2012 PLP (Trib (PTD)

MUHAMMAD NAWAZ BAJWAH, JUDICIAL MEMBER

The titled appeal pertaining to the tax year 2008, has been preferred at the instance of taxpayer, calling in question the impugned order passed by the learned CIR (A), Lahore, dated 31-1-2011.

2. Briefly stated, the relevant facts in brief are that the proceedings in the case were initiated on the basis of information received by the department that the taxpayer has purchased property, having value of Rs.10,00,000 Since, the taxpayer, allegedly, had not filed return of income, a notice under section 114(4) was issued for furnishing of return of income for tax year 2008 but the same, allegedly, remained un-complied with. Another notice under sections 121/111, dated 12-6-2008, was issued by the Taxation Officer but no response was made to the said notice by the taxpayer. Since, no response was received from the taxpayer, the Taxation Officer proceeded against ex parte and passed best judgment assessment under section 121 of the Income Tax Ordinance, 2001, vide order dated 19-6-2008. The investment made on purchase of property was treated as made through unexplained sources and addition under section 111(1)(b) amounting to Rs.10,00,000 was made for the tax year 2008. Being aggrieved, the taxpayer went in appeal before the learned CIR(A) who vide impugned order remanded the assessment to the Taxation Officer after observing that the appellant had filed income tax return for tax year 2008 on 28-10-2008 at NTN: 1285927, whereas provisional assessment was framed by the Taxation Officer on 19-6-2008. The return was filed after the Taxation Officer has passed order under sections 122C/111.

3. The learned AR on behalf of taxpayer agitated the orders passed by the authorities below to be contrary to law and facts of the case. It is contended by the learned AR of the appellant that the learned CIR(A) is not justified in setting aside the unlawful ex parte order of the Taxation Officer which merit cancellation. It is asserted by the learned AR that by remanding the case by the learned CIR(A) another opportunity was accorded to the department to remove the legal defects obtaining in the ex parte assessment. It is submitted by the learned AR that first appellate authority has failed to apply his judicious and proper mind to the facts of the case. In this behalf, it is explained by the learned AR of the appellant that neither any order was passed under sections 122C/111 nor any appeal was filed to challenge such an order which section did not exist in the Income Tax Ordinance, 2001 during the period under appeal. It is submitted by the learned AR that no default was committed by the taxpayer as statutory notices issued by the department were duly responded by the taxpayer. It is further submitted by the learned AR that the sufficient sources to invest in purchase of property were shown and the Taxation Officer deliberately ignored the explanation submitted by the taxpayer in this behalf.

4. On the contrary, the learned DR supported the order passed by the Taxation Officer and submitted that no prejudice is caused to the taxpayer as the learned CIR(A) has remanded the assessment to the Taxation Officer for reappraisal.

5. I have heard the arguments put forth by the learned representatives of both the sides and have carefully gone through the available record. After due consideration, I am in agreement with the arguments of the learned AR that the learned CIR(A) has failed to apply his judicious and conscious mind while remanding the case of the taxpayer. Taxation Officer passed ex parte order under sections 121/111 whereas the learned CIR(A) treated the same as passed under sections 122C/111 when provisions of section 122C were not even on the statute book. In the later part of the impugned order, the learned CIR(A) has also observed that the impugned order passed by the Officer of Inland Revenue, under section 122(1)/(5) of the Ordinance, when no such amendment of assessment was made by the Taxation Officer. It seems that the learned CIR (A) has failed to apply his conscious / proper mind in deciding the appeal of the taxpayer.

6. It is also noticed by me that the taxpayer has duly responded to the notices issued under sections 114 and 121/111 and filed his reply dated 7-5-2009 and 19-6-2009 respectively, copies of the same were duly produced before this Tribunal and placed on file. The taxpayer also filed return of income for tax year 2008 within the stipulated time i.e. on 28-10-2008, a copy of the same was also submitted before the Taxation Officer/CIR(A) as well as before this forum. The ex parte assessment was passed by the Taxation Officer on 19-6-2008 i.e. before close of the financial year 2008 for which return of income was required to be filed on or before 30-10-2008. It seems that the Taxation Officer passed the order in haste and hurry. It is also noticed by me that no notice under section 116 was ever issued by the Taxation Officer requiring the taxpayer to file wealth statement or wealth reconciliation to ascertain as to whether the taxpayer has sources to invest in the purchase of property. It is also noticed by me that the Taxation Officer has failed to point out in the assessment order that as and when the investment was made by the taxpayer whereas, on the other hand, it is the AR's assertion that the property in question was purchased by the taxpayer way back in 1997.

7. In view of the above observations made by me, I am left with no other alternate but to cancel the order passed by the Taxation Officer under sections 121/111 being not tenable in the eye of law. Order of the learned CIT(A) is accordingly vacated.

8. Appeal succeeds. H.B.T./256/Tax(Trib.) Appeal allowed.