Citation(s): 2012 SLD 25 = 2012 PTD 202

Income Tax Appellate Tribunal

I.T.As. Nos.1207/LB and 1291/LB of 2010, decision dated: 29-09-2011

AUTHOR(S): NAZIR AHMAD, JUDICIAL MEMBER AND ABDUL RAUF, ACCOUNTANT

MISS JAANA MALIK AND OTHERS

VS

C.I.R. (LEGAL), R.T.O.-II, LAHORE AND OTHERS

M. Waseem Ch. for Appellants (in I.T.A. No. 1207/LB of 2010). Sajjad Taslim, D.R.
for Respondents (in I.T.A. No. 1207/LB of 2010). Sajjad Taslim, D.R. for
Appellants (in I.T.A. No. 1291/LB of 2010). M. Waseem Ch. for Respondents (in
I.T.A. No. 1291/LB of 2010)
Law: Income Tax Ordinance, 2001
Section: 122(9),120,111(1)(b),122(9)

Topic: Unexplained Income and Notice for Compliance

ORDER

Titled cross appeals have been instituted at the instance of the taxpayer as well as
department against the appellate order dated 15-6-2010 recorded by Commissioner Inland
Revenue (Appeals) Lahore.

2. Facts in brief for disposal of instant appeals are that the taxpayer, a film actress, filed
annual return for the year under consideration disclosing net income of Rs.149,500, which
was taken to be assessment order under section 120(1) of the Income Tax Ordinance, 2001
(hereinafter called "the Ordinance"). The department on the basis of an information
received regarding purchase of a Suzuki Car for Rs.483,000 on 19-7-2002 and a house at
Defence Housing Authority (DHA) Lahore for a consideration of Rs.2,029,950 on 7-8-2002
initiated proceedings through issuance of notice under section 122(9) and finding no reply
from the appellant/taxpayer amended the assessment by adding the said assets in the
income already assessed. Taxpayer agitated the said treatment before CIR(Appeals) Lahore
on a number of grounds who remanded the case back to the taxation officer for de novo
proceedings after affording fresh opportunity of being heard to the taxpayer. Still
discontented the appellant has come up in further appeal before this Tribunal inter alia on
the following grounds:--

(i) That the Commissioner Inland Revenue Appeals-II, RTO, Lahore is remand back the case
of the appellant without jurisdiction, illegal and bye owned the jurisdiction.

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(ii) That on notice under section 122(9) read with section 122(5) has been received by the
taxpayer dated 26-6-2009 for compliance on 28-6-2009 and even subsequent order under
section 122 of the Income Tax Ordinance, 2001 and the assessment finalized on 30-6-2008
on the day I which the case was not fixed for hearing. Hence the assessment is liable to be
annulled. Reliance has been placed on judgment cited as 2008 PTD (Trib.) 1641.

(iii) That the proper opportunity of being heard has not been allowed to the taxpayer and
assessment finalized on the basis of improper service, which is not sustainable in the eyes
of law. Reliance has been placed on judgment (1994 SCMR 2232).

(iv) That the taxpayer has shown the value of Advance for Car in wealth statement as on
30-6-2003 at Rs.182,000 as advance in the wealth statement as on 30-6-2003 because the
taxpayer purchased the car on installments and the rest payment amounting to Rs.304,000
paid on 30-12-2004.

(v) That the addition made on account of purchase of House 163-V, DHA, Lahore Cantt at
Rs.2,050,000 is illegal because the house is not in the name of Taxpayer Miss Janna Malik,
The said house was purchased by her mother Mst. Swetie Nasim.

(vi) That amended assessment order for the Tax Year 2007 finalized by the Assessing
Officer is illegal, void and without jurisdiction and liable to be declared as annulled.

3. The department has also come up in appeal by raising the following grounds:--

(1) That the learned Commissioner Inland Revenue (Appeals-II) Regional Tax Office, Lahore
was not justified to set aside the order passed under section 122(1) of the Income Tax
Ordinance, 2001 in the circumstances when section 129 of the Income Tax Ordinance, 2001
does not permit to do so.

(2) That the learned Commissioner Inland Revenue (Appeals-II) Regional Tax Office, Lahore
while setting aside the case has exercised his powers beyond jurisdiction, therefore, the
orders is not sustainable.

4. Mr. Muhammad Waseem Ahmad Ch. Advocate appearing on behalf of the appellant
contends that the impugned order is not maintainable as the learned CIR(Appeals) instead
of annulling the order of taxation officer has remanded the matter back to him. Elaborating
his view point he maintained that the notice under section 122(9) of the Ordinance was
issued on 26-6-2009 for 28-6-2009, which is not a sufficient and reasonable time for
compliance and even the order was passed on a date not fixed for compliance i.e. 30-6-
2009. As per learned counsel, the amended order merits annulment not only for the reason
that sufficient opportunity of being heard was not provided but also for that the same was
passed on the date not fixed for hearing. In support of his arguments, he has placed
reliance on a reported judgments of Honourable Supreme Court reported as 1994 SCMR
2232 and 2008 PTD (Trib.) 1641. Learned AR further contends that the Suzuki Car was
obtained by the taxpayer on lease from Askari Leasing Company in the tax year 2003 and
the amounts paid upto 30-6-2003 were declared in the wealth statement as on 30-6-2003
and to substantiate his claim he produced the said wealth statement, lease documents and
registration of car. Learned counsel further contends that the house at DHA Lahore has
illegally been added in the taxpayer's income as the same does not belong to the taxpayer.
In support of his claim, he produced a copy of the transfer of allotment letter in respect of
10 Marlas Plot No.000163 Block V Phase 2 DHA Lahore dated 13-8-2002 issued by the
Secretary of DHA bearing Serial No.0052645 in the name of Mst. Sweety Naseem. While
concluding his arguments, he prays for annulment of the order.

5. Learned DR has fully supported the action of taxation officer by maintaining that as per
section 129 of the Ordinance CIR(Appeals) is not empowered to set-aside the order
impugned before him. By doing so, he has travelled beyond his jurisdiction, hence,
impugned order is not sustainable.

6. Arguments heard and record perused. In our opinion, the arguments of the learned
counsel carries considerable force. Issuance of notice under section 122(9) on 26-6-2009
for 28-6-2009 providing only two days for compliance cannot be considered as sufficient
and reasonable time for compliance and the finalization of assessment on the date other
than the one fixed for compliance is also not tenable. Moreover, no definite information was
available with the department while initiating proceedings as is evident from the wealth
statement and lease documents as well as ownership documents of the House submitted at
the time of hearing. Car was obtained on lease from Askari Leasing Company and the lease
amount paid upto 3-6-2003 to the leasing company was accordingly declared in wealth
statement for the tax year 2003. Addition of Rs.483,000, which is the total amount of the
car, shows that the taxation officer was in possession of incomplete information. Moreover,
the property which is not even owned by the appellant as is evident from the record of DHA
was added without making an effort to verify the ownership as well as the exact invested
amount clearly establish that no definite information was available with the department as
envisaged in section 122 of the Ordinance. The above infirmities clearly establish that the
proceedings for amendment of assessment are altogether illegal and not warranted. The
orders of the authorities below are annulled by deleting the addition under section 111(1)
(b).

7. As far as Revenue appeal is concerned, since we have annulled the order of the 2 forum
below, departmental appeal is accordingly dismissed.

8. The upshot of the above is that taxpayer's appeal is accepted whereas departmental
appeal is rejected.

Order accordingly.