I.T.As. Nos.. 1535/LB to 1537/LB of 2001, decided on 21st November, 2001 VS I. T. A. No. 124/LB of 2002, decided on 4th April, 2002, 2002 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 2159 (2002)

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

‑‑‑S.66‑A‑‑‑Powers of Inspecting Additional Commissioner to revise Deputy Commissioner's order‑‑‑Excessive use of electricity as compared to previous year‑‑‑Cancellation of assessment ‑‑‑Validity‑‑ Word "erroneous" as used in S.66‑A of the Income‑tax Ordinance, 1979 included prejudicial to the interest of revenue‑‑‑Error be that of fact or of law, by no means could be stretched to include that with more utilization of electricity the assessee's income had increased‑‑ Cancellation of assessment order was disapproved by the Tribunal and the order of the Assessing Officer was restored.

(1997) 95 Tax 75 (Trib.) and (1984) 48 Tax 34 (H.C.A.J.K) rel.

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

‑‑‑‑Ss.66‑A & 24(c)‑‑‑Powers of Inspecting Additional Commissioner to revise Deputy Commissioner's order‑‑‑Non‑deduction of tax on rent and commission‑‑‑Cancellation of assessment ‑‑‑Validity‑‑ Assessee had deducted and paid tax in respect of rent while the commission had been paid to a person who had paid tax thereon‑‑ Order of the Inspecting Additional Commissioner by no means could be considered as a correct appreciation of the jurisdiction .under S.66‑A of the Income‑tax Ordinance, 1979‑‑‑Cancellation of the order was disapproved by the Tribunal and the order of the Assessing Officer was restored.

1999 PTD 2172 rel.

Munir Ijaz and Shahid Abbas for Appellant.

Mrs. Sabiha Mujahid, D.R. for Respondent.

Date of haring: 4th April, 2002.

ORDER

KHAWAJA FAROOQ SAEED (JUDICIAL MEMBER).‑‑‑Cancellation of order under section 66‑A is challenged. The A.R. while challenging the order pointed out that the proceedings were initiated on the basis of three objections. One regarding electricity was later dropped and the order was cancelled on the basis of remaining two. He narrated the facts regarding all the issues and said that the excessive use of electricity during the year was satisfactorily explained and accepted by the IAC. He further said the other two are regarding non‑deduction of tax under section 24(c) on the rent and commission paid amounting to Rs.1,50,000 and Rs.48,000 respectively. The A.R. said that the departmental objection regarding more consumption of electricity in proportionate to the previous year does not make an order as erroneous. Notwithstanding the above arguments he remarked the assessee had satisfactorily explained his position in the following manner:‑‑

"The company deals with Broiler Breeders. Grand Parents are imported by a few multinational and local companies like Lohman, Hubbard, Arrboracher, Sparrow, and Highline etc. which produce Grand Parents, M/s. Famous Poultry Breeders (Pvt.) Ltd., purchases Grand Parents and nourishes them in the poultry farms. Eggs laid by these parents are first of all sorted out. Fertile eggs are separated. Non‑fertile eggs which are usually 2 to 3% are sold in the market whereas fertile eggs are stored at a constant temperature which is about 100F. Required quantity is taken out of the store and set in the setter. These setters are then put into the hatcher where constant degree of 170E is maintained for 17 and 18 days. Constant verification is provided to the hatcher alongwith light and eggs go on tilting throughout. Meaning thereby that expenditure on running a hatcher would be constant. Moreover, hatcher is used to full capacity because required number of eggs are taken to the hatcher through setter. These setters are put into incubators where they remain for three days. In the incumbator also a constant temperature is maintained. Chicks taken out of the incumbator are then cleaned and are sent to the market after packing."

Regarding two other objections he said that the assessee pays rent in October every year. During the impugned year on 15‑10‑1995 the rent was paid and tax @ 5% was deducted and paid. Similarly, the assessee made payment of the balance rent from October and onwards up to September, 1996 on 7‑10‑1996 on which account tax was deducted and paid in the Government Treasury. He produced before us the proof of payment.

Regarding payment of commission the A.R. said that the same has been paid to a regular tax payee and the department has been provided the proof of the same in terms of his assessment order. The name of the said recipient is Mr. Ahmad Bilal and he has declared commission amount to Rs.140,695 which includes the commission paid by the assessee‑company. The name of said Mr. Ahmad Bilal, amount of commission paid to him, his NTN and address have also been produced to the Assessing Officer at the time of original assessment and to the IAC during the proceedings under section 66‑A. The copy of the same has been produced before this Bench also. The A.R. produced before us judgment reported as (1997) 95 Tax 75 (Trib.) to say that mere disagreement between the officers on result of assessment, quality of assessment comments that better effort could have resulted in better assessment, has no relevance to the jurisdiction available to an IAC under section 66‑A. It can only be invoked where an order is erroneous as well as prejudicial to the interest of revenue. An order by no means can be called as erroneous by saying that electricity consumed during the year was more in proportionate to the earlier years. This is not an error. This is just an opinion, which can easily be substituted by another. There may be some adverse circumstances in which even snore consumption may result in reverse position while with lesser consumption sometime the assessee can have better results. This, however, in any case, are just estimates, mere suppositions and intellectual debates. Such estimates or ideas cannot be made base for invocation of the jurisdiction under section 66‑A. This Tribunal has in a chain of cases decided the issue regarding the word `erroneous' as used in section 66‑A and prejudicial to the interest of revenue. Nowhere such a situation has ever been supported either by the ITAT or the other superior Courts of the country. The judgment referred by assessee's A.R. is after reliance upon a judgment of Azad Jammu and Kashmir High Court reported as (1984) 49 TAX 34 (H.C.A.J.K.), which is a landmark of its time and subsequently a lot of development has been made by the other judicial forums. Nowhere the High Courts have ever supported cancellation of an order on such suppositions and ideas. Error be that of fact or of law by no means can be stretched to include that which more utilization of electricity the assessee income had increased.

Regarding application of section 24(c), the assessee has deducted and paid tax in respect of rent while the commission has been paid to a person who has paid tax thereon. These two objections also were not relevant for cancellation of the order. In this regard, we rely upon the language of section 24(c) as well as the judgment of this Tribunal reported as 1999 PTD 2172 wherein' this issue has been dilated upon in detail. The result is obvious. The order of the IAC by no means can be considered as a correct appreciation of the jurisdiction under section 66‑A. The cancellation of the order is disapproved and the order of the ITO is hereby restored.

C.M.A./M.A.K./353/Tax(Trib.)Order accordingly.