Income Tax Ordinance (XXXI of 1979)---

----S.63---Best judgment assessment ---Assessee returned nil income---Wealth statement indicated that assessee purchased factory building----Assessee participated in proceedings in response to the notice---Notice under S.61 of the Income Tax Ordinance, 1979 was not complied with and Assessing Officer proceeded ex parte under S.63 of the said Ordinance---After allowing benefit of returned value balance was added under S.13(l)(d) of the Ordinance--- First Appellate Authority confirmed the same ---Assessee, being aggrieved went into second appeal---Held, assessee conducted no business during period under review---No parallel case was stated while making assessment---Valuation estimated could not be compared because of difference in need, choice and taste between two individuals---Age of the building was not taken into consideration---First Appellate Authority, while confirming acted in cursory and casual manner---Assessment order, therefore, was not the best judgment assessment in circumstances-- Assessment was set aside and remitted to Assessing Officer for making reappraisal subject to opportunity being given to the assessee.

Waqar Azeem Ch. for Appellant.

Mian Javed-ur-Rehman, D.R. for Respondent.

Date of hearing: 16th September, 1996.

ORDER

NASIM SIKANDAR (JUDICIAL MEMBER). --The assessee, an individual in this further appeal for the year 1991-92 returned nil income from business. From the wealth statement attached therewith the assessing officer found that the assessee purchased a factory building at G.T Road, Muridke for a registered value of Rs.5,50,000. The total area of the factory, as evidenced by the registered sale deed was spread on 6 Kanals 4 Marlas. It comprised of sheds, office building and boundary was measuring 7020 sq.ft. In response to notices issued the assessee participated in the proceedings. However, notice issued under section 61 for compliance on 25-6-1996 was not complied with. Therefore the Assessing Officer proceeded ex parte under section 63 of the Income Tax Ordinance and found the returned value of the factory land and building to be understated. He made his own estimate of the land under the factory at Rs.1,50,000 per Kanal and worked out the total value at Rs. 9,30,000. The value of the officer building was computed at Rs.3,37,500, that of the sheds at Rs.1,60,000 and the boundary at Rs.4,91,400. In this manner total value of the factory was computed Rs.33,58,900. After allowing the benefit of returned value the balance amount of Rs.27,33,900 was added and deemed as income under section 13(1)(d) of the Ordinance as unexplained investment through assessment order framed on 27-6-1995.

2. Learned first appellate authority AAC Sahiwal on 19-7-1995 confirmed the treatment meted out to the assessee and therefore the aforesaid addition. The relevant portion of the order of the appellate authority is reproduced below to know the factors that weighed with him while rejecting the appeal of the assessee: --

"In response to notice of hearing Mr. Rana Muhammad Afzal, ITP attended the office on behalf of the appellant. Case has been discussed with him. A.R. of the appellant argued that the additions made under section 13(1)(d) of the Income tax Ordinance 1979 is illegal. He further contended that the value taken by the Assessing Officer in respect of each item is excessive.

I have heard his argument and perused the assessment records. As the A.R. of the appellant has failed to evidence. Therefore, the action of the assessing officer seems fair. The income assessed is confirmed substantial content with documentary being reasonable."

3. This has brought the assessee in further appeal before us.

4. Parties have been heard. Learned A.R. for the assessee contends that the Assessing Officer was not justified in proceeding ex parte on a single default and that the assessment so framed is not best judgment assessment. It is also claimed that no parallel case was confronted to the assessee and that the learned first appellate authority also acted in a mechanical manner to dismiss the appeal filed by the assessee. Further that transfer of case without notice and assigning of jurisdiction to AAC Sahiwal was illegal and unconstitutional. On merits it is claimed that- D. C. /Collector Sheikhupura having fixed the value of the land under section 27-A of the Stamp Act, 1899 in the area for the purpose of registration of convince/sale deeds, the estimation of price of land by the assessing officer at a much higher rate was per se excessive and unwarranted. Learned counsel offers to demonstrate by producing copies of registered sale deed, in the area during the same Assessment Year wherein properties of similar nature were transacted at much lesser rates. It also submitted that construction of the spot is more than thirty years old and is nothing more than a wastage or debris having no value at all.

5. Learned DR supports the impugned order on the ground that the assessee having failed to participate in the proceedings in response to notice issued on 19-6-1995 for compliance on 25-6-1995 no indulgence can be shown at the second appeal stage.

6. Having heard the parties we are inclined to agree with the submissions made at the bar for the assessee who admittedly conducted no business during the period under review. The parallel case considered while estimating value of the land under the factory has not been stated in any detail so that we could see for ourselves if the situation of both the properties was really comparable. The valuations estimated in respect of office building, sheds and boundary wall also suffer from the same infirmity. It goes without saying that kind and nature of construction raised by one party cannot in most of the cases be really comparable to another. Every businessman has his own peculiar needs, choice and taste to make office building or sheds. The claim of the assessee that factory building was more than 30 years old also does not appear to have been considered in the assessment order. Learned first appellate authority appears to have confirmed the treatment meted out to the assessee in cursory and casual manner. The operative part of the impugned order reproduced above amply demonstrates that no serious effort was made to order rival arguments, particularly the position taken up by the assessee. The confirming of jurisdiction upon AAC Sahiwal by CBR has also not been detailed in the impugned order. Learned counsel expresses his inability to assist us in throwing light on the facts and circumstances under which the jurisdiction was transferred to AAC Sahiwal.

7. In this view of the matter we will agree that the assessment order framed on 27-6-1995 is not a best judgment assessment. Also that the learned first appellate authority failed to record proper reasons while refusing to interfere for the assessee.

8. This being so, we will set aside both the first appellate order as well as the assessment order and remit the case to the Assessing Officer for making re-appraisal. The assessee shall be allowed an opportunity to support its submissions with respect to the rates of similar properties in the area as well as the nature, age and usefulness of the factory building etc.

9. Accordingly this appeal, succeeds to the extent and in the manner indicated above.

C.M.S./388/Trib. Appeal allowed.