2010 PTD 2414

Citation2010 PTD 2414

CourtINLAND REVENUE APPELLATE TRIBUNAL OF PAKISTAN

ORDER

KHALID WAHEED AHMED (JUDICIAL MEMBER).--- The order dated 6-9-2003 of CIT(A) Sialkot Zone, Sialkot pertaining to assessment year 1995-96 is assailed by the assessee appellant through the above titled appeal on the ground that the addition made under section 13(1)(aa) of Income Tax Ordinance 1979 (hereinafter called the Repealed Ordinance) should have been deleted instead of assessment on the issue having been set aside by the CIT(A).

2. Mr. Abdul Shakoor learned DR appeared on behalf of the revenue and Mr. Tabraz Ahmed Qureshi, Advocate appeared on behalf of the assessee/respondent.

3. The assessee/appellant in the instant case is a shareholder of M/s. Mohi-ud-Din (Pvt.), Ltd. Kharian. The assessment record of the above mentioned company revealed the information that the assessee/ appellant had made investment in purchase of shares of the said company namely Messrs Mohi-ud-Din (Pvt.) Ltd. On the basis of this information assessment proceedings in respect of the assessee/appellant were initiated by the Assessing Officer through issuance of notice under section 56 of the repealed Ordinance, for the year under consideration. Notices under sections 61, 58(1) and 62 were also issued by the Assessing Officer. The assessee was confronted through show-cause notice issued under section 13(1)(aa) of the Repealed Ordinance to explain the sources of investment statedly made in the purchase of shares of the company as above mentioned. In his explanation it was stated by the assessee/ appellant that the investment in the purchase of shares was made from the sale proceeds of agrarian land of forefathers of the assessee. According to the Assessing Officer as mentioned in the assessment order no proof of inheritance copy of Sale deed of land or any other document reflecting his share in the inheritance of land was filed by the assessee. The reply filed by the AR of the assessee was found unsatisfactory therefore not accepted by the Assessing Officer. The Assessing Officer made the addition of Rs.10,00,000 under section 13(1)(aa) to the income of the assessee for the year under consideration with the permission of IAC, Gujrat Range, Gujrat and the total income of the assessee for the year under consideration was thus assessed at Rs.10,00,000. The above mentioned assessment order of the Assessing Officer whereby the addition was made by him under section 13(1)(aa) of the Ordinance for the year under consideration was assailed by the assessee through the appeal filed before the first appellate authority. It was contended by the assessee before the First Appellate Authority that the necessary evidence and reconciliation statements could not be produced as the then AR of the assessee, Mr. Javeed Qureshi was taken ill who had later on expired. The service of notice issued under section 13(1)(aa) was also disputed by the assessee before the first appellate authority as having not been properly made upon him by the Assessing Officer. Apart from above it was also contended by the assessee that the amount of investment in the purchase of shares and the addition made at Rs.10,00,000 was misconceived and incorrect as the appellant had purchased share's worth Rs.1,00,000 only. Learned CIT(A) with the observation that the contentions of the assessee's AR relating to service of notice was found to be correct, set aside the assessment directing the Assessing Officer to A verify the source of investment after providing fresh opportunity to the appellant. Being dissatisfied with the above mentioned findings of CIT(A), the assessee is in further appeal before the Tribunal raising the following contentions through the grounds of instant appeal:

(i) That the officer below lack, assignment or territorial jurisdiction.

(ii) That the learned CIT(A) at Sialkot was not justified to set aside the case as the facts required the quashment of the assessment order.

4. Learned AR of the assessee in his arguments contended that the . addition made under section 13(1)(aa) was liable to be deleted because no approval of IAC was obtained by the Assessing Officer for making such addition. Learned AR contended that the addition made without the approval of the IAC was not maintainable. In this context learned AR of the assessee quoted a judgment of the honourable High Court reported as 2000 PTD 3788 (Lahore High Court) whereby it was held that the addition made under sub-clause (aa) to (e) of subsection of (1) section 13 without approval of IAC was not maintainable. Learned AR stated that in the case of the assessee-appellant there was no approval because the addition was made by the Assessing Officer after the grant of permission by the IAC to make addition under section 13(1)(aa) of the Repealed Ordinance. According to the learned AR of the assessee the permission granted by the IAC was not equivalent to his approval required to be obtained by the Assessing Officer in the case of such addition. Learned AR of the assessee submitted that the words "approval" and "permission" had different meanings and their impact was also quite different. It was also submitted by the learned AR of the assessee that when the law required an act to be performed in a particular manner, if not done in that manner was not tenable in the eyes of law. In support of his above contention learned AR of the assessee relied upon the decision of Tribunal reported as 2003 PTD (Trib) 1238 whereby on the similar facts as in the case before us, it was held that the words "approval" and "permission" have different meanings therefore the addition made under section 13(1)(aa) was deleted by the Tribunal. Learned DR on the other hand in his arguments defended the impugned order of the First Appellate Authority. It was the contention of the learned DR that there was no difference in the meanings of words "approval" and "permission" as used by the Assessing Officer when seen in the background of prevailing facts and circumstances of the instant case. According to learned AR the word "permission" was used in the same meanings as that of "approval" by the Assessing Officer and according to him the intention of the legislature which was to curtail the powers of the Assessing Officer and to associate higher authorities in such cases was fulfilled.

5. The arguments of learned representatives of both the parties have been heard and the order of the authorities below as well as the case law cited by the learned AR of the assessee have also been perused.

6. From the perusal of assessment order it transpired that the contention of the assessee regarding the investment in the purchase of shares having been made from the sale proceeds of agrarian land of forefathers was not accepted by the Assessing Officer for the reason that no proof of transaction of money, in the form of gift or loan or inheritance was filed. The perusal of the impugned order of the CIT(A) on the other hand reveals that before the first appellate authority it was the contention of the assessee that necessary evidence and reconciliation could not be produced before the Assessing Officer as the then AR Mr. Javed Qureshi was taken ill who later on expired. The objection raised by the assessee through grounds of appeal relating to issue of jurisdiction also remained unsubstantiated since no arguments or evidence was produced by the learned AR of the assessee in support thereof. Under the circumstances of the case the findings of the learned CIT(A) to set aside the assessment is held to be justified considering the facts of the case as mentioned above.

7. So far as the legal objection raised by the assessee contending that the assessment should have been annulled since the approval of the IAC and not the permission was required, for addition to be made under section 13(1)(aa) of the Ordinance we are not inclined to agree with the view point expressed by learned AR of the assessee in this behalf. The decision of Tribunal reported as 2003 PTD (Trib.) 1238 as relied upon by the learned AR of the assessee before the bench, in our opinion has no binding force for the reason that the said judgment was given by relying on another judgment of the Tribunal the facts as well as issue involved therein were not relevant to those of the above referred case i.e. reported as 2003 PTD (Trib.) 1238. It has been held by the Tribunal through the above mentioned judgment relied upon by the AR of the assessee that the "approval" and "permission" have different meanings. The relevant findings of the Tribunal in the case reported as 2003 PTD (Trib.) 1238 is reproduced as hereunder:--

"In view of the above facts and the case-law cited at the bar we are constrained to observe that the words "approval" and "permission" have different meaning and their impact is also quite different. Admittedly the Assessing Officer sought permission and the learned IAC allowed Permission, hence addition made by the learned Assessing Officer after seeking permission from the IAC is not tenable in eye of law. It is pertinent to mention here that when law required one thing is to be done in a particular manner the same should be done in the same manner or not done at all. Since in this case permission was sought and permission was granted, we have no hesitation in observing that approval in this case has never been sought nor granted and the permission allowed for making addition is not tenable in the eye of law."

8. On the other hand the facts of the case reported as 1994 PTD (Trib) 1288 which was relied upon by the learned AR of the assessee before the Tribunal in the above quoted case, reported as 2003 PTD (Trib) 1238 were entirely different. The original assessment in the said case was finalised under section 59(1) of the repealed Ordinance under Self Assessment Scheme. Later on it was noticed that the assessee's imports involved huge amount which did not commensurate with the capital available with him. The explanation offered by the assessee was not found plausible by the Assessing Officer therefore the permission was obtained from the C.B.R. which was required under Self Assessment Scheme for the assessment yea; 1985-86 for initiating the proceeding under section 65 of the Ordinance. It was the contention of the assessee that before reopening of a case finalized under section 59(1) for the assessment year 1985-86 the Assessing Officer was not only required to obtain approval from the IAC but he was also required to obtain permission from C.B.R. It was further contended by the assessee's AR that since no approval was obtained from the IAC, therefore, the notice issued by the Assessing Officer was invalid. This plea of the assessee's AR was not accepted by the Tribunal and the issue was disposed of with the following observations:--

"(6) We have examined the contention of the learned counsel for the assessee and have taken into consideration the facts of this case. The contention of the learned counsel for the assessee that in cases where the assessment is finalized under section 59 and immunity is granted then the Assessing Officer not only is required to obtain prior approval from the IAC but the permission of the C.B.R. is also necessary. But after taking into consideration the fact we are of the view that the approval of IAC and permission of C.B.R. was obtained in this case. From the scrutiny of letter dated 3-8-1987 written by the ITO to CIT East Zone for the purpose of obtaining permission of the C.B.R. it would appear that the ITO has mentioned in the said letter that the facts of the case justify the reopening of the assessment under section 65. Since this letter was sent through IAC, therefore, it would appear that the IAC also applied his mind before forwarding the letter to the CIT who ultimately obtained the permission of the C.B.R. under para 6 of the Circular No.3 of 1985. In our view there can be many conceivable modes regarding approval and each case can be examined on the basis of documentary evidence available. In our opinion in this case the ITO had made up his mind after considering the explanation offered by the assessee vide his letter dated 4-7-1987 that there was a case of issuing notice under section 65. The ITO after applying his mind submitted his proposal to IAC who also applied his mind before forwarding the letter to CIT. The IAC was associated with the whole exercise and had approved the action, of the ITO before forwarding his proposal to the CIT who ultimately obtained permission from the C.B.R. In our opinion all these facts suggest that the compliance of provision of section 65 was made by the Assessing Officer, therefore, the submission of learned counsel for the assessee on this point is not tenable."

9. It is obvious from the above findings of the Tribunal in the case reported as 1994 PTD (Trib.) 1288 the facts and the issue involved as well as the findings of the tribunal are entirely different from those in the case reported as 2003 PTD (Trib) 1238.

10. The perusal of the judgment of the Tribunal quoted before the Bench i.e. case reported as 2003 PTD (Trib.) 1238 further revealed that in the concluding paras another judgment of the Tribunal was also relied upon for reaching the above mentioned conclusion. The decision of the Tribunal cited as 1998 PTD (Trib.) 1935 has also no relevance to the facts of the above mentioned case before the Tribunal, or to the issue involved therein. The issue involved in the said judgment related to the taxability of amount received under Golden Handshake Scheme. Similarly the issue decided by the Honorable Lahore High Court in its judgment reported as 2000 PTD (Trib.) 3788 whereby it was held that the approval of IAC was a mandatory requirement for making the addition under the provision of section 13(1) is not a matter of dispute in the case before us. The question to be resolved in the instant case is that whether the "permission" of IAC amounts to grant of "approval" by him for the purpose of addition to be made under section 13(1) of the Ordinance.

11. In view of stated facts and discussion made as above the quoted judgment of Tribunal reported as 2003 PTD (Trib.) 1238 is not considered as binding therefore is being ignored.

12. We have considered the arguments put forth by learned representatives of both the parties and the case law relied upon by learned AR of the assessee. In our opinion the expression "permission" of IAC in the case before us has been used in the same sense and has the same meaning as that of "Approval" of IAC which is required to be obtained by the Assessing Officer for making, addition under the provision of section 13(1) of the Ordinance. Our this view point also finds support from the findings of the Tribunal in the judgment reported as 1994 PTD (Trib.) 1288 in which case the issues although not fully relevant was decided against the assessee and in favour of the department with the observations as reproduced in Para-8 above that since the letter for permission was sent through IAC therefore, it would appear that IAC also applied his mind before forwarding the letter to CIT who ultimately obtained the permission of C.B.R. Under the circumstances we are not inclined to interfere with the findings of CIT(A) which are hereby upheld being justified under the circumstances of the case.

13. As a result the appeal of the assessee fails.

C.M.A./125/Tax (Trib.) Appeal failed.