2016 PLP (Trib (PTD)

The instant appeal filed by department is directed against an order dated 10-6-2011 passed by learned CIR (Appeal-III), Islamabad relating to assessment year 2002-2003.

2. Brief facts are that the assessee being an individual derived income from a private hospital and from property including some investments in the construction of a plaza but had not filed return, whereon, a notice under section 56 of the repealed Income Tax Ordinance, 1979 was issued. In response a return was filed for the assessment year 2002-2003 by declaring nil income. Subsequently notices under sections 16 and 62 of the repealed Ordinance, 1979 were issued. The assessee was a non-resident and one Jehangir Akhtar shown to be brother appeared and filed a reply which however was not found to be satisfactory and the assessment was finalized by assessing total income of the assessee at Rs.1,471,

500. Mr. Jahangir Akhtar was treated as an agent of the assessee. Being aggrieved, an appeal was filed before the Commissioner of Income Tax/Wealth Tax (Appeals) who vide its order 53, dated 24-8-2006 rejected the appeal on the point of limitation. The assessee went in appeal before the Tribunal and the case was remanded for being decided on merits. Learned Appeal Commissioner then again rejected the appeal and matter once again went up to the Tribunal where it was remanded for being decided on merits. Following remand learned Appeal Commissioner accepted the appeal against which the department is in further appeal before this Tribunal on the following grounds:-- (1) That the learned CIR(A) was not justified in holding that the assessment has been made without appointing Ch. Jhangir Akhtar as agent/Representative of the non resident being against the facts of the case. (2) That the learned CIR(A) was not justified to hold that no agent was appointed under section 172 as the brother of the taxpayer who had been looking after the business and tax affairs, suo motu joined audit proceedings as agent and the Assessing Officer accepted him as agent. (3) The findings of the learned CIR(A) regarding approval of IAC is against the facts of the case as the Additional Commissioner granted approval for addition under section 13(1)(d) for Assessment year 2002-2003 vide his letter No. 2393 dated 29-6-2005.

4. Arguments have been heard and it seems that while accepting the appeal learned Appeal Commissioner observed that an ex-parte assessment order has been made by showing an agent/representative of the non-resident assessee. But incidentally no order for appointing Jehangir Akhtar as agent of the assessee in terms of the provisions of section 172 was made. Learned CIR(A) thus observed that in these circumstances in the absence of any order for appointment of Jehangir Akhtar as agent of the assessee, the notices served on him, if any, would not be considered as due service for the purpose of completion of assessment proceedings. Further the impugned order is also silent whether or not approval of the IAC was obtained for making additions under section 13 of the repealed ordinance.

5. Admittedly, the assessee is a non-resident and by just observing in the assessment order, that his property is being looked after by his brother, the assessment order was passed. Section 172 of the Income Tax Ordinance, 2001 provides that in case of assessee being a non-resident, the process of assessment can only be initiated after appointing someone as the representative if he is employed by, or on behalf of, the non-resident person; if he has any business connection with the non-resident person and from or through whom the non-resident person is in receipt of any income, whether directly or indirectly and if he holds, or controls the receipt or disposal of any money belonging to the non-resident person; if he is the trustee of the non-resident person or if he is declared by the Commissioner by an order in writing to be the representative of the non-resident person.

6. It seems that none of the above requirements have been met while framing the assessment order and thus the order passed by the learned Appeal Commissioner is not exceptionable. There is no force in the appeal which in result is rejected. HBT/157/Tax(Trib.) Appeal rejected.