AHMED ENTERPRISES, ISLAMABAD VS COMMISSIONER OF TAX (LEGAL) LARGE TAXPAYER UNIT, ISLAMABAD, 2011 PTD-ISLAMABAD 876 (2011)

Income Tax Ordinance (XLIX of 2001)---

----Ss. 122(5), 133 & 177---Audit and amendment of assessment---Reference to High Court---Assessee who had business of construction and sales of buildings, filed return for the relevant year and his case was selected for audit under S.177 of the Income Tax Ordinance, 2001---Income Tax Officer resorted to enquire into the income of assessee and passed order regarding assessed income of the assessee---Income Tax Officer made amendment in assessment under S.122(5) of Income Tax Ordinance, 2001, which amendment was upheld up to the Appellate Tribunal---Validity---Assessee had not produced any evidence, like statement of bank accounts, sale deeds of sold buildings etc. during the audit---Audit Officer had no other alternative, but to enquire into the income of the assessee by other means---Statements of two persons, who had purchased two offices from the assessee, were recorded and they produced sale agreements---Only legal issue and not factual controversy could be made the basis of a Reference before High Court---In, the present case, no legal lacuna or infirmity had been pointed out---Factual controversy had already been resolved by the Appellate Tribunal---High Court, in circumstances, could not enter into the factual controversy while deciding Reference application---Order accordingly.

1993 SCMR 1108; 1988 PTD 324 and 1997 SCMR 1256 ref.

Hafiz Muhammad Idris for Petitioner.

Ayaz Shoukat for Respondents.

Date of hearing: 20th January, 2011.

JUDGMENT

RIAZ AHMED KHAN, J.---This order is directed to dispose of Tax Reference No.1 of 2011.

2. Facts constituting the background of present reference are that applicant has got the business of construction and sales of plazas. The applicant had filed returns for the year 2003-2005 as Rs.9,80,582 and Rs.53,96,553 respectively. The case of the applicant was selected for audit under section 177 of the Income Tax Ordinance, 2001. During the audit, the applicant did not produce any evidence like statement of bank accounts, sale-deeds etc. The Income Tax Officer was thus constrained to resort to enquire into the income of the applicant. The statements of two persons, who had purchased two offices from the applicant were recorded, they produced sale agreements, needless to mention that names of these two buyers were given by the applicant. The applicant was afterwards confronted with the statements of these two persons. Accordingly, the Income Tax Officer passed order regarding assessed income of the applicant.

3. The said order was challenged before CIT(A), who vide order, dated 3-4-2009 accepted the appeal on one legal ground and the factual controversy was left over. The said order was challenged before the I.T.A.T. The said Tribunal vide order dated 2-10-2009, set aside the order of CIT(Appeals) and remanded the case for adjudication of the appeal on the other ground as well. The C.I.T. (Appeals) again annulled both the assessment orders vide order dated 19-03-2010.

4. The Department feeling aggrieved of the order of CIT. filed two appeals before the Appellate Tribunal Inland Revenue, Islamabad Bench, Islamabad. The said Tribunal vide order dated 3-8-2010 accepted both the appeals. Since there were two assessment orders, so two reference petitions have been filed.

5. We have heard the learned counsel for the parties and have also perused the record.

6. The contention of learned counsel for the applicant is that the amendment in the assessment under section 122(5) of the Income Tax Ordinance, 2001, can be made only on definite information and not otherwise. Learned counsel further contended that in the instant case, the amendment in the declared voluntary assessment was not made on the basis of definite information. According to him, the learned Income Tax Officer had recorded the statements of the purchasers to whom the applicant had not sold the property and on the basis of their statements, the income of the applicant was assessed. Learned counsel further contended that actually the applicant had sold property to one person andthen the said person sold the property to the person whose Statement was recorded by the Income Tax Officer. As such the information was not definite. Learned counsel for the applicant in support of his contentions relied upon 1993 SCMR 1108 = 1993 PTD 1108, 1988 PTD 324 and 1997 SCMR 1256.

7. Learned counsel for the respondents vehemently opposed the contentions raised by learned counsel for the petitioner and contended that the amendment in the assessment orders was made on the basis of definite information and prayed for dismissal of instant reference.

8. The contention of the learned counsel for the applicant is not correct for the reasons that this matter has been discussed in the impugned order in detail. The applicant had not produced the required documents to the Assessment Officer during the audit. The Audit Officer had no other alternate but to enquire into the income of the applicant through other means. The statements of the purchasers were recorded and those were confronted with the applicant. Furthermore, in a tax reference before the High Court only legal issue can be raised and factual controversy cannot make the basis of a reference. It is also to be noted that the legal lacuna must come out of the impugned order. In the instant case, no legal infirmity has been pointed out, the factual controversy has already been resolved by the Tribunal and while deciding the present reference we cannot enter into the factual controversy.

9. In the circumstances, we find no force in the present reference, which is accordingly dismissed.

H.B.T./3/IslReference dismissed.