Mrs. AMINA NAEEM VS COMMISSIONER OF INCOME TAX, 2015 PTD-LAHORE-HIGH-COURT-LAHORE 1815 (2015)

Income Tax Ordinance (XXXI of 1979)---

----Ss. 13(1)(aa) & 66A---Un-explained investments, etc., deemed to be income---Powers of Inspecting Additional Commissioner to revise Deputy Commissioner's order under S. 66A of the Income Tax Ordinance, 1979---Tax on unexplained investment in property---Relevant value of property for purposes of income tax under S. 13 of the Income Tax Ordinance, 1979---Reference to High Court---Question before High Court was whether assessment order against the taxpayer, whereby S. 66A of the Income Tax Ordinance, 1979 was invoked to assess tax on the property of taxpayer in terms of declared value on wealth tax return; instead of value on date of purchase of property, was valid---Contention of taxpayer was that for the purpose of tax under S.13(1)(aa) of the Income Tax Ordinance, 1979; the value of the property on the date of investment was relevant and not the market value shown, as of the valuation date, on the wealth tax return; therefore the said assessment order was misconceived---Held, that in the wealth tax return value of property, on valuation date, was disclosed, whereas for the purpose of charging of tax under S.13(1)(aa) of the Income Tax Ordinance, 1979; the investment made in the purchase of property was relevant and there was no apparent error on record in declaring different values of property in the wealth tax return vis-a-vis income tax return---Reference was answered in favour of the applicant taxpayer, accordingly.

Mian Ashiq Hussain for Applicant.

Malik Asad, Dr. Ishtiaq Ahmad Khan, Additional Commissioner Inland Revenue, LTU, Lahore for Respondent.

ORDER

Out of the referred questions in this Reference Application, following question of law is pressed and argued before us for our opinion which is asserted to have arisen out of order dated 16-1-2004 passed by erstwhile Income Tax Appellate Tribunal ("Appellate Tribunal"):--

"Whether in facts and circumstances of the case, the learned I.A.C. acted legally in cancelling assessment for assessment year 1994-95 under Section 66-A of the Income Tax Ordinance, 1979.?"

2.Learned counsel for the applicant-assessee, on whose instance this Reference was moved, submits that provisions of Section 66A of the Repealed Income Tax Ordinance, 1979 ("Repealed Ordinance") could not have been invoked on the basis of value of property shown in wealth tax return. He explains that value of property, shown in wealth tax return, was the market value on valuation date, whereas for the purpose of tax under Section 13(1)(aa) or (d) value of property on the date of investment was relevant. The applicant-assessee had shown the value of investment in the property as Rs.200,000 whereas in the wealth tax return market value of the property, on valuation date, was shown as Rs.450,000. Argues that Appellate Tribunal was misconceived while holding that provisions of Section 66A were rightly invoked on the basis of information available in the wealth tax return.

3.These submissions are opposed by the learned counsel for the respondent-department, however, he could not controvert the factual and legal position explained by the learned counsel for the applicant-assessee.

4.Heard and record perused.

5.We are in agreement that submissions made by the learned counsel for the applicant-assessee that in wealth tax return value of property, on valuation date, is disclosed, whereas for the purpose of charging of tax under Section 13(1)(aa), the investment made in the purchase of property is relevant. There was no apparent error on record in declaring different values of property in the wealth tax return vis-a-vis income tax return. Hence the basic ingredient of an assessment to be erroneous was missing.

Our answer to the proposed question is in negative i.e. in favour of the applicant-assessee. Rest of the questions, being not pressed, are not considered.

This Tax Reference is decided in favour of the applicant-assessee.

6.Office shall send a copy of this order under seal of the Court to the learned Appellate Tribunal as per Section 136(6) of the Repealed Income Tax Ordinance, 1979.

KMZ/A-88/LOrder accordingly.