2008 P T D (Trib.) 154
[Income-tax Appellate Tribunal Pakistan]
Before Jawaid Masood Tahir Bhatti, Judicial Member
I.T.A. No.1266/LB of 2006, decided on 06/07/2007.
(a) Income Tax Ordinance (XXXI of 1979)---
----Ss.13(1)(aa), (d) & (e)---Addition---Assessment year 2001-02---Additions were deleted by the First Appellate Authority with the observation that assessment was made before assessment year 2000-01; that TAS declaration was. also made during assessment year 2000-01 and accepted in good faith; that wealth statement as on 30-6-2000 was compulsory requirement of return filed under Self-Assessment Scheme was accepted in good faith that Return for the assessment year 2000-01 was accepted under S.59(1) of the Income Tax Ordinance, 1979 in good faith, that Prize Bonds were purchased and encashed during 3-12-1988 to 7-3-1995 and thus it was beyond the control of assessee to declare these in wealth statements dated 30-6-1986, 30-6-2000 or 30-6-2001 and that genuineness of gift made on 21-1-1990 had been doubted with the only plea. that stamp paper was purchased on 20-1-1990 and was executed on 1-1-1990 and while doing so Assessing Officer ignored the fact that it was a typing mistake due to which date was endorsed 1st January, 1990 instead of 21st January, 1990---Affidavit of donor had also been ignored---Validity---Genuineness of a document could not be doubted on technicalities---No notice under S.148 of the Income Tax Ordinance, 1979 was issued to the donor nor any cogent reasons were brought on record by which this fact could be doubted that at the time of making gift such amount was available with him or not---Amount declared as cash after sale of jewellery was doubted on the only ground that as per wealth statement on 30-6-1985 assessee was owner of 10-Tolas of gold ornament while he had shown sale of 25-Tolas; Assessing Officer had ignored the affidavit of the mother of the assessee that she had gifted 15-Tolas to her son and the same were sold in 1996---No notice under S.148 of the Income Tax Ordinance, 1979 was issued to goldsmith which was necessary---While making addition under S.13(1)(d) of the Income Tax Ordinance, 1979, element of intangible was ignored which was covered by the addition made in the trading account and assessee was taxed twice---Order of the First Appellate Authority was upheld by the Appellate Tribunal.
2003 PTD 2109; 1988 PTD 227; I.T.As. Nos.5803 and 5804/LB of 2003 and 1996 PTD (Trib.) 334 ref.
2004 PTD (Trib.) 1523 rel.
(b) Income Tax Ordinance (XXXI of 1979)---
----S.130(3)---Form of appeal and limitation---Condonation of delays--Service of notice---Delay in filing of appeal was condoned by the First Appellate Authority on the ground that assessee had established that the service upon the assessee was not proper---Service of demand notice must be on proper person---No limitation against void order---Validity---Held, in revenue matter, prayer for condonation by an assessee/citizen should all the more be considered sympathetically---Appellant was prevented by sufficient cause from presenting the appeal within due time limit and First Appellate Authority had rightly condoned the delay in filing the appeal---Departmental appeal was dismissed on this score also by the Appellate Tribunal.
1986 PTD (Trib) 188; 2004 PTD (Trib.) 1517; 2002 PTD 549 and (1987) 56 Tax 130 rel.
(c) Income-tax--
----Limitation---Condonation of delay---Principles.
2002 PTD 549 and (1987) 56 Tax 130 rel.
Mrs. Sabiha Mujahid, D.R. for Appellant.
Mumtaz Hussain Khokhar and Mrs. Afreen Maqsood for Respondents.
ORDER
JAWAID MASOOD TAHIR BHATTI, (JUDICIAL MEMBER),---Through this appeal, the appellant Department has objected to the impugned order of the learned CIT (A) dated 9-3-2006 for the assessment year 2001-02 on the following grounds:---
(1)That the order of the learned CIT (A), Multan is bad in law and' contrary to the facts of the case.
(2) That the learned CIT (A), Multan was not justified to condone the delay in filing first appeal and to accept the time-barred one.
(3) That the additions made under the various heads of section 13 have been deleted without considering the facts of the case.
(4) That the learned CIT (A), Multan has accepted the revised reconciliation without verification of sources and cogent reason.
(5) That the learned CIT (A), Multan was not justified to accept defected nature of gift deed dated 20-1-1990.
(b) The learned DR representing the Department has asserted the arguments on the basis of above said ground of appeal and has requested for restoration of the assessment order.
On the other hand, Mr. Mumtaz Hussain, Advocate representing the assessee/respondent has contended that appeal filed by the Revenue is illegal, hence not sustainable in the eyes of law, as the appeal in the instant case pertain to the assessment year 2001-02, maning thereby that the same fell within the purview of repealed Income Tax Ordinance, 1979, but the Department erroneously filed this appeal under section 131 of the Income Tax Ordinance, 2001. He has contended that the appeal, in the instant case pertains to the assessment year 2001-02, hence for all intents and purposes, proceedings would be considered to be pending and thus were to be governed by the repealed law. He has in this respect placed reliance ton the decision of Honourable High Court reported as 2003 PTD 2109. In this case, constitutional petition was filed before the Honourable High Court. This issue which came up for adjudication was that revision petition filed against the assessment order under section 138 of the I.T. Ordinance, 2001 was rejected by the Commissioner of Income Tax (Appeals) on the ground that new Ordinance did not provide any provision of revision. It was held by the Honourable High Court that the word "pending" does not mean physical pending but would also include within its definition what is proposed to be filed within unexpired periphery of time and thus held that the order of rejection of revision petition passed by the CIT (A) was without legal basis. The learned counsel has contended that in somewhat similar situation, where Income Tax Act, 1922 was repealed and the Income Tax Ordinance, 1979 was promulgated on 1-7-1979, the Honourable Sindh High Court in the reported judgment cited as 1988 PTD 227 observed as under:---
"The effect of the operation clauses (a) and (i) of sub-section (166) of the Ordinance is that all proceedings including an application for reference to the High Court in relation to the assessment year in respect of which the return of income was filed before July 01, 1979 must be dealt with under the repealed Act as if the Ordinance had not been passed. As a result of above findings, these applications are dismissed as not main tainable. We don't however, make any order as to costs."
Learned counsel has argued that this Tribunal on the basis of above referred decisions while deciding I.T.As. Nos.5803 and 5804/LB of 2003 (assessment years 1996-97' and 1997-98) has held as under:-
"I am constrained to observe that the departmental appeals are liable to be dismissed in limine for the reason that the same were filed under the new Ordinance though assessment years which were subject-matter of appeal pertain to 1996-97 and 1997-98 which were to be governed by the old law."
Learned counsel in this respect has also referred the decision of this Tribunal reported as 1996 PTD (Trib.) 334. Learned counsel has contended that the-Honourable-High Courts have laid down that when law requires something to be done in particular manner, same must be done that manner.
On the facts of the case, learned counsel has contended that the `learned CIT (A) has rightly condoned the delay, because service of demand notice was not proper which according to law was necessary on proper person as has already been observed by this Tribunal in a case reported as 1986 PTD (Trib) 188. He has argued that the question of limitation against order which was not maintainable in the eyes of law does not arise as has been held by this Tribunal in a case cited as 2004 PTD (Trib.) 1517. He has contended that the learned CIT (A) has rightly deleted the additions made under section 13(1)(aa), and 13(1)(e), because investment was made before assessment year 2000-01. TAS declaration was also made by the assessee. Return for the assessment year 2000-01, wealth statement as on 30-6-2000 along with reconciliation statement filed by the assessee were accepted in good faith by the Department, but while making addition of Rs.39,908 under section 13(1)(e), the Assessing Officer has ignored the element of intangible. He has argued that there was no accretion in immovable assets during 30-6-2001. This solid fact is evident from the reconciliation statement already filed before the Assessing Officer. He has submitted that the first wealth statement was filed in 1985. Total assets as on 30-6-1985 were Rs.22.000. Second wealth statement was filed on 30-6-2000 declaring total assets at Rs.4,33,800. Accretion between these two was of Rs.4,11,800. He has in this respect placed before me the reconciliation statement, which is reproduced hereunder:---
| + | - |
| Total assets as on 30-6-00 433,800 | |
| Total assets as on 30-6-85 32,000 | |
| Accretion411,800 | |
| L.B. Capital as on 1-7-85 15,000 | Capital as on 30-6-00100,000 |
| Gift from father (supported by | Purchase of House |
| gift deed and affidavit of | In the name of Minors445,500 |
| Donor | During Asstt. year 90-91 |
| Haji Khurshid Ahmed300,000 | |
| Encashment of Prized | Purchase of House304,800 |
| Bonds80,000 | During Asstt. year 96-97 |
| 3-12-88 to 7-3-95 from SB of | |
| Pak (Multan Branch) | |
| Sales Ornaments on 26-2-96to 28-2-96100,000 | Personal expenditure360,350 during 80-87 to 99-00 |
| Received as gift from mother | Personal expenditure40,000 |
| (Supported by affidavit Mst. | during 00-01 |
| Hanifa Bibi (Donor) | |
| TAS declaration220,330 | Cash 5,000 |
| Income 2000-0176,500 | TAS Tax27,000 |
| Income 86-87 to 99-00 514,850 | Furniture & Fixture24,000 |
| Grand Total1,306,650 | Grand Total1,306,650 |
Detail of TAS Declaration
filed on 25-9-2000
| Sources | Purchase of Properties |
| 1. Gift300,000 | H. N6.1787/65A445,500 |
| 2. Encashment of Prize 80,000 | Basti Ahmed Abad, Multan |
| Bonds | during 90-91 |
| 3. Savings50,000 | (In the name of minors) |
| 4. Sales of Ornaments 100,000 | H.No.410/411-D304,800 |
| 5. TAS Declaration220,300 | Shah Rukan Alam Colony, Multan |
| Total750,300 | 750,300, |
Learned counsel has contended that the investment was made before assessment year 2000-01. TAS declaration was also made during the assessment year 2000-01 and accepted "in good faith. Wealth statement as on 30-6-2000 was compulsory requirement of return filed under SAS was accepted in good faith by the Department. Return for the assessment year 2000-01 was accepted under section 59(1) in good faith. Prize bonds were purchased and encashed during 3-12-88 to 573-95. It was beyond control of assessee to declare these in wealth statements 30-6-85, 30-6-2000 or 30-6-01. Genuineness of the gift made on 21-1-1990 while doing so, he has ignored that it is a typing mistake due to which date was endorsed 1st January, 1990 instead of 21st January, 1990 and the Assessing Officer has ignored the affidavit of Haji Khurshid Ahmad the Donor. Learned counsel has contended that genuineness of a document cannot be doubted on technicalities. He had in this respect referred the decision of the Tribunal reported as 2004 PTD (Trib.) 1523, wherein it has been held that oral gift can be made. Learned counsel has contended that no notice under section 148 was issued to the said Donor nor any cogent reasons were brought on record which this factor can be doubted that at the time of making gift, such amount was available with him or not. He has argued that the amount declared as cash after sales of jewellery was doubted by the Assessing Officer with the only plea that as per wealth statement as on 30-6-1985, the assessee was owner of 10-Tolas gold ornaments, on the other hand, he has shown sale of 25-Tolas. Assessing officer in this respect has ignored the affidavit of Mst. Hanifa Bibi, mother of the assessee. No notice under section 148 was issued to the goldsmith, which according to law was .necessary. Learned counsel has contended that while making addition of Rs.39,908 under section 13(1)(d), the Assessing Officer has ignored the element of intangible. He has submitted that sales declared were at Rs.718,550 which have been estimated at Rs.1,000,000, while G.P. declared was at Rs.107.782. The Assessing Officer has applied GP at Rs.150,000 and the addition of Rs.42,418 has been made. According to the learned counsel, the addition of Rs.39,908 is covered by the addition of Rs.42,218 made in the trading account. According td the learned counsel, the Assessing Officer has taxed the assessee twice, which according to the learned counsel has rightly been deleted by the learned CIT(A).
I have heard the learned representatives from both the sides and have also perused the impugned order of the learned CIT (A) and the assessment order.
Brief facts of the case are that the assessee in this case is an individual deriving income from running a paint store. His case for the assessment year 2001-02 was selected for Total Audit through random ballot. Following results were declared by the assessee:-
| Sales | 718,550 |
| 15 % | 107,782 |
| P & L Expenses | 22,842 |
| Net Income | 84,940 |
Assessing Officer after obtaining documents, issued notice under section 13(1)(aa) on 17-2-2003 requiring to make compliance up to 25-2-2003. Another notice under section 13(1)(e) dated 12-3-2003 was issued. Assessee was asked to make compliance of same up to 21-3-2003. As per Department, no one attended the proceedings nor any reply or application for adjournment was received on due date. On 15-4-2003, after obtaining approval from IAC, the case was decided under section 63 on 16-4-2003. It is pertinent to note that as per the assessment order, no notice under section 61 was accompanied neither with the above cited notices nor issued before 16-4-2003 that is the date of order. Ex parte order has been passed under section 63 for default of notice under section 13(1)(aa) and 13(1)(e) in the following manner:---
| Sales estimated | 10,00,000 |
| % | 1,50,000 |
| Less P & L Expenses as claimed | 22,842 |
| Net business income | 127,158 |
| Addition under section 13(1)(aa)/(e) | 519,908 |
| Total assessed income | 647,066 |
The Assessing Officer has made the following additions under section 13 of the repealed Income Tax Ordinance, 1979
| Nature of Addition | Reason | Amount |
| Under section 13(1)(aa) | Gift deed of Rs.300,000 found bogus as stamp paper was purchased on 20-1-90 as was executed on 1-1-1990 | 300,000 |
| Under section 13(1)(aa) | As per wealth statement as on 30-6-1985, 10-Tola gold ornaments were shown whereas the assessee claimed sale of 25-Tola gold. Hence addition on account of sale of 50-Tola gold was made | 100,000 |
| Under section 13(1)(aa) | The assessee shown encashment of prize bonds at Rs.80,000 as prize bonds were not mentioned in the earlier W/statements. | 80,000 |
| Under section 13(1)(e) | The assessee claimed household expenses at Rs.45,000 which was calculated at Rs.84,908, Hence balance was added | 39,908 |
| | Total Additions | 519,908 |
The above said additions have been deleted by the learned CIT(A) being made without any basis with the following observations:--"I have heard contentions of both the parties in the light of prevalent facts of the case and I have come to the conclusion that:-
(1) Assessment was made before assessment year 2000-01.
(2) TAS declaration was also made during assessment year 2000-01 and accepted in good faith.
(3) Wealth statement as on 30-6-2000 was compulsory requirement of return filed under SAS was accepted in good faith by the Department.
(4) Return for the assessment year 2000-01 was accepted under section 59(1) in good faith.
(5) Prize bonds were purchased and encashed during 3-12-1988 to 7-3-1995. It was beyond the control of assessee to declare these in w/statements 30-6-86, 30-6-00 or 30-6-01
(6) Genuineness of the gift made on 21-1-90 has been doubted with the only plea that stamp paper was purchased on 20-1-1990 and was executed on 1-1-1990. While doing so he has ignored these solid facts that:-
(a) It is a typing mistake due to which date was endorsed 1st January, 1990 instead of 21st January, 1990, he has ignored the affidavit of Haji Khurshid Ahmed, the Donor.
(b) It was held by the Honourable ITAT in a case cited as 2004 PTDI (Trib.) 1523. Oral gift can be made. Genuineness of a document cannot be doubted on technicalities. Main factor is that no notice under section 148 was issued to the said donor nor any cogent reasons were brought on record which this factor can be doubted that at the time of making gift such amount was available with him or not.
7. Amount declared as cash after sale of jewellery was doubted with the only plea that as per W/S as on 30-6-1985 assessee was owner of 10- Tolas of gold ornaments. On the other hand, he has shown sale of 25-Tolas. Assessing Officer in this respect has ignored the affidavit of Mst. Hanifa Bibi mother of assessee appellant that he had gifted 15-T to his son. Same were sold in 1996 by the appellant.' No notice under section 148 was issued to the goldsmith which according to law was necessary.
8. While making addition of Rs.39,908 under section 13(1)(d), Assessing Officer has ignored the element of intangible.
| Sales declared | 718,550 |
| Sales estimated | 10,00,000 |
| GP declared | 107,782 |
| GP estimated | 150,000 |
| Addition | 42,218 |
Addition of Rs.39,908 is covered by the addition of Rs.42,218 made in the trading account. Legally he has taxed the assessee twice.
In these facts and circumstances of the case, I have no alternative but to delete the following additions amounting to Rs.519,908 being made without any valid. basis:-
| Head | Section | Amount |
| Gift | 13(1)(aa) | Rs.3,00,000 |
| Sale of Gold | 13(1)(aa) | Rs. 1,00,000. |
| Prize Bonds | 13(1)(aa) | Rs .80,000 |
| Household Exps. | 13(1)(e) | Rs.39,908 |
| Total Addition under section 13 | Rs.519,908 |
After considering the above said observations of the learned CIT, I find no warrant for interference in the impugned order of the learned CIT (A), which is upheld and the appeal filed by the Department is dismissed.
Regarding the ground of appeal objecting the acceptance of appeal by the learned CIT (A), which was time-barred, I have found that on behalf of the assessee, it has been established before the learned CIT(A) that the service upon the assessee was not proper. Service of demand notice must be on proper person as has already been held by this 13 Tribunal in a case reported as 1986 PTD (Trib) 188. In this regard, decision of this Tribunal cited as 2004 PTD 1517 has been referred, wherein it has been held that there is no limitation against the void order. On behalf of the assessee, a decision of Honourable High Court cited as 2002 PTD (H.C. Lah.) 549 has been referred wherein placing reliance on the decision of Indian Supreme Court cited as (1987) 56 Tax 130, it has been observed that:-
(i) Ordinarily, a litigant does not stand. to benefit by lodging an appeal late.
(ii) Refusing to condone delay can result in a meritorious matter being thrown out at very threshold and cause of justice being defeated. As against this, when delay is condoned, the highest that can happen is that a case would be decided on merits after hearing the parties.
(iii) Every day's delay must be explained does not mean that a pedantic? approach should be made, why not every hour's delay, every second's delay%? The doctrine must be applied in rational, common sense and pragmatic manner.
(iv) When substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred for other side cannot claim to have vested right in justice being done because of a non-deliberately delay.
(v) 'There is no presumption that delay is occasioned deliberately, or on account of culpable negligence or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact, he runs a serious risk.
(vi) It must be grasped that the judiciary is respected not on account of its power to legalize injustice on technical grounds, but because it is capable of removing injustice and is expected to do so.
Considering the observations and decisions of this Tribunal, 1 am of the view that in revenue matter, prayer for condonation by an assessee/citizen should all the more be considered sympathetically. In the light of the above discussion and the judgments of the superior Courts, I am satisfied that the appellant was prevented by sufficient cause from presenting the appeal within due time limit and the learned CIT (A) has rightly condoned the delay in filing the appeal. The appeal filed by the Department is, therefore, dismissed on this score also.
C.M.A./163/Tax(Trib.)Appeal dismissed.