Income Tax Ordinance (XXXI of 1979)‑‑‑

‑‑‑‑Ss.65 & 136(2)‑‑‑Additional assessment‑‑‑Assumption of jurisdiction after dropping the proceedings on the basis of same information‑‑‑Once the proceedings on the basis of an information had been dropped a fresh notice for the same assessment year could not be issued on the basis of same information as there was no fresh definite information relating to such assessment year‑‑‑Assessing Officer could not assume jurisdiction for issuing a notice under S.65 of the Income Tax Ordinance for the said assessment year as pre‑condition provided under S.65 of the Income Tax Ordinance, 1979 was not met with‑‑‑Appellate Tribunal was not justified in confirming the assumption of jurisdiction for issuing the notice under S.65 of the Income Tax Ordinance, 1979 in circumstances.

Mian Ashiq Hussain for Appellant.

Muhammad Ilyas Khan for Respondent.

Date of hearing: 2nd August, 2001.

JUDGMENT

MANSOOR AHMAD, J.‑‑‑This application under section 136(2) of the Income Tax Ordinance, 1979 is moved by the assessee. The legal question raised by the petitioner is enumerated hereunder:‑‑‑

Whether on the facts and in the circumstances of the case, learned Tribunal was justified in confirming assumption of jurisdiction by the Assessing Officer for issuing notice under section 65 of the Income Tax Ordinance, 1979, with regard to already concluded assessment, without availability of pre‑conditions prescribed by law?

The facts relevant in the case are that a notice under section 65 of the Income Tax Ordinance, 1979 was issued to the petitioner for re‑opening of his assessment for the assessment year 1992‑93. In response to the notice, the assessee appeared and submitted his reply. The proceedings were dropped and on the same ground, present notice under section 65 of the Ordinance was issued for re‑opening the ease for the assessment year 1991‑92. In pursuance of the proceedings, an additional assessment was made, whereby an amount of Rs.15,87,500 was added in assessee income for the year 1991‑92 under section 13(1)(aa) of Income Tax Ordinance. An appeal was preferred by the assessee and the Commissioner of Income‑tax (Appeals), Zone‑V, Lahore accepted the appeal of the assessee and deleted, the additional. Department preferred an appeal before the Income‑tax Tribunal, which was accepted and the case was remanded to the Assessing Officer to reappraise the matter pertaining to investment made by the assessee in 1991‑92 afresh. The case of the assessee was that he constructed a house on Plot No.78, Block 'C', Model Town, Lahore and in that a sum of Rs.5,65,000 were invested in construction, during the assessment year 1991‑92 and Rs.15,87,500 were incurred in 1992‑93 and the completion certificate, dated 11‑5‑1992 of the house was issued by Model Town Society. The original assessment in the case of assessee for the assessment year 1991‑92 was finalised and income of Rs.62,688. Additional Director Intelligence & Investigation (Direct Taxes), Lahore vide Letter No.286, dated 1‑6‑1996 conveyed an information that the assessee constructed a double storey building on which huge investment has been made, which is not in consonance with the sources of the assessee. On the basis of this letter, Assessing Officer issued a show‑cause notice on 6‑6‑1996 showing his intention to reopen the case for the assessment year 1992‑93. After reply of the assessee, the proceedings were dropped with the approval of Commissioner of Income‑tax, Zone‑B, Lahore. Thereafter, another notice, dated 29‑12‑1996 was issued for the assessment year 1991‑92, on the basis of same information, which followed the additional assessment whereby addition of income under section 13(1)(aa) of Income Tax Ordinance, 1979 was made. The appeal of the assessee accepted by Income‑tax Appellate Tribunal, Lahore Bench, Lahore, whereby the addition was deleted by Income‑tax Appellate Tribunal vacated the order of C.I.T.(A) and the case was remanded. The reference application filed by assessee was also rejected.

From the facts narrated above, the question of law raised by the petitioner does arise in the circumstances of the case and we propose to treat as such.

Admittedly a notice, dated 6‑6‑1996 was issued under section 65 of the Income Tax Ordinance, 1979 and taking the information supplied by Additional Director, Intelligence and Investigation (Direct Taxes), Lahore, conveyed vide its letter dated 6‑6-1996, the Assessing Officer showed his intention to re‑open the case for the assessment year 1992‑93 on the basis of information that the construction was completed on 11‑5‑1992. On the basis of reply, the Assessing Officer submitted a report recommending to drop the proceedings. The Commissioner of Income‑tax/Wealth Tax, 2‑B, Lahore allowed the dropping of proceedings vide its letter, dated 11‑7‑1996. After once dropping the proceedings on the basis of information, a fresh notice for the assessment year 1991‑92 could not be issued on the basis of same information, as there was no further definite information relating to assessment year 1991‑92. Therefore, after dropping the proceedings, the Assessing Officer would not assume jurisdiction for issuing a notice under section 65 of the Ordinance for the assessment year 1991‑92. As pre?condition provided under section 65 of Income Tax Ordinance, 1979 was not met with, therefore, answering the legal question raised by the assessee, we hold that the Tribunal was not justified in confirming the assumption of jurisdiction for issuing the notice under section 65 of Income Tax Ordinance, 1979 for the assessment year 1991‑92 and we answer the question raised by the assessee in negative.

C..M.A./M.A.K./M‑754/L ????????????????????????????????????????????????????????????????? Question answered