2015 PLP (Trib (PTD)

CH. ANWAAR UL HAQ, (JUDICIAL MEMBER).

The titled appeal pertaining to tax year 2005, has been preferred at the instance of taxpayer, arises out of impugned order dated 13-12-2011, passed by the learned CIR(A), Gujranwala. The appellant/taxpayer contested the order of the learned CIR (A) on the following grounds:-- (i) That the learned I-R Audit Officer Unit-11 Gujranwala/CIR (Appeals) was not justified to disallow the sale receipt of jewellery worth Rs.401326 keeping in view the facts and circumstances of the case. (ii) That the learned I-R Audit Officer Unit-11 Gujranwala/CIR (Appeals) was not justified to disallow the agricultural income/ hand remittance worth Rs.1443767 keeping in view the facts and circumstances of the case. (iii) That remaining addition under section 111(1)(b) is against facts, justice, equity and the law as well. Keeping in view the facts and circumstances of the case.

2. Briefly stated, the relevant facts are that the taxpayer in this case is an individual filed return for the tax year 2005 declaring NIL income which was deemed to be treatment as an assessment stood finalized in terms of section 120 of the Income Tax Ordinance, 2001. Proceedings in the case were initiated on the basis of information received by the department that the taxpayer had purchased 10-Marla property for a total consideration of Rs.12,36,

000. Statutory notices were issued by the assessing authority which were complied with by the taxpayer. The taxpayer tried to explain that the investment made was out of explainable sources available with the taxpayer out of foreign remittances, sale of jewellery and hand remittance/agricultural income. However, the taxpayer being not convinced with the submissions of the taxpayer has held that the taxpayer made investment in purchase of property out of un-explainable sources. Accordingly, he amended the deemed assessment under section 122(1) and made addition under section 111(1)(b) amounting to Rs.12,36,

000. Being aggrieved, the taxpayer preferred appeal before the learned CIR(A) and assailed the treatment meted out at assessment. The learned CIR(A) disposed of the appeal of the taxpayer while observing that:-- "Examination of record reveals that documentary evidence produced to the extent of foreign remittance being reasonable is acceptable however explanation of the taxpayer on account of agricultural income and hand remittance being not satisfactory and not in conformity with the provisions of law is rejected. However, the Officer Inland Revenue is directed to verify the documentary evidence regarding foreign remittance from the concerned bank and if it is proved correct after verification, the credit may be given."

4. The learned AR assailed the action of the assessing authority as contrary to law and facts of the case. It is submitted by the learned AR that the assessing authority was not justified to make the addition under section 111(1)(b) in the tax year 2005 when the notice for discovery was issued on 24-11-2010 i.e. in the tax year 2011, therefore, the addition required to be made in the tax year immediately preceding the financial year in which it was discovered. It is contended by the learned AR that amendment made in section 111(2) through Finance Act, 2010, cannot be given retrospective effect. Reliance in this regard is placed on the reported judgments cited as 2012 PTD (Trib.) 1978 and 2011 PTD (Trib.)

168. It is further submitted by the learned AR that the addition made under section 111(1)(b) is against facts, justice, equity and the law as the taxpayer has sufficient sources to make investment in purchase of property in question. It is contended by the learned AR that the requisite documentation were duly submitted before the authorities below regarding sources available through sale of jewellery for Rs.401326 and also from availability of agricultural income/hand remittance worth Rs.1443767 but the same were unjustifiably discarded. It is asserted by the learned AR in the presence of sources available, the impugned addition under section 111(1)(b) is highly unjustified and illegal. On the contrary, the learned DR supported the order passed by the authorities below.

5. I have heard both the parties and perused the available record. As far as the taxpayer's legal objection that the addition was not made in the relevant tax year, I find that the assessing authority has rightly made the addition under section 111(1)(b) in the tax year 2005 as the property in question was purchased by the taxpayer on 6-6-2005. The assessment in the instant case was completed on 16-6-2011, and first notice was issued in the case on 24-11-2010, when the relevant law i.e. section 111(2) was changed by substitution of the words "immediately preceding the financial year" with the words "to which such amount relates" through Finance Act, 2010. Since the law as it existed on the relevant date of initiation of proceedings and completion of assessment stood changed and the said changes made in law shall prevail and shall be applicable. Therefore, I find no weight in the contention of the AR and held that the addition under section 111(1)(b) has rightly been made in the tax year 2005 and the case-law relied upon by the AR is not strictly relevant to the facts and circumstances of the case, hence, the same is ignored.

6. As regard's learned AR contention that the taxpayer has sufficient sources to make investment in purchase of property, I find that the taxpayer has failed to bring on record relevant documentary evidences at any stage i.e. ownership of agricultural land, payment of agricultural tax etc., to substantiate his claim that he earned some kind of agricultural income. Similarly, under the law, there is no concept of allowing credit of cash/hand remittance. Therefore, the learned CIR(A) rightly confirmed the addition under this head. However, the issue of alleged availability of sources through sale of gold jewellery is remanded back for verification. The assessing officer is directed to make fresh inquiry by summoning the Jeweller and the taxpayer be allowed to cross-examine him. Accordingly, the issue of availability of sources through sale of jewellery amounting to Rs.401,326 is remanded back for de-novo decision and order of the learned CIR(A) in this behalf is vacated while rest of the order of the learned CIR(A) being in accordance with law is hereby maintained. 7 Appeal of the taxpayer is disposed of in the above manner. CMA/70/Tax(Trib.) Order accordingly.