I.T.A. NO.565/KB OF 1998-99, DECIDED ON 11TH MARCH, 1999. VS I.T.A. NO.565/KB OF 1998-99, DECIDED ON 11TH MARCH, 1999.
1999 P T D (Trib.) 2891
[Income-tax Appellate Tribunal Pakistan]
Before Shahid Jamal, Accountant Member and Tahseen.Ahmed Bhatti, Judicial Member
I.T.A. No.565/KB of 1998-99, decided on 11/03/1999.
Income Tax Ordinance (XXXI of 1979)---
----Ss.13(1)(b) & 65---Addition---Self-Assessment Scheme---No account case---Special audit ---Assessee's case was selected for Special Audit for assessment year 1997-98---While making reconciliation statement, assessee made accretion in wealth in the assessment year 1984-85 and explained the investment made in purchase of property on 20-9-1997---Assessing Officer found that income declared in previous years i.e. assessment years 1981-82 to 1984-85 was less than the accretion made in wealth for the assessment year 1984-85 and made addition of balance amount under S.13(1)(b), Income Tax Ordinance, 1979 in the assessment year 1997-98---Contention in appeal was that addition under S.13(1)(b) could not be made during the year 1997-98 and the action was to be taken under S.65 of the Income Tax Ordinance, 1979 for the assessment year 1984-85 which was time-barred---Accepting such contention addition was deleted by the First Appellate Authority-- Validity---Unexplained accretion as on 30-6-1997 had to be taken notice of during the assessment year i.e. 1997-98 and not during the assessment year 1984-85---Property purchased on 20-9-1997, however, was not relevant to the assessment year 1997-98, hence, there was no justification to invoke S.13(1)(b) of the Income Tax Ordinance, 1979---Addition, held, was rightly deleted, though on a different ground.
Shaukat Soomro, D.R. for Appellant.
A. Tahir Ansari, I.T.P. for Respondent.
Date of hearing: 11th March, 1999.
ORDER
SHAHID JAMAL (ACCOUNTANT MEMBER).---The above appeal has been filed by Department to contest the deletion of addition under section 13(1)(b) amounting to Rs.2,30,760 and reduction of an ad hoc addition from Rs.40,000 to 20,000.
2Heard Mr. Shaukat Soomro, learned D.R. for the appellant and Mr.
Abdul Tahir Ansari, A.R. for the respondent.
3. The facts giving rise to the above appeal are that the respondent, an individual, deriving income from repair of Motorcycles, had filed return of total income at Rs.51,500 under the Self-Assessment Scheme for the impugned year, the return was selected for Special Audit through Randum Ballot. During the process of Special Audit, the respondent was required to reconcile his wealth as on 30-6-1997 which was shown at Rs.5,00,000. The assessee submitted a reconciliation statement showing his wealth as on 30-5-1984:
| Wealth up to Assessment | | |
| Year 1984-85 | Rs.2,80,000 | |
| Income during the years | | |
| 1985-86to-1987-88 | Rs.4,50,000 | Rs.7,30,000 |
| Less Expenses. | | Rs.2,30,000 |
| Wealth as on 30-6-1997 | | Rs.5,00,000 |
4. The A.C.I.T. referred to the assessee's record and found that the income declared during the preceding year in fact total led up to 3,85,500 whereas assessee had claimed credit of Rs.4,50,000. The statement of income declared and assessed year wise which. has been produced in the assessment order is as under:---
| "Asstt. Years | Declared Income | Income Assessed |
| | (Rs.) | (Rs. ) |
| 1985-86 | 18,200 | 18,200 | 59(1) |
| 1986-87 | 24,400 | 24,400 | " |
| 1987-88 | 24,400 | 24,400 | " |
| 1988-89 | 30,200 | 30,200 | " |
| 1989-90 | 30,200 | 30,200 | " |
| 1990-91 | 30,200 | 30,000 | " |
| 1991-92 | 25,000 | 36,000 | " |
| 1992-93 | 25,000 | 38,000 | " |
| 1993-94 | 25,000 | 41,000 | " |
| 1994-95 | 20,000 | 35,000 | " |
| 1995-96 | 43,000 | 43,000 | " |
| 1996-97 | 38,000 | 47,000 | 62 |
| 1997-98 | 51,900 | | |
| | 3,85,500 | 4,50,000 | |
5. The A.C.I.T. further found that the income declared from 1981-82 to 1984-85 was only Rs.49,240 (the correct total comes to Rs.49,330) and not Rs.2,80,000, as was claimed by the assessee. He thus required the assessee to explain the balance amount to Rs.2,30,760. The Assessing Officer also found that the assessee had also made an investment of Rs.2,00,000 in purchase of Property No.1733/8 on 20-09-1997, the source thereof could not be substantiated from the assessment record or the Wealth Statement of the assessee. The assessee filed a Wealth Statement repeating his earlier submission that the accretion in wealth had adequately been explained in 'the reconciliation statement which showed that the assessee had wealth of Rs.2,80,000 during the year 1984-85 and that source was enough to justify the purchase of property. The explanation was not found satisfactory by the A.C.I.T. and accordingly he added an amount of Rs.2,30,760 under section 13(1)(d) of the Income Tax Ordinance with prior approval of I.A.C. He further added an amount of Rs.40,000, on ad hoc basis towards the receipts of the assessee. Being aggrieved, the assessee filed appeal before learned CIT(A) and took the plea that in case the assessee was not found to be the owner of wealth amounting to Rs.2,80,000 during the year 1984-85, the action was to be taken under section 65 for that year which was time-barred and not under section 13(1)(b) during the year 1997-98.
This argument was accepted by learned CIT(A) and the addition under section 13(1)(b) was deleted. The ad hoc addition of Rs:40,000 as made in receipts was reduced to Rs.20,000. Against this finding of learned CIT(A) the Department, being aggrieved, has filed the above appeal. Mr. Abdul Tahir Ansari, appearing on behalf of the respondent has taken the same argument before us. We are not impressed with his, plea that action in the unexplained wealth should have been taken in 1984-85 for the simple reason that it was a no account case and no Wealth Statement was filed in those years, as has also been mentioned by the A.C.I.T. arid hence the unexplained accretion of wealth was not taxed. Further the A.C.I.T. had replied him to explain the unexplained accretion as on 30-6-1997 and the plea taken by the assessee that he had wealth of Rs,2,80,000 during the year 1984-85 does not help him because the income declared during the years 1981-82 to 1984-85 was only Rs.49,330 and there is no document in the assessment record to show that the Tax Department had either examined the wealth accretion and accepted the wealth declared during those years, hence the unexplained accretion as on 30-6-1997, has-to be taken notice during the impugned assessment year and not during 1984-85. However, the said addition has been made under section 13(1)(b) of the Income Tax Ordinance which can be invoked only when the assessee to found to have made any investment, in any income year, which is not recorded in the books of accounts maintained for that income year or is not shown in the Wealth Statement furnished under section 58 in respect of that year. Now the respondent's case is a no account case and the A.C.I.T. has not pointed out any investment which assessee had made and had not recorded in the Wealth Statement. The Property referred to as 1733/A measuring 47.19 sq. yds. was purchased on 20-9-1997 and was not relevant to this income year, hence there was no justification to invoke section 13(1)(b). Accordingly, we hold that the addition was rightly deleted, though on a different ground.
6. As regards reduction of ad hoc addition in receipts from Rs.40,000 to 20,000 by the A.A.C., we are inclined to uphold the decision of the A.A.C. as we do not find any specific reason having been given for the addition of Rs.40,000 by the A.C.I.T. The appeal of the Department is, therefore, dismissed on both the grounds.
C.M.A./59/Tax(Trib.)Appeal dismissed.