I.T.A. No.791/IB of 2003, decided on 7th April, 2004. VS I.T.A. No.791/IB of 2003, decided on 7th April, 2004.
2004 P T D (Trib.) 2074
[Income‑tax Appellate Tribunal Pakistan]
Before Inam Ellahi Sheikh, Chairman and Muhammad Jahandar, Judicial Member
I.T.A. No.791/IB of 2003, decided on /01/.
th
April, 2004. Income Tax Ordinance (XXXI of 1979)‑‑‑
‑‑‑‑Ss. 65, 59A & 59(1)‑‑‑Additional assessment‑‑‑Re‑opening of assessment on the basis of same information available at the time of framing assessment under S.59A of the Income Tax Ordinance, 1979‑‑ Validity‑‑‑Assessing Officer proceeded on the same information which was available to him before passing the order under S.59A of the Income Tax Ordinance, 1979‑‑‑Assessment could not have been completed under S.59A of the Income Tax Ordinance, 1979 as admittedly detailed proceedings had been conducted and notices had been issued to the assessee‑‑‑Same information had been used for reopening the case which was available at the time of original assessment‑‑‑Apparently Assessing Officer was unable to comprehend the correct provisions of law while making the original assessment‑‑‑Assessing Officer had the information about the various transactions and although he considered transactions to be concealment, he still accepted the declared return considering that the return was qualified for acceptance and was immune from exclusion from the Self‑Assessment Scheme‑‑‑Department was unable to point out any provision of Self‑Assessment Scheme under which the Assessing Officer was compelled to accept the declared income in the presence of such information‑‑‑Appeal of the Department was dismissed by the Appellate Tribunal.
Khalid Javed, DR for Appellant.
Ghulam Sarwar and G. Abbas Chatha for Respondent.
Date of hearing: 7th April, 2004.
ORDER
INAM ELLAHI SHEIKH (CHAIRMAN).‑‑‑This departmental appeal is directed against an income‑tax assessee on the following grounds and arises out of an order, dated 1‑9‑2003 recorded by the learned CIT(A)‑I, Islamabad.
"(1) That the order of the learned CIT(A) is bad in law and contrary to the facts of the case.
(2)That learned CIT(A) was not justified to admit new evidence at appeal stage and rely upon it to cancel the assessment.
(3)The learned CIT(A) was not justified to cancel the assessment.
(4)That the learned CIT(A) was not justified in holding that the material which was utilized for additional assessment was already available on record at the time of framing of original assessment.
(5)That the appellant be allowed to alter or amend any ground of appeal if found inadequately worded, in the interest of justice. "
2. The relevant facts in brief are that the assessee filed a return to declare the income at Rs.3,88,000. Such declared Income was said to have been accepted vide an order, dated 12‑10‑2000 recorded under section 59A of the repealed Income Tax Ordinance. 1979 (hereinafter called the repealed Ordinance) although according to the Assessing Officer as appearing in the impugned assessment order under sections 62/65 of the repealed Ordinance, such assessment was finalized under section 59(1) of the repealed Ordinance Subsequently, a show cause notice was issued and the assessee was required to file a return under section 65 of the repealed Ordinance. No return is said to have been filed and the assessee defended his position on the allegations of acquisition and sale of various properties. The Assessing Officer did not accept the explanation in respect of one property titled House No. 222, Street 50, F‑10/4, Islamabad and treated the difference of Rs.16,665,000 between the sale and purchase price of the same property as income in the nature of trade and added the same to the originally assessed income. The learned CIT(A) accepted the assessee's appeal vide the impugned order in the following manner:---
Perusal of record reveals that on information from Director (I&I), Direct Taxes, C.B.R., dated 1999 the appellant was confronted through notices under sections 61 & 62 on 1‑9‑2000 which were replied on 25‑9‑2000 explaining position with documents and considering that the Assessing Officer accepted return under section 59A for the year under appeal per order dated 12‑10‑2000; the Assessing Officer by referring to the said information in the footnote in the said order under section 59A indicated action under section 65, the order under section 65 however mentions of a report from the said Organization, dated 24‑4‑2002 which was not found on record,' also the contents of report confronted, dated 3‑5‑1999 and that confronted after issuance of notice under section 65 are same, also the Assessing Officer in the footnote to the order under section 59A dated 12‑10‑2000 refers to report on record till that date i.e. 3‑5‑1999 and note 24‑4‑2002 for action under section 65. The IAC also granted approval for action under section without considering facts on record; that reopening of assessment under section 65 on the basis of information already on record which was confronted, considered and accepted and without any new and definite information brought on record was merely a change of opinion and is therefore, not maintainable under the law Also the end result of action per order under section 65 was that none of the information of the investigation report was proved except taxing the already considered gain on account of sale of self occupied house as business income which being sole transaction without proving it so from record cannot be held as business being adventure in the nature of trade of the appellant in this background "
3. The learned DR has strongly argued that the learned CIT(A) was not justified to cancel the assessment as there was no change of opinion involved. It was also argued that the First Appellate Authority was not justified to admit a new evidence. However, the learned DR failed to point out any such evidence which has been admitted by the First Appellate Authority. With regard to the finding of the learned CIT(A) that this was a change of opinion, the facts were examined by this Bench. It was found that the Assessing Officer has stated in the impugned order under section 62/65 that he was proceeding on the basis of an investigation report received from the Additional Director, I&I (Direct. Taxes), Islamabad vide No.308, dated 24‑4‑2002 which communicated that the assessee had made a payment of Rs.5,000,000 from ABN Amro Bank to CDA on 6‑10‑1998; the assessee had sold the house already mentioned above for a consideration of Rs.19,250,000 resulting in a gain of Rs.16,650,000 and that the assessee had constructed a building called Victory Plaza in F‑8 Markaz, Islamabad. Sale and purchase of various properties in the years 1986‑87 and 1989 were also reported. According to the assessment order under consideration, statutory notices were issued on 9‑6‑2001 and no response was made. The assessee was confronted with the above facts to which the assessee replied. The reply was generally rejected. However, the addition was only made in respect of the gain on sale of House No.222, Street 50, F‑10/4, Islamabad. It is interesting to note that the assessee has not filed a return under section 65 of the repealed Ordinance, yet the Assessing Officer has chosen to make an assessment under section 62/65 of the repealed Ordinance. Another interesting feature of the order of the Assessing Officer under consideration is that the order is signed by the income/Wealth Tax Officer, Circle‑13, Islamabad although it is supposed to be issued by the office of DICT, Circle‑13, Islamabad as noted at the heading of the Assessing Officer. A copy of the order passed by the Assessing Officer in the original proceedings, i.e., section 59A has also been filed which shows that the Assessing Officer had issued notices to the assessee under section 61 of the repealed Ordinance and there had been proceedings conducted from time to time before the assessment order under section 59A of the repealed Ordinance was passed. A close examination of such order also shows that section 59A has been overwritten over section 62 as is also apparent from the foot note of the same order which reads as follows:‑‑
"The case has been assessed under section 62. There is an information lying on the file about a report received from the date of Intelligence and Investigation C.B.R. Islamabad regarding action to be taken for Income‑tax and Wealth tax assessments pertaining to the year, 98‑99. These shall be taken up after issuance of show‑cause notice under section 65 to be issued to the assessee after the completed assessment for 98‑99. "
It appears to us that the Assessing Officer has proceeded on the same information which was available to the Assessing Officer on 24‑4‑2000 before passing the order under section 59A of the repealed Ordinance. In fact the assessment could not have been completed under section 59A of the repealed Ordinance as admittedly detailed proceedings had been conducted and notices had been issued to the assessee. Also it appears that the same information had been used for reopening the case which was available at the time of original assessment and which had been considered by the Assessing Officer as is obvious from the foot note of the order already reproduced above. It appears to us that the Assessing A Officer was unable to comprehend the correct provisions of law while making the original assessment. He already had the information about the various transactions and although he considered transactions to be concealment, he still accepted the declared return considering that the return qualified for acceptance and was immune from exclusion from the Self‑Assessment Scheme. The learned D.R. was unable to point out any provisions of the Scheme under which the Assessing Officer was compelled to accept the declared income in the presence of such information. In a nutshell, the learned DR is unable to displace the findings of the learned CIT(A). Hence the appeal is dismissed. A copy of this order may be sent to the RCIT, Northern Region, Islamabad.
C.M.A./127/Tax (Trib.)Departmental appeal dismissed