I.T.A. NO.2170/KB OF 1998-99 VS I.T.A. NO.2170/KB OF 1998-99, 2000 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 1438 (1999)

Income Tax Ordinance (XXXI of 1979)---

----S.66-A(l)(aa)---Powers of Inspecting Additional Commissioner to revise Deputy Commissioner's order ---Assessee was confronted under S.66-A of the Income Tax Ordinance, 1979 with a figure invested by him shown in the ledger account---Assessment was completed and issue was finally decided by the Appellate Tribunal---Notice under S.66-A was again issued on the basis of same material but with different figures and Assessing Officer was directed to reframe the assessment after investigating the source of investment over and above the amount sub judice before the Appellate Tribunal---Validity---Figures with which assessee was confronted in fresh notice were different---Different figures, extracted from the same ledger account, by the Assessing Officer or Inspecting Additional Commissioner, would not constitute a "new point" on which Inspecting Additional Commissioner-could have exercised jurisdiction under. S.66-A, Income Tax Ordinance, 1979---If Assessing. Officer or. Revising Officer had failed to properly examine the ledger accounts and extract the correct figures from those accounts, it was their own fault and not of the assessee for which a fresh notice or fresh jurisdiction could be assumed time and again-- inspecting Additional Commissioner, thus, misdirected himself and had gone far beyond his jurisdiction-, --Assessment completed in pursuance to the direction of Inspecting Additional Commissioner was declared to be illegal by Appellate Tribunal.

1992 PTD (Trib) 1187 ref.

A. S. Jafari for Appellant

Muhammad Saeed, D.R. for Respondent.

Date of hearing: 18th December, 1999.

ORDER

SHAHID JAMAL (ACCOUNTANT MEMBER).---This appeal, filed at the instance of the appellant, is directed against I.A.C.'s order. Under section 66-A, dated-2-4-1999.

2. Brief facts leading to this appeal are as under. The appellant is an individual and proprietor of a distribution agency known as Asra Enterprises. The appellant, hereinafter, referred to as assessee, is distributor of M/s. Lakson Tobacco Co. Ltd. and Premier Tobacco Industries Ltd. He declared his return for the first time as new taxpayer, for an income year of three months ended 30-6-1994, declaring income of Rs.29,500. The return was supported by Certificates from Lakson & Premier Tobacco Industries, of which he was agent, however, books of accounts were denied. Wealth statement was filed which showed net wealth of Rs.14,00,130. While examining the ledger accounts of M/s. Premier Tobacco Industries Co., the I.T.O. found that initial deposit of Rs.8,42,731 was made, this was` also the balance of debits and credits reflected in the ledger account at Rs.26,54,564 (Cr.) and Rs.18,11,835 (Dr.). The assessee explained that the initial deposit was made out of gift received from the brother Pervez Iqbal Qureshi amounting to Rs.7,62,166 and in support of this claim a gift affidavit was also produced. However, the I.T.O. considered the gift affidavit to be a sham document, and gift itself a collusive arrangement, and further noticed that the gift was made on 15-4-1994, whereas the deposit with M/s. Premier Tobacco Industries was made up to 13-4-1994, and hence the sources stated by the assessee was not genuine. He, therefore, treated the entire amount of deposit to have been made from undeclared sources and deemed it as income under section 13(1)(aa) of the Income Tax Ordinance, with prior approval of the I.A.C. Still further he rejected the trading account, which showed G.P. of 1.1 % on sales of Rs.2,27,23,389, on the ground that purchases were not fully verifiable and relying on a parallel case, applied G. P. of 1.26% on declared sales which resulted in addition of Rs.36,358 in G. P., and further made add backs from Printing Account, .from D.D. Charges, from Suzuki Rent and discount claim to have been passed on to the customers. The entire add back was made at Rs.1,35,730. He, thus, computed the total income at Rs.10,44,319 as against the declared income of Rs.29,500. Being aggrieved the assessee filed appeal. The learned CIT(A), after having perused the gift deed and relevant records, produced by the appellant-assessee, reached the conclusion that addition under section 13(1)(aa) amounting to Rs.8,42,731 was not justified, as the gift was made on 12; 3-1994 and not 15-4-1994 as mentioned by the I.T.O. and hence the source of initial deposit stood explained and he, therefore, deleted the addition. He further deleted the addition in G. P. because the parallel case cited by the I.T.O. was not parallel in the sense that the turnover disclosed in that case was much lesser than what was disclosed by the assessee. The Department filed appeal against learned CIT(A)'s order, dated 23-4-1996 and a Division Bench of this Tribunal disposed of the appeal vide I.T.A. No.226/KB of 1996-97, dated 23-4-1998, upholding the order of learned CIT(A) and dismissing the Department's appeal. Meanwhile, during the pendency of the appeal before the Tribunal learned I.A.C. Range-11, Hyderabad, issued a show-cause notice under section 66-A vide his Letter No.IAC/2/Range-II/HYD/97-98/112, dated 17-7-1997, showing his intention to cancel/modify/enhance the assessment order passed by the I.T.O., on the ground that ledger account of Premier Tobacco Industries Ltd. showed the peek deposit of Rs.29,77,068 and that of Lakson Tobacco Co. Ltd. at Rs.5,32,082. He was of the view that the I.T.O. had failed to take into consideration the peek deposit of Rs.13,04,255 with Premier Tobacco Industries Ltd. on 13-4-1997. This notice of the I.A.C. was further revised vide his letter No. 112, dated 29-7-1997, wherein the assessee was confronted as, to why credit of Rs.35,096,150 appearing in the two accounts be not deemed as income unless an explanation was offered. The assessee responded vide letter dated 24-7-1997. It was explained by him that the correct figure of deposit on 31-5-1994 in respect of accounts was Rs.28,32,247 and not Rs.35,09,150 as assumed by the I.A.C. and further as regards credit of Rs.13,04,255 with Premier Tobacco Industries on 13-4-1997, it was stated, that this pertained to assessment year 1997-98 which was still pending and was in no way related to assessment year 1994-95 for which the notice was issued. The I.A.C. was not satisfied with the reply as he considered the reply to be evasive and off the point, and holding that the assessee had failed to explain the source of deposit, and to that extent the order of the I.T.O. was erroneous and prejudicial to the interests of revenue, he cancelled the order and directed the I.T.O. to reframe the assessment after investigating the source of investment, "over and above the amount sub judice before the Income-tax Tribunal". This order was passed on 2-8-1997. In pursuance to this direction the I.T.O. passed a fresh order under section 62 read with section 66-A on 20-8-1997. In this order an amount of Rs.26,66,364 was deemed to be income from unexplained source under section 13(1)(aa) of the, Income Tax Ordinance and a demand notice of Rs.9,32,890 was issued and served upon the assessee on 30-8-1997. Meanwhile, the assessee had filed an appeal against the order passed by the' I.A.C. under section 66-A of the Income Tax Ordinance, 1979. This appeal was heard on 15-5-1998 and decided on 11-11-1998 vide I.T.A. No.506/KB of 1997-98. Before the Tribunal the representative of the assessee submitted that the I.A.C. had proceeded on totally incorrect figures, as the correct figures reflected in the ledger accounts of the two companies on 31-5-1994, were Rs.24,20,982 in respect of Premier Tobacco Industries Ltd., and Rs.4,11,265 in respect of Lakson Tobacco Co. Ltd., total credit being Rs.28,32,247. These accounts were shown by the D.R. who could not, refute the figures. Accordingly, the Tribunal, not finding any merit in the proceedings initiated under section 66-A, cancelled the order. After this fresh proceedings under section 66-A were restarted vide show-cause notice No.2141, dated 24-3-1999 by the I.A.C., Range-II, Hyderabad. In this notice the I.A.C., once again showed his intention to cancel/modify the assessment, holding that deposit with Premiere Tobacco Industries Ltd. shown at Rs.24,26,981 and Lakson Tobacco Co. Ltd. shown at Rs.4,11,265 which .was admitted by the assessee's representative before the Tribunal in 66-A appeal, was not investigated properly and hence the assessment was prejudicial to the interest of revenue. In response to this notice assessee's counsel replied that the issue raised in the show-cause notice stood decided by the Tribunal s order dated 11-11-1998 and hence I.T.O.'s order had merged with the Tribunal's order and in view of subsection (1)(a) of section 66-A, the I.A.C. did not have the jurisdiction to proceed on a matter which was decided in appeal. The I.A.C., however, was not satisfied by this reply, as in his opinion, Tribunal had failed to take into account source of deposit to the said companies and hence neither was subsection (1)(a) attracted nor the ratio of decision given by Supreme Court in the case cited as 1992 PTD (Trib.) 1187 was applicable. In view of this he cancelled the assessment for de novo assessment, but failed to issue any instruction to the I.T.O. in this direction. The above appeal has been filed against this order of I.A.C. dated 2-4-1999.

3. We have heard Mr. A. S., Jafari, Advocate for the appellant and Mr. Muhammad Saeed, learned D. R. for the respondent.

4. Mr. A. S. Jafari has submitted that the issue of deposit was raised in the original assessment dated 18-5-1995 which was decided by the learned CIT(A) vide his order dated 23-4-1996. In this order an amount of Rs.8,42,731 was added as unexplained income and deleted by the learned CIT(A). The Department had tiled appeal against the said deletion but Department's appeal was dismissed. The issue of deposit was once again raised under section 66-A and reassessed vide order, dated 20-8-1997 in which an addition of Rs.26,66,364 was made. The I.A.C.'s jurisdiction under section 66-A was challenged and the Tribunal vide its order dated 11-11-1998 had examined the issue of peak deposit and held the addition not to be sustainable and hey., ~ the order passed under section 66-A was cancelled. Now for a second time proceedings under section 66-A were initiated on the same issue which had been decided by the Tribunal.

5. The learned D.R., on the other hand, submitted that the figures now confronted to the assessee vide show-cause notice and order dated 20-4-1999 were the same which were admitted by the assessee before the Tribunal but the source of which remained unexplained, hence the proceedings initiated were justified.

6. We have heard the contentions raised by both the parties and also perused the records. The issue in all the assessments is the same i.e. the source of deposit to M/s. Premier Tobacco Industries Co, Ltd. and Lakson Tobacco Co. Ltd. of which the assessee is a distributor, but figures confronted to the assessee in such new notice was different. However, a different figure extracted the same from ledger account, by the I.T.O. or I.A.C.-, would not constitute a new point on which I.A.C. could have exercised jurisdiction. If the Assessing Officer or the Revising Officer had failed to properly examine the ledger accounts and extract the correct figures from those accounts, it is their own fault and not of the assessee for which a fresh notice or fresh jurisdiction an be assumed time and again. We are taking add back that the I.A.C. could assure jurisdiction even after the decision given by the Tribunal on the issue. The learned I.A.C. had clearly misdirected himself and had gone far beyond his jurisdiction initiating proceedings under section 66-A. The action was totally illegal and hence the same is cancelled, and consequently any assessment completed to pursuance to this direction would also be clearly illegal.

7. The order passed by I.A.C. is hereby cancelled and appeal is allowed to the appellant-assessee.

C.M.A./M.A.K.8/Tax (Trib.)Appeal allowed.