Income Tax Ordinance (XXXI of 1979)‑‑‑

‑‑‑‑Ss.66A, 13 & 136(1)‑‑‑Income Tax Rules, 1982, R.207A‑‑‑Powers of Inspecting Additional Commissioner to revise Deputy Commissioner's order‑‑‑Valuation of immovable property‑‑‑Addition‑‑‑Assessment year 1994‑95‑‑‑Assessing Officer assessed the difference of value between sale and purchase price of plot as income in the nature of trade and tax was paid accordingly by the assessee‑‑‑Inspecting Additional Commissioner set aside the assessment order under S.66A of the Income Tax Ordinance, 1979 on the ground that assessed value of the plot was much lower than the rate prescribed by the Collector's Table for such property., thus, difference in value was liable to be added in assessee's income under S.13 of the Income Tax Ordinance, 1979‑‑‑Contention of the assessee was that R.207A was inserted in the Income Tax Rules, 1982 by Notification No.414(1)97, dated 13‑6‑1997 and the same could not be pressed into service with retrospective effect to the prejudice of the assessee‑‑‑Validity‑‑‑Since mode of valuation of immovable property as provided under R.207A of the Income Tax Rules, 1982 was not available with the Department in the year' 1994‑95 same having been inserted in the Income Tax Rules on 13‑6‑1997; could not have been applied retrospectively to the assessee's case which was a past and closed transaction by that time‑‑‑High Court dismissed the departmental appeal in circumstances.

Javed Farooqi for Appellant

Ali Akbar for Respondent.

ORDER

ANWAR ZAHEER JAMALI, J.‑‑‑This appeal under section 136(1) of the Income Tax Ordinance, 1979 raises the following questions for our decision:‑‑‑

"(1) Whether on the facts and circumstances of the case learned Income‑tax Appellate Tribunal was justified in cancelling the order passed under section 66A wherein value of the property declared by the assessee is lower than the rate prescribed in the Collector's table for the property?

(2) Whether on the facts and circumstances of the case learned I.T.A.T. was justified in cancelling the order in presence of rule 207A of the Income Tax Rules, 1982 which is also contrary to the decision of I:T.A.T. vide Order No. I.T.A. I136/KB of 1997‑98, dated 2‑3‑1998?"

The facts of the case may be summarised as under:

For the assessment year 1994‑95 the respondent filed his Income Tax Return declaring his v)tal income at Rs.34,703 during that financial year. Such declaration of income was not accepted by the Assessing Income -tax Officer. However, assessment case of the respondent was finalized at an income of Rs.87,817.

On 6‑3‑1999 respondent was served with a show‑cause notice under section 66A of Income Tax Ordinance, 1979 relating to the assessment year 1994‑95 issued by the Inspecting Additional Commissioner of Income Tax, Karachi, wherein it was mentioned that declaration of purchase of one .open Plot NO.A‑230, Block 4, Gulistan‑e‑Jauhar, Karachi measuring 240 sq. yds. at Rs.1,65,000 (at the rate of Rs.687 per sq. yd.) was much lower than the rate prescribed by the Collector's table for such property i.e. Rs.867 per sq. yd:, thus, the difference in value was liable to be added in assessee's income in exercise of powers conferred by section 13 of Income Tax Ordinance, 1979.

Reply to aforementioned show‑cause notice was submitted by the assessee/respondent mentioning therein that the said plot was purchased for Rs.1,50,000 and was sold by the assessee in April, 1995 at Rs.1,65,000 and declaration of such profit was made in the Income Tax Return for the year 1995‑96. During the assessment proceedings, this transaction was assessed on the basis of purchase price of Rs.1.50,000 and sale price of Rs.2,08,080 (profit of Rs.58.080) which was treated as income in the nature of trade and assessed under section 22 of the Income Tax Ordinance, 1979, putting an additional liability for payment of tax of Rs.12,778 on the assesses which was accordingly paid by him.

The Inspecting Additional Commissioner of Income‑tax did not find such reply of show‑cause notice under section 66A as satisfactory, thus, set aside the assessment order, of the respondent for the year 1994‑95 ‑and remanded his case to the A.C.I.T. for de novo proceedings vide its order dated 10‑6‑1999.

Against this order, assessee/respondent preferred an appeal before the Income‑tax Appellate Tribunal, Karachi which was allowed by the said Tribunal vide its order impugned in this appeal.

We have heard Mr. Javed Farooqi, Advocate for appellant and Mr. Ali Akbar, Advocate for respondent.

Learned counsel for appellant contended that rule 207‑A of Income Tax Rules, 1982 deals with the issue of valuation of immovable property for the purpose of section 13 of the Income Tax Ordinance, 1979 and sub -rules (1) and (2) provide that in case of open plot the value determined by the Development Authority of Government Agency on the basis of auction price in respect of similar plots in the area was the proper price and in other cases the value determined by the District Collector for the purpose of stamp duty shall be the proper price. In the instant case the applicable value determined by the Collector for the purpose of stamp duty was Rs.867 per sq. yd., therefore, action taken by the Inspecting Additional Commissioner of Income‑tax was legal but the Appellate Tribunal erroneously set aside the same. '

On the other hand Mr. Ali Akbar replying the above point submitted that admittedly dispute in the present appeal relates to the assessment year 1994‑95 when the transaction of purchase and sale of the open plot had taken place while rule 207‑A was inserted in the Income Tax Rules, 1982 by Notification No. SRO 414(1)97, dated 13‑6‑1997, and. therefore, same cannot be pressed into service with retrospective effect to the prejudice of the assessee. Referring to the merits of respondent's case, learned counsel submitted that during the assessment year 1995‑96 transaction in respect of aforesaid plot has already been finalized at a purchase price of Rs.1,50,000 and sale price of Rs.2,08,080 showing a profit of Rs.58,080 for which the respondent had to pay an additional tax of Rs.12,778 and thus no loss to the Government Revenue was caused, therefore, the present appeal merits dismissal.

From the perusal of the impugned order passed by the Income‑tax Appellate Tribunal it appears that the contentions raised before us by the parties' counsel were not raised by them before‑ the Tribunal. However the appeal preferred by the respondent was allowed by the Tribunal with the following observations:‑‑‑

"A perusal of the impugned order shows that the learned I.A.C. has not called for and examined the sale‑deed for ascertaining if the amount of consideration shown in the sale‑deed was higher than declared by the assessee in the wealth statement. As there was no material before the learned I.A.C. for holding that the assessment order was erroneous, therefore, it is held that the impugned order is not sustainable in law."

On examination of relevant record we find force in the submissions of Mr. Ali Akbar that since mode of valuation of immovable property as' provided under rule 207A of Income Tax Rules, 1982 was not available with the Income Tax Department in the year 1994‑95, being inserted in the Income Tax Rules on 13‑6‑1997, same could not have been applied retrospectively to the respondent's case which was a past and closed transaction by that time. In addition to this it has not been disputed' before us by the appellant that purchase and sale transaction in respect of Plot No.A230, Block‑4, Gulistan‑e‑Johar, Karachi was assessed during the assessment year 1995‑96 and profit of Rs.58,080 earned by the respondent was added to his income and taxed, treating it as income under section 22 of the Income Tax Ordinance, 1979. Accordingly Government revenue was fully recovered from the assessee in the year 1996 i.e. about three years before the issuance of show-cause notice under section 66A of the Income Tax Ordinance, 1979. From the perusal of the order passed by the Inspecting Additional Commissioner of Income‑tax, dated 10‑6‑1999 it is evident that he did not apply his mind to these admitted facts of the case.

In view of the above discussion we answer both the questions raised before us in affirmative and consequently dismiss this appeal with costs.

C.M.A./M.A.K./C‑29/K Appeal dismissed.