I.T.As. Nos. '1702/LB to 1704/LB of 1999, decided on 6th August, 2002. VS I.T.As. Nos. '1702/LB to 1704/LB of 1999, decided on 6th August, 2002., 2002 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 3107 (2002)

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

‑‑‑‑Ss. 62 & 132‑‑‑Additional assessment ‑‑‑‑Aslah/property disposed of during the year not shown in the wealth statement‑‑‑Same facts and change of opinion‑‑‑Re‑opening of assessment‑‑‑Validity‑‑‑Case could not be reopened/re‑appraised on same facts and as a result of change of opinion‑‑‑No information had been received by the Assessing Officer justifying the reopening of the assessment as warranted by law‑‑ Evidence regarding disposal of Aslah was correct and the appellant was right that the Aslah was disposed of within the assessment year and hence he was correct by not showing the same in wealth statement‑‑‑No addition on this plea could be evolved‑‑‑Assessment order framed under S.65 of the Income Tax Ordinance, 1979 was annulled being illegal by the Appellate Tribunal and assessment order passed under Ss.62/132 of the Income Tax Ordinance, 1979 was restored.

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

‑‑‑‑‑Ss. 65, 59(1) & 13‑‑‑Additional assessment‑‑‑Reopening of assessment in the absence of wealth statement and wealth tax return and material evidence of concealment‑‑‑Validity‑‑‑Wealth statements and wealth tax returns were not available on record and in absence of wealth statement, wealth tax returns and any confession by the assessee prior to reopening of the assessment the Department had no definite material evidence required to reopen the assessment so as to make a case for concealment‑‑‑Department should have possessed definite material evidence and information but the Department had failed to establish concealment as neither the wealth statement was filed by the assessee and until and unless there was record available in the shape of wealth statement/wealth tax return or admission by the assessee regarding his assets at the end of the assessment years how it could be held that there was concealment on simple complaint and direction of any Income‑tax Authority‑‑‑Provisions of Ss.65 & 13 of .the Income Tax Ordinance, 1979 were not attracted at all and a case of concealment could not be made and legally held valid in the eyes of law‑‑‑Appellate Tribunal held that the Department had no legally valid case of concealment, thus, the assessments reopened under S.65 of the Income Tax Ordinance, 1979 were irregular, unfounded and unlawful‑‑‑Assessment orders framed under S.65 of the Income Tax Ordinance, 1979 were annulled being illegal and original assessment orders passed under S.59(1) of the Income Tax Ordinance, 1979 were restored.

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

‑‑‑‑S. 65‑‑‑Income Tax Rules, 1982, R.207‑A-‑‑Additional assessment‑‑ Exchange of property‑‑‑Re‑opening of assessment on the point of valuation‑‑‑Transactions in acquisition were mostly due to exchange of assets which were registered as per District Collector rates‑‑‑Action under S.65 of the Income Tax Ordinance, 1979 could not be taken in view of R.207‑A of the Income Tax Rules, 1982 and lack of definite information as undisclosed/assessed income was not diverted to the acquisition of such plots/assets.

Javed‑ur‑Rehman, D.R. for Appellant.

Mian Ashiq Hussain for Respondent.

Date of hearing: 1st August, 2002.

ORDER

IMTIAZ ANJUM (ACCOUNTANT MEMBER). ‑‑‑All the titled appeals by the Revenue are directed against the consolidated order, dated 12‑1‑1999 passed by the Appellate Additional Commissioner of Income‑tax/Wealth Tax Sahiwal. Deletion of additions made under section 13(1)(d) for the assessment year 1992‑93, addition under section 13(1)(aa) for the assessment year 1993‑94 and direction of restoration of assessment under section 59(1) for the assessment year 1994‑95 have been challenged.

2. We have heard Mr. Japed‑ur‑Rehman, learned representative for the department and Mian Ashiq Hussain, learned authorized representative for the assessee/respondent.

3. Relevant facts briefly are that assessment for the year 1992‑93 originally framed under section 62 after total audit completed at net income of Rs.170,654 was reduced to Rs.122,650 in first appeal. Assessments for the years 1993‑94 and 1994‑95 were completed under Self‑Assessment at net income of Rs.85,000 and Rs.90,000 under section 59(1) respectively. As noted by the Assessing Officer on the basis of complaint and observation of inspection authorities records were scrutinized. A show‑cause notice was issued for action under section 65 confronting the assessee on purchase of Aslah and land measuring 28 Kanals, disposal of property and purchase of plots of different size as per wealth statement as on 30‑6‑1991 and 30‑6‑1992. In addition assessee was confronted on acquisition of agriculture land 68 Kanals; 16 Marlas; of 24 Kanals on 19‑1‑1993 alongwith acquisition till 21st June, 1993. For the assessment year 1994‑95 agriculture land measuring 57 Kanals for Rs.630,000 of Rs.130,000 was paid. As observed by the Assessing Officer explanation furnished inasmuch as that major portion of properties belonged to his brother acquisition was due to exchange of properties etc. was found unsatisfactory. With the approval of IAC notices under section 65 were issued for all the years 1992‑93to 1994‑95. Assessee was again confronted on acquisition of different assets/properties. Reply made has been reproduced on page 2 of the orders under sections 62/65. In nutshell it was contended that since basis of reopening in terms of purchase of Aslah proceedings were initially dropped the same could not be reactivated. Regarding subsequent assessments proceedings were challenged to be illegal and invalid as the documents in the shape of wealth statement relied upon were neither furnished earlier on nor called before the issuance of show‑cause notice. It was emphatically urged that since sources of information which could be termed as definite information were not before the Assessing Officer proceedings could not be initiated under section 65. The Assessing Officer continued the proceedings during which again a reply was furnished which has also been reproduced on pages 3 and 4. Anyhow itdid not find favour with the Assessing Officer. Local enquiries were got conducted and on that basis assessee was confronted on acquisition of various assets. After rejecting explanation/evidence rendered additions were made under different clauses of section 13 of the Income Tax Ordinance, 1979.

4. Assessments finalized by making additions under section 13 as mentioned above which were challenged in first appeal. AAC having reproduced the grounds of appeal, replies of the assessee in response to show‑cause notice as well as in response to call notices under sections 61 and 58(1), grounds of appeals and host of reported case‑law with citations as under:

1994 PTD (Trib.) 1360; 1990 PTD 155 (SC Pak.); 1990 PTD 338; 1995 PTD (Trib.) 580; 1993 PTD 766; 1989 PTD 141 (Kar. H.C.); PLD 1989 Kar. 337 = 1989 PTD 478; 1990 PTD 155; 1990 PTD 338; 1994 PTD 766; 1994 PTD (Trib.) 1360; 1995 PTD (Trib.) 580; NTR 1996 H.C.I. (Sind H.C. Kar.); 1997 PTD (Trib.) 230 and I.T.A. No. 2979/113/95, decided on 29‑11‑1995. Finally disposed of the appeals in the following manner:‑‑‑

"Assessment Year 1992‑93

Original assessment in this case was completed at net income of Rs.75,000. The case was subsequently selected for total audit through computer and the income was assessed at Rs.1,70,654 and subsequently as a result of appeal the income was assessed at Rs.1,22,654. The arguments and the cases cited by the AR and keeping in view the fact that the basis on which the assessment was reopened i.e. non‑showing of Aslaha has been withdrawn and the assessment order is silent in this regard and I find that the reopening is illegal under section 65 of the Income Tax Ordinance, 1979 as the department had not possessed definite information regarding concealment as provided in subsection (1) of section 65 of the Income Tax Ordinance, 1979. The case cannot be reopened reappraisal of same facts and as a result of change or opinion. There no information had been received by the Assessing Officer justifying the reopening of the assessment as warranted by law. I have also perused the wealth statement and reply alongwith evidence submitted by the appellant and it is found that the evidence regarding disposal of Aslaha is correct, and the appellant is right that the Aslaha was disposed of within the assessment year 1992‑93 and hence, he was correct by not showing the same in wealth statement as on 30‑6-1992 therefore, no addition or basis on this plea can be evolved. Therefore, assessment order framed under section 65 is, therefore, annulled being illegal. However, assessment order passed under sections 62/ 132 is restored."

"Assessment Years 1993‑94 and 1994‑95

I have, perused the record and heard the arguments of the A.R and also gone through the ground of appeals therefore, in view the facts and circumstances of the case, it is found that wealth statements and wealth tax returns for both the years vis‑a‑vis 1993‑94 and 1994‑95 are not available on record and therefore, in the absence of the wealth statements. Wealth Tax Returns and any confession by the appellant prior to reopening of the assessment the department had no definite material evidence required to reopen the assessments so as to make a case for concealment. The department should have possessed definite material evidence and information but in this case the department has failed to establish concealment as neither the wealth statement was filed by the appellant and until and unless there is record available in the shape of wealth statement/wealth tax return or admission by the appellant regarding his assets at the end of the assessment years how it could be held that there was concealment, on simple complaint and direction of any income‑tax authority. Therefore, provisions of sections 65 and 13 of Income Tax Ordinance, 1979 are not attracted at all and a case of concealment could not be made and legally held valid in the eyes of law. I, therefore, hold that the department had no legally valid case of concealment, thus, the assessments reopened under section 65 of the Income Tax Ordinance, 1979 are irregular, unfounded and unlawful. Therefore assessment orders for 1993‑94 and 1994‑95 framed under section 65 are, therefore, annulled being illegal. However, original assessment orders passed for both the assessment years 1993‑94 andl 1994‑95 under section 59(1), are restored."

5. Learned D. R. has reiterated that facts of the properties acquired during the relevant periods of the assessment years 1992‑93 to 1994‑95, exchange of properties and advance paid etc. are facts which have not been denied. In view of this Assessing Officer was in possession of definite information due to which approval was granted by the IAC. Thus action under section 65.was lawfully initiated.

6. On the other hand learned AR of the assessee has reiterated the pleadings before both the authorities below inasmuch as that‑‑‑

(a) documents in the shape of wealth statement were neither furnished nor called by the Assessing Officer before issuance of show‑cause notices;

(b) proceedings initiated for purchase of Aslah were dropped as the same weapon had been sold before the close of the accounting period;

(c) there' was no concealment of the properties mostly acquired in exchange except mistake of its, description for the assessment year 1992‑93 which was " explained in detail, therefore, it could not have been made the basis for reopening of the case;

(d) assessments for the years 1993‑94 and 1994‑95 admittedly were framed under section 59(1);

(e) it is a basic principle that valuation is not the subject of taxation because it is income for the investment/expenditure in acquisition of asset which can be taxed.

On the basis of above summarized objections/contentions the AR has emphasized that AAC has exhaustively examined the pros and cons and facts of the case have been fully supported by the case law relied upon. Learned AR has re‑emphasized on appraisal of the facts of exchange pointing out the mistakes as also highlighted by the AAC on pages 6, 7 and 8 of the appellate order and case‑law cited at bar 1990 PTD 115 (SC Pak., 1990 PTD 338, 1989 PTD 141 (Kar. H.C.) and 1995 PTD (Trib.) 580 rightly arrived at the conclusion that jurisdiction under section 65 was not lawfully assumed for all the impugned assessment years. As a result assessment under section 65 for the assessment year 1992‑93 was annulled while order under sections 62/132 for the years 1993‑94 and 1994‑95 framed under section 59(1) restored.

7. We have given a careful consideration to the facts of the case as placed before us in the absence of assessment records and contentions of both the parties. Admitted facts are that assessment for the year 1992‑93 was framed under section 62 after detailed proceedings income was assessed at Rs.170,654 vide order dated 29‑5‑1999. Copies of the wealth statement as on 30‑6‑1991 and reconciliation thereof shows the following properties:‑‑

A.Non‑Agricultural Property:

Wealth statement as on 30‑6‑1992 filed at the time of original assessment indicates the addition of two plots as under:‑‑

(i) 5 Marlas for Rs.17,000.

(ii) 4 Marlas for Rs.14,000.

The position of assets for the assessment years 1993‑94 and 1994‑95 showed exchange of 24 Kanals of inherited land for 72 Kanals 16 Marlas undeveloped land against inherited land of 45 Kanals 12 Marlas duly exhibited as on 30‑6‑1991 then exchange of 5 Marlas of urban plot for 2 Kanals rurual land alongwith exchange of 2 Kanals inherited land for 18 Kanals undeveloped ,land etc. while acquisition of only one property as per agreement in the name of assessee's brother Muhammad Latif pertained to assessment year 1994‑95.

8. In view of the facts briefly stated above we are of the opinion that transactions in acquisition were mostly due exchange of assets as on 30‑6‑1992 which were registered etc. as per D.C. rates. Action under section 65, therefore, could not be taken in view of Rule 207A and lack of definite information as undisclosed/assessed income was not diverted to the acquisition of these plots etc. The matter of acquisition of revolver was dropped by the Assessing Officer himself at the time of assessment it, therefore, could not be made the basis.

9. Having considered the contentions of the assessee we are of the considered view that assessing authority assumed jurisdiction under section 65 for all the impugned years unlawfully. The assessments framed in the facts as well as case‑law on the subject were rightly adjudicated upon by the AAC. We, therefore, uphold the treatment by the AAC Departmental appeals, for all the years under consideration, being devoid of merit are dismissed.

C.M.A./M.A.K./457/Tax (Trib.)Appeals‑dismissed.