2008 P T D (Trib.) 47
[Income Tax Appellate Tribunal Pakistan]
Before Rasheed Ahmed Sheikh, Judicial Member and Mian Masood Ahmad, Accountant Member
I.T.As. Nos.5714/LB of 1996, 2249/LB and 2282/LB of 2000, decided on 02/11/2007.
(a) Income Tax Ordinance (XXXI of 1979)---
----Ss.66-A, 62 & 13(1)(a),(aa)---Powers of Inspecting Additional Commissioner to revise Deputy Commissioner's order---Quality of assessment---Evidence regarding obtaining of loan, addition made in building account, rental income and copies of bank statement were furnished---Assessing Officer after satisfying himself with the explanation tendered by the assessee completed the assessment under S.62 of the Income Tax Ordinance, 1979---Appellate Tribunal agreed that a brief order was passed by the Assessing Officer in terms of S.62 of the Income Tax Ordinance, 1379, nevertheless, the fact remained that the assessment was completed after conscious application of mind to all the evidences and the documents which were brought on record---Assessment originally made in circumstances, could not be said to be erroneous being prejudicial to the interest of revenue---Assessing Officer had resorted to check quality of assessment order which was not permissible under S.66-A of the Income Tax Ordinance, 1979.
1999 PTD 285; 1993 PTD 201 and 1997 PTD (Trib) 902 ref.
2002 PTD (Trib.) 3027 and 1984 PTD 137 rel.
(b) Income Tax Ordinance (XXXI of 1979)---
----S.66-A---Powers of Inspecting Additional Commissioner to revise Deputy Commissioner's order---If an assessment order is not found up to the mark or quality of the assessment order is poor this weakness would not be a sufficient ground for inviting S.66-A of the Income Tax Ordinance, 1979.
2002 PTD (Trib.) 3027 and 1984 PTD 137 rel.
(c) Income Tax Ordinance (XXXI of 1979)---
---S.13(1)(aa)---Unexplained investment etc., deemed to be income---Addition was factually incorrect as the source of cash credit and parties were verifiable.
1996 PTD (Trib.) 1069 rel.
(d) Income Tax Ordinance (XXXI of 1979)---
----Ss.66-A & 13(1)(d)---Income Tax Rules, 1981, R.207(a)---Powers of Inspecting Additional Commissioner to revise Deputy Commissioner's order---Disagreement with the Assessing Officer---Cancellation of assessment---Validity---Show-cause notice proved that Inspecting Additional Commissioner had no material whatsoever to consider that assessment order was erroneous and prejudicial to the interest of revenue as no details of property viz. location of the property was even mentioned for which it had been alleged that the same had been disposed of---Assessing Officer failed to ascertain the exact amount of value and taxed its profitability---Inspecting Additional Commissioner having failed to mention the location of the properties, he had incorrectly invoked the provisions of. S.66-A of the Income Tax Ordinance, 1979 without assigning any reason or showing any material as to why he had considered the assessment order to be erroneous and prejudicial to the interest of revenue except that he did not agree with the treatment meted out by the Assessing Officer.
1984 PTD 137 rel.
(e) Income Tax Ordinance (XXXI of 1979)---
----S.66-A---Powers of Inspecting Additional Commissioner to revise Deputy Commissioner's order---Erroneous order prejudicial to the interest of revenue---Where Assessing Officer had applied his mind while making assessment or granting the exemption after examining the accounts and arrived at a judicious conclusion, such a conclusion could not be termed as erroneous because the Assessing Officer had. exercised the quasi judicial powers vested in him---Assessment for the charge year could not be reopened/revised under S.66-A of the Income Tax Ordinance, 1979---Order passed under S.66-A of the Income Tax Ordinance, 1979 was annulled and that of Assessing Officer originally passed under S.62 of the Income Tax Ordinance; 1979 was restored by the Appellate Tribunal.
1999 PTD (Trib.) 3229 rel.
Javed Zakaria for Appellants (in I.T.As. Nos.5714/LB of 1996 and 2249/LB of 2000).
Abdul Rasheed Ch., D.R. for Respondents (in I.T.As. Nos.5714/LB of 1996 and 2249/LB of 2000).
Abdul Rasheed Ch., D.R. for Appellant (in I.T.A. No.2282/LB of 2000).
Javed Zakaria for Respondents (in I.T.A. No.2282/LB of 2000).
ORDER
Of these three appeals, the assessee-appellant has filed two .appeals one is against order passed by the learned IAC under section 66-A and the other is against order passed under sections 62/66A/132 while the department has also filed one cross appeal against order passed under sections 62/66-A/132 for the assessment year 1994-95.
2. The brief facts giving rise to these appeals are that the assessee appellant is a Private Limited Company engaged in the business of letting out of properties and have also started business of sale and purchase of plots/estate with effect from this assessment year 1994-95.
That the appellant for the said assessment year filed its return under section 55 of the Income Tax Ordinance, 1979 before the Deputy Commissioner of Income Tax. While finalizing assessment under section 62 of the Income Tax Ordinance, 1979 the Deputy Commissioner of Income Tax called various details which were submitted before him. In the notice issued under sections 62/13 dated 18-4-1995 the DCIT/Assessing Officer called explanation in respect of credit/loan amounting to Rs.15 Millions, addition in building at Rs.19,38,000 and rental income etc. Finding the explanation of the assessee which was furnished vide letter dated 20-4-1995 the Deputy Commissioner of Income Tax passed the order under section 62 of the Income Tax Ordinance, 1979.
3. Subsequently, what happened in this case was that the assessment already completed under section 62 of the Income Tax Ordinance, 1979 was cancelled by the IAC by inviting the provisions of section 66-A of Income Tax Ordinance. The reason advanced to hold the already completed assessment to be erroneously made and was also prejudicial to the interest of revenue was that short terms loan introduced in the balance sheet amounting to Rs.1,50,00,000 stood accepted by the assessing officer on the basis of photocopy of a cheque furnished by the assessee. No inquiries whatsoever were made by the assessing officer to ascertain genuineness of the said creditors at the time of formulating the assessment. Another reason advanced was that since the assessee had disposed of a property valuing Rs.55,500 meaning thereby he was engaged in purchase and sale of property which was adventure in the nature of the trade. No probe was made by the assessing officer regarding actual sale rates and ascertainment of the profit earned by it. Next reason was that a property was also purchased by the assessee appellant for Rs.19,38,000 whereas record did not show making of any effort at the behest of the assessing officer to find out its fair market value. From all these march of events it was observed by the IAC that the assessment originally made under section 66-A was erroneous in so far as prejudicial to the interest' of Revenue. Accordingly, a show-cause notice was issued confronting the assessee as to why the already completed assessment may not be cancelled by invoking provisions of Section 66-A of the Income Tax Ordinance. The reply furnished by the assessee-appellant could not convince the IAC. Resultantly, the already completed assessment was cancelled by the learned IAC by holding that the assessment originally made under section 62 of the Income Tax Ordinance, 1979 was erroneous and that was also prejudicial to the interest of revenue and ultimately direction was given to make the assessment afresh. This treatment grieved the assessee-appellant as a result of which the present appeal has been filed directly before the Tribunal against that order.
4. During the pendency of the appeal against order under section 66-A before the Tribunal, the Assessing Officer proceeded to make re-assessment under sections 62/66A in pursuance of the order under section 66-A. The assessee requested the Assessing Officer to keep in abeyance the proceedings under sections 62/66-A till the disposal of the appeal filed by the assessee against order under section 66-A. The Assessing Officer in re-assessment proceeding once again issued summons under section 148 to Haji Abdul Razak Yaqub who submitted the reply again and while making the assessment the Assessing Officer has travelled beyond his jurisdiction as long as he also made an addition out of rental income which was not disputed by the learned IAC in the order under section 66-A. The Assessing Officer in his order under sections 62/66-A' made the following additions:---
| (a) Addition under section 13(1)(aa) | Rs.150,00,000 (Cash credit) |
| (b) Addition under section 13(l.)(aa) | Rs. 22,75,000 (Valuation of the property) |
| (c) Addition out of rented income | Rs. 1,50,000 |
5. Being further aggrieved from the order of the Assessing Officer passed under sections 62/66-A the assessee has filed appeal before the leaned CIT (A) who vide order No.3367 dated 29-2-2000 set aside the addition under section 13(1)(aa) of the Income Tax Ordinance and maintained the rental income. However, the learned CIT (A) deleted the addition under section 13(1)(d) of the Income Tax Ordinance, 1979. During the pendency of the main appeal under section 66-A both the department and the assessee have come up in appeal before the Tribunal against the order under sections 62/66-A/132 of the learned CIT (A). The assessee has come up in appeal against the addition under section 13(1)(aa) of the Income Tax Ordinance and estimation of rental income while the department has assailed the deletion of addition under section 13(1)(d) of the Income Tax Ordinance, 1979.
6. These appeals came up for hearing before the Tribunal and vide its order dated 29-11-2006 bearing ITA Nos.5714/LB/96 etc. the Tribunal dismissed, assessee's appeals against order under section 66-A as well as against order under sections 62/66-A/132 in default being non-prosecution but decided the appeals of the department as represented by the D.R. The assessee filed Miscellaneous Applications for recalling of the Tribunal's order. The Tribunal vide order bearing M.As. Nos.22 to 33/LB of 2007 dated 16-8-2007 recalled its order as a whole and restored the assessee's as well as the departmental appeals to their original numbers, hence, these appeals.
7. Both the learned representatives appearing at the bar have been heard at a great length and perused the documents as well as the case-law furnished before us. To start with, Mr. Javed Zakaria, Advocate, learned counsel for the assessee, vehemently attacked initiation of proceedings under section 66-A of the Income Tax Ordinance, 1979 on legal as well as on factual premises. First contention was that proceedings under section 66-A of the Income Tax Ordinance, 1979 have not been lawfully invoked reason being cognizance of all the reasons now advanced in the show-cause notice issued under section 66-A of the Income Tax Ordinance, 1979 had already been taken while formulating the original assessment made under section 62 of the Income Tax Ordinance, 1979.
Since, Original order under section 62 of the Income Tax Ordinance, 1979 was passed after applying conscious mind, therefore, it cannot be branded that the already completed assessment was erroneous and was also prejudicial to the interest of revenue. It was also strongly asserted that the provisions of section 66-A of the Income Tax Ordinance, 1979 are merely invited by the IAC to check quality of the order passed by the assessing officer, which is not permissible under the law. Also asserted that mere disagreement with the order of the assessing officer does not empower the IAC to invoke the provisions of section 66-A of the Income Tax Ordinance, 1979. To strengthen the aforesaid arguments, case-law in Re: 2002 PTD (Trio) 3027, 1999 PTD 285, 1993 PTD 201, 1984 PTD 137, 1997 PTD (Trib) 902 are referred to. On the other hand, the learned DR appearing on behalf of the revenue supported the impugned order for the reason embodied therein.
8. We have deliberated the rival contentions seriously and find the contentions raised by Mr. Javed Zakaria, learned counsel for the assessee to be quite legitimate. March of events depicts that in order to formulate the original assessment first notice under section 62 was issued on 8-4-1995 whereby certain details and documents were requisitioned along with a notice under section 61 of the Income Tax Ordinance, 1979 which was duly complied with by the assessee appellant. Later on, another notice under section 62 read with section 13(1) was issued on 18-4-1995, the contents of which are as under: ---
"Pleased refer to the above.
Your case was fixed through notice under section 61 for 15-4-95 requiring various details as per attached pro forma and furnishing of books of account for examination, but none attended nor any detail furnished on the due date. You are required to furnish following details supported by evidence in addition to details already requisitioned through the notice under section 61 referred above:-
(1) A new loan during the year is appearing in the balance sheet at Rs.1,50,00,000. Please furnish necessary evidence and in case of unsatisfactory reply or non-compliance I will add this amount in the income during the charge year under consideration as cash credit under section 13(1)(a) of the Income Tax Ordinance, 1979.
(2)(sic) A new loan during the year is appearing in the balance sheet at Rs.1,50,00,000. Please furnish necessary evidence and in case of unsatisfactory reply or non-compliance I will add this amount in the income during the charge year under consideration as cash credit under section 13(1)(a) of the Income Tax Ordinance, 1979.
(3) Addition in building has been shown at Rs. 19,38,000 during the year and you are required to furnish necessary details and in case of unsatisfactory reply I will add this amount under section 13(1)(aa) of the Income Tax Ordinance, 1979.
(4) Please furnish evidence of rental income.
The case is fixed for 20-4-95 for which notice under section 61 is enclosed. Please note that no further adjournment will be allowed and in case of non-compliance I will proceed on the basis of facts and circumstances of the case."
9. That notice was again responded and the necessary evidence regarding obtaining of loan. Addition made in building account, rental income and copies of bank statement were furnished. The assessing officer after having found himself to be satisfied with the explanation tendered by the assessee-appellant completed the assessment under section 62 of the Income Tax Ordinance, 1979. We agree with the learned IAC to the extent that a brief order was passed by the assessing officer in terms of section 62 of the Income Tax Ordinance, 1979, nevertheless, the fact remains the assessment was, completed after conscious application of mind to all the evidences and the documents which were brought on record. Therefore, it cannot be said that the assessment originally made was erroneous in so far as prejudicial to the interest of revenue. In our considered opinion the assessing officer has resorted to check quality of the assessment order, which is not permissible under section 66-A of the Income Tax Ordinance, 1979. We remember that not only the higher appellate Courts but also the Tribunal has held in its judgments that mere disagreement between officers on result of assessment could not be genuine reason to resort to the provisions contained in section 66-A of the Income Tax Ordinance, 1979. If an assessment order is not found upto the mark or quality of the assessment order is poor this could not be a sufficient ground for inviting section 66-A of the Income Tax Ordinance, 1979. We remember that in a case reported as 1984 PTD 137, it was held as under:-
"It was noticed that Inspecting Additional Commissioner felt advised to discard the assessment order of Income Tax Officer, as in his estimation. Income Tax Officer accepted low income of the assessee and allowed concession on various items. It is well accepted that provisions of section 34A were not available on the ground mere disagreement in assessment. Such powers can be invoked only when an order of Income Tax Officer is found deviating from law. That Inspecting Additional Commissioner was not in agreement with the result of assessment made by the Income Tax Officer, was not a genuine reason for resort to section 34A. The other aspect of the case is that power conferred on Inspecting Additional Commissioner under section 34A is just in the nature of supervisory power. In exercise of supervisory authority, Inspecting Additional Commissioner was not expected to indulge in deep inquiry by assuming the role of ITA. The distinction between their positions was obvious." (Underline by us only for emphasis)
In another judgment reported as 2002 PTD (Trib.) 3027 it was concluded as under:-
"The power of suo motu revision under subsection (1) is in the nature of supervisory jurisdiction and the same can be exercised only if the circumstances specified therein exist. Two circumstances must exist to enable the commissioner to exercise power of revisions under this subsection, viz. (i) the order is erroneous, (ii) by virtue of the order being erroneous, prejudice has been caused to the interest of the Revenue. It has, therefore, to be considered firstly as to when an order can be said to be erroneous. We find that the expression "erroneous judgment" has been defined in Black's Law Dictionary. According to the definition "erroneous" means "involving error; deviating from the law". "Erroneous assessment" refers to an assessment that deviates from the law of land is therefore, invalid, and is a defect that is jurisdictional in its nature, and does not refer to the judgment of the assessing officer in fixing the amount of valuation of the property. Similarly, "erroneous judgment" means "one rendered according to course and practice of Court, but contrary to law, upon mistaken view of law, or upon erroneous application of legal principles" From the aforesaid definitions it is clear that an order cannot be termed as erroneous unless it is not in accordance with law. If an Income Tax Officer acting in accordance with law makes a certain assessment, the same cannot be branded as erroneous by the Commissioner simply because, according to him the order should have been written more elaborately. This section does not visualize a case of substitution of the judgment of the Commissioner for that of the Income Tax Officer, who passed the order, unless the decision is held to be erroneous. Cases may be visualized where the Income Tax Officer while making an assessment examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determines the income either by accepting the accounts or by making, some estimate himself. The Commissioner, on perusal of the records, may be of the opinion that the estimate made by the officer concerned was on the lower side and left to the Commissioner he would have estimated the income at a figure Higher than the one determined by the Income Tax Officer. That would not vest the Commissioner with power to re-examine the accounts and determine the income himself at a higher figure. It is because the Income Tax Officer has exercised the quasi-judicial power vest in him in accordance with law of land arrived at a conclusion and such a conclusion cannot be termed to be erroneous simply because the Commissioner does not feel satisfied with the conclusion. It may be said in such a case that in the opinion of the Commissioner the order in question is prejudicial to the interests of the Revenue. But that by itself will not be enough to vest the Commissioner with the power of suo motu revision cannot be exercised. Any and every erroneous order cannot be the subject of revision because the second requirement also must be fulfilled. There must be some prima facie material on record to show that tax which was lawfully exigible has not been imposed or that by the application of the relevant statute on an incorrect or incomplete interpretation a lesser tax than what was just has been imposed."
10. Even otherwise, it is imperative to mention here that prior to issuance of show-cause notice under section 66-A of the Income Tax Ordinance, 1979 a notice under section 148 of the Income Tax Ordinance, 1979 was also issued to one and the only creditor namely Haji Abdul Razzaq who categorically confirmed advancing of loan to the assessee-appellant. The confirmation thereof by the creditor was also made for the second time when the re-assessment proceedings were initiated by the assessing officer. What happened was that while replying to the assessing officer, dates of making of payments to the creditor were mistakenly typed as 20-6-1993 in front of each payment of Rs.50,000. Conversely, correct dates of payment were not only recorded on the pay orders but were also appearing on the paying slips as well in the bank statement which testified that payments were made to the creditors on different dates. All these documents besides furnishing to the IAC, were also submitted to the assessing officer which were brushed aside by them. Copies of those documents are also placed on our record to corroborate and to substantiate the typographical error appearing in the certificate issued by Messrs Haji Abdul Razzaq Muhammad Yaqoob. Thus, the addition made under section 13(1)(aa) of the Income Tax Ordinance, 1979 was uncalled for. Moreover, provisions of sec tion 13(1)(aa) of the Income Tax Ordinance, 1979 are illegally invited to the facts recorded in the instant case. Because this is clause (a) of subsection (1) of section 13 which deals with cash creditors appearing in the books of accounts.
11. Coming to the next reason advanced by IAC for invocation of section 66-A of the Income Tax Ordinance, 1979 was that the assessee was involved in purchase and sale of property. It was specifically stated by Mr. Javed Zakaria, the learned counsel for the assessee, that no purchase and sale of the property was made in the year under appeal. Rather that line of business was started. It was also pointed out that no income from this practice was estimated by the Assessing Officer on re-assessment because no transaction whatsoever was executed in the assessment year under appeal. However, an addition under section 13(1)(d) of the Income Tax Ordinance, 1979 amounting to Rs.22,75,000 on account of purchase of property was made on reassessment which was allegedly to have been understated. It was contended by Mr. Javed Zakaria, Advocate, the learned counsel for the assessee that the property in question was purchased at the prevailing rate and was got registered with the Registrar on the same price. Thus, no addition was warranted under section 13(1)(d) on account of understatement of value of the property because according to Rule 207(A), of the Income Tax Rules, 1981 the value of the property fixed by the Registrar for the purpose of Stamp Duty is liable to be accepted. Coming to the third objection of the IAC with regard to estimation of property which was purchased for Rs.17,00,000. Its value cannot be estimated on the ground that the property in question was purchased for the trading purposes and that is why it is duly appearing in the balance sheet of the company as a stock in trade. Whenever, it would be sold in the market, its profit would be declared in the year in which that will be sold. Hence, no addition under section 13(1)(d) can be made on this Court.
12. So far as estimation of rental income is concerned, it is interesting to note that issue of estimating rental income was nowhere appearing in the show-cause notice but its cognizance was taken by the assessing officer on re-assessment. Thus, estimation of rental income is factually incorrect because rent was received from three parties only which are also limited companies namely Ibrahim Textile Mills Limited, AA Textile Limited and Zenith Textile Mills Limited and the payments are received through crossed cheques. Hence, rental income cannot be estimated on mere conjecture, surmises and whims.
13. We have heard the learned representatives of both the sides at length and also perused the record and various case laws cited at bar.
Now, we take up the assessee's appeal filed under section 66-A of the Income Tax Ordinance, 1979.
14. The learned counsel for the appellant-assessee has at the very outset has challenged the legality of section 66-A of the Income Tax Ordinance, 1979 and his contentions have been incorporated in the earlier part of this order. The arguments of the learned counsel that when all the details were submitted before the Assessing officer at the time of passing original order under section 62 which has been proved by the assessee by producing the communications exchanged between the parties i.e. notices issued by the Assessing Officer under sections 62/13 calling details of cash credit/loan appearing in the balance sheet. The assessee has provided full details of creditor/lender i.e. name and address of Mr. Haji Abdul Razak residing at 560-Marrium Manzil, Garden East, Karachi. The said creditor in response to notices issued under sections 144/148 has also certified the loan by providing categorically the name of Circle which was Circle-II, Cos. I, Non-Resident wherein he was assessed and details of Pay Orders and amount. The Pay Orders have been drawn from the Muslim Commercial Bank Ltd. same has been deposited in the bank account No.CUR.03177-3 of the Assessee's account in Muslim Commercial Bank, Newnham Road, Karachi. The source of cash credit and parties are verifiable therefore, the addition under section 13(1)(aa) is factually incorrect. Further, all the details as discussed supra, have been provided to the assessing officer and the same had been examined by the assessing officer while passing the order under section 62 and there remains no ambiguity warranting any action on the basis of alleged issues. His arguments find support from the order of the Tribunal reported as 1996 PTD (Trib.) 1069 and others cited above, wherein while agreeing with the learned counsel to the effect that assessing officer fully considered the issue, appreciated the relevant facts and thereafter allowed the financial expenses claimed by the appellant and as such, it is not proper to say that order was erroneous as observed by the learned Inspecting Additional Commissioner of Income Tax and consequently quashed the order passed under section 66-A.
15. It is also noted by us that the learned Inspecting Additional Commissioner of Income Tax has based his order and has invoked the provisions of section 66-A in the year under review on arbitrary, vague and fanciful assumption,' while the jurisdiction under section 66-A can be invoked on the basis of sound facts leading to inference that assessment made by the assessing officer was in any manner erroneous and prejudicial to the interest of revenue. The learned Inspecting Additional Commissioner of Income Tax had no material on the record for considering that the assessment order is erroneous and resulted in loss of revenue. The show-cause notice amply prove that the learned Inspecting Additional Commissioner of Income Tax had no material whatsoever to consider that assessment order was erroneous and prejudicial to the interest of revenue as no details of property viz. location of the property was even mentioned. In the said notice the learned IAC alleged that "property valuing Rs.55,500 has been disposed of. The Assessing Officer has failed to ascertain the exact amount of value and taxed its profitability" in another Para he went on to say in the said show-cause notice under section 66-A that "property valuing Rs.19,38,000 was purchased. The Assessing Officer has failed to ascertain the fair market value of this property". Further in the order the learned IAC has also failed to mention the location of the properties, therefore, the learned Inspecting Additional Commissioner of Income Tax he has incorrectly invoked the provisions of section 66-A without assigning any reason or showing any material as to why he has considered the assessment orders to be erroneous and prejudicial to the interest of revenue except that he did not agree with the treatment meted out by the assessing officer. In the case under appeal the learned Inspecting Additional Commissioner of Income Tax has merely disagreed with the assessing officer. The Azad T&K High Court in the judgment reported as 1984 PTD 137 and others cited supra, has observed that "mere disagreement between officers on result of assessment could not be genuine reason to resort to the provisions contained in section 66-A of the Income Tax Ordinance, 1979 which contains similar provision as in section 34-A of the Income Tax Act, 1922".
16. Now reverting to the contention of the learned counsel that the learned Inspecting Additional Commissioner of Income Tax has not given specific finding as to how the order of the assessing officer is erroneous and prejudicial to the interest of revenue, the reliance placed by the learned counsel on the case reported as 1999 PTD (Trib.) 3229 has been considered by us wherein it has been held that learned Inspecting Additional. Commissioner of Income Tax should give instances of findings which are erroneous and prejudicial to the interest of revenue. It was further held by the Tribunal that the findings of the learned Inspecting Additional Commissioner of Income Tax must be in nature of objective and not subjective and do not base on probabilities and possibilities in other words it should not be based as such which requite probe into the matter. It will be pertinent to reproduce an extract from the above mentioned order:--
"In order to exercise jurisdiction under section 66-A the precondition is that after examination of record if any proceedings or after making or causing to be made such enquiry as deemed necessary the assessing officer comes to a definite conclusion based on the material and reasons that the order sought to be revised is erroneous as well as prejudicial to the interest of revenue. Mere possibilities and probabilities of coming to some other conclusions had the desired enquiries. being held would not provide sufficient justification for exercise of jurisdiction under section, 66-A. The reason being that the findings required to be given under section 66-A have to be objective in nature and if the findings such as given by the learned ACIT in this case that, had the prove been conducted, the source; of investment would have become clear with regard to application of section 13, or enquiries as intended in the show-cause notice such as, "what were the past activities?." And, "what kind of crop compelled them to hay the items dulyfrom one season", are allowed to he raised in the proceedings under section 66-A, it shall become subjective in nature and such proceedings are bound to income wanton in nature which could never be the intention of legislature while conferring; jurisdiction under section 66 A. For the foregoing reasons it is held that the learned ACIT has failed miserably to make out a case for exercise of jurisdiction under section 66-A and, therefore, the impugned order under section 66-A is hereby cancelled. The assessment order stands restored."
17. We have carefully considered that the question whether the learned Inspecting Additional Commissioner of Income Tax was justified in holding the order passed by the assessing officer to he erroneous and prejudicial to the interest of revenue it is opined by us that where the assessing officer has applied his mind while making the assessment or granting the exemption after examining the accounts and arrived at al judicious conclusion and such a conclusion cannot be termed as erroneous because the assessing officer has exercised the quasi judicial powers vested on him. We are therefore of the considered view for this fact assessments for the charge year could not be reopened/revised under section 66-A of the Income Tax Ordinance, 1979. In consequence, the order passed under section 66-A is hereby annulled and that of the assessing Officer originally passed under section 62 is restored.
18. As we have already annulled/quashed the order under section 66-A of the Income Tax Ordinance, 1979 which is the rout cause of the present litigation, therefore, all the subsequent proceedings under sections 62/66-A/132 falls on the ground as when any action is declared without jurisdiction and void then all orders and proceedings taken on the basis of such illegal action shall also be initiated, therefore, we need not to dilate upon other issues. We hereby dismiss the appeal of the assessee against order under sections 62/66-A/132 as well as departmental appeal against order under sections 62/66-A/132 beeninfructuous.
19. Consequently, all the three appeals stand disposed of as above.
C.M.A./168/Tax(Trib.)Order accordingly.