I.T.A. No.675/KB of 2003, decided on 5th December, 2003. VS I.T.A. No.675/KB of 2003, decided on 5th December, 2003., 2004 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 726 (2003)

Income Tax Ordinance (XXXI of 1979)‑‑‑

‑‑‑‑Ss. 13(1)(d), 65 & 80‑C‑‑‑Addition‑‑‑Additional assessment‑‑ Estimation of value of vehicles‑‑‑Purchase of vehicles from Bank in Prime Minister Taxi Scheme on instalments and auction from Customs Department‑‑‑Addition by estimating higher value than the price paid for such vehicles‑‑‑Validity‑‑‑Assessing Officer had riot given any base for proper valuation of both the vehicles‑‑‑Both the vehicles were purchased from the Government‑governed institution and documents were produced before the Assessing Officer who after verifying the evidence completed the assessment‑‑‑No new information was brought on record or received by the Taxing Authority to reopen the case‑‑‑When all the facts and evidence was available on` record, action of reopening the assessment under S.65 of the Income Tax Ordinance, 1979 was not proper specifically when the Inspecting Additional Commissioner had accorded permission only .but had not given approval‑‑‑Addition made under S.13(a)(d) of the Income Tax Ordinance, 1979 was not tenable in the eye of law‑‑‑Appeal of assessee was allowed and both the orders of the officers below were cancelled by the Appellate Tribunal‑‑‑Addition made under S. 13(1)(d) of the Income Tax Ordinance, 1979 was deleted.

2000 PTD (Trib.) 2193; 2002 PTD (Trib.) 337; 1997 PTD (Trib.) 1143 and 2003 PTD (Trib.) 1978 ref.

I. T. A. No. 1961/KB of 2001 rel.

Abdul Tahir Ansari, I.T.P. for Appellant.

Ghulam Shabir Memon, D.R. for Respondent.

Date of hearing: 2nd December, 2003.

ORDER

MUHAMMAD ASHFAQ BALOUCH (JUDICIAL MEMBER).‑ The above captioned appeal has been filed by the assessee against order, dated 9‑1‑2003, relating to assessment year 2000‑2001 passed by the learned CIT(A) Hyderabad. Assessee had agitated on the following grounds:‑‑

That no notice under section 13(1)(d) was issued and received by appellant.

That procedure of addition under section 13(1)(d) was not properly adopted as per decided case. As no approval was obtained from IAC it is no A/C case.

That vehicle Toyota Corolla No.8294 was purchased from Custom Department through Mr. Sahib Zaman for Rs.2,50,000 as it was used and second‑hand and 1988 Model, which was declared in wealth tax return of 1999‑2000 and 2000‑2001 and assessment was also completed but Assessing Officer increased value without any basis and not considered purchase receipt and framed second opinion.

That vehicle Suzuki Swift PG‑4115 purchased in instalments for Rs. 175,000 with accessories of Rs.25,000 from the then Prime Minister Scheme i.e. Yellow Cab.

That this vehicle has also been shown in Wealth Tax return and assessment also completed however due to accident its value declared at Rs.100,000 and not concealed any amount.

That all the documents were submitted before Assessing Officer at the time of hearing.

That in above case statement under section 143(B) was filed as this is a case of petrol pump and action under section 65 is not to be taken as per decision of superior Courts and CIT(A) also not considered the fact of statement under section 143(B).

That reply of notice under section 62 was given on 26‑6‑2002.

2. The brief facts so far as relevant for disposal of this appeal are that assessee an individual deriving income from running a petrol pump. Original income was assessed at Rs.3,58,275 under separate block of income coveted under section 80(c) of the Income Tax Ordinance, 1979. Thereafter Assessing Officer has reopened the case under section 65 on the basis of note received from the CIT(A), Sukkur Zone, Sukkur regarding the valuation of two vehicles (i) Swift Car Regn. No. PG‑4115 value declared at Rs.1,00,000 (ii) Toyotta Corrolla Regn: No. AA‑8294 value declared at Rs.2,50,000. After reopening the assessment, Assessing Officer has made the addition on account of two vehicles amounting to Rs.5,87,000 under section 13(1)(d) of the Income Tax Ordinance, 1979. Assessee being aggrieved with the order of the Assessing Officer, went in appeal before the learned CIT(A) which was set aside. Assessee dissatisfied with the treatment given by both the officers below filed the appeal before this Tribunal.

3. Mr. Abdul tahir ITP, learned Representative of the appellant assessee has argued that the Assessing Officer has reopened the assessment without any justification, only on the basis of note received from the CIT Sukkur. According to learned counsel for the assessee the Suzuki Swift was purchased by the assessee from Bank in the Prime Minister Taxi Scheme on instalment basis for consideration of Rs.1,75,000 with accessories of Rs.25000. As Suzuki swift was damaged in an accident, therefore, its value was declared at Rs.100,000. But Assessing Officer estimated it at Rs.3,37,000. According to him the Toyota Corrola Car No.8294 was purchased from the Custom Department it was old Model of 1988 and used car, therefore, its value was declared at Rs.2,50,000, while the Assessing Officer estimated its value at Rs.600,000. According to learned A.R. all the documents were submitted before the Assessing Officer at the time of original assessment. It is also argued that Assessing Officer has not given any notice under section 13 of the Income Tax Ordinance, ,1979. in support of his arguments learned counsel for the assessee has relied upon (i) 2000 PTD (Trib.) 2193 (ii) 2002 PTD (Trib.) 337 (iii) 1997 PTD (Trib.) 1143 and (iv) 2003 PTD (Trib.) 1978.

4. On the other hand Mr. Ghulam Shabir Memon, learned representative of the respondent‑Department has supported the orders of the officers below and contended that the learned CIT(A) has already set aside the assessment and had given opportunity to the assessee to prove his claim before the Assessing Authority.

5. We have considered the arguments of both the parties and have also perused the orders of the Authorities below and relevant law. From perusal of the impugned order of the learned CIT(A) we have found that the learned CIT(A) has set 'aside the assessment with the following observations:‑‑ .

"However the perusal of assessment order and record shows that the officer has failed to give any base for the proper valuation of the vehicles. The determination of correct value of both the car was not so difficult but it was made cumbersome by making a guess work in adopting the Valuation. In respect of Suzuki Swift car the assessee has stated that the same was purchased from Honourable Prime Minister Taxis Scheme on the basis of instalments. In this regard the correct course for the officer was to have contacted the Bank ' Manager where the assessee has deposited instalments of the vehicles. Bank Manager could have easily given the cost of the vehicles for the purpose of its valuation.

Similarly correct procedure of the adoption of the valuation of Toyota Corolla car was also not taken by the officer. Since the vehicle was purchased from the Custom. Authorities the officer ought to have obtained the detailed regarding purchase of vehicle from the Custom Authorities, Multan and on the basis of information could have approached the Custom Authorities for its proper valuation. But this method was also not adopted and valuation was made without any basis or placing correct evidence on the file. Besides above the officer also failed to make a local enquiry about the proper valuation of the vehicle and the valuation adopted by him was based on without collecting evidence for the purpose of record.

In view of above discussion, it is held that valuation of vehicles taken by the officer was not based on any solid footing. The addition made on account of valuation of vehicles is hereby set aside for de novo proceedings in the matter. The officer is further directed to collect the information from two Authorities as suggested in the above paras. and after obtaining information the matter may also be confronted to the assessee to fulfil the requirement of natural justice.

6. The contention of the learned A.R. that I.A.C. reopened the assessment without any proper justification. This contention has force because from the perusal of above referred order of the learned CIT(A), it appears that Assessing Officer has not given any base for the proper valuation of both the vehicles in question. It is also pertinent to note that both the vehicles were purchased from the Government governed institution and documents were produced before the Assessing Officer who after verifying the evidence completed the Assessment. Thereafter no new information was brought on record or received by the Taxing Authority to reopen the case. In the circumstances supra when all the facts and evidence ‑were already available on record, the action of reopening the assessment under section 65 of the Income Tax Ordinance, 1979 was not proper. Specifically in the circumstances when I.A.C. has only accorded permission but has not given approval. Reliance is placed on I.T.A. No. 1961/KB of 2001.

7. In view of above discussion, addition made under section 13(1) (d) is not tenable in the eye of law. Hence, appeal of assessee is allowed and the orders of the officers below are cancelled. Consequently addition made under section 13(1)(d) of the Income Tax Ordinance, 1979 stands deleted.

8. The appeal succeeds.

C.M.A./1069/(Trib.) Appeal accepted.