2007 PLP (Trib (PTD)

SYED NADEEM SAQLAIN (JUDICIAL MEMBER).

Out of titled six appeals filed by the Revenue, three appeals have been filed against the combined impugned order passed under section 62 of the repealed Income Tax Ordinance, 1979 (assessment years 2000-2001, 2001-2002 and 2002-2003) while two have been filed under section 121 of the Income Tax Ordinance, 2001 (Tax years 2003 and 2004), dated 28-11-2005. The Revenue has challenged the cancellation of assessment for all the years under appeal. Besides, the Revenue has also filed appeal against the order, dated 28-11-2005 under section 121(1) of the Income Tax Ordinance, 2001 whereby addition made under section 111(1),(b) has been deleted..

2. Briefly stated the facts of the case are that the assessee is an AOP deriving income from running a poultry farm. The case of the assessee was brought on tax roll as a result of an internal survey. Statutory notices were issued requiring the assessee to file returns and to explain the purchase of property worth millions. The learned A.R. of the assessee filed explanation which was found unsatisfactory. After marking certain calculation, income/wealth was assessed at Rs.8,00,000, Rs.8,10,000, Rs.8,20,000, Rs.2,30,000 and Rs.2,88,000 respectively for the years under consideration. Being aggrieved with the findings of the Assessing Officer, the assessee preferred appeal before the learned First Appellate Authority who vide his order, dated 28-11-2005 cancelled the assessments, hence the instant appeals by the Revenue.

3. The learned D.R. appearing on behalf of the Revenue contended that the learned CIT(A) was not justified in cancelling the assessments. It was submitted that poultry farm was established during the period relevant to the assessment year 2000-2001. It was further submitted that the exemption to poultry farm income was available according to section 4(3)(xx) of the repealed Income Tax Act, 1922, clauses (99) and (102A) of Part-I of Second Schedule of the repealed Income Tax Ordinance, 1979 only when the period of its establishment is determined by the concerned Commissioner of Income Tax on application of the assessee but in this case the assessee has never filed any application nor such order has been passed by the Commissioner of Income Tax. It was argued that since the assessee has not fulfilled the legal formality., the Assessing Officer has rightly brought the assessee on tax roll and the learned CIT(A) erred in law in not confirming the said assessments. He prayed for restoration of the said assessments.

4. The learned A.R. of the assessee reiterated the same arguments as he put forth before both the lower officers. It was argued that income of the assessee from poultry farm is exempt from tax as per clause 4(3)(xx) of the repealed Income Tax Act, 1922/Clause No.99/102A of Second Schedule Part-I of the Income Tax Ordinance, 1979. It was asserted that poultry farm was established in the year, 1977 and electricity connection was installed on 5-2-1977 vide Meter No. 1582972 B1-(07) in the name of Mr. Muhammad Nawaz. In this regard a certificate issued by the SDO, GEPCO. No. 11, Daska was also provided before the learned First Appellate Authority. The learned A.R. of the assessee also argued that as per Register Of landowner issued by Patwari vide No. xxxiv/10, the land in question was used for poultry farm. Regarding contention of the learned D.R. that no application filed by the assessee and no such order has been issued, it was submitted that business of the assessee was commenced in the year, 1977 and at that time filing of application was not a prerequisite as per clause 4(3)(xxx) of the Income Tax Act, 1922. It was argued that this condition was inserted vide Income Tax Ordinance, 1979.

5. It is also not out of place to mention here that the wealth tax assessments for the assessment years 1994-95 to 2000-2001 have been cancelled by the learned CIT(A) for the same reasons as mentioned in the order, dated 28-11-2005 for cancellation of income tax assessments. However, no wealth tax appeals were filed against the said order. When asked regarding non-filing of wealth tax appeals the learned D.R. could not give any plausible reasons.

6. We have heard both the parties and gone through the relevant orders. The order of the learned First Appellate Authority is reasoned one since he has decided the case purely in view of documentary evidence provided by the learned A. R. of the assessee. The learned D.R. has failed to rebut the assertions made by the learned A.R. as well as observations made by the learned CIT(A) in his order. The certificates provided from the SDO, GEPCO and copy from Register of landowner issued by the Patwari clearly confirms that the poultry farm was established in 1977 and at that time filing of application to the Commissioner was not required. Factum of non-filing of wealth tax appeals also supports the assessee's stance. Keeping all these facts in view, we are of the opinion that the learned CIT(A) was amply justified in cancelling the assessments, thus no interference is required in the impugned order which is hereby maintained. Appeals of the Revenue are dismissed being devoid of any merit.

7. As far as deletion of addition under section 111(1)(b) of the Income Tax Ordinance, 2001 for the tax year, 2004 is concerned, the same is also justified since facts and circumstances are same on the basis of which assessments for the assessment years 2000-2001 to 2004 were cancelled by the learned CIT(A). Hence no interference is required on this issue too. Appeal of the Revenue for the tax year, 2004 is also dismissed.

8. It is ordered accordingly. C.M.A./56/Tax (Trib.) Order accordingly.