I.T.As. Nos.3324/LB, 3325/LB of 2004, 5311 and 5312 of 2005, decided on 3rd March, 2007. VS I.T.As. Nos.3324/LB, 3325/LB of 2004, 5311 and 5312 of 2005, decided on 3rd March, 2007., 2007 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 2084 (2007)

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

----S.19---Income from house property---Annual letting value---Estimation of---Assessee contended that admittedly, declared rental receipts being supported by rent deeds had always been accepted in the previous assessment years and that neither any material had been placed on record to justify the quantum of Annual Letting Value nor the contents of any enquiry report of the Circle Inspector had been confronted---Validity---No justification existed for deviating Prom, the previous history as the Assessing Officer had not brought on record any material evidence to establish that property had been let out at a higher rent---Order of the First Appellate Authority was vacated by Appellate Tribunal and Taxation Officer was directed to accept the declared Annual Letting Value.

1992 PTD (Trib.) 161 rel.

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

----S.11---Penalty for concealment of income etc.---Penalty order being 'without lawful. ,jurisdiction was deleted by the Appellate Tribunal as the order of First Appellate Authority, on the basis of which penalty was imposed, was vacated by the Appellate Tribunal.

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

----Ss.116, 58(1) & 62---Imposition of penalty after notice of hearing etc.---Limitation---Notice under S.116 of the Income Tax Ordinance, 1979 for non-Piling of wealth statement was issued on 19-6-2000 and the penalty proceedings, if at all to be based on said notice, could not be imposed later than 30-6-2000 as provided by proviso to S.116 of the Income Tax Ordinance, 1979 and imposition of penalty on 30-6-2004 was in excess of lawful jurisdiction---First Appellate Authority confirmed that no notice under S.58(1) of the Income Tax Ordinance, 1979 was issued during the re-assessment proceedings and the penalty had been imposed on the basis of notice under S.116 of the Income Tax Ordinance, 1979 issued at the time of original assessment which was hit by limitation on 30-6-2002---First Appellate Authority had rightly deleted the penalty order which was upheld by the Appellate Tribunal and Departmental appeals were dismissed.

Sohail Mutes Babri, I.T.P. for Appellant, (in I.T.As. Nos.3324/LB and 3325/LB of 2004).

Manroor Hussain Shad, D.R. for Respondent (in I.T.As. Nos.3324/LB and 3325/LB of 2004).

Manzoor Hussain Shad, D.R. for Appellant (in I.T.As. Nos.5311/LB quid 5312/LB of 2005).

Sohail Mutee Babri, I.T.P. for Respondent (in I.T.As. Nos.5311/LB and 5312/LB of 2005).

ORDER

Out of these four appeals, two have been filed by the assessee against the impugned order of the learned CIT (A) dated 5-3-2004 for the assessment years 1997-98 and 1999-00 on the common ground that the estimated A.L.V. in respect of two properties being Property No.42/43; Gulberg-II and 14-Empress Road, Lahore have wrongly been confirmed by the learned CIT(A) while the remaining two appeals have been filed by the Department against the consolidated impugned order dated 20-6-2005 for the assessment years 1984-85 and 1997-98 deleting the penalty imposed under section 111 of the repealed Ordinance, 1979 for the assessment year 1984-85 and under section 110 of the repealed Ordinance, 1979 for the assessment year 1997-98.

We have heard the learned Representatives for both the' patties and have also perused the impugned order of the learned CIT (A) and the assessment orders.

Regarding the appeals filed by the assessee, Mr. Sohail Mutee Babri, representing the assessee has contended that the Taxation Officer without airy .justification has estimated the A.L.V. in respect of above referred properties which has been confirmed by the learned CIT(A). He has contended that .admittedly the declared rental receipts being supported by the rent deeds for the above referred properties have always bean accepted in the previous assessment years. He has contended that no material has been placed on record to justify the quantum of A.L.V. adopted in respect of both the properties neither the assessee has been confronted with the contents of any so-called enquiry report of the Circle Inspector. He has contended that the declared A.L.V. being supported by rent deeds and accepted in the preceding years there was no justification to make such harsh estimation which is without any justification. The learned counsel in this respect has also placed before us the decision of this Tribunal in the case of the assessee for the assessment years 1984-85 dated 4-9-2004 in LT.A. No.5628/LB of 2002 and the decision of this Tribunal reported as 1997 PTD (Trib.) 2203 therein it has been specifically held that the A.L.V. can be determined only where the property is not leased out or else the correct information regarding the tenant is not provided. Like-wise in another decision of this Tribunal reported as 1992 PTD (Trib.) 161 it has been held that the annual rental value has to be fixed keeping in view the reasonable expectation of property to be let out from year to year. It has further been held that, where a property is also under occupation of the tenant and there is law against the ejection of the tenant and restriction of enhancement of rent it could not be said that the property could reasonably be accepted to be let out on a higher rent than what is being paid by the tenant occupying the property.

After considering all these facts and the legal position, we find no justification, deviating from the previous history as the Assessing Officer has not brought on record any material evidence to establish that 13 the property has been let out at a higher rent. We, therefore, vacate the impugned orders of the learned CIT(A) in this respect and the Taxation Officer is directed to accept the declared A.L.V.

Regarding the two appeals filed by the Department against the deletion of penalty we have found that the learned CIT(A) has deleted the penalty under section 111 of the repealed Ordinance for the assessment year 1984-85 as the notice under section 116 along with the order under section 132 dated 15-11-2002 was issued by the Taxation Officer in the light of the order of the CIT(A) dated 18-9-2002 whereas the said order had already been vacated by this Tribunal vide order dated 4-9-2004 in I.T.A. No.5628/LB of 2002 and therefore, the penalty order being without lawful jurisdiction has been deleted.

Likewise the penalty made under section 110 of the .repealed Ordinance for the assessment year 1997-98 has been deleted as the order passed under sections 62/132 on the basis of which the penalty order has been made, is completely silent about any default under section 58(1). The Assessing Officer had to establish default, if any, in the body of the order before proceeding further on the subject-matter whereas he has proceeded in continuity to original proceedings under section 62 where the then Assessing Officer issued notice under section 166 for non-filing of wealth statement under section 58(1). The said notice was issued on 19-6-2000 and the penalty proceedings, if at all to be based on said notice, could not be imposed later than 30-6-2000 as provided by proviso to section 116 of the repealed Ordinance, 1979 and the imposition of penalty under section 110 on 30-6-2004 was in excess of lawful jurisdiction. The learned CIT(A) after perusal of the record has confirmed that no notice under section 58(1) was issued during the re-assessment proceedings and the penalty has been imposed on the basis of notice under section 116 issued at the time of original assessment which was hit by limitation on 30-6-2002.

We are of the view that the learned CIT(A) has rightly deleted the penalty orders for both the years. The impugned orders of the learned CIT(A) are, therefore, upheld and both the appeals filed by the Department are dismissed.

The two appeals Piled by the assesses far the assessments 1997-98 and 1999-00 arc allowed while the two appeals filed by the department for the assessment years 1984-85 and 1997-98 are dismissed for the reasons mentioned above.

C.M.A./63/Tax (Trib.)Order according.