2011 P T D (Trib.) 262
[Income Tax Appellate Tribunal of Pakistan]
Before Khalid Waheed Ahmed, Judicial Member and Mahmood Ahmed Malik, Accountant Member
I.T.As. Nos. 623/IB to 628/IB of 2003, decided on 06/11/2004.
(a) Income Tax Ordinance (XXXI of 1979)---
----Ss. 13(1), 61, 62, & 65---Addition---Setting aside of---Income from sale of land/plots to individual customers---Assessee contended that addition should have been deleted by the First Appellate Authority instead of having been set aside as the same was made without confronting under S.62 of the Income Tax Ordinance, 1979---Validity--Statutory notices under S.61 of the Income Tax Ordinance, 1979 were issued on different occasions and each time the hearing was adjourned on the request of the assessee--Assessments reopened under S.65 of the Income Tax Ordinance, 1979 were barred by limitation of time on 30-6-2001---Assessee filed returns and reply to notices issued under Ss.62 and 13(1) of the Income Tax Ordinance, 1979 on 25-6-2001 and further reply was also filed on 26-6-2001 when there was hardly any time left with the Assessing Officer to issue any further notice---BY filing of returns along with details of income and wealth statements as well as reconciliation of wealth at such time, it was made impossible for the Assessing Officer by the assessee to issue any further notice on the basis of return/details filed on 25-6-2001 and 26-6-2001---Assessing Officer could not be expected to do an act which could not possibly be done---Irrespective of the justification for seeking adjournments by the assessee he could not be allowed to avail the benefit of the situation arising for the reasons the causes of which were attributable to assessee---If the Assessing Officer could not confront the assessee on the issue of assessment under the head "income from sale of land/plots" after filing of return along with details of such income on last dates because of time limitation he was himself responsible for such delay---One could not be allowed to avail benefit of his own mistake---Contention that assessments should be annulled instead of setting aside the issue for the reason that he was not provided with the opportunity of being heard through issuance of notice under S.62 of the Income Tax Ordinance, 1979 confronting him on the issue after filing of returns on 25-6-2001 was not acceptable---Ass'essee being a contributory party to the alleged default, by filing the returns and details on the last date not leaving any opportunity for the Assessing Officer to issue any further notice was not entitled to claim any benefit on the basis of the same.
(b) Income Tax Ordinance (XXXI of 1979)---
---S. 62---Assessment on production of accounts, evidence etc.---Income from sale of inherited land---Claim of exemption---Assessment of income by the Assessing Officer, claimed to be exempt, without confronting the assessee under S.62 of the Income Tax Ordinance, 1979---Setting aside of assessment by the First Appellate Authority instead of annulment---Validity---Assessee declared receipts/income which was claimed as not chargeable to tax---In case of claim of exemption under the fiscal law the onus was upon the assessee to substantiate his claim---Assessee when filed returns claiming exemption in respect of the receipts income declared by him, he was obliged to file evidence in support of the claim---For not producing any evidence in support of the claim of the exemption the Assessing Officer could reject the claim for not having been substantiated---Opportunity of providing evidence in support of the claim regarding sale of inherited land having already been provided by the First Appellate Authority, there remained no cause of grievance to the assessee---Under the provision of S.62 of the Income Tax Ordinance, 1979.a notice in writing pointing out defects in the books of accounts was required to be issued where account books were maintained and produced before the assessing officer---No statutory provision existed for issuance of any notice under S.62 of the Income Tax Ordinance, 1979 in case where no books of accounts were produced---Opportunity of being heard was to be provided to the assessee before making any decision against him---Assessee failed to substantiate his claim of exemption in respect of income from sale of inherited land, the Assessing Officer could reject the claim---Before such rejection the assessee should have been confronted on the issue by the Assessing Officer; however this being not a mandatory provision did not render the act as ab initio void and the defect being of a remedial nature stood cured with the decision of First Appellate Authority whereby the assessee had been provided with the opportunity of being heard---Order of First Appellate Authority whereby he had set aside the assessments on the issue of income assessed under the head "income from sale of land/plots to individual customer" was maintained by the Appellate Tribunal.
1971 SCMR 681; PLD 2002 SC Pak 408; 2003 PTD (Trib.) 1956; (2000) 82 Tax 215 (H.C. India); 1985 PTD (Trib.) 178; 1999 PTD (Trib.) 3892; 1993 PTD (Trib.) 266 and 2003 PTD (Trib.) 242 distinguished.
(c) Income Tax Ordinance (XXXI of 1979)---
----Ss.13(1) & 62---Addition---Sale of land/plots to individual customers---Observation regarding careless of Assessing Officer---Assessee declared the amount of receipts as income from sale of inherited land---Assessing Officer had taken the same figure as taxable income treating the sale of land as business activities---Same figure of receipts declared by the assessee as receipts from sale of inherited land were adopted by the Assessing Officer as his income from business of sale of property without working out the income in a proper manner---Total sale receipts could not be adopted as business income without deducting the cost of sales since he had not added the amounts under the provisions of S.13(1) of the Income Tax Ordinance, 1979.
(d) Income Tax Ordinance (XXXI of 1979)---
----S. 62---Assessment on production of accounts, evidence etc.---Sale of land---Assessment of income---Setting aside of assessment by the First Appellate Authority---Assessing Officer on the basis of evidence available with him assessed the income---Assessee contended before the First Appellate Authority that he had not made any profit from the sale of land---Since the issue raised needed further verification of fact and since the assessee's appeals on this ground were not proved, the setting aside of the assessment on the issue for de novo assessment after ascertaining the fact was held to be justified and maintained by the Appellate Tribunal.
(e) Income-tax---
----Add back---Accommodation allowance---Taxability of---Assessee received the accommodation allowance as Member of Provincial Assembly---Assessing Officer treated the amount as house rent allowance and after allowing up to the 45% of the basic salary, the balance amount was added to the taxable salary---First Appellate Authority confirmed the treatment with the observation that the assessee for similar treatment for the next assessment year did not contest the same---Validity---Reason given by the First Appellate Authority was not plausible one and without any justified basis---One could not be deprived of a legal right merely for the reason that he had not availed the same at some other occasion, even if, he was otherwise legally entitled for the same---Contention of the assessee that the amount received was not house rent allowance but charges to meet the expenses for accommodation during the Assembly session needed further verification of fact and of further discussion regarding the applicability of relevant provision of law---Order of First Appellate Authority on the issue was vacated and assessments were set aside and remanded to the Assessing Officer for de novo decision and after taking into consideration the contention of the assessee and relevant provision of law.
(f) Income Tax Ordinance (XXXI of 1979)---
----Ss.13(1) & 65---Addition---Investment in purchase of land---Assessee contended that additions should have been deleted instead of having been set aside by the First Appellate Authority as the additions were made without issuance of notice under S.13(1) of the Income Tax Ordinance, 1979---Validity---Contention of the assessee was not found to be correct because as mentioned in assessment order, a notice under S.13(1) of the Income Tax Ordinance, 1979 was issued on 7-5-2001 wherein he was required to explain the sources of investment made in purchase of land which was sold---Assessee had also filed replies/explanation on 25-6-2001 and 26-6-2001 as reproduced in the assessment order---Assessee's contention that Assessing Officer had not issued notice under S.13(1) of the Income Tax Ordinance, 1979 after filing of return under S.65 of the Income Tax Ordinance, 1979 and wealth statement on 25-6-2001, was devoid of force---Assessee had already been confronted under S.13(1) of the Income Tax Ordinance, 1979 on the basis of information that he made the said investment in the purchase of property which was sold---Requirements of S.13(1) of the Income Tax Ordinance, 1979 whereby he was required to be provided with the opportunity to file explanation regarding sources of investment having been fulfilled---No legal infirmity in the assessment order on the issued was found---Order of First Appellate Authority whereby the assessment had been set aside on the issue of addition under S.13(1) of the Income Tax Ordinance, 1979 was not interfered with by the Appellate Tribunal.
(g) Income Tax Ordinance (XXXI of 1979)---
----S.13(1)(aa)---Addition---Assessee contended that addition should have been deleted instead of setting aside because the assessee had explained the source of investment made in purchase of asset as per reconciliation of wealth---Assessee, at the time of heaving, raised another objection that the addition was liable to be deleted on the ground that amount added was different from the one confronted to explain to the assessee through notice under S.13(1)(aa) of the Income Tax Ordinance, 1979---Validity---As per explanation filed on 26-6-2001, it was informed by the assessee that the actual of 1/2 share was Rs.66,31,200 and not Rs.43,26,098---Contention that assessee was not confronted with the amount of Rs.66,31,200 after filing the reply/explanation rendered the addition illegal was not acceptable---Under the provision of S.13 of the Income Tax Ordinance, 1979 the assessee was to be provided with the opportunity to explain the sources of investment which was provided and also availed by him---Assessee had himself offered the explanation with regard to investment of Rs.66,31,200 and could not take the plea that the opportunity was not provided to him for explaining the source of investment when he had himself offered the explanation for Rs.66,31,200---Even otherwise, assessee filed his reply/explanation to the notice issued under S.13(1) of the Income Tax Ordinance, 1979 at the time when there was hardly any time left with the Assessing Officer to issue any further notice---Assessee could not be allowed to avail the benefit of situation created by himself --- Order of First Appellate Authority was held to be justified in the circumstances.
(h) Income Tax Ordinance (XXXI of 1979)---
----S.13(1)(aa)---Addition---Accretion in wealth---Setting aside of addition---Contention of the assessee was that accretion in wealth stood reconciled with the revised wealth statement; and amount of accretion pertained to the previous year, which could not be added to the income of the assessee for the year under consideration---Validity---Plea of the assessee was not accepted by the Assessing Officer for the reason that the assessment for the assessment year 1998-99 already stood completed as such the revised wealth statement filed for the relevant year i.e. as on 30-6-1998 was not acceptable---No legal infirmity in the order of First Appellate Authority to set aside the assessment was found because issue involved relating to period of investment and sources of investment required the verification of facts---Adequate relief already stood provided to the assessee by the order of First Appellate Authority whereby the assessment on the issue had been set aside for verification and ascertainment of fact.
Muhammad Aslam Anwar and Masoom Akhtar, FCA for Appellant.
Dr. Muhammad Iqbal, D.R. for Respondent.
ORDER
KHALID WAHEED AHMED JUDICIAL MEMBER.---These appeals at the behest of the assessee-appellant, are directed against the combined order, dated 17-6-2003 of CIT(A), Zone-I, Islamabad pertaining to assessment years 1994-1995 to 1999-2000.
2. The original assessments in the case of the assessee-appellant, an individual, for the assessment years 1994-95 to 1998-99 were finalized by accepting the declared version as hereunder:--
| Assessment year | Assessed under section | Assessed income |
| 1994-95 | 59(1) | Rs.40,000 |
| 1995-96 | 59(1) | Rs.48,960 |
| 1996-97 | 59(1) | Rs.115,200 |
| 1997-98 | 59(A) | Rs.115,200 |
| 1998-99 | 59(A) | Rs.115,200 |
The above mentioned assessments for the assessment years 1994-95 to 1998-99 were later on reopened through notices issued on 12-5-2000 under section 65 of the Income Tax Ordinance, 1979 (hereinafter called the repealed Ordinance). Reassessments for these years were completed under sections 65/62 of the repealed Ordinance through a combined assessment order passed on 30-6-2001 in the following manner:--
Assessment year 1994-95
| (a) Salary income. | Rs. 55,529 |
| (b) Income from sale of land/plots to individual customers. | Rs.8,741,000 |
| (c) Property income. | Rs. 48,000 |
| Total income: | Rs.8,844,529 |
Assessment year 1995-96
| (a) Salary income. | Rs. 302,170 |
| (b) Income from sale of land/plots to individual customers. | Rs.4,804,000 |
| (c) Property income. | Rs. 48,960 |
| Total income: | Rs.5,155,130 |
Assessment year 1996-97
| (a) Salary income. | Rs. 294,600 |
| (b) Income from sale of land/plots to individual customers. | Rs. 3,836,250 |
| (c) Income from sale of land to Bahria Town. | Rs.293,585,750 |
| (d) Addition under section 13(1)(aa) in respect of: | |
| (i) Purchase of plot measuring 203 Kanal. | Rs. 4,400,000 |
| (ii) Purchase of plot measuring 7 Kanal and 14 1/2 Maria. | Rs. 346,500 |
| (e) Income from sale of plot measuring 192 Kanal and 17 Marlas. | Rs. 17,036,318 |
| (f) Property income | Rs. 115,200 |
| Total income. | Rs.319,614,618 |
Assessment year 1997-98
| (a) Salary income. | Rs. 201,847 |
| (b) Income from sale of land/plots to individual customers. | Rs. 1,050,000 |
| (c) Income from sale of land to Bahria Town. | Rs. 86,600,000 |
| (d) Property income. | Rs. 115,200 |
| Total income: | Rs. 87,967,047 |
Assessment year 1998-99
| (a) Salary income. | Rs.220,900 |
| (b) Income from sale of land/plots to individual customers. | Rs .975,000 |
| (c) Income from sale of land to Bahria Town. | Rs.105,313,250 |
| (d) Addition under section 13(1)(aa) in respect of purchase of 1/2 share in land measure 204 Kanal and 1 Marla situated in Mauza Juliana Tehsil City District Lahore. | Rs.6,631,200 |
| (e) Property income. | Rs. 115,200 |
| Total income | Rs.113,255,550 |
For the assessment year 1999-2000, the assessment was finalized at total income of Rs.1,00,72,416 comprising of income assessed under following heads:--
| Salary income. | Rs.224,300 |
| Property income. | Rs.115,200 |
| Income from sale of land | Rs.780,000 |
| Addition under section 13(1)(aa) | Rs. 8,952,916 |
| Total income: | Rs.10,072,416 |
The assessments framed for all the years under consideration were challenged by the assessee through the appeals filed before the first appellate authority, which were disposed of by the CIT(A) in the following manner:--
"In view of the foregoing and facts and circumstances of the case it would be appropriate to set aside the orders on all the grounds other than the ground regarding disallowance of Accommodation allowance for the years 1995-96 to 1998-99 with the directions that contentions of the Counsel as above be verified independently, discrete enquiries, be conducted to ascertain facts of each transaction, verify contended claim of inherited land got through settlement by the Court subsequent to reply dated 17-4-1995, verify claim of accretion for 1999-2000 contended to be fully explained considering contended mitigating circumstances and thereafter appellant be confronted about the defects and basis of the treatment for each year by providing an opportunity of being heard and to explain his position and to produce evidence in support thereof, reply be considered and thereafter fresh orders be passed for the year under appeal in accordance with facts on merits and under the law.
As regards addition on account of accommodation allowance for 1995-96 to 1998-99 on the ground of Rule 4 of the Income Tax Rules, 1982 it is noted that the appellant for similar treatment for the year 1999-2000 did not contest the same per grounds of appeal for 1999-2000. In view of this position the addition for the years 1995-96 to 1998-99 is in order and is hereby confirmed."
The order of the CIT(A) is contested by the assessee-appellant through the above titled appeals on the following common issues raised through the grounds of appeals for the relevant assessment years mentioned as hereunder:
Assessment years 1994-95 to 1999-2000
That the learned CIT(A) has erred in setting aside the addition which being sale of inherited land was exempt but was taxed without any notice under section 62, which is mandatory requirement of law and the same should have been annulled being illegal ab initio.
Assessment years 1994-95 and 1995-96
That the DCIT having failed to provide reasonable opportunity to prove existence/possession of Inherited land after 1995 has violated principle of audi altram partem and as such the CIT(A) should have annulled the assessment instead of setting it aside.
Assessment years 1995-96 to 1998-99
That MPAs are granted accommodation allowance calculated with reference to the number of days of Assembly session and as such covered under clause (39) of 2nd Schedule to the Income Tax Ordinance, 1979 whereas the DCIT has treated as House Rent governed by Income Tax Rules, and upholding the addition on the ground that the appellant did not contest such addition in appeal for 1999-2000 is baseless and ridiculous.
Assessment years 1996-97 to 1998-99
(i) That the learned CIT(A) has erred in setting aside the issue of assessment of profit of Rupees from sale of land to Messrs Bahria Town Ltd., instead of annulling it when it is clear from record that the land sold was Appellant's voters land and that he merely received payments for them to protect their interest. The addition is otherwise unlawful for want of statutory notice under section 62 after the submission of return.
(ii) In addition to above mentioned common issues, the other grounds of appeals for different years are reproduced as hereunder:--
Assessment year 1996-97
(i) That the additions under section 13(i)(aa) of Rs.44,00,000 and Rs.3,46,500 are unlawful as no specific notice under section 13(1) for these amounts was given and the learned CIT(A) has erred in law in setting aside this issue instead of annulling the additions because the appellant had declared the purchase and sale of 203 kanals 17 marlas land to Bahria Town and the transaction having completed within the year ending 30-6-1996 there was no concealment in not showing the same in the wealth statement.
(ii) That the learned C1T(A) has erred in setting aside the calculation and assessment of profit from sale of 192 kanals 17 marlas land to Bahria Town profit of which was declared at Rs.36,93,068 (as per reconciliation of wealth) whereas the learned DCIT has calculated the same at Rs.1,70,36,318 hypothetically not appreciating that the accretion/profit being a windful and accretion to capital was claimed exempt, as the appellant was MPA and not a property dealer. Besides this no specific notice under section 62 or 13 was given which was statutory requirement of law.
Assessment year 1998-99
(i) The CIT(A) has erred in setting aside the addition under section 13(1)(aa) of Rs.66,31,000 with regard to purchase of 1/2 of land at Mauza Juliana Distt. Lahore instead of annulling it not appreciating that the appellant had ample sources for purchases of this asset as per reconciliation of wealth particularly when he had received advance of Rs.2,00,00,000 on 20-4-1998 through cross cheque from Malik Riaz of Bahria Town out of which land was purchased.
Assessment year 1999-2000
(i) That the learned CIT(A) has erred in law in setting aside the addition under section 13(1)(aa) of Rs.89,52,916 being difference of original and revised wealth statement as on 30-6-1998 as the same should have been deleted as circum stances requiring revision of wealth statement as on 30-6-1998 were submitted along with documentary evidence during the course of assessment.
(ii) That the proviso I of S.13 was under suspension till 30-6-2000 and was revived through Finance Ordinance, 2000. The provision being substantive in nature cannot be applied for the years during which it was suspended. As such addition of Rs.89,52,916 being undeclared amount upto year ending 30-6-1998 is void and unlawful.
(iii) That even otherwise when the law permits under section 13 the assessment of any amount relating to earlier years, in the current year, it also allows explanation of sources relating to undeclared amount of earlier years. As such non acceptance of explanation under section 13(1)(aa) substituted along with documentary evidence by DC 1T and CIT(A) is unlawful.
3. Mr. Muhammad Aslam Anwar, Advocate and Mr. Masoom Akhtar, FCA the learned ARs appeared on behalf of the assessee appellant and Dr. Muhammad Iqbal, the learned DR appeared on behalf of the revenue.
4. Learned ARs of the assessee, in their arguments contended that the additions made to the income assessed for the assessment years 1994-95 to 1999-2000 of the amounts representing sale proceeds of inherited land should have been deleted by the C1T(A) instead of having been setting aside. In this regard it was vehemently contended on behalf of the assesses that the taxation of the amount, as claimed as not chargeable to tax without issuance of any notice under section 62 of the repealed Ordinance confronting the assessee on the issue, was illegal ab initio and such addition was liable to be deleted. Learned ARs contended that it was mandatory upon the Assessing Officer to issue a notice under section 62 before making such addition. Learned AR of the assessee however admitted that no books of account were produced or maintained by the assessee for the years under consideration. According to learned AR despite the admitted, non-maintenance of books of account it was mandatory upon the Assessing Officer to issue a notice under section 62 of the repealed Ordinance. It was the contention of learned AR of the assessee that before proceedings adversely to the interest of the assessee a notice confronting the assessee on the issue must be issued by the Assessing Officer even if there was no such specific requirements under the relevant provisions of law. Learned ARs further submitted that it was a settled principle of law that no one should be condemned unheard. In this context, the judgments of the honourable Supreme Court of Pakistan reported as 1971 SCMR 681 as well as 2002 SC Pak 408 and certain other decisions of Indian High Court and ITAT, Pakistan were also referred by the learned ARs of the assessee. It was also contended by the learned AR of the assessee that the receipts shown as sale proceeds of inherited land for the assessment years 1994-95 to 1999-2000 were exempt from tax. According to learned AR of the assessee the assessment of said income without confronting the assessee through notice issued under section 62 of the repealed Ordinance was unjustified. It was contended by the counsel of the assessee that said land not declared in the wealth statement of the previous years was inherited subsequently as a result of settlement of dispute by the court. According to learned ARs of the assessee, the proof in support of the assessee's contention could have been produced before the Assessing Officer, had the assessee been confronted on the issue. It was the contention of learned ARs that the Assessing Officer violated the principle of natural justice by not providing the assessee of being heard and to substantiate his contention. The assessment framed on the issue was not tenable in the eyes of law, therefore, should have been annulled instead of having been set aside by the CIT(A).
5. With regard to addition made of the amount of accommodation allowance under the head salary it was contended by the learned AR on behalf of the assessee that the same should have been deleted by the CIT(A) being exempt under clause 39 of Part I of the Second Schedule to the repealed Ordinance. According to learned AR the accommodation allowance was given according to the number of days of Assembly session. It was contended that the accommodation allowance could not be treated as House Rent Allowance. Learned ARs stated that the allowance was given to meet the expanses during the Assembly session only and as such being an allowance to meet the expenses wholly and necessarily incurred in the performance of duty on office was covered under the provision of clause 39 supra. According to learned AR the CIT(A) was not justified in confirming the said addition made by the Assessing Officer for the assessment years 1995-96 to 1998-99 on the ground that same was not contested for the assessment year 1999-2000.
6. With regard to common ground for the assessment years 1996-97 to 1998-99 against the setting aside of assessment on the issue of assessment of profit from sale of land to Messrs Bahria Town Ltd. learned ARs of the assessee offered no argument and opted not to press this ground of appeals.
7. The selling aside of the addition by the CIT(A) made by the Assessing Officer under section 13(1)(aa) of the repealed- Ordinance of the amounts of Rs.44,00,000 and Rs.3,46,500 on account of purchase of land measuring 203 kanals and 7 kanals 14 1/2 marlas respectively was also contended to be unjustified. It was the contention of learned AR of the assessee that no specific notices under section 13(1) of the repealed Ordinance were issued to the assessee before making the addition. It was contended by the learned A.Rs. that the additions were made on the basis of notices issued under section 13(1) before reopening of assessment through notice issued under section 65 of the repealed Ordinance. It was further contended by the learned A.Rs. that profit from sale of land was exempt being gain of capital nature.
8. With regard to addition of Rs.66,31,000 made to the income for the assessment year 1998-99 under section 13(1)(aa) of the repealed Ordinance on account of purchase of 204 kanals and 1 marlas land in Mouza Juliana Lahore it was the contention of the learned ARs that the CIT(A) was not justified to set aside the assessment on the said issue. According to learned ARs of the assessee the addition was liable to be deleted because the assessee was not confronted, under section 13(1) in respect of the said amount before making the addition. It was stated by the learned AR that through the notice issued under section 13(1)(aa) of the repealed Ordinance by the Assessing Officer the assessee was confronted for the amount of Rs.43,26,098 whereas the addition was made of the amount of Rs.66,31, 200. According to learned ARs of the assessee for this legal infirmity in the assessment order the addition should have been deleted by the CIT(A). It was also contended by the learned ARs that the addition was even otherwise liable to be deleted since the sources were explained by the assessee.
9. The addition of Rs.89,52,916 made under section 13(1)(aa) of the repealed Ordinance to the income of the assessee for the assessment year 1999-2000 is contested on the ground that the sources stood explained. According to learned ARs of the assessee revised wealth statements for the assessment years ending 30-6-1998 and 30-6-1999 were filed whereby the assets declared were reconciled. According to learned ARs since as per revised wealth statement filed by the assessee for the year ending 30-6-1998 the investment related to the previous year the addition in the income of the assessee for the assessment year 1999-2000 was unjustified. According to learned ARs of the assessee, the proviso (1) of section 13 of the repealed Ordinance being non operative till 30-6-2000 the addition of the previous year could not he made to the income of the assessee for the year under consideration.
10. Learned ARs on the other hand, in his arguments, defended the impugned order with the submission that no grievance was caused to the assessee by setting aside the assessment on the issue of addition impugned by the assessee through the grounds of appeals. It was the contention of learned DR that opportunity of being heard was provided to the assessee through notice issued under sections 62 and 13(1) of the repealed Ordinance in response to which the assessee also filed the explanation. Learned DR submitted that the opportunity of being heard having been availed by the assessee it was not correct that he was condemned unheard. Learned DR further contended that it was also not correct that notices under sections 62 and 13(1) were not issued after reopening of assessment by issuance of notice under section 65 of the repealed Ordinance. Learned DR submitted that as mentioned in the assessment order notices under section 62 and 13(1) along with notice under section 61 were issued on 7-5-2001 for 17-5-2001 which were duly complied with by filing written reply on 25-6-2001. The AR of the assessee also filed further replies on 26-6-2001 to the above mentioned notices issued under sections 62 and 13(1) of the repealed Ordinance. Learned DR contended that the Assessing Officer was justified in making the addition of sale of land to the income of the assessee for all the years under consideration since the land sold was much more than the inherited land declared by the assessee in the wealth statement of the previous years. It was the contention of learned DR that there was no mention of any share of the assessee in the disputed inherited land in the previous wealth statements. Learned DR further submitted that grievance of the assessee regarding non providing of proper opportunity on this issue stands redressed with the setting aside of the assessment by the CIT(A) and there remains no further cause of grievance to the assessee. Learned DR submitted that proceedings under section 65 were initiated through issuance of notice under section 65 on 12-5-2000. According to learned DR the assessments which were going to the barred by limitation of time on 30-6-2001 were required to he completed in any case before 30-6-2001. Learned DR contended that assessment proceedings were prolonged and kept pending for a long period till the last date to provide the assessee with the fair opportunity of being heard. Learned DR stated that on each and every occasion when the case was fixed for hearing it was adjourned on the request made on behalf of assessee. According to learned DR from the above mentioned sole fact it was proved that the assessee was provided with more than sufficient opportunities. Learned DR further submitted that the replies and explanation were also filed by the assessee on all the issues which were considered and discussed in details in the assessment order. by the Assessing Officer. According to learned DR even otherwise the delay in assessment was solely caused due to the assessee, therefore, his claim for annulment of income for the reason of non-issuance of any further notice after the filing of return or revised wealth statements on the last dates when the time allowed for reassessment was going to expire, is totally unjustified and also highly unreasonable. Learned DR further contended that the assessments were completed after considering the replies and explanations filed by the assessee who had been responding to the various notices issued during the reassessment proceedings therefore the assessments were justified and could not be called illegal. With regard to addition made under section 13(1)(aa) to the income of the assessee for the assessment years 1996-97 and 1997-98 it was the contention of learned DR that the same were made after issuing notice under section 13(1) of the repealed Ordinance. According to learned DR it was not correct that notice under section 13(1) was not issued. Learned DR contended that notice under section 13(1) was issued on 7-5-2001 which was duly responded by the assessee. With regard to difference in the amount of addition made under section 13(1)(aa) for the assessment year 1998-99, it was the contention of learned DR that the assessee himself offered the explanation regarding investment made by him in the purchase of land at Lahore for the amount of Rs.66,31,200 instead of the amount confronted at Rs.43,26,098. According to learned DR that the opportunity of submitting explanation under section 13(1) stood provided to the assessee, therefore, there was no legal infirmity in the order of the Assessing Officer. With regard to the setting aside of assessment on the issue of addition made under section 13(1)(aa) of the repealed Ordinance to the income for the assessment year 1999-2000 learned DR contended that the assessee had been provided the opportunity to substantiate his contention on the issue which required verification of facts, as such the order of the CIT(A) to set aside the assessment was justified. According to learned DR, the assessee cannot blame the department for not considering the revised wealth statement of the previous year filed on the last dates when there was hardly any time left and the assessments were going to be barred by time limitation. According to learned DR, the proceedings remained pending for an almost one and half years and the assessee was issued notices under sections 62 and 13(1) much before the date of completion of assessment.
11. Arguments of learned representatives of both the parties have been heard and the orders of the authorities below as well as case law cited by the parties have also been perused. The main contention of learned AR of the assessee with regard to addition made to the income for all the years under consideration under the head "income from sale of land/plots to individual customers" is that the same should have been deleted by the CIT(A) instead of having been set aside. This contention is based on the plea that the said addition having been made without confronting the assessee on the issue was not maintainable. The relevant facts giving rise to the issue are that the assessee declared "income from sale of inherited land at Mouza Topi, Rawalpindi", in the statement of income i.e. computation chart filed for the assessment years 1994-95 to 1998-99 along with the returns of income filed in response to notices issued under section 65 in the following manner:-
| Assessment year 1994-95 | Rs.8,741,000 |
| Assessment year 1995-96 | Rs.4,804,000 |
| Assessment year 1996-97 | Rs.1,050,000 |
| Assessment year 1997-98 | Rs.1,050,000 |
| Assessment year 1998-99 | Rs. 975,000 |
The above income/receipts were claimed to be exempt by the assessee on account of being the sale proceeds of inherited land. For the assessment year 1999-2000, the amount of income declared under this head was Rs.7,80,000. The Assessing Officer on the basis of information available with him in the form of reply dated 17-4-1995, filed in the case of wealth tax proceedings in response to notice issued under section 16(3) of Wealth Tax Act, 1963, did not accept the plea of the assessee regarding exemption from tax of the said income and the sane was charged to tax and added to the taxable income of the assessee for all the years under consideration. According to the Assessing Officer as per information gathered from the wealth tax assessment record, the assessee inherited/owned only 40 Kanals 4 Marlas land which already stand disposed of during the previous year and there was no further inherited land available with him for sale during the year under consideration. It was contended on behalf of the assessee that further land was inherited subsequently on the basis of settlement of dispute by the Court the proof of which according to him was available with the assessee. However, according to learned AR the same could not be produced before the Assessing Officer because the assessee was not confronted on the issue. Before proceedings further we would like to point out here that the proceedings under section 65 for the assessment years 1994-95 to 1998-99 were initiated through issuance of notice under section 65 on 12-5-2000 with the approval of Inspecting Additional Commissioner of Income Tax and Wealth Tax, Range-III, Rawalpindi. These notices were served upon the assessee on 13-5-2000. Subsequently, an application for adjournment was received from the AR of the assessee on 22-5-2000 after the case was adjourned to 29-5-2000. The perusal of the assessment order reveals that the statutory notices under section 61 were issued on different occasions and each time the hearing was adjourned on the request of the assessee. It is also important to mention here' that the assessments reopened under section 65 for the assessment years 1994-95 to 1998-99 were going to be barred by 'limitation of time on 30-6-2001 in view of the provision of sub-section (3A) of section 65 of the repealed Ordinance. It is pertinent to mention here that the assessee filed returns and reply to notices issued under sections 62 and 13(1) on 25-6-2001 and further reply to notice under sections 62/13(1) was also filed on 26-6-2001 when there was hardly any time left with the Assessing Officer to issue any further notice. By filing of returns along with details of income and wealth statements as well as reconciliation of wealth at such time. It was made impossible for the Assessing Officer by the assessee to issue any further notice on the basic of return/details filed by him on 25-6-2001 and 26-6-2001. The Assessing Officer could not be expected to do an act B which cannot possibly be done as explained through Maxim "LEX NON COGIT AD IMPOSSIBLIA". Further irrespective of the justification for seeking of the adjournments by the assessee he cannot be allowed to avail the benefit of the situation arising for the reasons the causes, of which are attributable to himself i.e. assessee. In the instant case if the Assessing Officer could not confront the assessee on the issue of assessment under the head "income from sale of land/plots" after filing of return along with details of such income on last dates because of time limitation he was himself responsible for such delay. It is settled principle of law that one cannot be allowed to avail benefit of his own mistakes. Thus the contention of the assessee that the assessments should be annulled instead of setting aside the issue for the reason that he was not provided with the opportunity of being heard through issuance of notice under section 62 confronting him on the issue after filing of returns on 25-6-2003 is not acceptable. The assessee being a contributory party to the alleged default by filing the returns and details on the last date not leaving any opportunity for the Assessing Officer to issue any further notice is not entitled to claim any benefit on the basis of the same.
12. Apart from the above reason the contention of the assessee regarding the validity of assessment of income by the Assessing Officer claimed to be exempt without confronting the assessee on the issue is even otherwise not acceptable. The assessee in this case declared receipts/income which was claimed as not chargeable to tax. It is now a settled principle of law that in case of claim of exemption under the fiscal laws the onus is upon the assessee to substantiate his claim. Thus the assessee when filed the returns claiming exemption in respect of the receipts income declared by him he was obliged to file evidence in support of the claim. In our opinion for not producing any evidence in support of the claim of the exemption the Assessing Officer could reject the claim for not having been substantiated. However, since the opportunity of providing evidence in support of the claim regarding sale of inherited land has already been provided by the CIT(A) in our opinion there remains no cause of grievance to the assessee. The case law relied upon by the assessee in this regard in our opinion is also of no help to him being distinguishable from the facts of the instant case. Under the provision of section 62 of the, repealed Ordinance a notice in writing pointing out defects in the books of accounts is required to be issued where accounts books are maintained and produced before the Assessing Officer. In the case before us admittedly no accounts were produced or being maintained by the assessee. The judgment of honourable Supreme Court of Pakistan reported as 1971 SCMR 681 cited by the assessee is related to the issue of dismissal of government servant without issuance of a show-cause notice despite the opportunity through issuance of a show-cause notice was provided in the statute itself. Failure to give such notice was held as fatal which rendered the impugned act void ab initio. In the case before us there is no statutory provision of issuance of any notice under section 62 in a case where no books of accounts are produced. There is no denial of the settled principle of law that opportunity of being heard is to be provided to the assessee before making any decision against him. As mentioned above the assessee failed to substantiate his claim of exemption in respect of income from sale of inherited land, the Assessing Officer could reject the claim. On the basis of principle of natural justice before such rejection the assessee should have been confronted on the issue by the Assessing Officer. However, this being not a mandatory provision did not render the impugned act as ab initio void and the defect being of a remedial nature stands cured with the decision of the CIT(A) whereby the assessee has been provided with the opportunity of being heard. Similarly the facts of the case in the judgment of honourable Supreme Court of Pakistan reported as PLD 2002 SC 408 and the issue involved therein are distinguishable from the instant case. The facts of the quoted case are that the Director General (operation) Port Qasim Authority Karachi was proceeded on corruption allegation under the NAB Ordinance. It was alleged that being Public servant, by using corrupt practices and corruption also accumulative movable, immovable and agricultural properties in his name in the name of his spouses, dependents and other relatives and benamidars by missing his official position. The issue, raised before and decided by the .High Court were:-
(i)Whether the property of the plaintiff is benami and if so, its effect?
(ii)Whether a benami property owned by the relatives of the accused can be attached and ultimately sold if the charge against accused is proved?
The question was raised that whether a Civil Court is vested with the jurisdiction to entertain a suit to try an issue which was subject matter of a criminal charge for which an accused is being tried in a Criminal Court as a special law i.e. NAB Ordinance. The contention of the appellant was that in case the jurisdiction of the Civil Court was ousted, the ostensible owners/alleged benamidar shall be rendered without any remedy in case their properties are ultimately confiscated in the said criminal proceedings and sold treating the same as properties of the accused person, even if, such ostensible owners are in a position to prove that they acquired the properties from their own resources which could be explained. It was in this context that the apex Court of Pakistan observed that no person can be condemned unheard as regard any matter in which he has any interest. The relevant part of the judgment of the honourable Supreme Court of Pakistan is reproduced as hereunder:
"The law by now is firmly settled that no person can be condemned unheard as regards any matter in which he has any interest. It has also been laid down as principle of law by the superior Courts that in every statute, principle of natural justice of hearing a person before condemning him as to his rights shall be deemed to have been embodied unless application thereof has been expressly or impliedly done away with. In the absence of any express provision to exclude the applicability of principles of natural justice of hearing of a person adversely affected by an order or judgment of the Court under NAB Ordinance, we would hold that he (benamidar) has a right to approach the said Court during the trial and before final judgment is passed that he should be heard. We may also observe that in all such cases, where the properties are alleged to have been purchased by an accused person in the names of his spouse, relative and others as benamidars, the Court should itself summon. those persons and give them opportunity to produce evidence- in support of their claim as to ownership in their own right to substantiate that they had sufficient sources of their own to acquire the properties and thereafter decide the case. As regards remedy of appeal, it being a substantive right cannot be availed by a person unless conferred by the statute. Under the relevant provisions of NAB Ordinance as regards appeal against final judgment of the Accountability Court, it can only be maintained by the State or the accused person. This being so, the ostensible owners or benamidars if heard by the Accountability Court and findings recorded against them, may invoke any other remedy in such situation including remedy under Article 199 of the Constitution."
From the perusal of above it is obvious that the contention of the assessee that the proceedings without issue of a show-cause notice are rendered ab initio void, even if, there is no specific provision for issuance of such mandatory notice, is not supported from this judgment of the honourable Supreme Court of Pakistan. Another case law cited by the learned AR was a decision of Tribunal reported as 2003 PTD (Trib.) 1956. The facts of which and issue involved are entirely different and have no relevancy with those of the instant case. In the said case the assessment under section 63 was finalized on 14-6-2001 whereas the notice under section 65 of the repealed Ordinance was issued, on 28-6-2001. The assessment having been made without first acquiring the jurisdiction of reassessment proceedings under section 65 was held ab initio void. Almost similar facts, and issue was involved in other case of Indian jurisdiction quoted by the learned AR of the assessee as (2000) 82 Tax 215 (H.C. India). The other judgments of the Tribunal cited by the learned AR of the assessee reported as 1985 PTD (Trib.) 178, 1999 PTD (Trib.) 3892, 2003 PTD (Trib.) 242 and 1993 PTD (Trib.) 266 are also not of any help to the assessee AR because in the said cases additions made were deleted for not issuing statutory notices specifically provided in the law. Under the circumstances, considering the facts in their entirety and in view of the relevant provisions of law, we are not inclined to interfere on behalf of the assessee in the order of the CIT(A) on the issue. The order of the CIT(A) whereby he has set aside the assessments on the issue of income assessed under the head "income from sale of land/plots to individual customers" for all the years under consideration is hereby maintained.
13. Before parting on this issue we will like to make our observation regarding the careless manner in which the income under the head "sale of land/plots to individual customers" was assessed by the Assessing Officer. The assessee declared the said amount of receipts as income from sale of inherited land. Surprisingly the Assessing Officer has taken the same figure as taxable income treating the sale of land as business activities. The same figure of receipts declared by the assessee as receipts from sale of inherited land were adopted by the Assessing Officer is his income from business of sale of property without working out the income in a proper manner. The total sale receipts could hot be adopted as business income without deducting the cost of sales since he had not added the amounts under the provisions of section 13(1) of the repealed Ordinance.
14. In the grounds of appeals for the assessment years 1996-97 to 1998-99 another issue raised is regarding the setting aside of the assessment of income from sale of land to Messrs Bahria Town Ltd. The CIT(A) through the impugned order also set aside the assessments on this issue for all the three years under consideration. As already mentioned above the learned AR of the assessee opted not to press this ground of appeal. The Assessing Officer on the basis of evidence available with him assessed the income for the three years under consideration under this head. It was the contention of the assessee before the CIT(A) that he had not made any profit from the sale of land to Bahria Town. However, since the issue raised needed further verification of fact and since the assessee's appeals on this ground were not proved by learned ARs the setting aside of the assessments on this issue for de novo assessment after ascertaining the fact is held to be justified, therefore, maintained.
15. Next issue involved in the assessments for the assessment years 1995-96 to 1998-99 is the taxability of accommodation allowance received by the assessee as Member of Provincial Assembly. The Assessing Officer treated it as House Rent Allowance and after allowing upto the 45% of the basic salary, the balance amount was added to the taxable salary of the assessee. The CIT(A) with the observation that the appellant for similar treatment for the assessment year 1999-2000 did not contest the same confirmed the treatment accorded in this regard for the years under consideration. The reason given by the CIT(A) for the above findings is not plausible one and without any justified basis. One cannot be deprived of a legal right merely for the reason that he had not availed the same at some other occasion, even if he is otherwise legally entitled for the same. The contention of the assessee that the amount received is not House Rent Allowance but charges to meet the expenses for accommodation during the Assembly session needs further verification of fact and of further discussion regarding the applicability of relevant provision of law is also required. The order of the CIT(A) on the issue is therefore vacated and the assessments for the assessment years 1995-96 to 1998-99 are also set aside and remanded back to the Assessing Officer for de novo decision and after taking into consideration the contention of the assessee and the relevant provision of law.
16. The next issue is the addition of Rs.4,00,000 and Rs.3,46,500 made under section 13(1) of the repealed-Ordinance to income assessed for the assessment year 1996-97. It is the contention of the assessee's AR that the addition should have been deleted instead of having been set aside by the CIT(A). According to learned AR, the additions were made without issuance of notice under section 13(1) of the repealed Ordinance. The contention of the assessee is not found to be correct because as mentioned on the page 20 of the assessment order a notice under section 13(1) was issued on 7-5-2001 wherein he was required to explain the sources of investment made by him in the purchase of the land which was sold by him to Messrs Bahria Town. The assessee had also filed replies/explanation on 25-6-2001 and 26-6-2001 as reproduced in the assessment order. On being pointed out with this fact, the assessee's AR contended that the Assessing Officer had not issued notice under section 13(1) after filing of return under section 65 and wealth statement on 25-6-2001. This contention of the assessee is devoid of any force. The assessee has already been confronted under section 13(1) on the basis of information that he made the said investment in the purchase of property which was sold- by him to Messrs Bahria Town. The assessee had also filed explanation in this regard. As already discussed in the above paras, the assessee cannot be allowed to avail the benefits of the situation created by himself. Even otherwise the requirements of section 13(1) whereby he is required to be provided with the opportunity to file explanation regarding sources of investment having been fulfilled we find no legal infirmity in the assessment order on the issue. Under the circumstances, the order of the CIT(A) whereby the assessment for the assessment year 1996-97 has been set aside on the issue of addition under section 13(1) is not interfered with.
17. In the grounds of appeal for the assessment year 1998-99, the setting aside of the addition of Rs. 66,31,200 made under section 13(1)(aa) of the repealed Ordinance is also contended to be unjustified. According to contention of learned AR, the addition should have been deleted because the assessee had explained the sources of investment made in the purchase of this asset as per reconciliation of wealth filed by him. At the time of hearing of appeal however this ground was not argued by the learned AR of the assessee who raised another objection that the addition was liable to be deleted on the ground that the amount added was different from the one confronted to explain the assessee through notice under section 13(1)(aa) of the repealed Ordinance. Learned AR contended that this being a legal ground it could be agitated at the appellate stage. Learned AR stated that the assessee was confronted to explain the amount of Rs.43,26,098 being the investment as his 1/2 share in the purchase of land measuring 204 kanals 1 marla situated in Mouza Juliana Lahore through notice issued under section 13(1) on 7-5-2001. Learned AR further stated that as per explanation filed on 26-6-2001, it was informed by the assessee that the actual of 1/2 share was Rs.66,31,200 and not Rs.43,26,098. The contention of learned AR that the assessee was not confronted with the amount of Rs.66,31,200 after filing the reply/explanation on 26-6-2001 renders the addition illegal is also not acceptable considering the facts as well as the provision of law. Under the provision of 13 of the repealed Ordinance the assessee is to be provided with the opportunity to explain the sources of investment which was provided and also availed by him. So far as the addition of different amount then mentioned in the show-cause notice is concerned, the assessee had himself offered the explanation with regard to investment of Rs.66,31,200 made by him. He cannot now take the plea that the opportunity was not provided to him for explaining the source of the investment when he had himself offered the explanation for Rs.66,31,200. Even otherwise as discussed in the above paras, the assessee filed his reply/explanation to the notice issued under section 13(1) at the time when there was hardly any time left with the Assessing Officer to issue any further notice. The assessee cannot be allowed to avail the benefit of situation created by himself. Under the circumstances, taking into consideration entirety of the circumstances as well as facts and provision of law we are not inclined to interfere in the order of the first appellate authority on the issue which is hereby held to be justified.
18. The last issue pertains to grievance of the assessee against the setting aside of the addition of Rs.89,52,916 under section 13(1)(aa) of the repealed Ordinance to the income of the assessee for the assessment year 1999-2000. The main contention of the assessee in this regard is that the accretion in wealth stands reconciled with the revised wealth statement as on 30-6-1998 filed by the assessee. According to learned AR the amount of accretion pertains to the previous year, therefore, could not be added to the income of the assessee for this year. The perusal of the assessment order reveals that the plea of the assessee was not accepted by the Assessing Officer for the reason that the assessment for the assessment year 1998-99 already stood completed as such the revised wealth statement filed for the relevant year i.e. as on 30-6-1998 was not acceptable. In our opinion, there is no legal infirmity in the order of the CIT(A) to set aside the assessment because issue involved relating to period of investment and sources of investment requires the verification of facts. In our opinion, adequate relief already stands provided to the assessee by the order of the CIT(A) whereby the assessment on the issue has been set aside for verification and ascertainment of fact. The appeal of the assessee on this issue also fails.
19. As a result, the appeals of the assessee for all the years under consideration on all the issues raised through the grounds of appeals fail except on the issue of accommodation allowance raised for the assessment years 1995-96 to 1998-99 which also stands disposed of in the manner as indicated above.
C.M.A./184/Tax (Trib.)Order accordingl