(a) Income Tax Ordinance (XXXI of 1979)‑‑‑

‑‑‑‑Ss.65, 12(18) & 80C(4)‑‑‑Additional assessment‑‑‑Jurisdiction under S.65 of the Income Tax Ordinance,: 1979 was assumed on the ground that since amount exceeding authorized capital was to be treated as loan being chargeable as deemed income under S.12(18) of the Income Tax Ordinance, 1979 additional assessment under S.65 of the Income Tax. Ordinance, 1979 was warranted‑‑‑First Appellate Authority turned down the explanation of assessee summarily‑‑‑Validity‑‑‑Assessing Officer as well as First Appellate Authority fell in error as both the Authorities did not consider and adjudicate upon the objection of assessee pointing out the bar for invoking provisions under S.12(18) in view of the provisions of S.80C(4) of the Income Tax Ordinance, 1979.

(b) Income Tax Ordinance (XXXI of 1979)‑‑‑

‑‑‑‑‑Ss.65 & 80C(4)‑‑‑Additional assessment‑‑Final discharge of tax liability‑‑‑ Immunity‑‑‑If objection of the assessee regarding immunity of proceedings under S.65 of the Income Tax Ordinance, 1979 was not legally acceptable in view of subsection (4) of S.80C of the Income Tax Ordinance, 1979, it should have been discarded after referring to the contentions and provisions of law.

(c) Income Tax Ordinance (XXXI of 1079)‑‑‑

‑‑‑‑Ss.12(18) & 65‑‑‑Deemed income‑‑‑Additional assessment‑‑‑Share deposit money in excess of authorized capital‑‑‑Share deposit money received in advance before the substitution of S.12(18) through Finance Act, 1998, its excess of authorised capital, though the authorized capital was enhanced subsequently with effect from the date of share deposit money, was treated as loan and addition was made, which was maintained by the First Appellate Authority‑‑‑Validity‑‑‑Appellate Tribunal observed that orders were not sustainable on facts and law for the reasons that the Assessing Officer failed to assume jurisdiction under S.65 of the Income Tax Ordinance, 1979 in a lawful manner; that the Assessing Officer failed to reject/rebut the objections raised by the appellant in response to show‑cause notice; that the First Appellate Authority disposed of the contention of appellant summarily inasmuch as two grounds had almost been ignored; that the case‑law had been heavily relied upon by Assessing Officer without drawing a comparison or parallel of the two cases and that the case‑law relied upon by the assessee reported in 2002 PTD (Trib.) 141 had been found applicable on all fours.

2001 PTD (Trib.) 2880 distinguished.

2002 PTD (Trib.) 141; 2001. PTD 1180 and Civil Petition No.984‑L of 2001 rel.

.

Muhammad Bashir for Appellant. Anwar Ali Shah, D.R. for Respondent.

Date of hearing: 23rd October, 2001.

ORDER

IMTIAZ ANJUM (ACCOUNTANT MEMBER). ‑‑‑This appeal by appellant, private limited company, has been filed on the grounds that CIT(A) as well as Assessing Officer were not justified to initiate and confirm proceedings under section 65 in view of the immunity provided to the appellant under section 80C(4). It has further been agitated that both the Officers below erred in treating share deposit money as loan within the purview of section 12(18). Issuance of notice under section 65 has further been challenged on the plea that it was as a result of change of opinion which is not permissible under the law and the sum of Rs.2,48,000 treated as loan under section 12(18) is against the facts and not supported by any case‑law.

2. Mr. Muhammad Bashir, Advocate is present for the appellant/assessee and Mr. Anwar Ali Shah, is present for the Revenue.

3. The facts of the case briefly are that appellant a private limited company derived income from execution of contracts. For the impugned year statement under section 143‑B was filed declaring payments and tax, deduction as under:‑‑‑

Contract payments received ???????????????????????????????????????????????????? Rs.1.,56,62,477

Income‑tax deducted??????????????????????????????????????????????????????????????? Rs.7,81,275

Statement under section 143E was accepted through order under sections 59A/80C of the Income Tax Ordinance, 1979, dated 29‑1‑1999. Later on, on scrutiny of the balance‑sheet for the period ending 30‑6‑1999 during the wealth tax assessment proceedings of the directors it was noticed that company had received the share deposit money for an amount of Rs.748,000 when added to paid‑up capital of Rs.500,000, the amount exceeded the authorized capital of Rs.10,00,000. Further information sought through notice under section 144 was provided by the appellant vide letter dated 6‑2‑2001 indicating that share deposit money of Rs.748,000 was received in cash as on 30‑6‑1998. In view of this information a show‑cause notice was issued confronting the appellant that by virtue of share deposit money received in cash on 30‑6‑1998 paid‑up capital, exceeded the , authorized capital to the extent of Rs.248,000 which amount was liable to be treated as loan under the provisions of section. .12(18) of the Income Tax Ordinance, 1979. Appellant through reply, dated 20‑2‑2000 contended that before substitution of section 12(18) through Finance Act, 1998 any advance received was not caught by the mischief of existing provisions. It was specifically asserted that the amount received from the directors were advances against allotment of shares and not loan. Provisions of section 12(18) thus were not applicable. The Assessing Officer found the above explanation of the appellant unsatisfactory. Notice under section 65 was issued with prior approval of 1.A.C. on 24‑2‑2001. Further proceedings were taken up by issuing call notice under section 61. A notice under. section 62 was issued on 19‑3‑2001 which has been reproduced on pages 2 and 3 as under:‑‑‑

"Perusal of the balance‑sheet filed. for the year ending with 30‑6‑1998 in your case reveals that share deposit money received by you on 30‑6‑1998 at Rs.7,48,000 from the share holders by way of cash when added towards paid‑up capital at Rs.5,00,000, exceeded from your authorized capital to the extent of Rs. 2,48,000 which attracts the provision of section 12(18) of the Income Tax Ordinance, 1979. In response to notice under section 61 you're A.R. has contended that the permission for enhancement of authorized capital was made through special resolution as on‑30‑6‑1998 and permission too was granted 'by the Security and Exchange Commission of Pakistan, Faisalabad w.e.f. 30‑6‑1998 and as such there was no illegality as a deposit money was converted into shares in the subsequent period. Information has been collected from the Deputy Director, Securities and Exchange Commission of Pakistan, Faisalabad which revealed that you have applied for enhancement of authorized capital vide application dated 23‑2‑2001 and it was accepted for record by the said authority on 16‑3‑2001 whereas show‑cause notice to treat the share deposit money as loan was issued by this office on 7‑2‑2001 which thus shows that you have applied to the Securities and Exchange Commission of Pakistan for enhancement of your share capital after the issuance of show‑cause notice by this office and as such your plea that the enhancement granted by the said authority w.e.f. 30‑6‑1998 at this stage, cannot be entertained being applied after' issuance of show‑cause notice by, this office. Secondly, the plea taken by you're A.R. that share deposit money is an advance and the amendment. In section 12(18) vide Finance Act, 1998 also does not attract? in your case, is also in correct. Full Bench judgment in the case reported as 2001 PTD (Trib.) 2880 in a case reported as I.T.As. Nos.3863/LB and 3864/LB of 1998 (Assessment years 1992‑93 and 1993‑94). decided on 30‑10‑1999, has held that whether company was competent or had any authority to call for share deposit money in excess of authorized capital. Held no and whether base reading of provision contained in section 12(18) showed that intention of Legislature was that if any transaction was claimed or shown, which was in nature of loan then deeming provision shall come into operation‑‑‑Held yes. Finally it was held that treating the share deposit money as loan under section 12(18) of the Income Tax Ordinance, 1979 was justified.

In view of the above‑stated facts, I intend to treat the share deposit money received by way of cash in excess of the authorized capital, as loan which attracts the provision of section 12(18) of the Income Tax Ordinance, 1979 and as such is intended to be taxed in your hands for the assessment year 1998‑99."

The reply made by the appellant dated 28‑3‑2001 and reproduced on page 3 of assessment order is as under:‑‑‑?????????

"1. The balance‑sheet for the year ending 30‑6‑1998 was furnished and hence your observation in the ensuing lines of second para. of your notice is based on surmises. In tact, authorized capital was Rs.20,00,000 as on 30‑6‑1998 (Relevant documents are enclosed). Balance‑sheet on record of Wealth Tax for the year ending 30‑6‑1999 was virtually for Bank purpose to, avail running finance facility.

2. Your honour would appreciate that share deposit money was not called for in excess of authorized capital. As such case reported as 2001 PTD (Trib.) 2880 is not helping your good?self. Moreover, in our case share deposit money was not received as loan but it was the amount to be utilized against the issuance of shares.

3. Assessment in our case was completed under section 80C. As such provision of section 12(18) are not applicable in view of section 80C(4) of the Income Tax, Ordinance, 1979.

4. In view of facts and circumstance of the case the provisions of section 12(18) of the Income Tax Ordinance, 1979 are not attracted. It is, therefore, prayed that proceedings may kindly be dropped."

The Assessing Officer with remarks "after thoroughly examining the reply" discarded the plea of non‑furnishing of the balance‑sheet of the company as on 30‑6‑1998 on the ground that as through the balance‑sheet for the year ending 30‑6‑1999 appellant had admitted to have received the share deposit money, it obviously had been already shown in the said balance‑sheet as on 30‑6‑1998. The Assessing Officer, however, by bringing out the material facts of the case with regard to the share deposit money, paid and the authorized capital as declared as per the balance‑sheet ended 30‑6‑1999 focused on these aspects with effect from 30‑6‑1998: As a result the contention of enhanced authorized capital to Rs.20,00,000 with effect from 30‑6‑1998 was got verified from the Deputy Registrar, Security and Commission of Pakistan, Faisalabad. It was revealed that although copy of special resolution to enhance authorize capital w.e.f. 30‑6‑1998 was filed on 23‑2‑2001, was allowed by charging penalty for late filing of the said special resolution. A certificate of enhancement of authorized capital from Rs.10,00,000 to Rs.20,00,000 was issued on 16‑3‑2001. The Assessing Officer formed his opinion as under:‑‑‑

"This, therefore, clearly indicate that as on 30‑6‑1998 the company was not authorized to collect any money in the shape of share deposit money from its shareholders/directors than the authorized capital of the company which the assessee has unlawfully obtained from the directors for which it was not legally obliged to do so, therefore, the amount so received by way of cash clearly attracts the provisions of section 12(18) of the Income Tax Ordinance, 1979. In a case recently decided by the Full Bench, I.T.A.T., Lahore Bench, Lahore reported as 2001 PTD (Trio.) 2880 in a case reported as I.T.As. Nos.3863/LB and 3864/LB of 1998 (Assessment years 1992‑93 and 1993‑94) decided on'30‑10‑1999, it has clearly been held that share deposit money received when added in paid‑up capital exceeding the authorized capital of the company, the same' amount is treated as loan and all the provisions of section 12(18) of the Income Tax Ordinance, 1979 shall come into play to such loan. It has been admitted by the assessee that the share deposit money from the directors/shareholders was received by way of cash. Therefore, the loan received by way of cash and not through normal banking channel, thus attracts the provisions of section 12(18) of the Income Tax Ordinance, 1979 and as such is deemed as income of the assessee for the year under consideration and taxed in the hands of the assessee‑company accordingly."

The amount exceeding the authorized capital to the extent of Rs.2,48,000 was thus treated as loan received in cash and liable to be treated as deemed income under section 12(18) of the Income Tax Ordinance, 1979.

3‑A. The CIT(A) vide order, dated 29‑5‑2001 after considering the facts of the share deposit money received from the three directors, and special resolution to enhance the authorized capital, dated 23‑2‑2001 (which was after the issuance of show‑cause notice to reopen the assessment), enhancement of capital allowed after charging of penalty for late filing of the special resolution observed "that the Assessing Officer rightly treated the authorized capital to the extent of Rs.248,000 as loan on account of share deposit money received in cash front the abovementioned directors. In this view of the matter, reopening (If the case under section 65 of the Income Tax Ordinance, 1979 is held to be justified and is upheld. Since the share deposit money was received other than through a crossed cheque or banking channel, the provisions of section 12(18) of the Income Tax Ordinance, 1979 were also rightly invoked by the Assessing Officer. As such the impugned addition is maintained being justified.

4. Mr. Muhammad Bashir, Advocate and Mr. Anwar Ali Shah, D.R., learned representatives of the parties have been heard. The relevant facts of the impugned order under sections 62/65 and appeal order, dated 29‑5‑2001 have been considered.

5. Mr. Muhammad Bashir, Advocate, learned A.R. of the appellant has referred to the extract of notice under section 65 reproduced as last para. on page 2 and first para. of 3 of the impugned order. The A.R. has contended that the Assessing Officer after recording the facts or the share deposit money of Rs.748,000 received as calculated by him and by adding the said amount to the paid‑up capital to Rs.500,000 to arrive at the excess amount of Rs.248,000 to be treated as loan under the provisions of section 12(18), formed the opinion that the entire exercise was undertaken to pass the special resolution, application submitted to the Deputy Registrar, Securities and Exchange, Faisalabad and got permission of enhancement of capital issued on 16‑3‑2001 after the show‑cause notice, dated 7‑2‑2001 for taking up additional assessment proceedings in order to treat the share deposit money over and above the authorized capital. As such the Assessing Officer was not convinced of the bona fides in view of the belated resolution and permission by the Securities Exchange Authority for enhancement of the authorized capital. The Assessing Officer also rejected the plea of share deposit money received in advance before the substitution of section 12(18) through Finance Act, 1998.on the strength of a Full Bench judgment reported 2001 PTD (Trio.) 2880 duly mentioning the finding which has also been quoted and relied upon by the CIT(A) as well as under:‑‑‑

"Whether company was competent to order an authority to call for share deposit money in excess of authorized capital. Held no and whether base reading of provision contained in section 12(18) showed that intention of Legislature was that if any transaction was claimed or shown which was in nature of loan then deeming provision shall come into operation. Held yes."

Treating of the share deposit money as loan under section 12(18) was thus justified.

6. The learned A.R. has argued that the conclusion drawn by the Assessing Officer and confirmed by the CIT(A) is misdirected as share deposit money has wrongly been treated as loan and at par with parallel case relied upon without drawing comparison of the facts The A.R. has relied upon a reported case 2002 PTD (Trib.) 141 pointing out that I.T.A.T. has held that ,letter of law in this existing provisions of Ordinance had to be interpreted in sense in which it was used and could not be ignored as to cause injustice to assessee. The learned A.R. has further contended that I.T.A.T. was pleased to " hold that when .two requirements of section 12(18) as it stood before `its substitution through Finance Act, 1998 were not fulfilled provisions of that section was not attracted especially when subsequent amendment made in 1998 and at the relevant time advance irrespective of its nature of use could not be deemed as income of assessee. Whether amendment in section 12(18) by Finance Act, 1998 was brought about to clarify earlier provisions and of to bring change in it was answered in affirmative. It is settled principle of taxing statutes that where two interpretation were equally possible then one favourable subject was to be adopted.

7. The learned D.R. on his turn has emphasized the facts of the special resolutions for enhancement of the authorized capital being subsequent to the issuance of show‑cause notice for taking up proceedings for additional assessment have been rightly appreciated by CIT(A) in upholding action under section 65 as at material time Assessing Officer was in possession of information in the shape of share deposit money deposited by the directors. The D.R. has also emphasized that at the given time amount exceeding authorized capital was legally treated as loan and added as deemed income under the provisions of section 12(18).

8. We have considered the facts as per the impugned orders and the contentions of the parties briefly mentioned above. A careful appraisal of the facts and contents of the orders partially quoted supra bring out very clearly the following facts and aspects of the case:‑‑‑

(i) There is no dispute about the character of the deposit i.e. share deposit money claimed paid by the three directors as on 30‑6‑1998 and accepted as such by the Assessing Officer except that balance‑sheet as at 30‑6‑1998 neither submitted nor was examined by Assessing Officer.

(ii) The receipt of share deposit money ascertained on examination of the balance‑sheet as on 30‑6‑1999 during the wealth tax assessments of the directors.

(iii) In view of the position mentioned in Serial No.(i) above and as specifically mentioned by the Assessing Officer as well the issues or for that matter information before him for action under section 65 and under section 12(18) comprised:‑‑‑

(a) share deposit money on 30‑6‑1999 contributed as under:‑‑‑

Mr. Ghulam Muhammad Alvi??????????????????????????????????????? Rs. 350,000

Mr. Ghias‑ud‑Din???????????????????????????????????????????????????????????????????? Rs. 248,000

Mr. Muhammad Sarwar?????????????????????????????????????????????????????????? Rs. 150,000

Total??????????????????????????????????????????????????????????????????????????????????????? Rs. 748,000

(b) Paid‑up capital Rs.500,000 on 30‑6‑1999 and authorized capital as per balance‑sheet as on 30‑6‑1999 Rs.10,00,000

(iv) As share deposit money was brought forward from the year ending 30‑6‑1998 the Assessing Officer on the basis of facts of balance‑sheet as on 30‑6‑1999 confronted the appellant on the amount exceeding authorized capital as under:‑‑‑

Paid‑up capital ??????????????????????????????????????????????????????????????????????? Rs.500,000

Share deposit money??????????????????????????????????????????????????????????????? Rs.748,000

Total??????????????????????????????????????????????????????????????????????????????????????? Rs. 1,248,000

Authorized capital???????????????????????????????????????????????????????????????????? Rs. 1,000,000

Excess amount????????????????????????????????????????????????????????????? Rs.248,000

(v) Issuance of notice under section 65 on 24‑2‑2001 special resolution to enhance the authorized capital, dated 23‑2‑2001 accepted by Deputy Registrar, Securities Exchange and' Commission, Faisalabad, and certificate dated 16‑3‑2001 issued permitting enhancement of authorized capital w.e.f. 30th June, 1998.

On the basis of facts and information the issues framed are disposed of as under:

9. Since there is no dispute about the nature of the deposit which was paid and received as share deposit money reflected in the balance?sheet as at 30‑6‑1999 noticed by the Assessing Officer during the wealth tax assessment proceedings of the directors, the crucial aspect to be appraised is whether the information coining into possession of the Assessing Officer was definite information which had been concealed‑by the appellant. Going by the facts as narrated by the Assessing Officer on the basis of documents etc. share deposit money received for an amount of Rs.748,000 had been admitted declared as per the balance‑sheet as on 30‑6‑1999 on the basis of which Assessing Officer assumed that such amount having been brought forward must have found its place in the balance‑sheet as on 30‑6‑1998. However, there is no discussion of the facts of its declaration or mention in the show‑cause notice for conclusion drawn after considering reply by the appellant whether the amount representing share deposit money received in cash was not declared or concealed. The Assessing Officer has thus altogether ignored the aspect of assumption of jurisdiction under section 65 of the Income Tax Ordinance. Apparently in the process of proceedings he lost sight of the varies of the lawful exercise of his jurisdiction under section 65 of the Ordinance, 1979. On his turn CIT(A) summarily disposed of the issue of proceedings under section 65 inasmuch as that since Rs.248,000 exceeding the paid‑up capital was correctly deemed as loan within the ambit of section 12(18) and the explanation tendered by the assessee was rightly turned down, reopening was justified.

10. As is ascertained from the contents of the show‑cause notice jurisdiction under section 65 was assumed on the ground that since amount exceeding authorized capital was to be treated as loan being chargeable as deemed income under section 12(18) additional assessment under section 65 of the Income Tax Ordinance was thus warranted. Evidently both the Assessing Officer as well as the CIT(A) did not consider and adjudicate the objection of the appellant pointing out the bar for invoking provisions under section 12(18) in view of the provisions of section 80C(4). Both the authorities fell in error. The CIT(A) particularly after mentioning the ground No.3 in the opening para. of the impugned order dated 29‑5‑2000 has failed to dispose of the specific ground.

11. For argument sake even if it is presumed that Assessing Officer has made additional assessment under section 65 to tax the deemed income which had escaped assessment or the total income of the assessee and tax payable by him had been assessed or deemed to have been assessed or determined under section 59(A) every action is subject to the provisions of subsections (2), (3) and (4) of section 65 of the Ordinance. It is considered advantageous to reproduce the provisions contained in subsection (2) of section 65 as under:‑‑‑

(2) No proceedings under subsection (1) shall be initiated unless definite information has come into the possession of the (Deputy Commissioner) (and) he has obtained the previous approval of the Inspecting (Additional Commissioner) of Income‑tax in writing to do so.

(Explanation.‑‑‑As subsection, "definite information" includes information in respect of the sale and purchases, made by the assessee, of any goods, and any information regarding acquisition, possession or transfer, by the assessee, of any money, asset or valuable article, or any investment made or expenditure incurred by him).

A plain reading of the provision quoted above makes it abundantly clear that Assessing Authority has to satisfy the criteria laid therein. Notwithstanding the fact that action taken is within the framework of the provisions of section 65, or not there is no discussion whatsoever about the viries of the proceedings which have been duly challenged by the appellant. Similarly, in case, the objection of the appellant regarding immunity of proceedings under section 65 in view of subsection (4) of section 80C was not legally acceptable it should have been at least discarded after referring to the contentions and provisions of law. In the facts and circum?stances mentioned above we have no hesitation to hold that the orders of the authorities below are not speaking orders on vital legal issues.

12. As far as reliance by the Assessing Officer on reported case 2001 PTD (Trib.) 2880 is concerned the Assessing Officer has neither made an attempt to correlate the facts of the two cases nor appreciated the findings of the ITAT as a whole. A bare reading of the ITAT judgment shows that issues pertained to pronouncement regarding the vesting/taxing powers of tax authorities and jurisdiction to tax a 'particular transaction, discover real nature of transaction and apply correct law so that intention of legislation was fulfilled. In the case in hand the nature of transaction as share deposit money received in cash is not at all disputed. In that event the issue of share deposit money. received in advance for the period as on 30‑6‑1998 and that too exceeding the authorized capital which was enhanced w.e.f. 30‑6‑1998 irrespective of the certificate issued by Deputy Registrar, Securities Exchange Commission, Faisalabad on 16‑3‑2001 had to be appreciated as curative in nature. We have considered various aspects in light of our observations mentioned above and frame issues to be decided as under:‑‑‑

(i) Whether the Assessing Officer to begin with assumed jurisdiction in a rightful manner particularly when objections of the A.R. raised in response to show‑cause notice have not been legally discarded after discussing the same?

(ii) Whether admitted facts of share deposit money, enhancement of authorized capital w.e.f. 30‑6‑1998 by which date the said amount had already been received still renders the excess amount worked out on the basis of authorized capital of Rs.10,00,000 justified?

(iii) Whether the findings of the reported case (2001) 83 Tax 769 (Trib.) were still applicable?

(iv) Whether findings of ITAT in earlier judgment that the directors had advanced loan in the garb of share deposit money particularly in excess of authorized capital were applicable or not?

The findings as highlighted supra regarding the real nature and intention' of the legislation in the facts of the present case inasmuch as that whether the Assessing Authority was competent to invoke jurisdiction under section 65 have not been found relevant on the one hand. On the other hand we have consulted the reported case 2002 PTD (Trib.) 141 whereby it has been held that provision of section 12(18) existing at the relevant time and applicable to the income year pertaining to the assessment year before substitution of the section 12(18), were not attracted because two conditions had to be simultaneously satisfied, first that there was loan received by assessee and secondly that it was claimed and shown by him. It was further held that letter of law in existing provisions of the Ordinance had to be interpreted in the sense in which it was used and could not be ignored as to cause injustice to assessee.

13. As far as issues mentioned at No.(ii), (iii) and (iv) are concerned we find it pertinent to record that issues pertaining to share deposit money, deposited in excess to authorized capital and shares issues subsequently settled through a judgment of .Lahore High Court reported in 2001 PTD 1180 (H.C. Lahore ) from which ITAT benefited for their judgment reported in 2002 PTD (Trib.) 141, have been at rest by Honourable Supreme Court of Pakistan in Civil Petitions Nos.984/L to 988/L of 2001; we deem it proper to reproduce the extracts as under:‑‑‑

"We have considered the arguments addressed at the Bar and have also gone through the available material. The observations made by the High Court in the impugned judgment are to the effect that in all the cases not only authorized capital of the respondents was increased but in fact shares were also issued against the deposits made by the applicants. This situation has not been controverted by Mr. M. Ilyas Khan, learned Advocate Supreme Court appearing for the petitioners Department. So, is the position with regard to judgment of the High Court in CIT v. Crescent Textile Mills Ltd. (1974) 29 Tax 242). We are convinced that the amounts in question were `share deposit money' and not 'loan' for the simple reason that shortly after the termination of the assessment years share capital was increased through resolutions in that regard. As mentioned earlier, the expression `advance' was added to section 12(18) of the Ordinance by the Finance Act, 1998 which became effective for 1‑7‑1998, therefore, even if these amounts were deemed to be advances, the same cannot be treated as `income' on account of non=applicability of the aforesaid amendment.

Before parting with these matters, it may be observed that all concerned are one on the point that when two interpretations are possible in relation, to any provisions in the discipline of taxation, the one favourable to the assessee is to prevail. The learned Members of the Division Bench of the High Court were quite right in reiterating the above principle of law in paragraph 12, already reproduced above, of the impugned judgment. "

14. After having considered various facts and factors particularly the case‑law relied upon by the Assessing Officer and the case relied upon by the learned A.R. of the appellant/assessee and our observations above the impugned orders are not sustainable for the following':‑‑‑

(a) The Assessing Officer failed to assume jurisdiction under section 65 in a lawful manner.

(b) The Assessing Officer failed to reject/rebut the objections raised by the appellant in response to show‑cause notice.

(c) The CIT(A) disposed of the grounds summarily inasmuch as Grounds Nos.2 and 4 have almost been ignored.

(d) The case‑law has been heavily relied upon by the Assessing Officer without drawing a comparison or parallel of the two cases.

(e) The case‑law relied upon by the learned A. R. reported in 2002 PTD (Trib.) 141 has been found applicable on all fours.

15. In view of reasons recorded supra both the orders have been found not sustainable on facts and law. Order accordingly.

C.M.A./M.A.K./273/Tax(Trib.)??????????????????????

Appeal accepted.