MESSRS SCHOWK INTERNATIONAL (PVT.) LTD. VS COMMISSIONER OF INCOME-TAX
2002 P T D 498
[Lahore High Court]
Before Jawwad S. Khawaja and Mansoor Ahmed, JJ
Messrs SCHOWK INTERNATIONAL (PVT.) LTD.
versus
COMMISSIONER OF INCOME-TAX
P.T.R. No .5 of 1995, decided on 16/07/2001.
(a) Income Tax Ordinance (XXXI of 1979)---
----S.136(2)---Reference to High Court---Question of law---For referring a question of law it is necessary that such question must arise out of order of Tribunal.
(b) Income Tax Ordinance (XXXI of 1979)---
----S.136(2)---Reference to High Court---Question of fact---Valuation of property---Question relating of property being a question of fact could not be raised by twisting the expression and language.
(c) Income Tax Ordinance, (XXXI of 1979)---
----S.136(2)---Reference to High Court---Reference application was dismissed in limine by the High Court as question proposed did not arise out of the Tribunal's order and some of the questions related .to the factual controversy in respect of valuation determined by the Income Tax Department.
Maqbool Elahi Malik for Petitioner.
Ch. Muhammad Saleem for Respondent.
ORDER
MANSOOR AHMED, J.---The assessee seeks a reference under section 136(2) of the Income Tax Ordinance, 1979 and in that he formulates the, questions of law which are enumerated as under:
(i)Whether in the facts and circumstances of the case the I.T.O. had. the jurisdiction to frame assessment on 3-5-1993 on the basis of original return dated 10-10-1989 or he was bound by law to make the assessment on the basis of revised return, dated 30-4-1992 and if so whether a consequential order passed by C.I.T. (Appeals) and Income-tax Appellate Tribunal without jurisdiction.
(ii)Whether the order of the I.T.O. for the assessment year 1990-91 was bad in law for adopting calender as the assessment year when no business or professional income are declared or assessed in the case of assessee and if so whether the appellate order passed in pursuance thereto were illegal and violative of section 2(26)(b) of the Income Tax Ordinance, 1979.
(iii)Whether the sale transaction, dated 5-1-1989 concluded and executed by an A.O.P. could be lawfully assessed in the hands of the petitioner company incorporated under Companies Ordinance, 1984 on 14-1-1989?
(iv)Whether the assessment order, dated 3-5-1989 passed by the I.T.O. was violative of the mandatory requirements of section 13(2) of the Income Tax Ordinance and if so whether the proceedings initiated on 10-4-1992 after obtaining the approval of Income-tax Appellate Commissioner (IAC) on 8-4-1992 were sheer farce and formality and if so whether the price of the plot determined by I.T.O. as such was violative ;of the said provisions of law?
(v)Whether the I.T.O. was legally justified to determine the value of the plot in question at such a exorbitant level by ignoring the registered deed dated 5-1-1989, the decision of Income-tax Department in vendor's case regarding this very, sale, the C.B.R.'s instructions, dated 22-9-1980, local and district authorities valuation fixed for the purpose of collection of, the sales tax and the stamp duty and also by ignoring the law laid down by the superior Courts and the Tribunal itself regarding the registered sale-deed?
(vi)Whether the I.T.O. and appellate forums were justified in law to rely upon other sales without considering the size location. Commercial potential and restriction imposed upon the construction of plaza ac the site and if so whether the parallel sales could be used by I.T.O. without allowing the assessee to controvert the same and to produce the other relevant material in support of the case?
(vii) Whether I.T.O., C.I.T. (Appeals) and the Tribunal were justified to adopt imaginary and fanciful value of plot in dispute without disclosing any reliable data or basis to justify the price of the land adopted by them in this case.
(viii) Whether in the circumstances and the facts `of the case the learned Tribunal -was justified to disallow the additional ground urged before it and also to dismiss the application for rectification moved by the assessee before it.
(ix)Whether the impugned order passed by Tribunal were illegal inasmuch as it ignored the provisions of Qanun-i-Shahadat which made the sale-deed relevant-and also created a presumption of correctness in its favour and also the principles of Islamic jurisprudence governing such sales.
(x)Whether the order passed by the Tribunal in this case was legally sustainable and as to whether it was riot based on any legal evidence and was, therefore, liable to be set aside.
2. Background and the facts of the case are that assessee/applicant is a private limited company. It had submitted its return for the assessment year 1990-91 'showing nil income. The return was accompanied with a balance-sheet for a period ending on 31-12-1989. Perusal of the balance-sheet revealed that a piece of land was purchased by the company out of loans from the two directors and share-holders who were husband and wife. Later another return was filed for the period ending on 30-6-1989, again showing nil income for the period. It was stated that no business was carried on by the company since its incorporation on 14-1-1989 till .30-6-1990. It was declared in this return that a marriage hall on the demised property/plot was under construction. The Assessing Officer sought the explanation of the assessee relating- to the charge of income from 31-12-1989 to 30-6-1990 and the explanation advanced by the assessee was discarded by him and he proceeded to frame assessment keeping tin view the income year as declared in the return filed on 10-10-1990 for the period ending on 31-12-1989.
3. The plot a shown in the return and particulars whereof were provided -by the assessee was a property known as 9-Egerton Road, Lahore having an area of 17 Kanals, 3 Marlas and 189 Sqr. Ft. The assessee-Company disclosed that this plot was purchased by the company from Messrs Hatta Construction Company on 5-1-1989, through a registered sale-deed of the same date for Rs.2,23,50,000. Besides this a sum of Rs.25,36,311 was shown to have been incurred from stamp duty and other incidental charges. The declared value of the plot was rejected by the Assessing Officer taking it as understated value and after necessary inquiry adopted the cost of land at Rs.2,25,000 per Maria. Thus the total value of the plot worked out by the Assessing Officer was Rs.7,73,62,000. The difference worked out by the Assessing Officer between the declared value and estimated value, was Rs.5,50,12,000. This differential amount was assessed in the hands of the assessee company under section 13(1)(d) of the Income Tax Ordinance, 1979 as income from undisclosed sources.
4. The assessee-company filed an appeal before the Commissioner of Income-tax (Appeals) urging that the estimated value worked out by the Assessing Officer was without any basis and that there was no legal justification for discarding the price mentioned in the registered sale deed. It was also submitted that the parallel cases referred by the Assessing Officer to compare the market value of the same properties was not a proper mode. That the properties in those cases were not parallel, in nature. It was also submitted that assessee-company was not provided adequate and reasonable opportunity of hearing. It was also emphasized that the sale price of the plot by Messrs Hatta Construction Company was declared in their own return for the assessment year 1989-90 and it was accepted by the department. The Commissioner of Income-tax (Appeals) through a detailed order rejected all the pleas of the Assessee-company. However, partial relief was allowed to the Assessee-company by reducing the price of Rs.2,25,000 per Marla to Rs.1,70,000. The Assessee-company was dissatisfied by the order of C.I.T. (Appeals) and filed second appeal before the' Income-tax Appellate Tribunal. It would be relevant to point out that the department has also filed an appeal challenging the reduction of value per Marla by the First Appellate Authority. Both the appeals were disposed of by the Income-tax Appellate Tribunal vide its consolidated order, dated 17-8-1994. The assessee filed a reference application under section 136(1) of the Income Tax Ordinance before the Income-tax Appellate Tribunal, seeking the reference to be made to the High Court propounding the same questions which have been enumerated in the present petition. This reference application was rejected by the Income tax Appellate Tribunal vide its order, dated 26-2-1995 observing that some of questions did not arise from the order and other questions were factual in nature. Thus those were not the questions of law and were not referable to the High Court.
5. Arguments d heard. The learned counsel for the petitioner reiterated his arguments and pleas which were advanced before the Income-tax Appellate Tribunal.
6. We have examined the proposed questions of law, and are not persuaded to hold, that the questions suggested by the petitioner are in any manner substantial Questions of law. The questions predominantly related to the valuation of the property and it being primarily a question of fact did not merit consideration. However, examining the proposed questions we find that question No. 1 did not arise from the order of the Tribunal as it was never held by the Tribunal that revised return for the year 1990-91 was filed by the Assessee-company in compliance to the notice of the Assessing Officer. For urging a question of law it is ecessary that such question must arise out of order of Tribunal. This question does not arise out of the order of the Tribunal, therefore, it did not merit any consideration. Likewise the proposed Question No.2 did not arise out of the order of the Tribunal nor any finding was recorded giving rise to any such question. Considering Question No.3 we could not observe any finding of the Tribunal relating thereto nor it appears to have been raised before the Tribunal. Accordingly this question is also not tenable. Question No.4 was examined in the light of the judgment of the Tribunal and it transpires that no part of the judgment of the Tribunal gives rise to such issue, therefore, it does not arise out of the order of the Tribunal. Question No.5 in substance relates to the valuation of property and substantially it being a question of fact cannot be raised bi twisting the expression and language. Similar is the Question No.6 which again is relatable to the question of valuation. We are of the considered view that the question of valuation being that of a question of fact cannot be raised through tapestry of language and expression. Question No.7 is also relatable to substantial question of valuation. It is being raised to call into question the finding of fact in respect of valuation. It did not give rise to any substantial legal question. Therefore, it has no worth. Question No.9. does not arise out of the order of Tribunal. Similarly Question No.10 does not arise out of the order and it is base on misappreciation and the proposition which is being raised is alien to the order passed by the Tribunal.
In view of our finding that some of the questions proposed by the assessee do not arise out oh the Tribunal and some of the questions relate to the factual controversy in respect of valuation determined by the D Income-tax Department, we are not inclined to admit this reference application for regular hearing. Accordingly the same is dismissed in limme.
C.M.A./M.A.K./S-337/L Application dismissed