Income Tax Ordinance (XXXI of 1979)---

----Ss.13(1)(d), 22 & 32(3)---Income from business---Purchase of shop-- Addition---Deemed income---Investment in circumstances of shop ---Assessee returned income during assessment proceedings---Wealth statement revealed purchase of shop by assessee---Declared income and cost of construction of shop was rejected by Assessing Officer and he adopted cost of construction at enhanced rate ---Assessee's version that construction was completed in the relevant year 1991-92 was also turned. down ---Validity---Assessee had not brought on record any evidence by way of completion certificate of P.T-1 Form entries---Department, thus, rightly rejected claim of assessee and held completion to have taken place during the year 1990-91.

Muhammad Sarfraz, CA for Appellant.

Khalid Aziz Banth, D.R. for Respondent.

Date of hearing: 1st April, 1997.

ORDER

ABDUL MALIK (ACCOUNTANT MEMBER).---The assessee in this case derives income from share of a Registered Firm. Share income was declared at.Rs.1,26,982. In addition to the share income other income was also shown making total at Rs.1,53,191. Wealth statement of the assessee revealed that he had acquired a shop 10 x 13 sqft. and construction of basement to 3rd floor was made. The ITO worked out total constructed area of 1750 sq ft. Type of construction was as ' A' Class and, therefore, declared cost of construction at Rs.157.14 was considered grossly under-stated. The ITO expressed his intention to adopt construction rate at Rs.250 per sq ft. It was claimed before the ITO that the construction was made during the period relevant to 1991-92. The ITO rejecting the claim of the assessee made addition of Rs.81,250 under section 13(1)(d) with the approval of the IAC. The CIT relying on Inspector's report held that construction of shop was completed during the period relevant to 1990-91. Claim of the assessee that the shop was constructed in the next period was found not to be acceptable.

2. At the time of hearing the learned AR again contested that the rate of completion falls in the year 1991-92.

3. The above facts show that the only point under dispute is date of completion of construction. The appellant has not brought on record any evidence of completion in the year 1991-92 by way of Completion Certificate or PT-1 Form entries. His assertions are not supported by any evidence. Moreover construction is not of large size, which could continue for a long period. It is merely basement and other floors of an area consisting of 10 x 35 sq ft. Under these circumstances the CIT rightly rejected claim of the assessee and held completion to have taken place during the year 1990-91. Appeal of the assessee on this point, therefore, fails.

ADDITION 13(1)(e): The ITO held that on education of the children the assessee has shown total expenditure of Rs.28,219 which he found in view. of size of family and standard of living to be without basis.

When the matter came up before the learned CIT, he reduced the addition from Rs.41,781 to Rs.16,781. Most of the points mentioned by the ITO are not supported by any reference to the educational institution where the children are receiving education nor it has been said that the assessee is living in some posh locality. Except for inflationary trend, there is no ground in support of addition made by the ITO.

4. At the time of hearing the learned DR pointed out that in the preceding year estimate of expenses made by the ITO was accepted by the assessee. The arguments of the learned DR in absence of any tangible fact pointed-out during this year cannot be accepted. Household expenditure can vary from year to year depending upon circumstances, therefore, addition of Rs.16,781 maintained by the CIT is hereby deleted.

5. Appeal of the assessee partially succeeds.

C.M.S./412/Trib. Order accordingly.