1997 PLP (Trib (PTD)

The learned A.R. has mostly relied on para. No.2 of circular wherein strict directions by the Central Board of Revenue:

Not to invoke the provision of section 12(18) in respect in genuine loans etc; through the banking channels. He argued that the circular having been issued by Central Board of Revenue by way of interpretation of section 12(18) is fully applicable and in fact binding on the subordinate officers. The use of word ' etc.' in circular by no stretch can be considered as without purpose. It is connected with the main purpose of the provision which is to check the fictitious loans and to preclude back dated introduction of creditors. Referring back he said that the bank transaction in the impugned case is much earlier to the date of assessment hence question .of back dated introduction of creditors does not arise. It is true that it was not a cross cheque but at the same time it is still under the normal banking channels. While referring to Circular Nos.11 and 12 he further argued that these two circulars deal with the loans received by an assessee through bearer-cheques and cash but, however, restrict the same for the assessment year 1991-92 i.e., in respect of the transactions which have earlier been made in the accounts of the assessee prior to the-amendment. The learned A.R. has also relied upon various reported judgments in support of his claim. Firstly the cited judgment reported as 1993 PTD page 183 Note 133 what originated from 198 ITR 1110. He referred to the para regarding interpretation of the taxing statutes which speaks:-- "Objects and reasons for acting provision can be considered." Similarly, he cited another recent judgment of the Income Tax Appellate Tribunal reported as 1996 PTD (Trib.) 100 wherein the honourable Tribunal gave following observations:

"Central Board of Revenue Circular .... If a beneficial view is taken by C.B.R. in favour of assessee, Income Tax Appellate Tribunal, in exercise of its judicial discretion, would not interfere so as not to deprive the assessee of such beneficial treatment. Income Tax Ordinance (XXXI of 1979) .... S.8 .C.B.R. instructions. Order, instructions, and directions of C.B.R. are binding on all the officers entrusted with the execution of Income Ordinance, 1979. Interpretation of Statutes... Fiscal statute ...If there is any doubt in the interpretation of fiscal statute, it is to be resolved in favour of assessee. " On the same point he cited another judgment of the Income Tax Appellate Tribunal reported as 1991 PTD 758 which speaks, "While interpretation the statutes, it is the duty of the Courts to suppress the mischief and advance the remedy".

4. Relying upon these judgments, he said that purpose of the impugned provisions being to curb the back dated introduction of fictitious loans. It should not be expanded over to the genuine loans even if the same have not been issued through crossed cheques. He continued that it is for this background that the Central Board of Revenue immediately felt the need of interpreting the impugned provision and Circular No.3 was introduced. He said the Circular No. 11 though restricted the loans given by bearer cheque to be exempt from the provisions of section 12(18) for the current year being pending on the date of issuance of the Circular No. 11 i.e., on 27-1-1992 yet, however, the same cannot over vide the provisions of Circular No.3 which not only out-rightly examined the purpose of legislation in its clause (1) but also purposely used the word ' etc' read with cross cheque, pay order and demand draft.

5. It is true that Circular No. 11 did create some doubt by its language when it says "for current assessments (underlined for emphasis) which are pending on issuance of clarification on this issue". But, however, keeping in view the principle of ' ejusdem generis' the word ' etc' would include the bearer cheques also provided the same otherwise fulfil other requirements. In the impugned case) the bank has issued a letter which 'certifies the genuineness of the transaction in the following manner:

"It is certified that the Cheque No.002476, dated 18-4-1992 for Rs.2,70,000 paid on 21-4-1992 and cheque No.002478 dated 28-4-1992 for Rs.180,000 paid on 30-4-1992 issued by M/s Surgeon Surgical (Pvt.) Limited, Sialkot in favour of Mr. Muhammad Yaqoob Director of the Company." The certificate clearly speaks of the facts that the loan which was received by the assessee was a genuine transaction between, the company and the Director. In keeping view the spirit of the legislation and Circular No.31, issued by the Central Board of Revenue we have no doubt in our mind' that the additions made and confirmed by the officers below are not maintainable in law. When the law is introduced for curbing evil' it should not be used as a lever against the rightful tax payers by way of interpretation.

6. We, therefore, order for deletion of the amount added at Rs.4,50,000 under provisions of section 12(18). Regarding addition on account of household expenses, the expenses declared by the assessee at Rs.1,09,654 cannot be considered as below On the other hand, the estimate of the learned ITO is also without any basis which cannot be allowed as held by Income Tax Appellate Tribunal in its famous judgment reported 1987 PTD page

300. The addition of Rs.6,000 is, however, genuine which is hereby confirmed. (7) The appeal of the assessee is accordingly disposed of in the manner mentioned above. C.M.S./288/Trib. Appeal disposed of.