Income Tax Appeal No.453/LB of 2002, decided on 6th September, 2004. VS Income Tax Appeal No.453/LB of 2002, decided on 6th September, 2004.
2005 P T D (Trib.) 1364
[Income-tax Appellate Tribunal Pakistan]
Before Syed Nadeem Saqlain, Judicial Member and Raja Sikandar Khan, Accountant Member
Income Tax Appeal No.453/LB of 2002, decided on 06/09/2004.
(a) Income Tax Ordinance (XXXI of 1979)---
----Ss. 13(1)(b), 65 & 5(1)(c)---Addition---Additional assessment---Affidavit---Addition on account of purchase of car was confronted being not shown in the balance sheet---Assessee submitted that due to financial crises the company could not maintain the said vehicle and the same was sold---Affidavit of the purchaser and sale receipts were furnished---Contention of the assessee was rejected on the ground that vehicle was registered in the name of assessee and addition was made---Assessee contended that affidavit of purchaser which was submitted, Assessing Officer could not reject the same summarily---Validity---Assessing Officer was fully justified to reopen the case in view of the fact that the assessee purchased a car which was duly registered in its name---Assessing Officer had no justification to take the action in view of affidavit filed by the purchaser that the car was sold---Since carstood disposedofbeforetheendofyear,thesamewasrightlynotshowninthe balance sheet---No plausible reason was given by the AssessingOfficertorejecttheaffidavit/salereceiptfiledbytheassessee to prove the disposal of car---Addition made by the Assessing OfficerunderS. 13(1)(b)oftheIncomeTaxOrdinance,1979lackedlegalsanctitywhichwasdeletedbytheAppellateTribunal.
1988 PTD (Trib.) 612 and I.T.A. No.2052/LB of 2003 ref.
1991 MLD 1243 and 2001 MLD 1257 rel.
(b) Income Tax---
----Affidavit---In absence of counter affidavit, the averment supportedby an affidavit are presumed to be true---Statement supported by an affidavit ought to be accepted unless rebutted by another statement on oath.
1991 MLD 1243 and 2001 MLD 1257 rel.
Ahmad Naseer Sh. for Appellant.
Abdul Rasheed, D.R. for Respondent.
Date of hearing: 3rd September, 2004.
ORDER
The titled appeal has been filed by the assessee against an order recorded by the learned CIT(A) Zone I, Lahore relating to the assessment year 1996-97. The appellant has agitated the reopening of the case under section 65 and the addition made by the Assessing Officer under section 13(1)(b) amounting to Rs.6,90,000.
2.The brief facts giving rise to this appeal are that original assessment in this case was finalized at nil income. Later it was observed by the Assessing Officer that the assessee purchased a vehicle Honda Civic bearing registration No.LOZ-999 which was registered in its name on 16-6-1996. Perusal of record revealed that the said vehicle was not shown in the balance sheet. Therefore, the Assessing Officer issued show-cause notice to which no reply was received. The Assessing Officer reopened the case with the prior approval of the learned IAC under section 65. Again notice issued under section 65, no compliance was made by the assessee. Finally the Assessing Officer issued show-cause notice under section 13(1)(b) proposing addition of Rs.6,90,000 on account of purchase of Honda Civic. In response thereto, the learned A.R. submitted that due to financial crises the company could not maintain the said vehicle and the same was sold to one Mrs. Azra Altaf w/o Mian Asif Ali on 26-6-1996. In support of his contention, an affidavit, dated 7-9-1999 of the alleged purchase and sale receipts were furnished. The Assessing Officer rejected the contention put forth by the learned A.R. on the ground that the vehicle stood registeredin the name of the assessee on 30-6-1996 and therefore, addition of Rs.6,90,000 was made under the provisions of section 13(1)(b). The assessee being aggrieved preferred appeal before the learned first Appellate Authority who upheld the treatment given by the Assessing Officer.
3.The learned A.R. for the assessee has submitted that the reopening of the case was not justified by the Assessing Officer. The learned A.R. argued that the original order was passed by the IAC in the capacity of Special Officer assigned under section 5(1)(c), hence the action of the Assessing Officer regarding reopening of the case with the prior approval of IAC is against the law. He contended that approval should have been obtained from the learned CIT. Reliance in this regard was placed on the reported judgment cited as 1988 PTD (Trib.) 612. The following paragraph was referred to by the learned A.R.:--
"13 and 5(1)(c)---Addition---When an Inspecting Assistant Commissioner has been assigned the duties of an Income Tax Officer, with reference to Income TaxOfficer and Inspecting Assistant Commissioner will be deemed to be reference to Inspecting Assistant Commissioner in place of Inspecting Assistant Commissioner---Where in such a case, it was required that with prior approval of an Inspecting Assistant Commissioner was to be obtained, instead of an Inspecting Assistant Commissioner, the Commissioner had to be read---No prior approval of Commissioner having been obtained before making addition in the case, the addition, held should be against the legal requirement and had to be deleted."
ThelearnedA. R.alsopointedoutthatnonoticeundersection 13(2) of the Ordinance was issued by the Department which is mandatory requirement of law, hence the addition made under section 13(1) is liable to be deleted. Reliance in this regard was placed on I.T.A. No.2052/LB of 2003. The learned A.R. also submitted that the car was used by the company only for 15 days and the same was disposed off before the ending of the income year i.e. 30-6-1996. An affidavit of the purchase was submitted before the Assessing Officer to the effect that the car was sold on 26-6-1996 to one Mrs. Azra Altaf w/o Mian Asif Ali. The Learned A.R. for the assessee submitted that the Assessing Officer cannot reject the affidavit filed by the assessee/Company summarily. Reliance in this regard was placed on reported decisions 1991 MLD 1243 and 2001 MLD 1257. It was held in the reported judgments that it is established proposition of law that in absence of counter-affidavit, the averments supported by an affidavit are presumed to be true. Itwasalsoheldthatthestatementsupportedbyanaffidavitoughttobeacceptedunlessrebuttedbyanotherstatementon oath.ThelearnedA.R.submittedthatthecar wasnotshown in the balance sheet sincethesamewasdisposedoffbytheassesseeon26-6-1996 i.e. before the end of the financial year i.e. 30-6-1996 as against its date ofpurchase on 11-6-1996.
4.The learned D.R. on the other hand, submitted that the Assessing Officer was duly justified to reopen the case because the registration of car in the name of the assessee constitutes definite information. He further submitted that the Assessing Officer was fully justified to make the addition since the car purchased by the assessee stood registered in its name as on 30-6-1996.
5.After hearing both the sides and going through the orders passed by the authorities below we find that the Assessing Officer was fully justified to reopen the case in view of the fact that the assessee purchased a car which was duly registered in its name. However, the Assessing Officer had no justification to make the action in view of affidavit filed by the purchaser that the car was sold on 26-6-1996. Since the car stands disposed off before the end of year as on 30-6-1996, the same was rightly not shown in the balance sheet. No plausible reason was given by the Assessing Officer to reject the affidavit/sale receipt filed by the assessee for the disposal of car.
Inthereporteddecision2001MLD1257itwasheldasunder:--
"We do not propose to enter any factual controversy. Nevertheless it is the settled legal position that a statement supported by an affidavit ought to be accepted unless rebutted by another statement on oath. The concerned officer of KDA has been chosen to file an affidavit, and therefore, the factual assertion purporting to contradict the petitioner cannot be accepted."
Under these circumstances the addition made by the Assessing Officer under 13(1)(b) lacks legal sanctity which is hereby deleted. The appeal filed by the assessee is allowed in the above stated manner.
C.M.A./374/Tax (Trib.)Appeal allowed.