I.T.AS. NOS.203/KB TO 206/KB OF 1998-99, DECIDED ON 29TH JUNE, 1999. VS I.T.AS. NOS.203/KB TO 206/KB OF 1998-99, DECIDED ON 29TH JUNE, 1999.
1999 P T D (Trib.) 4034
[Income-tax Appellate Tribunal Pakistan]
Before Shahid Jamal, Accountant Member and Tahseen Ahmed Bhatti, Judicial Member
I.T.As. Nos.203/KB to 206/KB of 1998-99, decided on 29/06/1999.
(a) Income Tax Ordinance (XXXI of 1979)---
---S.13---Addition---Intangible addition---Allowance/credit of such addition- Principles.
(b) Income Tax Ordinance (XXXI of 1979)---
----Ss.156 & 13(1)(aa)---Rectification of mistake---Intangible addition---No acquaint case---Application for rectification of assessment order to allow credit of intangible additions made in income---No objection was taken up during the assessment proceedings---Application for rectification was rejected on ground that there was no apparent mistake in the assessment order---First Appellate Authority on appeal directed the Assessing Officer to allow credit of intangible addition---Validity---Held, since the assessee had never, claimed the benefit of intangible additions during original proceedings or even during set aside proceedings, the question of any mistake creeping in the assessment order would not arise at all---Rectification could be made for apparent mistake floating on the surface of the assessment order and not for debatable issues---Order of First Appellate Authority was vacated by the Appellate Tribunal while restoring the original assessment order.
1997 PTD (Trib.) 1677 distinguished.
Messrs National Food Laboratories case 1991 SSC 869 rel.
Shaukat Soomro, D.R. for Appellant.
Abdul Tahir Ansari, I.T.P. for Respondent.
Date of hearing: 11th March, 1999.
ORDER
SHAHID JAMAL (ACCOUNTANT MEMBER).---All the above four appeals have been filed at the instance of the Department and are directed against learned A.A.C.'s order, dated 19-8-1998. The Department has taken objection against learned A.A.C.'s decision to entertain appeals for refusal of rectification under section 156 and applying ratio of decision cited in reported case 1997 PTD (Trib.) 1677 which was otherwise not applicable to the facts of the case.
2. Brief facts giving rise to above appeals are that the respondent is an individual deriving income from sale of Aaleem at Sukkur. A complaint was received in his case to the effect that he was owner of several properties namely Property No. B-2673 and Property No. 13519/4-8-9. In view of the complaint enquiries were conducted by the Special. Officer-A, Sukkur and as a result of enquiries it transpired that Property No.B-519 was old and no adverse inference could be drawn in respect of the said property. However, property No.B-2673 was purchased on 5-1-1988 for Rs.50,000 and further re-constructed, the act of reconstruction pertaining to assessment year 1991-92. Since all the properties were occupied by the respondent of his family members, the only question before the Assessing, Officer was with regard to investigation in purchase and re-construction of the said property. These issues were examined and as a result an amount of Rs.25,000 was added under section 13(1) (aa) of the Income Tax Ordinance during 1988-89, the year of purchase of property and an amount of Rs.2,00,000 was added -during 1991-92 the year, of construction of the said property. As regards assessment years 1989-90 and 1990-91 these were finalised under section 62 of the Income Tax Ordinance assessing income from sale of Haleem at Rs.40,000 and Rs.45,000 as against declared income for Rs.20,000 each in the respective assessment year. The respondent 'was aggrieved by these assessments and, therefore, filed appeal before learned A.A.C. The additions under section 13(1)(aa) made during the assessment years 1988-89 and 1991-92 were set aside by learned A.A.C. with directions to re-examine the issue, the income assessed from sale of Haleem was, however, confirmed at Rs:40,000 during 1988-89 but reduced to Rs.45,000 during 1991-92. The Assessing Officer took up these set aside assessments and issued a series of notices, none of which were complied, as a result the Assessing Officer was forced to finalise the assessments under section 63 read with section 13(1) (aa) of the Income Tax Ordinance. In the re-assessment, the Assessing Officer maintained the addition of Rs.25,000 and Rs..2,00,000 under section 13(1)(aa) of the Income Tax Ordinance, as was originally made meanwhile assessments for 1989-90 and 1990-91 were also completed on the basis of enquires estimating income from sale of Haleem at Rs.40,000 and Rs.45,000 respectively. After the assessment had been finalised the respondent moved application under section 156 of he Income Tax Ordinance to rectify the assessment orders and allow him credit of intangible additions made to his income during the preceding years. Since the issue was not taken up during the assessment proceeding the Assessing Officer informed that in his view there was not apparent mistake in the assessment order and the same could not be rectified. Against this refusal, the respondent filed appeal before A.A.C. The A.A.C. entertained the appeal and following the ratio of decision given, in reported case of 1997 PTD (Trib.) 1677 directed the Assessing Officer to allow credit of intangible additions to the tune of Rs.20,000 each during the assessment years 1988-89, 1989-90 and 1990-91. During the assessment year 1991-92 he directed that credit of Rs.60,000 be allowed; the balance amount was set aside to be re-examined. The Department is aggrieved by this decision of learned A.A.C. and has filed the above appeal.
3. Heard Mr. Shaukat Soomro, learned D.R. for the appellant and Mr. Abdul Tahir Ansari, I.T.P. for the respondent.
4. The issue before us is whether there teas any apparent mistake in the assessment order with regard to credit of intangible additions if the same were not claimed at all during the assessment proceedings, and the issue was raised subsequently, and if so what amount of credit could be allowed? The answer to this lies in the very judgment which Mr. Tahir Ansari; Advocate of the respondent has relied upon i.e. the reported judgment of 1997 PTD (Trib."") 1677. The said judgment has defined intangible addition as, "an intangible addition ma be described as the difference between declared and the assessed cross profit. It is the estimate made b the revenue as against the return trading results " After having defined intangible addition it has laid down titre: basic rules for the allowance of the said additions, "firstly a claim for set-off or benefit of intangible addition will have to be made at the first available opportunity and in original proceedings. Secondly in case of a claim of credit in the same assessment year the Revenue by bought home come count and relevant evidence may dislodge it on the around that amount of addition was not available for use to the assessee or was not directly relatable to the additions made in the trading account. Same would '-e the situation with regard to additions made in previous years if the Revenue can establish that the unexplained amount had been earned during the ear of assessment from a source unconnected with the declared sources of income in the previous years- Thirdly, that the intangible addition was only in trading account and not in profit and loss account".
5. The facts of the case as stated before us are that the respondent had not maintained any accounts; has not submitted any trading accounts or disclosed any gross profit and no specific addition made to gross profit in the preceding years. It was just a question of estimate of income. As such the ratio of the above judgment was clearly not applicable to the facts of the case, and since the respondent had never claimed the benefit of intangible additions during original proceedings or even set aside proceedings, the question of any mistake creeping in the assessment order does not arise at all. The learned A.A.C. was clearly unjustified in entertaining appeals on account of refusal of rectification under section 156 of the Income Tax Ordinance. Rectification can be made for apparent mistake floating of the surface of the assessment order and not for debatable issues. This principle has been settled by Supreme Court of Pakistan in the case of Messrs National Food Laboratories reported as (1991) SSC 869. In view of this, we vacate the order of learned A.A.C. and restore the original assessment order.
6. Consequent to our finding of the four appeals are allowed to the Department.
C.M.A./84/Tax(Trib.) Appeals allowed