2007 P T D (Trib
2007 P T D (Trib.) 2446
[Income-tax Appellate Tribunal Pakistan]
Before Munsif Khan Minhas, Judicial Member and Muhammad Faiyaz Khan, Accountant Member
I.T.A. No. 213/LB of 2003, decided on 11/05/2007.
Income Tax Ordinance (XXXI of 1979)---
----S. 13(1)(aa)---Addition---Definite information---Addition on the basis of Inspector's report that show room/shop had been completed on 30-6-1998---Validity---Inspectors report transpired that no definite information had been brought on record that the show room/shop was completed on 30-6-1998---No single piece of documentary evidence was produced by the. Inspector whereas assessee had produced copy of registered Iqrar Nama between assessee 'and contractor---Valuation Certificate given by the approved Architect, wherein it had been certified that up to 30-6-1998, only foundation-work was conducted---Nothing had been confronted to assessee, except. sketchy Inspector's report, which had been made the basis for action under S.13(1)(d) of the Income Tax Ordinance, 1979---Nothing was in possession of Assessing Officer for action under S.13(1)(d) of the Income Tax Ordinance, 1979---Assessing Officer was guile unjustified in making valuation of incomplete show room/shop terming it a completed one without documentary evidence---In the presence of solid documentary evidence, provided by the assessee in support if his stand, addition was not warranted---First Appellate Authority had rightly deleted the addition with the observation that "the Assessing Officer had failed to disclose that definite information on the basis of which it was presumed that the assessee had completed show room/shop up to 30-6-1998 except that sketchy report of Income Tax Inspector---Finding of First Appellate Authority were confirmed by the Appellate Tribunal in the circumstances.
Ghulam Kasim Hussain, D.R. for Appellant.
Mumtaz Hussain, Khokhar for Respondent.
Date of hearing: 2nd May, 2007.
JUDGMENT
MUNSIF KHAN MINHAS (JUDICIAL MEMBER).---Titled appeal pertaining to the assessment year 1998-99 has been lodged by the Revenue/Appellant against the impugned order, dated 8-10-2002 passed by the learned CIT/WT (Appeals), Multan on the ground that he was not justified to delete the additions made under section 13(1)(d) without evolving any cogent reason.
2. Learned counsel for both the parties have been heard.
3. Brief facts of the case are that no suo motu return was filed. However, in response to notice under section 56, return declaring income from house property at Rs.34,605 was filed for the year under appeal. On requisition, learned A.R. submitted wealth statement as on 30-6-1998 and wealth reconciliation statement w.e.f. 1993-94 to 1998-99. Total declared value of all movable and immovable assets was shown at Rs.226,680. In the liability portion, the assessee declared security of tenant at Rs.10,00,000. On 13-5-1999, written reply along with copy of agreement between Muhammad Akram (assessee and Rana Muhammad Luqman (contractor) for the construction of show room/shop namely Aamir Brothers, Chowk Fawara, Multan was submitted by the assessee. mentioning date of agreement of construction as 5-5-1998 and admitted the construction of show room/show upto foundation level. All this is mentioned in the .assessment order. Finding total value of construction declared at Rs.208,160 to be understated and considering completion .of construction work on the total covered area of 5494 upto 30-6-1998, the Assessing Officer deputed Circle Income Tax Inspector who submitted this report, dated 4-9-1998 that Mr. Muhammad Akram (assessee) had constructed newly purchased property with A-One construction material. In this way local enquiry revealed completion of construction work during June, 1998 as per Assessing Officer. Later on statutory notice under section 144(c) was issued by the Assessing Officer to the assessee/landlord of property vide No.240, dated 15-12-1998 calling for NTN/GIR No. During the course of proceedings, the assessee furnished Iqrar Nama and Architect Certificate, dated 28-1-1998 made both with landlord and construction contractor, dated. 5-5-1998. Dislodging the above documents and terming declared cost of construction to be too low, the Assessing Officer issued notice under section 13(2) and show-cause notice under section 13(1)(d), dated 26-6-2001 disclosing his intention as under:-
"The wealth statement filed by you shows that the value of 9 marla plot located at Mohallah Mai Meherban, Multan and cost of construction for covered area of 5494 sq. ft. is highly understated. The cost of acquisition of plot and cost of construction of building is determined as under:--
| (i) Plot at Mai Meherban, Multan | Rs.306,450 |
| (ii) Cost of construction of building @Rs.300 per sq. ft. | Rs.16;48,200. |
The understatement in the value of plot and construction comes to Rs.15,08,140. By this notice you are provided an opportunity to explain your position as to why not an addition under section 13(1)(4) of the Income Tax Ordinance, 1979 be made in your income for assessment year 1998-99."
4. In response to the above, the assessee tendered his reply agitating Inspector's report and provided documentary evidence i.e. registered construction agreement with contractor, Certificate of Architect and details in respect of value of 9 marla plot. It was also pointed out by the assessee that the same value has been declared in the reconciliation statement for the assessment year 1997-98, whereas, notice under sections 13(2) and 13(1)(4) has been given for the assessment year 1998-99 which is tenable. However, dissatisfied with the reply of the AR of the assessee and after getting approval under section 13(1)(d) from concealed IAC, Assessing Officer made assessment as under:--
| (i) Understated valuation of pot | Rs.68,100 |
| (ii) Understated valuation of construction | Rs.14,40,040 |
| Total addition under section 13(1)(d) | Rs.15,08,104 |
5. Being aggrieved with the treatment meted out to the assessee, an appeal was lodged with the learned CIT(A), who deleted tie addition made under section 13(1)(d) of the repealed Ordinance being convinced with the arguments supported with documentary evidence, produced by the assessee. This has aggrieved the Revenue to come up in second appeal before us.
6. We have heard the arguments of rival parties and also perused the orders of the authorities below as well as record. From the order of assessment, it is revealed that the Assessing Officer has made impugned addition under section 13(1)(d) by observing that the show room/shop has been completed on 3.0-6-1998. He has based his action under section 13(1)(d) merely on ITI report. A bare reading of said ITI report transpires that no definite information has been brought on record that the show room/shop is completed on 30-6-1998. In this respect, no single piece of documentary evidence was produced by the ITI. Whereas, learned AR of assessee has produced copy of registered Iqrar Nama between assessee and contractor. Valuation Certificate given by the approved Architect, wherein it has been certified that upto 30-6-1998, only foundation work was conducted. It is also observed that during the proceedings of the case and particularly in reply of notice under section 62, as well as 13(1)(d) & 13(2), assessee has requested the Assessing Officer to disclose the evidence in possession of Assessing Officer that show room/shop has been completed on 30-6-1998 as alleged. But nothing has been confronted to the assessee, except sketchy ITI report, which has been made basis for action under section 13(1)(d). For the foregoing, we arc constrained to observe that nothing was in possession of the Assessing Officer for action under section 13(1)(d), therefore, he was quite unjustified in making valuation of incomplete show room/shop terming it completed one without documentary evidence. In the presence of solid documentary evidence, provided by the assessee before the Assessing Officer in support of his contention, addition under section 13(1)(d) is not warranted. Learned CIT(A) has rightly deleted the said impugned addition after going through the facts as well as documentary evidence with the observation that "the Assessing Officer had failed to disclose that definite information on the basis of which it was presumed that the assessee had completed show room/shop upto 30-6-1998 except that sketchy report of ITI". We find no legal flaw in the finding of the learned CIT(A), which are hereby confirmed, being well reasoned.
7. Departmental appeal fails.
C.M.A./126/Tax(Trib.)Order accordingly.