Income Tax Ordinance (XXXI of 1979)---

----Ss. 13(1)(aa) & 156---Addition---Permission/approval---Permission was sought by the Assessing Officer to make addition rather than approval---Validity---Words "approval" and "permission" have different meanings and their impact is also quite different---Assessing officer sought permission for addition and the inspecting Additional Commissioner allowed the same---Addition made after seeking permission from Inspecting Additional Commissioner was not tenable in the eye of law---When law requires a thing to be done in a particular manner, that should be done in that manner or not at all---Approval had never been sought nor granted and the permission allowed for making addition was not tenable in the eye of law---Miscellaneous application having been decided purely on the legal ground in favour of assessee, Appellate Tribunal rectified its earlier order and deleted the addition made under S.13(1)(aa) of the Income Tax Ordinance, 1979.

1994 PTD (Trib.) 1288; 2000 PTD 3788 and 1998 PTD (Trib.) 1935 rel.

Syed Abid Raza Kazmi for Appellant.

Mrs. Talat Altaf, D.R. for Respondent.

Date of hearing: 13th August, 2002.

ORDER

SYED NADEEM SAQLAIN (JUDICIAL MEMBER).---Titled miscellaneous application -for the assessment year 2000-2001 has been filed at the instance of the assessee seeking rectification in our earlier order, dated 6-5-2002 passed in ITA No.2008/LB/2002.

2. Briefly stated the facts of the case are that though the Assessing Officer accepted the declared nil income but he made an addition under section 13(1))(aa) since in his view source of investment towards purchase of shop at Katchery Road Daska was not properly explained. The appeal of the assessee before the First Appellate Authority was rejected. On further appeal, the Tribunal set aside the matter and remanded the case back to the Assessing Officer for de novo consideration.

3. Now the assessee through present miscellaneous application has sought rectification in our earlier order, dated 6-5-2002. It has been contended by the learned A.R. appearing on behalf of the assessee/applicant that the Tribunal while deciding the case has inadvertently given no finding on the point of approval for making addition under section 13(1)(aa) which is the subject-matter of the appeal decided by the Tribunal. It is submitted that the Assessing Officer sought permission from the IAC for making addition under section 13(1)(aa) of the Ordinance whereas the condition precedent for exercise of jurisdiction to make an addition under sub-clauses (aa) to (e) of section 13 is to seek approval from the IAC. He further submitted that as per law the Assessing Officer was under legal obligation to seek approval from the IAC for making addition under section 13(1)(aa) and not permission since there is a big difference between the two words "approval" and "permission". In this regard the learned A.R. of the assessee referred to a reported judgment of the Tribunal cited as 1994 PTD (Trib.) 1288 wherein the Tribunal differentiated the meaning of the above two words in the following manner:---

The word Approval is defined asunder:--

In Oxford Dictionary:

"Approval means the act of approving, approval consent"

In Chamber's Dictionary:

"Sanction or ratification"

The word Permission is defined as under:--

In Oxford Dictionary:

"Consent authorization"

In Chamber's Dictionary:

"The act of permitting"

4. It is further submitted that the Tribunal has set aside the case for de novo consideration whereas the basis on which addition under section. 13(1)(aa) made was illegal, ab initio void and entails deletion of the same as has been held by the Tribunal as well as by the Superior Courts in a number of judgments. He also sought strength from a judgment of Lahore High Court reported as 2000 PTD 3788 wherein the august Court held that approval by Inspecting Additional Commissioner as contemplated in proviso to section 13 of the Income Tax Ordinance, 1979 not procedural but a condition precedent for exercise of jurisdiction to make addition under section 13(1)(aa) to (e) of the Income Tax Ordinance, 1979.

5. The learned D.R. on the other hand supported the earlier judgment of the Tribunal and submitted that the Tribunal has already given sufficient relief to the assessee by setting aside of the case and if the assessee has some evidence in his favour, the benefit of-the same will automatically goes to him. He prayed for the confirmation of the Tribunal s order.

6. We have given our anxious consideration to the facts of the case the judgments cited at the bar. We do agree with the contention of the learned A.R. that no finding was recorded on the ground taken by the assessee in respect of approval. The contention of the assessee is correct that the Assessing Officer sought permission and not approval for making addition under section 13(1)(aa) of the Ordinance. The relevant paragraph of the Assessing Officer's letter No. 182, dated 28-12-2001 is reproduced as under:---

"The above said facts and circumstances lead to the conclusion that the assessee has made investment in the purchase of shop amounting to Rs.23,10,000 out of un-explained sources, therefore, it is requested that necessary permission to make the addition under section 13(1)(aa) amounting to Rs.23,10,000 in the total income of the assessee for the assessment years 2000- 2001 may very kindly be granted."

The learned IAC vide his letter No.587, dated 11-1-2002 allowed permission to make addition under section 13(1)(aa). It is also worth nothing that both the authorities below used the word, permission in the subject of their letters which are almost identical. The subject is being reproduced for the sake of convenience:

"Permission to make addition under section 13(1)(aa) of the Income Tax Ordinance, 1979 in the case of Mr. Abu Ali Tehsin, Proprietor Messrs Osama Shoes, Kitchery Road, Daska Assessment year 2000-2001."

7. From the above it is quite clear that Assessing Officer sought permission and the learned IAC allowed permission for making addition under section 13(1)(aa). The Tribunal in its judgment reported as (1998) PTD (Trib.) 1935 differentiated the words "approval" and "permission" and accepted the plea of the assessee that these two words have different connotation and their impact is also quite different. It is also worth noting that in the original proviso which was inserted vide Finance Ordinance, 1980 the words used for invoking section 13(1)(aa) was "approval". The language of the above-said proviso is as under:---

"Provided that in case referred to in clauses (aa) to (e) such income shall not be chargeable to tax unless prior approval of the Inspecting Assistant Commissioner has been obtained."

8. In an other judgment of the Lahore High Court reported as 2000 PTD 3788 the apex Court defined the word "approval" and observed that approval of the learned IAC is a condition precedent for exercise of jurisdiction to make an addition under sub-clauses (aa) to (e) of section 13. The relevant paragraph of the supra judgment is reproduced as under:---

"As observed earlier both the First Appellate Court as well as the learned Tribunal did not address the objection of the assessee and proceeded to maintain the addition which was clearly not warranted by law. An addition requiring the approval of the IAC and made without such approval could not be sustained. It will be seen that the approval of the IAC as contemplated in proviso to section 13 of the Income Tax Ordinance, 1979 is not procedural but a condition precedent for exercise of jurisdiction to make an addition under section 13(1)(aa) to (e) of the Income Tax Ordinance, 1979 is not procedural. It is a condition precedent for exercise of jurisdiction to make an addition under sub-clauses (aa) to (e) of section 13. The absence of such approval clearly renders the addition to be illegal."

9. In view of the above facts and the case-law cited at the bar we are constrained to observe that the words "approval" and "permission" have different meaning and their impact is also quite different. Admittedly the Assessing Officer sought permission and the learned IAC allowed permission, hence addition made by the learned Assessing Officer after seeking permission from the IAC is not tenable in eye of law. It is pertinent to mention here that when law requires one thing is to be done in a particular manner, the same should be done in the same manner, or not done at all. Since in this case permission was sought and permission was granted, we have no hesitation in observing that approval in this case has never been sought nor granted and the permission allowed for making addition is not tenable in the eye of law.

10. Since miscellaneous application is decided purely on the legal ground in favour of the assessee, we would like to rectify our earlier order, dated 6-5-2002 and the directions given in our order i.e. set aside the addition made under section 13(1)(aa) is hereby modified and the same should be taken as deleted.

11. Resultantly, the miscellaneous application succeeds accordingly.

C.M.A./625/Tax (Trib.) Application succeeds.