2003 PLP 1885 (PTD)

NASIM SIKANDAR, J.--This is a reference made by the Income Tax Appellate Tribunal, Lahore Bench Lahore under section 136(1) of the late Income Tax Ordinance, 1979. Following question of law is stated to have arisen out of their order, dated 8-5-1996:- "Whether on the facts and circumstances of the case the transaction in the form of telegraphic transfer (TT) reflected in the Bank statement operated by the partner of the firm can be defined as definite information and substantial evidence to proceed the case under section 65 of the Income Tax Ordinance, 1979?"

2. The respondent-assessee is a registered firm and derived income, at the relevant time, from running a flour mill. For the assessment year 1982-83 in its respect assessment was completed under section 62 of the Ordinance, 1979. For the other years involved viz. 1980-81 to 1985-86 the assessments were completed under Self-Assessment Scheme. Subsequently on receipt of an information that assessee-firm was maintaining two bank accounts in the name of one Muhammad Shahid son of Muhammad Khalid (minor) son of partner of the firm reassess ment proceedings were initiated and finally an assessment under section 65 of the Ordinance was completed. While doing so the Assessing Officer treated the deposits in the bank account as a sales in each year and subjected them to a G. P. rate. Also an addition under sec tion 13(1)(c) of the Ordinance was made in all these years in question.

3. The assessee succeeded partially in the first appeal where though reopening of the case was maintained but the applied rate was reduced from 5% to 2.5%. Both the assessee as well as the Department assailed the first appellate order. The assessee challenged the re-opening of the original assessments, the estimate of sale, application of rate and the aforesaid addition under section 136 of the Ordinance. The Department assailed reduction in the G.P. Rate.

4. Learned Tribunal by way of the impugned order concluded that re-opening of the assessment under section 65 of the Ordinance was not justified as the Assessing Officer could not establish Benami nature accounts before issuing a notice and proceedings under the said provisions of the Ordinance. Also that even after re-opening, no concrete evidence was not brought on record to substantiate the allegation of Benmai nature of these accounts. Accordingly it was found that the Assessing Officer did not have the definite information at the time of re-opening of the assessment under constitution. As a result of their aforesaid findings, the departmental appeals were dismissed being devoid of any force. Thereafter the assessee approached the Tribunal posing four questions for a reference to this Court under the said provisions of the late Ordinance. However, the learned Tribunal referred only the question reproduced above which in their view being a question of law required consideration and answer by this Court.

5. After hearing the-learned counsel for the parties we will readily agree with the learned counsel for the respondent that the question does not need to be answered for two reasons. Firstly, that the Tribunal never ruled upon the evidentiary value of the telegraphic transfer in the bank account operated by the said partner of the firm. Secondly the issue if al particular fact in the case of the assessee did amount to definite information is predominantly a question of fact, We are also in agreement with him that even otherwise an answer to the question referred by the Tribunal will be of academic interest only inasmuch as it is not going to effect the cancellation of assessments as directed by this Tribunal in any manner. The reason simply being that the Assessing Officer never connected the two bank accounts with the firm. If at all the Benami nature of the accounts is accepted still the transactions completed therein could at best be taken into account of the individual partner and not in the hands of the firm: In absence of establishment of direct link between the assessee-firm and the accounts allegedly operated upon by one of the partners in the name of his son, the transactions effected therein could not be considered to be a part of the business of the assessee-firm.

6. That being so, we will refuse to answer the aforesaid question for the reasons given above.

7. Answer declined. S.A K /C-214/L Answer declined.