2010 PTD 2281
ORDER
MUNSIF KHAN MINHAS (JUDICIAL MEMBER).--- The assessee has filed these appeals against the combined order dated 51-2009 passed by CIT(A-II) Islamabad for the tax years, 2005 and 2006 on the following grounds:
Assessment Year-2005
(i) That the said Taxation Officer was not at all justified to make assessment under section 122(5) read with section 39(3) of the Income Tax Ordinance, 2001 which in view of the facts and circumstances of the case is illegal and un-justified.
(ii) That the learned Taxation Officer was also not at all justified to add Rs.500,000 under section 39(3) of the Income Tax Ordinance, 2001 as cash loan which is again in view of the facts and circumstances of the case is illegal, un-warranted and un justified.
(iii) That the addition made in the income of your appellant under section 39(3) of the Income Tax Ordinance, 2001 is just on presumption and Taxation Officer was not allowed the proper opportunity as such assessment is illegal and unjustified.
(iv) That the said Taxation Officer was also not at all justified to issue notice under section 190 the Income Tax Ordinance, 2001.
Assessment Year-2006
(i) That the said Taxation Officer was not at all justified to make addition of Rs.403,823 under section 111 of the Income Tax Ordinance, 2001, learned CIT(A) was not justified to uphold this addition.
(ii) That the learned Taxation Officer made addition without mentioning of sub-clause of section 111 of the Income Tax Ordinance, 2001 and its confirmation by CIT(A) was not justified as such assessment is illegal and un-justified.
(iii) Credit of gain on sale of plot amounting to Rs.400,000 has not been given by the Taxation Officer and learned CIT(A) also ignored this act of Taxation Officer which is not justified.
(iv) The learned Assessing Officer has no jurisdiction to pass impugned order keeping in 'view the F.B.R. jurisdiction Order C.No.10(11)IT-Jud/2005 dated 28-12-2006 read with amended F.B.R. jurisdiction Order C.No.1(17)IT-Jud/2007 dated 25-4-2009. Hence, order passed is void ab initio, unlawful and without Jurisdiction.
(v) That while making amended assessment, the amended order passed by learned Assessing Officer is void ab initio, and void of merit because the notice issued as well as order passed under section 122 is without mentioning of any specific clause of subsection (5) of section 122 of Income Tax Ordinance, 2001. In view of the foregoing the notice issued and order passed under section 122 are defective, hence amended order requires to be annulled.
(vi) That learned Assessing Officer is not clear in his mind under what provision of law he is proceeding as he has in the absence of any definite information, initiated the proceedings under the provision of section 122(5) of Income Tax Ordinance, 2001 for clarification as mentioned in his impugned order which is unlawful.
(vii) That whole super structure created by the learned Assessing Officer and as confirmed by CIT(A) is illegal, void and invalid as there is fatal mistake of assumption of jurisdiction by learned Assessing Officer without specifying any sub-clause of section (5) of section 122 of Income Tax Ordinance, 2001.
2. Brief facts leading to the appeals are that the assessee an individual who derives income from salary as electric engineer from Attock Refinery Limited. Returns for tax years, 2005 and 2006 were filed declaring net income at Rs. 812,046 and Rs.978,278 respectively. For tax year, 2005 during audit proceeding it was observed that taxpayer declared liabilities at Rs.3,232,500 in the wealth statement where as no evidence regarding these liabilities was provided. The assessee was confronted with related issues through notices asking for various details/documents. In response explanation furnished by the learned AR was duly considered. For the reasons recorded in the order an amount of Rs.500,000 was added back to the total income for want of proof. For tax year, 2006 it was observed that there is an unexplained income of Rs.403,823 in the assets declared in the wealth statement filed along with return of income. The assessee was confronted with related issues through notices under section 122(9) asking for various details/ documents. In response explanation furnished by the learned AR was considered unsatisfactory. For the reasons recorded in the order assessment was framed by making addition of Rs.403,823. Net income was assessed at Rs.1,382,101 for the year under appeal. Being dissatisfied with the treatment given by the Taxation Officer the assessee preferred appeals for the years, 2005 and 2006 respectively 'before the learned Commissioner (Appeals) who vide his impugned order dated 5-1-2009 confirmed the orders passed by the Assessing Officer. Being aggrieved with the order of the learned CIT(Appeals-II) the assessee has come up in the present appeals before learned Tribunal on the grounds mentioned in para 1.
Tax Year 2006
3. The learned AR has argued that this case was not selected for audit as well as the assessment for the year 2006 is concerned he insisted that vide letter C.No.10(11)IT-Jud/2005 dated 28-12-2006, jurisdiction was granted to the learned CIT (Audit Division) for the cases which was selected for audit. For the rest of the case jurisdiction was lying with the CIT (Enf. and Collection Division). This case was not selected for audit, hence the Taxation Officer (Audit Division) has no jurisdiction to reopen the deemed assessment. The learned AR further referred letter' C. No,1(17)IT.Jud/2007, dated 25-4-2009 which embodied the following wordings:-
"(a) After the words "Chapter-VIII" at entry "e" of S.No.1 TABLE-A in column(3), the following shall be inserted:- "in cases selected for audit"
(b) The following entry "k" after entry " j " at S.No.2 of TABLE-.
A in column (3) shall be inserted;
"(k) Exercise powers to determine income under "Anti avoidance' provisions, contained in Chapter-VIII in respect of cases other than those selected for audit."
So it is a corrigendum in which CIT (Enforcement and Collection Division) have been empowered to determine the income under Anti-avoidance provisions contained in Chapter-VIII in respect of cases other than those selected for audit. Although in letter dated 25-4-2009, it has been written that it shall take effect from 1-1-2007. Yet this order has been passed after the said date.
4. I have heard the respective submissions of both parties, perused the relevant record. It is corrigendum which is of clarifacatory nature. As this case was not selected for audit, resultantly the jurisdiction vested with the CIT (Enforcement and Coll. Division) and not with the CIT(Audit). The order passed under section 122(5) is without jurisdiction for the assessment year 2006, which is nullity in the law. Resultantly it is hereby cancelled and consequently deemed assessment shall stand restored for the assessment year 2006. In the light of foregoing discussion impugned orders of both the authorities below hereby stand vacated being legally not maintainable.
5. Assessee's appeal succeeds accordingly for tax year, 2006.
Tax Year, 2005
6. As far as Tax year, 2005 is concerned, mainly thrust of the learned AR is that specific clause of subsection (5) of section 122 of Income Tax Ordinance, 2001 was not confronted to the assessee. The contention of the learned AR cannot be given due weight because in the case of CIT v. Abdul Ghani, reported as 95 Tax 353 (S.C), the honourable Supreme Court of Pakistan has given clear cut finding that non-mentioning or even wrong mentioning of a section in any of the assessment documents does not render the assessment order void. It is the subject-matter and substance of the notice which is to be considered for determination of the question of provision of law under which action was contemplated irrespective of the, section referred therein. Accretion shown in wealth statement was not satisfactorily explained and the finding of the learned CIT(A) is not open to any exception. It is, upheld and maintained.
7. Assessee's appeal for the tax year, 2005 hereby stands dismissed.
H.B.T./156/Tax (Trib.) Order accordingly.