2010 P T D (Trib.) 9
[Income-tax Appellate Tribunal Pakistan]
Before Muhammad Saeed, Accountant Member
I.T.As. Nos. 337/KB, 338/KB and 339/KB of 2008, decided on 14/09/2009.
Income Tax Ordinance (XLIX of 2001)---
----Ss.39(f)(i), 40, 122(5-A) & 131---Amendment of assessment order---Making addition by disallowing expenditure---Deletion of addition---Appeal to Appellate Tribunal---Additional Commissioner finalized the order under S.122(5-A) of Income Tax Ordinance, 2001 whereby assessment order was amended---Additional Commissioner had also made addition by disallowing expenditure---Assessee/respondent being aggrieved with order of the Additional Commissioner filed appeal before Commissioner Income Tax (Appeals), who vide impugned order deleted orders passed by the Additional Commissioner for the reason that impugned orders were passed without notice to respondent/ assessee---Appellant-Department dissatisfied with judgment of the Commissioner Income Tax (Appeals) had filed appeal before Appellate Tribunal---Order passed by the Additional Commissioner of Income Tax was on the basis of ex parte as none attended on behalf of assessee/taxpayer---Order passed by the Commissioner Income Tax (Appeals) was vacated and the matter was remanded to the same' quarters with the direction that as the issue involved in the appeals having not been decided on merits, finding should be given on the agitated issue on merits and passed the order after confronting with the parties.
Afaque A. Qureshi, D.R. for Appellant.
Abdul Tahir Ansari for Respondent.
ORDER
MUHAMMAD SAEED, ACCOUNTANT MEMBER.---Above captioned appeals have been filed by the department against the consolidated order dated 13-2-2008 passed by the learned CIT(A) Hyderabad. Department has agitated on the following common grounds:--
(1) That keeping in view the facts and circumstances of the case, the learned Commissioner of Income Tax (Appeals) was not justified to cancel the order passed under section 122(5A) of the Income Tax Ordinance, 2001 without considering the facts of the case.
(2) That keeping in view the facts and circumstances of the case, the learned CIT(A) was not justified to delete addition made by disallowing expenditure which is of capital nature and not admissible under section 40 of the Income Tax Ordinance, 2001.
(3) That keeping in view the facts and circumstances of the case the learned CIT(A) was not justified to hold that the impugned order was passed on a date for' which there was no notice, whereas assessment was completed ex parte under section 122(5A) being not responding of the, notices issued to the taxpayer on the date of hearing."
2. Brief facts of the case are that the taxpayer is Private Limited, Company, deriving lease income from the Flour Mill. The Additional Commissioner of Income Tax after perusing the record reveals that the return of income for the Assessment year, 2002-2003 has been finalized under section 62 in loss of Rs.24,473 against the declared loss of Rs.100,650, which is erroneous- insofar as it is prejudicial to the interest of Revenue for the reason that the taxpayer is enjoying lease income, which falls under section 39(i)(f) of the Income Tax Ordinance, 2001 and expenses claimed are not covered under the above section. Proceedings finalized under section 62 of the repealed Ordinance, 1979 without considering the facts and similar treatment has been confirmed by the learned I.T.A.T. vide I.T.A. No.836/KB/1998-1999 dated 7-4-1999 and for the tax years 2004-2005 were selected for audit under section 177 of the income Tax Ordinance, 2001 on the similar issue. Notices were issued and properly served to the taxpayer. Despite proper service of notices no one attended nor any application for adjournment was received. Therefore, Additional Commissioner of Income Tax finalized the order under section 122(5A) of the Income Tax Ordinance, 2001 keeping in view the decision of the Tribunal cited supra. Assessee being 'aggrieved with the order of the Additional Commissioner of Income Tax, filed the appeals before the, learned CIT(A), who vide impugned order deleted the orders passed by the Additional Commissioner of Income Tax under section 122(5A) of the Income Tax Ordinance, 2001 for the reason that impugned orders were passed on dates for which there is no notice. Department dissatisfied with the treatment meted out by the learned CIT(A) preferred the appeal before this Tribunal.
3. Mr. Afaque A. Qureshi, learned Representative of the appellant/ Department has supported the order of Additional Commissioner of Income Tax and contended that the learned CIT(A) was not justified to cancel the order passed under section 122(5A) of the Income Tax Ordinance, 2001 without considering facts. The learned CIT(A) was not justified to delete the addition made by disallowing expenditure, which is of capital nature and not admissible under section 40 of the Income Tax Ordinance, 2001. He has further argued that the learned CIT(A) was not justified to hold that the impugned order was passed oh a :date for which there was no notice, whereas assessment completed on ex parte basis under section 122(5A) being not responding of the notices issued to the taxpayer on the date of hearing.
4. On the other hand, Mr. Abdul Tahir Ansari, learned counsel for the respondent/taxpayer has supported the order of the learned CIT(A) and contended that the Additional Commissioner of Income Tax has passed the order without affording the opportunity of being heard and order passed prior to the date for which there was no notice received by the taxpayer. Therefore, the learned CIT(A) has rightly cancelled the order passed by the Additional Commissioner of Income Tax under section 122(5A) of the Income Tax Ordinance, 2001.
5. I have heard the both the learned representatives of two parties and have also perused the assessment order as well as impugned order and other relevant record.
6. The learned CIT(A) while deleting the addition made by the Additional Commissioner of Income Tax with the following observation:--
"Heard the appellant's AR, and record examined, the arguments put forth by the learned counsel carry much weight. It is held that the action of the Additional Commissioner of Income Tax is not only harsh, arbitrary, illegal and void ab initio, due to the fact that impugned orders were passed on a date for which there was no notice, but also the specific disallowance of deduction is not justified and is based on misconception of law, liable to be deleted."
7. From a plain reading of above observation of the learned CIT(A), I find that the learned CIT(A) has deleted the additions. Before me learned DR has vehemently contended that the orders passed by the Additional Commissioner of Income Tax 'under section 122(5A) of the Income Tax Ordinance, 2001 on ex parte basis as the taxpayer has failed to attend the call in application for adjournment was received and on the similar issue Tribunal confirmed the treatment in the above referred order dated 7-4-1999. After considering facts and circumstances of the case of orders passed by the Additional Commissioner of Income Tax, I am of the considered view that order passed by the Additional Commissioner of Income Tax was on the basis of ex parte as none attended on behalf of the taxpayer therefore, I have reasons to vacate the orders of the learned CIT(A) and remand back the matter to the same quarter with the direction that the issue involved in these appeals were not decided on the merit, therefore, I hereby direct him to give findings on the agitated issue on merits and pass the order after confronting both the parties.
8. Resultantly, appeals filed by the department are disposed of in the manner as indicated above.
H.B.T./157/Tax (Trib.)Case remanded.