2015 PLP (Trib (PTD)

CH. ANWAAR UL HAQ (JUDICIAL MEMBER).

The titled appeal pertaining to tax year, 2010, has been preferred at the instance of taxpayer, arises out of impugned order dated 24-9-2013, passed by the learned CIR(A), Lahore. The taxpayer also filed miscellaneous application seeking condonation of delay in filing appeal before this Tribunal. MA(Cond) No. 41/LB/14

2. It is submitted by the learned AR of the applicant that the taxpayer had never received the impugned order of the learned CIR(A) dated 24-9-2013 and came to know about the aforesaid order when one of the official of the department on 23-4-2014, approached the taxpayer for recovery of the impugned demand. It is submitted by the AR that after came to know the impugned order, the taxpayer vide application dated 28-4-2014 applied for the certified copy of the impugned order and after receipt of the order he preferred appeal before this Tribunal, hence, the same is within time. It is contended by the learned AR that service of impugned order on Authorized Representative was not proper and the period of time for filing appeal would not commence from service of such order upon an AR. Reliance in this behalf is placed by the AR on the decision reported as 2007 PTD

1. It is further contended by the AR that delay in filing appeal was not deliberate and was beyond the control of the appellant. It is also submitted by the AR that this Tribunal has inherent powers to condone delay in filing appeal under sections 131 and 132 of the Income Tax Ordinance, 2001, read with Rule 16 of the ATIR Rules, 2010.

3. The grounds urged for condonation of delay in filing appeal before this Tribunal seems to be plausible. It was held by the Hon'ble Lahore High Court [2002 PTD 608 and 2002 PTD 5061 that the prayer for condonation of delay in filing appeal should be considered objectively, unless taxpayer was contumacious in his action as the taxpayer did not stand to gain anything by delaying an appeal nor a delay on his part gave rise to or create valuable right in favour of the revenue. Therefore, the present application is accepted and the main appeal is admitted for adjudication. ITA No. 956/LB/13

4. Briefly stated, the relevant facts are that the taxpayer in this case is an individual filed return for the tax year, 2010 declaring income at Rs.125,000 which was deemed to be treatment as an assessment stood finalized in terms of section 120 of the Income Tax Ordinance, 2001. Proceedings in the case were initiated on the basis of information received by the department that the taxpayer had purchased vehicle for a consideration of Rs.12,69,

000. Assessment for the year was amended under section 122(1)/(5) and an addition of Rs.12,60,000 and Rs.60,000 (registration charges) was made under section 111(1)(b) of the Income Tax Ordinance,' 2001. The taxpayer assailed the amendment of assessment and subsequent addition under section 111(1)(b) before the learned CIR(A) who vide order dated 24-9-2013, decided the appeal of the taxpayer after observing as under:-- "I have given due consideration to the arguments of the appellant. It is observed that the assessing officer made addition under section 111(1)(b) for the reason that the appellant had failed to establish availability of cash received through gift from 2003 to 2010. He also observed that the appellant had reconciled his wealth with the wealth for tax year, 2009 whereas no wealth statement for any of the preceding years was available on record, so that the value of opening assets for tax year, 2010 was not verifiable. It is also observed that he requested the appellant to remove the aforesaid objections. However, no reply was received from the appellant in response to last notice. I have further noted that even if the receipt of gift amounting to Rs.12,00,000 from his father was accepted, the said amount was gifted to two individuals namely the appellant and his brother, whereas the appellant had claimed credit of entire amount without any justification.. In my considered opinion, therefore, the assessing officer was justified in discarding the explanation of the appellant regarding sources of investment in acquisition of car. Resultantly, addition of Rs.12,69,000 made under section 111(1)(b) of the Ordinance is upheld. Addition of Rs.60,000 made by the assessing officer under some unknown provision of law is not maintainable and is accordingly deleted ".

5. The learned AR on behalf of taxpayer submitted before us that the learned CIR(A) was not justified to upheld the addition made under section 111(1)(b) amounting to Rs.12,69,000 and contended that the taxpayer has sufficient sources to make investment in purchase of motor-vehicle. It is contended by the learned AR that admittedly the taxpayer had liquid/cash assets as per wealth statement/reconciliation statement as on 30-6-2009 at Rs.13,55,000 and the said amount was utilized during the period ended on 30-6-2010 to purchase a car for consideration of Rs.12,69,

000. It is contended by the AR that no unexplained amount was credited during the year under consideration in the wealth statement and therefore under the law no addition could be made during the year. It is also explained by the AR that the taxpayer had acquired the amounts during the preceding years through explainable sources, therefore, if the department had any objection regarding the sources, the same could only be made in the relevant tax year. It is asserted by the learned AR that the authorities below were not justified to discard the sources of investment acquired through liquid/cash assets. It is contended by the AR that the impugned addition under section 111(1)(b) was made unjustifiably and illegally and liable to be deleted. On the contrary, the learned DR supported the orders passed by the authorities below and submitted that the taxpayer has failed to explain the sources out of which he had made investment in purchase of motor-vehicle under consideration, therefore, the impugned addition has rightly been made towards income of the taxpayer for tax year, 2010.

6. We have looked into the matter and after due consideration, we are convinced with the submissions made by the learned AR at the, bar. It is the contention of the AR that the taxpayer has liquid/cash assets as on 30-6-2009 at Rs.13,55,000 and the said amount was utilized during the period ended on 30-6-2010 to purchase a car for consideration of Rs.12,69,

000. Perusal of the wealth statement/reconciliation statement filed by the taxpayer for the period relevant to tax year 2010, reveals that the taxpayer is correct in its assertion that he had net assets as on, 30-6-2009 at Rs.13,55,000 and for the purpose he has utilized these liquid assets/ funds available with him. Since, no un-explained amount was credited during the year under consideration in the wealth statement of the taxpayer, therefore, in view of the provisions contained in section 111, no addition could be made during the year under consideration. If the department has any objection with regard to the net assets as on 30-6-2009, they can probe the same by initiating proceedings for the relevant tax year and if any addition required to be made that could only be made in that relevant tax year. The taxpayer has satisfactorily explained with the help of documentary evidences that he had made investment out of explainable sources, therefore, the addition made under section 111(1)(b) is found to be not maintainable in the eye of law is hereby deleted. Orders of the authorities below are accordingly vacated and appeal of the taxpayer is accepted. MA(Stay) No.833/LB/14

7. The appellant/taxpayer also preferred miscellaneous application seeking stay of recovery proceedings initiated by the department. Since, we have disposed of the main appeal of the taxpayer, the present applications for stay has become infructuous which is accordingly dismissed. HBT/21/Tax(Trib.) Appeal accepted.