I.T.As. Nos.573/KB and 574/KB of 2005, decided on 27th June, 2005. VS I.T.As. Nos.573/KB and 574/KB of 2005, decided on 27th June, 2005., 2006 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 862 (2005)

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

----S. 65---Re-assessment proceedings---Proceedings under S.65 of Income Tax Ordinance, 1979 could be initiated only in case where definite information had come into the possession of Deputy Commissioner and that too after obtaining the approval of Inspecting Assistant Commissioner in writing to do so---Letter from Assessing Officer for obtaining the permission and another letter granting permission were on record, but neither mandatory prior_ approval was sought nor approval was granted---Permission was not equivalent to approval and since there was no mandatory approval of Inspecting Assistant Commissioner, addition was not maintainable in law---C.I.T.(A) in circumstances had erred to have not deleted the addition instead of setting aside the same.

1993 PTD (Trib.) 1172; (2005) 91 Tax 462 (Trib.) and 2003 PTD (Trib.) 1238 ref.

(b) Words and pharas---

----"Permission" and "approval"---"Permission" is not equivalent to "approval".

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

Gohar Ali, D.R. for Respondent.

Date of hearing: 25th June, 2005.

ORDER

By this order we would prefer to decide appeals captioned above arising from the order under section 65 of the Income Tax Ordinance, 1979, set aside by the CIT(A) directing to proceed de novo after due consideration to the discussion and providing proper opportunity to assessee of being heard.

2. Perusal of the record shows that vide order sheet entry proceedings were initiated by the ITO on 22-11-2000. The re-assessment proceedings were initiated invoking section 65 of the Income Tax Ordinance, 1979 and due to failure on the part of the assessee to make compliance of the notices, the reassessments were finalized ex parte.

3. The order sheet entry dated 18-1-2001 shows that permission to reopen the case under section 65 of the Income Tax Ordinance, 1979 was sought from the Inspecting Additional Commissioner of Income Tax Sukkur vide ITO's letter No.910, dated 18-1-2001 and permission to reopen the case was accorded vide letter No.1556, dated 23-1-2001. The learned counsel for the assessee/appellant vehemently argued that the matter has been set aside for the reason that all reassessments have been finalized ex parte without affording an opportunity of hearing but it is apparent from the impugned order itself that the issue regarding the facts of not obtaining approval remained unadjudicated.

4. From a bare reading of section 65, it appears that the proceedings under section 65 can be initiated only in case definite information has come into the possession of the Deputy Commissioner and that after obtaining the approval of the IAC in writing to do so. The letter from the Assessing Officer for obtaining the permission and another letter granting permission is on record. Neither the mandatory prior approval was sought nor approval was granted. It is a settled law that permission is not equivalent to approval and since there is no mandatory approval of the IAC, we find that the addition is not sustainable in law and in the present circumstances the learned CIT(A) erred to have not deleted the addition instead of setting aside the same. Reliance in this context is placed on reported judgments i.e. 1993 PTD (Trib.) 1172, (2005) 91 Tax 462 and 2003 PTD (Trib.) 1238 at page 1242A. In the circumstances supra, the appeals preferred by the assessee stands allowed.

5. Consequently the order invoking section 65 stands annulled.

H.B.T./472/Tax (Trib.)Appeal allowed.