(a) Income Tax Ordinance (XXXI of 1979)---

----Ss. 56, 61 & 13(1)---Purchase of property by assessee---Valuation of property--- Registered deed---Parallel case ---Addition---Assessee purchased house for specified consideration and declared value accordingly---Assessing Officer rejected the same and adopted value of house at higher rate, basing his order of assessment on parallel cases and ignoring the value contained in the registered deed---Validity---Held, sanctity of registered deed could not be simply thrown away, it must be maintained unless contrary is proved by stronger evidence---Order was not speaking order, assessment had been framed after considering prevailing market value---Rule of comparing "likes with likes" must have been adopted, for law does not permit leap into dark-- Addition therefore was not justified in circumstances.

(b) Income Tax Ordinance (XXXI of 1979)---

----Ss. 56 & 64(3)---Limitation---Limitation to assess the case under S.64(3) is two years from the end of the financial year in which notice under S.56 is served.

1996 PTCR 1335 and 1995 PTD (Trib.) 1179 ref.

Asif Aziz Banth for Appellant.

Mian Masood Ahmad, D.R. for Respondent.

Date of hearing 12th December, 1996.

ORDER

KHAWAJA FAROOQ SAEED (JUDICIAL MEMBER).---The facts of the case and cause of grievance of the assessee is as under:

The assessee a Private Limited Company, purchased a house measuring 5 Kanal 17 Marlas and 139 Sft. for a consideration of Rs.65,52,731 including registration charges. The value was considered by the ITO to be low on the basis of Inspector's report' and another case titled as Punjab T.B. Association bearing No.80-A, Gulberg-II Lahore. The area of referred property is 12 Marlas 65 Sft. (Total constructed) which was purchased by the assessee for a total consideration of Rs.22,25,000 including registration charges, on 2-10-1991. The ITO considered this to be a parallel case and on the basis of local inquiry by the Inspector of the area on 18-3-1993 adopted the value Q Rs.99,885 per Marla total of which being Rs.1,17,50,000. The ITO thus made an addition of Rs.51,97,269. This estimate was contested by the appellant before CIT(A) who rejected the appeal.

Before us the assessee has taken a number of grounds including the assessment to be barred by limitation having finalized on 29-6-1995. The valuation of the property is also challenged on factual as well as only legal grounds. The issuance of simultaneous notices under sections 56 13(1) and 61 is also contested to be illegal, void ab initio. The A.R. of the assessee argued that the limit to assess the case had expired as the notice under section 56 has been issued on 30-3-1993. The assessee's plea is not tenable as the limitation to assess the case under section 64(3) is two years from the end of the financial year in which notice under section 56 was served. The last, date as such in this case was 30-6-1995 while the assessment has been made earlier.

The other point argued by the learned A.R. is that the notice under section 56 simultaneously with notice under sections 61 and 13(1)(d) was illegal hence the assessment build thereon should not have been maintained by learned CIT(A) being based on a patent illegality. He also said that subsequently another notice was issued by the learned I.T.O. on 7-4-1993 which again was simultaneous being under section 56 and under section 13(1)(d) together. He argued that in the presence of an earlier notice there was no reason of repetition of the same under sections 56 and 13(1)(d). He also challenged the adoption of the procedure for addition under Income Tax Ordinance by saying that section 13 provides for two notices and two approvals for an addition wherein estimate is involved under section 13(2). Coming to the facts of the case he said that the case referred by the ITO was by no stretch of imagination parallel as it was not applicable on all fours the present case. The distinction is very prominent. He repeated that the property referred is a commercial property being purchased by Punjab T.B. Association which renders services to a specific type of patients. The plot comprises of only 12 marlas and is fully constructed as referred by the ITO. The third and equally important fact is that the property is on main road.

In comparison to above facts the impugned property is residential and only a small part of the same have superstructure in term of constructed area. Besides, the property is situated much behind the main road and the assessee has in fact purchased a small lane also under obligation so as to link this plot with the road for passage purposes. The street thus purchased is 19 feet and 2 inches wide.

Without prejudice to above he said that in another parallel case which was purchased by the same family in the same year in respect of Plot No.33-K, Gulberg-II, Lahore, the value was fixed at Rs.65,000 per marla in appeal on the basis of which an appeal effect order has been framed on 30-11-1993 for the relevant assessment year 1991-92. Another factor, the learned AR said that goes in favour of the assessee is the pay orders through which the payment has been made by the Directors of the Company. On verification of which the ITO accepted the declared investment to the extent of declared value. He further argued that when it is established that the whole payment is made through pay orders and nothing on record establishes payment in addition to the reported sum, the addition is unjust. He repeated that the ITO have no proof in any shape to support his estimate so as to say that any additional sum has been paid by the buyer to the seller in any form.

Coming back to legal side of the case, he said that the impugned property was supported by registered deed, the sanctity of which should not have been simply ignored by the ITO without putting on record any proof contrary to the same. In support of his arguments he has relied upon various judgments including 1996 PCTR 1335.

The D.R., however, supported the decision of the subordinate officer. He said that the learned CIT(A) has already thrashed out the issue in detail and the value adopted by the ITO being reasonable has been maintained by him after appreciation of all his arguments. Before, we give our findings it will be fair to reproduce the relevant part of the order of learned CIT(A) so as to thrash out the arguments of learned A.R. and D.R. The same is as follows:---

"The case has been discussed with the A.R. and assessment records have been perused. As regards the fist objection of the A.R. that the assessment framed on 30-6-1995 is barred by time and is hereby rejected. The assessment made by time and is the assessing officer is legally valid. The basis of valuation of the property by the assessing officer is fair and reasonable and is according to the prevalent market rates. The assessing officer has given instances of parallel cases in the assessment order. Therefore, the value of property adopted at Rs.99,885 per marla is fair and reasonable and no interference is called for. The addition made at Rs.51,93,269 is hereby confirmed. "

A bare perusal of the above part given the impression that the learned CIT(A) has only agreed with what has been done by the subordinate officers. He has disagreed with the assessee to the extent of limitation without any arguments and have considered the assessment to be legally valid. He has also considered the basis of valuation to the fair and that the same is based on prevailing market rates.

The order in fact is not a speaking order at all. It is true that they assessment was not barred by limitation hence we do not comment on this part but, however, we cannot agree with him that the assessment has been framed after considering the prevailing market price. A commercial plot of 12 Marla size cannot be equated with a residential property having 5 Kanals 17 Marlas and 139 Sft. It is an inapt comparison wherein the rule of comparing 'likes with likes' have been fully ignored. The law does permit to make an estimate but does not permit a leap in the dark. The sanctity of a registered deed being an agreement of the two Muslim adults cannot simply be thrown away as referred in the above-quoted case of the Supreme Court of Pakistan. Its sanctity needs to be maintained unless a stranger evidence is available. Similar observation have been given by the Honourable IAT in its latest judgment wherein the learned Tribunal gave following findings:---

1995 PTD 1179 (Trib.):

"On this point we are inclined to agree with the assessee's counsel. Where an acquisition of a 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 consideration shown in the deed was too low and the assessee had acquired the property by expending more money. In view, therefore, the tax authorities should take the value of the assessee's share in the shop equal to the amount shown in the registered deed plus acquisition charges come by the assessee, if any. The tax authorities have not equally stated whether the assessee's income during the year did or did not justify the acquisition of the share in the shop."

In keeping view the above detailed discussion even if we do not give any finding in respect of A.R. arguments that simultaneous issuance of notices under sections 56 and 61 are illegal to which the AR has already shown his intention not to press. The facts of the case do not justify this addition in any manner. Even otherwise the ratio of cases referred supra does not give room for any addition. We, therefore, have no hesitation in dele4ing this addition. The case is accordingly disposed of in the manner and to the extent mentioned above in favour of the assessee.

C.M.S./408/Trib. Order accordingly.