I.T.As. Nos.4061/LB and 4062/LB of 1997, decided on 18th November, 2003. VS I.T.As. Nos.4061/LB and 4062/LB of 1997, decided on 18th November, 2003., 2004 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 1492 (2003)

Per Khawaja Farooq Saeed, Judicial Member and Mazhar Farooq Shirazi, Accountant Member‑‑‑

Income Tax Ordinance (XXXI of 1979)‑‑‑

‑‑‑‑S. 13(1)(d)‑‑‑Income Tax Rules, 1982, R.207A‑‑‑Addition made on the basis of parallel case in violation of R.207‑A of the Income Tax Rules, 1982, was cancelled by the First Appellate Authority‑‑‑Validity‑‑ No addition could be made beyond the document registered on the basis of District Collector notification by the Assessing Officer unless some specific proof came to the knowledge of the department‑‑‑Action of the Government of prescribing a procedure for addition under S.13 of the 1979 was a welcome step and it had controlled a situation which was bringing a bad name and was more of adverse effect than of positive tax recovery‑‑‑Without going into the nicety of amendment and or other such factors Appellate Tribunal held that R.207‑A of the Income Tax Rules, 1982 was applicable even on the pending proceedings‑‑‑Parallel case which factually was not on all fours on the facts and circumstances of the case could also not be of any help in disregarding instructions of the Legislature in terms of R.207‑A of the Income Tax Rules, 1982‑‑‑Appeal of the, department was dismissed by the Appellate Tribunal.  

Messrs Siemen A.G.'s case 1991 PTD 488 rel.

Minority view

Per Mr. Amjad Ali Ranjha, Accountant Member.

Muhammad Asif, D.R. for Appellant.

Muhammad Iqbal Hashmi for Respondent.

Date of hearing: 18th November, 2003.

ORDER

KHAWAJA FAROOQ SAEED (JUDICIAL MEMBER).‑‑‑The two appeals have been filed by the department. They are against deletion of the addition made under section 13(1)(d).

The D.R. says that in the parallel case which has been referred in the order the only difference is that the same is located at a distance of six kilometers off Ferozepur Road while the property under discussion is located at a distance of seven kilometers. The addition, therefore, had rightly been made and should be restored.

The A.R. on his turn added that even this distinction is enough to say that the so‑called parallel case is not relevant on the facts and circumstances of this case besides the referred industry is on South East of the Rohi Drain and the assessee is on North‑West. In addition to above distinction a lot of case law had developed and acceptance of the registered sale-deeds on the basis of Rule 207A as well as earlier judgment of the Supreme Court in terms of Messrs Siemens A.G. reported as 1991 PTD 488 (SC Pak.) and a chain of judgment by ITAT, has become almost obligatory. No addition can be made beyond the documents registered on the, basis of D.C. notification by the DCIT unless some specific proof comes, to the knowledge of the department. This step of the Government of Pakistan of prescribing a procedure of addition under section 13 is a welcome step and it has controlled a situation which was coming as a bad name and was more of adverse effect than of positive tax recovery. However, without going into the nicety of the amendment and or other such factors now that the learned Tribunal as well as the Honourable High Court has held Rule 207A to be as applicable even on the pending proceedings we hold that the order of the assessee was fully justified. A parallel case which factually was not on all fours on the facts and circumstances of this case could also not be of any help in disregarding instructions of the Legislature in terms of Rule 207‑A.

The result of the discussion is obvious. These appeals filed by the department for the two years are of no merit hence are dismissed:

(Sd.)(Sd.)

(Amjad Ali Ranjha)(Khawaja Farooq Saeed)

Accountant Member Judicial Member

As Per. Mr. Amjad Ali Ranjha Accountant Member.

I beg to differ with my learned brother (Judicial Member) regarding rejection of departmental appeal for the following reasons:‑‑

I am sorry to say that my learned brother has completely ignored some very important aspects of the case based on facts, as are discussed below:‑‑

(i) I am of the considered view that facts of case should never' be ignored while relying on the judgments of superior authorities. Facts of this case are that the assessee had purchased 7‑Kanals & 8‑Marlas of land at Ferozepur Road, Lahore at the average rate of Rs.20,270 per Kanal and 26 Kanals, 17 Marlas of land for registered value of Rs.5,35,000 at the average rate of Rs.19,225 per Kanal at 7 KM. Ferozepur Road, Lahore on the left flank of Rohi Nala. Department has cited a parallel case with its NT No. 7‑2‑1716356 of Messrs Dynasty Textile and Dyeing Mills Ltd. which is situated at 6‑KM Ferozepur Road, Lahore at right flank of Rohi Nala measuring 24'‑Kanals of land on 18‑9‑1991 yielding per Kanal rate at Rs.74,916 including registration charges. Now, the assessee under consideration has purchased these lands almost after three or four years after the case cited by the department. Naturally, it would be more developed area for industrial purposes after three/four years as far as the issue of basic infrastructure like metalled road, electricity, disposal and drains and other facilities are concerned. Hence, there is no doubt that the value declared by the assessee at Rs.20,270 per Kanal for the assessment year 1993‑94 and at Rs.19,225 per Kanal relevant to assessment year 1994‑95 is ridiculously low. Hence, I am in favour of confirming the departmental order and accepting the departmental appeal, whereas my learned brother is completely ignoring this important fact of the case and is accepting the ridiculously low value without any valid reasons.

(Sd.)

(Amjad Ali Ranjha)

Accountant Member

As the difference of opinion has arisen between the members of this Bench, hence the case is referred to the Hon'ble Chairman for nomination of a third member to resolve the following question:‑‑

Whether in view of the facts and circumstances of the case, departmental appeals need to be accepted or dismissed?

(Sd.) (Sd.)

(Khawaja Farooq Saeed)(Amjad Ali Ranjha)

Judicial‑Member Accountant Member

MAZHAR FAROOQ SHIRAZI (ACCOUNTANT MEMBER).‑-- The title income tax appeals pertaining to the assessment years 1993‑94 and 1994‑95 have been referred to me by the worthy Chairman for resolving the difference of opinion which arose between the learned Judicial Member and the learned Accountant Member on the issue whether in view of the facts and circumstances of the case departmental appeals need to be accepted or dismissed?

The brief facts giving rise to the present appeals are against the deletion of addition under section 13(1)(d) made by the learned First Appellate Authority. The assessee purchased 7 Kanals and 8 Marlas of land at Ferozepur Road, Lahore at average rate of Rs.20,270 per Kanal and 26 Kanals 17 Marlas land for registered value of Rs.535,000 at the average rate of Rs.19,225 per Kanal at 7 KM Ferozepur Road, Lahore. In view of parallel case the declared rate was rejected and additions under section 13(1)(d) were made which were deleted by the learned First Appellate Authority vide order, dated 17‑6‑1997. The department came up in appeal against the order of the learned CIT(A) before this Tribunal.

My learned brother, the learned Judicial Member vide reasons stated (supra) maintained the order passed by the learned CIT(A) while the learned Accountant Member recorded his disapproval against maintenance of the order passed by the learned First Appellate Authority.

The learned counsel for the assessee has submitted the same arguments which were taken at the time of hearing of appeal and recorded by the learned Judicial Member. The learned DR, on the other hand, has supported the order of the learned CIT(A) for the reasons stated therein.

After hearing both the sides and going through the findings recorded by my learned brothers, the learned Judicial Member and Accountant Member and of the considered view that the learned Judicial Member was justified to reject the departmental appeals in view of the prescribed procedure laid down for addition under section 13. The parallel case was not or all fours on the facts and circumstances of the case and was not of any help in disregarding the instructions of Legislature in terms of Rule 207A. Under these circumstances concur with the view point recorded by my brother the learned Judicial Member and the departmental appeals are dismissed being devoid of merit as per majority view.

C.M.A./54/Tax (Trib)Appeals dismissed.