1998 PLP (Trib (PTD)

5. The appellant being aggrieved filed an appeal before the CIT(A). After discussing the facts of the case the learned CIT(A) rejected the appeal.

6. During the course of hearing the learned A.R. of the appellant contended that the learned CIT(A) failed to appreciate that the appellant's return under SAS for the year 1992-93 could only have been taken up for scrutiny under para. 4(c) read with para. 9 of the Scheme i.e. where positive evidence of concealment is available on file. In the appellant's case, no question of concealment arises because the loan from the appellant to his wife was mentioned in both the wealth statement of the appellant as well as the wealth statement of his wife Mrs. Shahnaz Zahid. It was further argued that no interest income was shown in the return because interest was charged/received. The case did not fall under the deeming clause of section 12(7) because under the C.B.R. notification SRO 750(1)/79, dated 28-3-1979 and SRO 197(1)/81, dated 15-3-1981 issued under clause (b) of the proviso to subsection (7) of section 12 (Annexures B and C), the loan was not used by the appellant's wife for the purpose of any business or for any investment in stocks or shares, etc. The loan to the appellant's wife was paid off within the year and was used by her mainly for personal expenses. It was stated it is difficult to bifurcate personal expenses of husband and wife in any case. The A.R. argued that it would be against the spirit and intention of the Self-Assessment Scheme if by strict and literal interpretation of the provisions of section 12(7) and SROs issued thereunder, failure to mention notional interest on loan to wife as deemed income would render the appellant's return disqualified on grounds of concealment. With prejudice to the above submissions, even if addition on this account under section 12(7) is considered legal, such addition would be limited to 2% plus Bank rate (10%) = 12% i.e., Rs.12,000 only and not Rs.14,

000. The notice under section 61, dated 13-5-1985 issued by the ITO before assessment on 3-6-1985 did not mention any reason for non acceptance of the return under SAS or any allegation of concealment. Hence, the appellant was given no opportunity explaining the above very genuine position to ITO. On the issue of agricultural income it was submitted that the ITO had no power under the law to recompute the appellant's exempt agricultural income. While the' ITO has taken so-called evidence of alleged concealment from the assessment record of the appellant's wife, he has failed to use that very record for verification of the appellant's agricultural income for land situated in the same village. This record shows that; The appellant's agricultural income. for the previous assessment year 1981-82 was accepted by the Income Tax Department 8's Rs.2,85,000 and his wife's agricultural income for that year was accepted as Rs.115,

000. For the assessment year 1983-84 (i.e. the year after the year in question), the appellant's agricultural income was accepted as Rs.4,40,000 and his wife's agricultural income as Rs.1,20,

000. Tehsildar's certificates, dated 10-3-1984 for this year for the appellant's wife and children showing income of Rs.2,000 per acre were provided. For the assessment year in question, 1982-83 the ITO has accepted agricultural income at Rs.1,20,000 for the appellant's wife. Tehsildar's certificate, dated 17-1-191;3 for this year certifying income of Rs.2000 per acre in Kotla Abdul Fateh Village for the appellant's-in-laws is also provided. There is no reason whatsoever why the appellant's agricultural income based on the same yardstick (Rs.2,000 per acre) for land in the same village as his wife and in-laws should not be accepted. The curtailment in agricultural income/addition in taxable income deemed to be under section 13 required mandatory approval of the IAC which has not been obtained. In support of the above contentions the learned A. R. submitted necessary documents and case-laws. The learned D.R., the other hand, supported the order of the assessing officer and the learned CIT(A). We have considered the arguments put forth by the learned A.R. and DR. There is no merit in the appellant's contention with regard to his return being accepted under the Self-Assessment Scheme as he failed to disclose interest under section 12(7) which in our opinion he was required to do under the law. The addition of interest income at Rs.14,000 under section 12(7) also merits no interference as the ITO has clearly stated in the body of his order that money was utilised by his wife for business purposes. The assessee's contention that the same had been paid to her for domestic expenditure is without any evidence and therefore, disregarded. However, the ITO's statement in the body of the order, this tantamounted to concealment is not tenable as the assessee had declared the loan in his wealth statement and the same was reflected in the wealth statement to his wife Mrs. Shahhaz Hamid. When all the facts had been disclosed the conclusion of the learned CIT(A) and the ITO that the assessee has committed concealment was unwarranted. In this context these are number of reported cases. A few of them are cited for ready reference CIT v. Muhammad Hanif SC 1972 83 ITR 215, CIT v. Anwar Ali SC 1970 76 ITR 696 and Muhammad Yaqoob and Muhammad Ibrahim (1986) 54 Tax

49. With regard to addition of Rs.1,15,000 from undisclosed sources due to curtailment of agricultural income the learned AR of the appellant has cited an order of the Tribunal passed in ITA No.666/LB/ 1985-86, dated 25-6-1987 wherein it has been stated: "The I.T.O. erred in unnecessarily himself determining the appellant's income from agriculture. This probe was beyond the ITO's jurisdiction as agricultural income does not come within the ambit of jurisdiction of provisions of the Income Tax Ordinance, 1979. Learned CIT(A) total lost sight of this legal aspect of the matter. " Furthermore the assessee's agricultural income was accepted at Rs.4,40,000 for the subsequent year (1983-84). In view of the above facts the addition of Rs.1,15,000 is uncalled for and is accordingly deleted. C.M.S./423/Trib. Order Accordingly.