale of a plot by assessee---Determination of market price by Assessing Officer without summoning the assessee---Determination of value of plot by Assessing Officer, in circumstances, was notional and not genuine-- Assessing Officer without bringing any new fact on record re-opened the assessment under S.65, Income Tax Ordinance, 1979---Such action of Assessing Officer tantamounted to change of opinion.

1987 PTD (Trib.) 653 ref.

Muhammad Saeed, D.R. for Appellant. Muhammad Javed Zakaria for Respondent.

Date of hearing: 14th June, 1997.

ORDER

AFTAB IQBAL RATHORE (ACCOUNTANT MEMBER).---This Department appeal for the assessment year 1982-83 is directed against the order of the learned CIT(A) dated 10-7-1989. The Department agitates the holding of the re-opening of the assessment as illegal by the learned CIT(A). The Department also agitates the observation of the learned CIT(A) that the addition could be made under section 13(1) read with section 13(2) after obtaining two approvals which was not in this case.

2. The learned D.R. submitted that the assessee is also Director of Pvt. Ltd. He sold a plot of land to M/s N... P... L... for the consideration of Rs.7.00,000. No profit/loss was declared on the sale of this plot. The return filed by the respondent was processed and finalised under section 62. Later, it was discovered that the purchaser of land M/s. N... Pvt. Ltd. had agreed to addition of Rs.5,00,000 in the value of the plot for determination of income under section 13 in its case. The I.T.O., in the case of the respondent on the basis of the said information, concluded that the seller had also, as a result, earned income of Rs.5,00,000 in the sale of the said plot. It was submitted by the learned D.R. that the market value of the property was admitted by the purchaser to -be Rs.12,00,000 (sale price Rs.7,00,000 enhancement of value of Rs.5,00,000, total Rs.12,00,000). The learned D.R. argued that the addition of Rs.5,00,000 made in the purchase price of the plot in the hands of the purchaser was the profit earned by the seller, the respondent assessee in this transaction and, therefore, the action of the I.T.O. to tax the same under section 62/63 was justified. The learned A.R. on the other hand submitted that the action of the I.T.O. in invoking the provisions of section 65 was based on change of opinion. He stated that the I.T.O. wrote a letter to the respondent assessee on 26th December, 1984 in which after mentioning the sale of the property to M/s. N... P... L... for the consideration of Rs.7,00,000 observed in para. 3 of the said letter since you are a director of the company who deals in purchase and sale of lands, flats etc. please states as to why the value of property should not be estimated and gain on sale of profit should not be treated as adventure in the nature of trade. The learned A.H. submitted that a reply, dated 6th March, 1985 explaining the whole position was submitted to the I.T.O. who accepted the respondent's plea and framed the assessment on 18-3-85 at Nil income. This fact has also been stated in detail in the impugned order from which, it was submitted by the learned A.R., it is clearly established that the present action of the I.T.O. invoking the provisions of section 65 of the Income Tax Ordinance, 1979 is due to the change of opinion not based on any new fact which has come to the knowledge of the assessing officer. The learned A.R. further submitted that the respondent assessee was not summoned by the assessing officer who framed the assessment in the case of M/s. N... Pvt.... Ltd. to verify the actual sale price of plot. It was stated that the actual sale price of plot is the one which has been recorded in the sale-deed and not the price agreed between the purchaser and the Department. It was further stated that the market price determined by the I.T.O. in agreement with the purchaser is not the correct market price but has been agreed to by the purchaser to buy piece of amount. This view gains support from the reported case referred as 1987 PTD (Trib.) 653. It was further argued that in the case of the purchaser the value determined by the I.T.O. is notional and not genuine and agreed price between the seller and purchaser. It was also argued that in the case of the respondent assessee it has been incorrectly held that the sale of plot is an adventure in the nature of trade. It was argued that no transactions other than the sale of this one plot has been mentioned by the ITO to prove that the assessee has been engaged in business of purchase and sale of plot in the past as well.

3. We have considered the submissions made by both the learned representatives. The purchase and sale of the plot under reference to M/s. N... P... Ltd. may have been an adventure in the nature of trade but the I.T.O. who framed the assessment for the first time at Nil income on 18-3-1985, after confronting the assessee with the facts relating to this transaction, concluded that this transaction did not result in earning of any profit income to the respondent assessee. The subsequent action of the ITO in invoking the provisions of section 65 of the Income Tax Ordinance it is clearly evident from the facts recorded above, is based on change of opinion. The learned CIT(A) has referred to a number of cases in support of the conclusion drawn by him that this is a case of change of opinion in which the ITO without bringing any new tact on record re-opened the assessment under', section 65 of the Income Tax Ordinance. We agree with the conclusion drawn by the learned CIT(A) and, therefore, confirm his action. The Departmental Appeal being devoid of any merit is rejected.

4 As regards the issue of invoking the provisions of section 13(1) read with section 13(2) no decision is being given for the reason that we have already upheld that the order of the learned CIT(A) cancelling the assessment framed under section 62/65 `or other reasons discussed above. The Departmental appeal being without any merit fails and is, therefore, rejected.

M.B.A./508/Trib. Appeal dismissed.