2012 PLP (Trib (PTD)

MUNSIF KHAN MINHAS, JUDICIAL MEMBER.

The above titled appeal, at the behest of the assessee-appellant, pertaining to assessment year 2002-2003 is directed against the order dated 29-6-2005 of CIT(A), Rawalpindi.

2. Ch. Naeem-ul-Haq, Advocate the learned AR appeared on behalf of the assessee-appellant and Mr. Mohy-ud-Din Ismail, the learned DR appeared on behalf of the revenue.

3. The assessee-appellant, an individual, derives income from running a recruiting agency. Return was filed declaring net loss of Rs.31,

150. The declared income was not accepted in the absence of books of accounts and the assessment was finalized under section 62 of the Income Tax Ordinance, 1979 (hereinafter called the Repealed Ordinance). An addition of Rs.12,00.000 was made in the income of the assessee for the year under consideration under section 13(1)(aa) of the Repealed Ordinance. The contention of the assessee before the first appellate authority that the sources of assessee stood explained as gift of Rs.5,00,000 received from father and savings from the employment in Saudi Arabia from 19-1-1988 to 30-4-1995 was not entertained by the CIT(A) who confirmed the addition of Rs.12,00,000 made by the assessing officer under section 13(1)(aa) of the Repealed Ordinance. The order of the CIT(A) to confirm the addition made under section 13(1)(aa), is assailed by the assessee-appellant through the argumentative and narrative grounds of appeal. The legality of the assessment order has been assailed by the assessee-appellant by filing additional grounds of appeal which are reproduced as hereunder:-- (i) That the addition under section 13(1)(aa) is illegal void ab initio without jurisdiction and is illegal. (ii) That making of addition under section 13(1)(aa) without prior approval of IAC and unjustified. (iii) That so called mentioned approval in the body of order has no sanctioned and termed being not obtained so the order is illegal. (iv) That ex parte order under section 62 is illegal void ab initio against the law.

4. We have heard the arguments and perused the record. Learned AR states that under the repealed Income Tax Ordinance various income tax authorities were empowered to exercise independent jurisdiction. However, under the scheme of things contained in the Income Tax Ordinance, 2001 the income tax laws are now executed through Commissioner, who holds pivotal position and all the powers are now vested with him. The Commissioner may exercise all or any of the powers as Commissioner or he may delegate all or any of his powers to the Taxation Officer under section

210. Any taxation officer including an IAC cannot exercise independent jurisdiction. The definition of Commissioner has been provided in section 2(13) and that of Taxation Officer in section 2(65). Learned AR further states that procedure of making addition under the repealed Ordinance has been laid in section 13 which provides that approval of IAC is mandatory. He contended that Commissioner has to delegate his powers under section 210 to the IAC who is required to grant approval under the repealed Ordinance but delegation of such powers is open to question and contrary to law. He contended that the Tribunal in its decision in I.T.As. Nos. 86-91(PB) of 2005 (assessment years 1994-1995 to 2001-2002) dated 20-5-2006 has confirmed the findings of CIT(A) that concept of approval has been dispensed with under the Income Tax Ordinance, 2001. He further states that in another order of the Tribunal in I.T.As. Nos. 1902, 1903 and 1910-1913(1B) of 2005 (assessment years 2000-2001 and 2001-2002). Similar decision was given about the concept of approval under the new Ordinance. Learned AR states that addition under section 13(1)(aa) is illegal because it was made with the approval of IAC and such approval was not legally correct. He states that the Tribunal in their judgment reported as 2010 PTD (Trib.) 494 had held as under:-- "We are inclined to agree with the findings of learned CIT(A) in the light of ratio settled by the Tribunal in its orders dated 20-5-2006 in I.T.As. Nos. 1910-1913(IB) of 2005. It has been settled by the Tribunal that the powers of assessment as well as approval cannot vest in one authority i.e. the Commissioner. Therefore, the approval of assessment by the same authority is not legally correct. In these decisions of the Tribunal distinction was created in respect of judgment reported as 2004 PTD 1173 relied upon by the learned DR and it was held that it does not apply to the matter of approval under the new Income Tax Ordinance, 2001. These decisions of the Tribunal are on all fours with the instant case. We could not find any warrant to hold a different view. Keeping in view all the facts and circumstances of the case, and the ratio already settled by the Tribunal we hereby uphold the orders of learned CIT(A) and reject the departmental appeals for both the years for being without any merit."

5. Learned DR states that there were visible contradictions in explanation of the assessee with regard to the amount of addition under section 13(1)(aa) and it was rightly confirmed by the CIT(A).

6. We have considered arguments of both the sides in the light of relevant record and we are of the opinion that the issue of approval for addition under section 13(1)(aa) has already been decided by this forum in the aforesaid judgment reported as 2010 PTD (Trib.)

494. Learned DR failed to put forth any explanation to justify any deviation from the aforesaid judgment. In the light of facts and circumstances of the case we hereby hold that addition of Rs.1,200,000 under section 13(1)(aa) is legally incorrect and is hereby deleted.

7. Assessee's appeal is accepted in the manner as indicated above. C.M.A./282/Tax(Trib.) Appeal accepted.