1982 PLP 322 (PTD)

The petitioner in this writ petition is an assessee and the dispute relates to the assessment year 1978‑

79. Initially he did not file any return for the said year. On the basis of the report of a Survey, Inspector the Income‑tax Officer on 3‑2‑1980 issued notices under sections 60 and 65 of the Income‑tax Ordinance to him. The petitioner filed a nil return and took up the position that he had not carried out any business during the year in question. The Income‑tax Officer examined his wealth statement and found that he had, constructed a house on a plot of five marlas on Mcleod Road, Lahore, during the assessment year and that he had declared its value as Rs. 2,50,

000. When called upon to state the sources from where he had received this amount he took up the position that he had sold some gold ornaments and had received remittances from abroad. To substantiate his assertion be produced certain documents and vouchers. The Income‑tax Officer was not satisfied with the petitioner's assertion that be had not carried on any business in the year in question. He made his own estimate of his income and assessed him at an amount of Rs. 13,

000. The petitioner was apparently satisfied with this assessment for he did not agitate against the order of the Income‑tax Officer in any forum.

2. Subsequently, it came to the notice of the income‑tax authorities that assertions made by the petitioner with regard to the sources from where he had raised the money to construct the house were not true and the receipt produced by him for the sale of gold ornaments was a forged one. Accordingly, an Inspecting Assistant Commissioner served a notice upon him under section 66‑A of the Income‑tax Ordinance. After giving him an opportunity to explain his position the Inspecting Assistant Commissioner added the value of the house, that is Rs. 2,50,000, to the net income already found by the Income‑tax Officer and assessed him at an income of Rs. 2,63,

000. The petitioner challenged the order of the Inspecting Assistant Commissioner before the Commissioner of Income‑tax. On 11‑5‑1981 the learned Commissioner set aside the order of the Inspecting Assistant Commissioner solely on the ground of jurisdiction.

3. The income‑tax authorities did not allow the matter to rest at that and on 22‑10‑1981 the Income‑tax Officer issued a notice to the petitioner under sections 62 and 65 of the Income‑tax Ordinance calling upon him to show cause why his assessment should not be modified by making a correct valuation of the property and treating all the investments made therein as income from undisclosed sources. In this writ petition the petitioner has challenged the legality of this notice.

4. Before I take up the first submission made on behalf of the petitioner I may mention that during the assessment year under consideration the Income‑tax Act, 1922 was in force. This Act was repealed and replaced by the Income‑tax Ordinance, 1979 which came into effect on 1‑7‑1979. All proceed ings in respect of the petitioner were taken under the provisions of the Income‑tax Ordinance. In doing so, the income‑tax authorities relied upon section 166 (2) (c) (ii) of the Ordinance which reads as follows :‑‑ (c) where in respect of any assessment year. . (i) . . . . . . . . . .. (ii) any income chargeable to tax had escaped assessment, or had been under assessed or assessed at too low a rate, or had been the subject of excessive relief or refund or the total income of the total world income and the tax payable had been determined under subsection (1) of section 23 of the repealed Act and no proceedings under section 34 of the said Act in respect of any such income are pending at the commencement of this Ordinance a notice under. section 65 may be issued with respect to that assessment year and all the provisions of this Ordinance shall apply accordingly. Learned counsel for the petitioner submitted that this clause contained a special provision and that the power conferred by it upon the income‑tax authorities could be exercised‑only but once. In his case this power stood exhausted on 3‑2‑1980 when the Income‑tax Officer for the first time served him with a notice under sections 60 and 65 of the Ordinance. Consequently, after the assessment had been finalized no fresh notice could be issued to him in pursuance of the said clause.

5. It is difficult to agree with the learned counsel. Section 14 (1), General Clauses Act, states that where by a Central Act any power is conferred, then, unless a different intention appears, that power can be exercised from time to time as occasion arises. There is nothing in section 166 (2) (c) (ii) of the Ordinance which would militate against a notice being issued to an assessee more than once. It is to be observed that the Ordinance deals with public revenues. It will not be right to interpret its provisions in a manner that would allow an unscrupulous person to easily evade payment of taxes legally due from him. Apart from that there 's another aspect of the matter also. It is not disputed that if the Ordinance had not come into force the petitioner could be served with more than one notices under section 34 of tile Income‑tat Act. See Jagmohan Goenka v. K. D. Bonerjee ((1954) 26 I T R 637). It is difficult to accept that the provisions of section 166 (2) (c) (ii) were intended to detract from that power in respect of persons who had during the first inquiry into their income succeeded in concealing their true earnings.

6. The next submission on behalf of the petitioner is that there was no fresh material before the Income‑tax Officer upon the basis of which he could hold that it was a case of income escaping assessment. It is also contended that when the assessment was made the Income‑tax Officer had all the necessary material before him. His order in this regard was not challenged by any one. It had thus attained finality. Now the assessment proceedings could not be repelled merely because the Income‑tax Officer had on the same material come to form a different opinion. To fortify his contention the learned counsel referred to a number of decisions from the Indian jurisdiction. Dr. H. K. Mahtab v. I. T. O. (1981 P T D 74), Income‑tax Officer v. Barkat Ali Khan Bahadur ((1974) 97 I T R 239), K . T. Kubal & Co. Private Limited v. Commissioner of Income‑tax ((1963) 49 I T R 433), Bhimraj Panna Lal v. Commissioner of Income‑tax ((1957) 32 I T R 289) and Gordon Woodroffe & Co. Ltd. v. Income tax Officer ((1964) 41 I T R I2).

7. It is unnecessary to refer to the authorities cited by the learned counsel for there can be no quarrel with the proposition that where the Income‑tax Officer has made an assessment after considering all the relevant material he cannot later re‑open the proceedings merely because from the same material he had come to form a different opinion with regard to the income of the assessee. But this is not the case here. When the assessment proceedings were first held the petitioner averred that he had raised the money for constructing the building from the sale of ornaments and foreign remittances. The income‑tax Officer accepted the averments of the petitioner on their face value. But after the assessment proceedings had been finalized he found that the information supplied to him by the petitioner with regard to the source of his funds was entirely false. It was thus not a case of mere change of opinion on the material already available but one of discovery of new facts. Consequently, there was no bar in the way of the Income‑tax Officer from reopening the assessment proceedings.

8. It is then submitted that once the Income‑tax Officer had accepted the value of the house as Rs. 2,50;000 it was no longer open to him to reject that value and embark upon a fresh inquiry into the matter. I do not think that I, can accept the submission. If the Income‑tax Officer has material before him showing that in the first inquiry the house had been grossly undervalued he can no doubt proceed to assess its correct value. It is to be observed that; in the notice the Income‑tax Officer had stated :‑ "The property in question (65‑Mcleod Road, Lahore) is a huge building reportedly constructed at a cost of more than five lacs but its value has been wrongly declared and accepted at Rs. 2,50,000." The word `reportedly' as underlined is significant. It indicates that the house is being re‑evaluated not on account of a mere change of opinion but upon a report or reports. As to how far the report or reports are reliable, is a matter for the Income‑tax Officer to decide. No doubt before relying upon the said report or reports the Income‑tax Officer will give an opportunity to the petitioner to call in question its, or their credibility. It is hardly a matter where in exercise of writ jurisdiction this Court should stop the enquiry.

9. It is then argued that as the value of the house has been declared in the wealth statement filed by the petitioner it cannot be treated as a part of his income for the purpose of assessment' of income‑tax. This argument too is without any basis. From the statement may by the petitioner before the Income‑tax Officer it appears that he had constructed the building during the assessment year in question. If he is unable to satisfactorily account for the source from which he had raised the money it can be treated as expenditure incurred within the meaning of section 13 (1) (e) of the Income‑tax Ordinance (corresponding to section 4 (2‑E) of the Income‑tax Act) and thus. treated as part of his income.

10. Finally, the learned counsel for the petitioner argues that after the Commissioner of Income‑tax had set aside the order of the Inspecting Assistant Commissioner the assessment proceedings could not be reopened. This submission is entirely misconceived. The Commissioner had set aside the order of the Inspecting Assistant Commissioner merely on the ground o jurisdiction. His order can in no way be regarded as debarring the Income‑tax Officer from exercising his jurisdiction under section 65 of the Income‑tax Ordinance. ,

11. For the reasons stated above I find no merit in this petition which is hereby dismissed with costs. Petition dismissed.