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

‑‑‑‑Ss. 13(2) & 13(1)(d)‑‑‑Unexplained investment etc., deemed to be income‑‑‑Double approval‑‑‑By mentioning separately Ss. 13(2) & 13(1) of the Income Tax Ordinance, 1979 in the order sheet in respect of approvals from Inspecting Additional Commissioner, Assessing Officer acknowledged the legal issue of simultaneous two approvals which had supported the objection raised by the assessee that approvals at two steps were required‑‑‑Only one consolidated approval had been obtained and said consolidated approval in place of two separate approvals was not approved.

2000 PTD 439 and 2001 PTD 781 rel.

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

‑‑‑‑Ss. 13(1)(d) & 65‑‑‑Income Tax Rules, 1982, R. 207‑A‑‑‑Addition‑‑ Parallel case‑‑‑Addition by valuing property on the basis of parallel case‑‑‑Validity‑‑‑Addition was made on the basis of parallel case‑‑ Except suspicion there was nothing on record to prove that any consideration which was over and above what had been recorded in the registered deed had ever passed on to the seller from the buyer the appellant/assessee‑‑‑Valuation adopted by the Assessing Officer and its partial decrease at first appeal stage were not maintainable‑‑‑Addition made under S.13(1)(d) was devoid of any legal sanction and was a nullity in the eye of law and the same was deleted by the Appellate Tribunal.  

2002 PTD 71; 2003 PTD (Trib.) 714 and 2002 PTD 2418 rel.

Muhammad Shahid Abbass for Appellant (in I.T.A. No.3139/LB of 2000).

Sheraz Mirza, D.R. for Respondent (in I.T.A. No.3139/LB of 2000).

Sheraz Mirza, D.R. for Appellant (in I.T.A. No.3267/LB of 2000).

Muhammad Shahid Abbass for Respondent (in I.T.A No.3267/LB of 2000).

Date of hearing: 13th January, 2004.

ORDER

EHSAN‑UR‑REHMAN (JUDICIAL MEMBER).‑‑‑The titled cross appeals are directed against the order, dated 29‑4‑2000 passed by the learned CIT/WT(A). The appellant/assessee has called in question the impugned order on legal and factual grounds by challenging the re‑opening under section 65, application of addition under section 13(1)(a) and the application of Rules 207A of the Income Tax Rules, 1982 whereas the assessee and the Revenue both have assailed the modification. The modification in the assessed per square rate of the impugned property, at the learned First Appellate Authority has reduced the rate for the valuation of impugned property from Rs.1000 per sq. ft to Rs. 500 per sq. ft. The assessee is yet not satisfied with this reduction as an alternative to the legal grounds but the Revenue is solely contesting this reduction in assessed per sq. ft. rate.

It is quite pertinent to bring on record that this appeal before us is in consequence of the 2nd round of appeals. As at the end of the first round of appeal the action under section 65 and addition under section 13(aa) were upheld, whereas on the point of addition under section 13(1)(d) the matter was set aside. (The sections referred to this order are of the repealed Ordinance, 1979).

The facts which have given arise to filing of these appeals are that the assessee purchased area on ground floor in Commercial Liberty Market for a sum of Rs.5,45,000. But the Assessing officer by placing his reliance on two cases by giving their NTNs only rejected this declared value of Rs.5,45,000 giving an average rate of Rs. 158 per sq. ft. As in these two cases quoted, the declared per sq. ft. rate was Rs.861 and in the other case it was Rs.1228 per sq. ft., the Assessing Officer by giving the margin for the variation in period of purchase and of the locality, confronted a rate of Rs.1000 per' sq. ft. for valuing the property viz. making of addition under section 13(1)(d) to the extent of statedly suppressed cost of purchase. The assessee is the owner of one half share of the impugned property and exactly the same treatment is accorded in the case" of the other co‑sharer Also. At the first appeal stage the learned CIT/WT(A) reduced to Rs.500 the assessed rate of Rs.1000 for an addition under section 13(1)(d) by the noticing that the cases as quoted by the Assessing officer are not strictly parallel as the year of assessment in these cases has not been confronted to the assessee. The passing of this order has brought both the parties in further in this Tribunal.

The learned AR has been heard who has pleaded before us as under:---

(I) That the addition under section 13(1)(d) is suffering from incurable defects as two separate approvals i.e. one under section 13(2) and the other under section 13(1) have not been obtained, in support of this fact produced the photostat copy of the order‑sheet of the assessment record wherein on 16‑1‑1999 letter was written for approval to determine the value of the property under section 13(2) and also addition under section 13(1)(d) granting and receiving of letter of approval of IAC in reference to earlier entry on 29‑1‑1999. Both these entries have been highlighted by the learned AR. In support of his this contention that double approval was a pre‑requisite and the absence of which has invalidated the addition under section 13(1)(d) and drew the force for this arguments from the reported case as (2000 PTD 439 (Lahore High Court). In this judgment it has been held that two separate and independent approvals of the Inspecting Additional Commissioner are required for making addition under section 13 when the year of assessment is 1986‑87.

(II) The learned AR submitted that obtaining of consolidated approval cannot even legalize the impugned addition under section 13(1)(d) and placed his reliance on the reported judgment with citation as (2002 PTD 71, (Lahore High Court). The fact of consolidated approvals was brought to notice by referring to the action of the Assessing Officer which is also evident from the order‑sheet entries as referred in para. supra.

(III) That on the basis of "value declared in a parallel case, the value declared on the basis of registered Deed cannot be rejected. For his this submission reliance was placed on the reported judgment with citation as (2003 PTD (Trib.) 714) wherein on the basis of majority view the support was sought by the learned AR. In this reported judgment the identical issues have been dealt at length for addition under section 13(1)(d).

(IV) It was submitted that Rule 207‑A of the Income Tax Rules 1982 is retrospective/retroactive is to be applied here. As the value declared by the assessee is a registered purchased value which is in accordance with notified rates for this area which is evident on approval by' Sub‑Registrar by registering the Deed.

(V) As the Assessing Officer failed to bring on record the sufficient evidence to challenge the valuation as recorded in the registered Deed, therefore, the valuation as made by the learned First Appellate Authority is not proper, so the declared value may be accepted.

The learned DR on the other hand has supported the assessment order by submitting that it is a usual practice that, much lesser values are recorded in the registered Deed but failed to controvert the arguments of the learned AR with any case‑law contrary to the case‑law referred by the learned AR.

After hearing the arguments, after carefully going through the case‑law and on perusal of the available information on record. It is very clear from the order‑sheet entries that the Assessing Officer was quite conscious of two approvals which is evident from his writings on the order‑sheet entry, dated 16‑1‑1999. For ready reference the date-wise entries of order‑sheet of 16‑1‑1999 and 29‑1‑1999 are being reproduced as under:‑‑

16‑1‑1999. "Sent letter to the IAC Range‑III to seek his approval to determine the value of the property under section 13(2) and addition under section 13(1)(d) on 29‑1‑1999."

29‑1‑1999. "Letter from IAC bearing No. 1226‑III, dated 29‑1‑1999 received."

From perusal of the above entries it becomes very clear that the legal issue of simultaneous two appeals has been acknowledged by the Assessing Officer with wording of writings of these order‑sheet entries. By mentioning separately the section 13(2) and the 13(1) in respect of approvals from Inspecting Additional Commissioner, it has clearly A supported the objection raised by the learned AR that approvals at 2 steps were required. It is further clear that only one consolidate approval has been obtained and this consolidated approval in place of two separate approvals have not been approved by the Honourable High, Court in the reported judgment with citation as [(2001) PTD 781(Lahore High Court)]. The principal of two separate approvals has been upheld by the Honourable Lahore High Court in the reported judgment with citation as 2002 PTD 439 (Lahore High Court). The Honourable High Court has given the verdict although the statute has been suitably amended for a single approval. But even then the Honourable High Court has upheld the provisions of two separate approvals and disapproved the simultaneous combined two approvals. The principal of determining a parallel case has been well enunciated in the majority decision of this Tribunal with citation as (2003 PTD (Trib.) 714). Keeping in view this majority view in this cited case it could very safely be stated that on the basis of parallel cases quoted by the Assessing Officer, there are simply reasons to suspect as there is nothing on record to prove that any consideration which is over and above what has been recorded in the registered Deed has ever passed on to the seller from buyer the appellant/assessee. On the point of Rule 207‑A of the Income Tax Rules the Honourable Lahore High Court in the reported judgment with citation as 2002 PTD 2418 has held that for making addition under section 13 Rule 207‑A shall be applied as it is remedial retrospective and retroactive.

So keeping in view the discussion supra the case of the assessee before us is clearly covered by the case‑law cited supra and the orders passed by both the authorities below are not sustainable which are vacated. The valuation as adopted by the Assessing Officer and thereafter its partial decrease at the first appeal stage are not maintainable. The addition made under section 13(1)(d) is devoid of any legal sanction behind it which is a nullity in the eye of law, therefore, is deleted. Therefore, the appeal filed by the assessee succeeds whereas the departmental appeal after deleting of the addition in entirety has become infructuous, therefore, is dismissed.

C.M.A./41/Tax (Trib.) Appeal dismissed.