1997 PLP (Trio (PTD)

5. The other arguments taken by him was in respect of non-ticking of the notice under section 65, he said that non-ticking of any of the four points in the notice under section 65 so as to determine the base of the re-opening that the I.T.O. has not applied his mind and he infect and nothing on record to pin-point under what precise provision of enactment, he wish to proceed. This way by not applying his mind he has made the proceedings as unlawful which alone in the opinion of the A.R. refers the whole proceedings as void and illegal ab initio, Reliance in respect thereto has been made on the judgments reported as (1971) 82 ITR 821 Supreme Court of India, (1959) 35 ITR 383 also Supreme Court of India 1997 PTD 47, Lahore High Court, 198& PTD

973. In this regard the judgment given by Honourable High Court of Pakistan being more applicable, relevant part is reproduced which is as follows:

The notice dated 21-2-1995 under section 65 aforementioned issued to the petitioner does not indicate under what subsection of the section it has been issued; when confronted, the learned counsel for the department contended that as already show-cause notice was issued to the petitioner which the petitioner had submitted explanation; is understood that the notice has been issued under sub para. (C) of section 65(1) of the Ordinance, which is misconceived; as under the law, the assessing officer is required to apply his mind cautiously and to indicate the assessee under section 65(1) under what reason; his assessment is sought to be reopened as reopening of a case to some extent is a penal action; so the assessee he prepared to meet the consequence of reopening of an assessment. As the notice prima facie is defective and the error is not curable as it does not indicate the reason of reasons he said income already assessed in the hands of the petitioner. Without discussing the merits of the case, as the notice itself, being illegal ab initio, the proceedings initiated on the basis of the said notice are set aside, the petition is accepted accordingly. While advancing his arguments, he said that the proceedings being illegal the super-structure built there on automatically crumbles to ground. The aforementioned judgments he said applies with more force on the impugned case, as the I.T.O. had not issued a show cause notice to the assessee, prior to the issuance of a notice under section 65 which also is against the principle of natural justice. And the notice even on this score was illegal."

6. He further said that there was no reason to discard the declared value being based on a registered deed with some stronger evidence in term of definite information. The cases relied upon in support of this arguments are:

1995 PTD (Trib.) 1170, 1991 PTD (Trib.) 639 and 1993 PTD (Trib.)

952. We shall mention here a para from 1993 PTD (Trib. 952 = 957 which is as follows:--. The bare reading of the bare language of section 13(1)(d) of the Ordinance would show that it does not say that where an assessee has made any investment or acquired any Article the difference between the market value of the investment or the article and the consideration paid by the assessee for making the investment o1 acquiring the article will be deemed as income of the assessee Clause (d) ibid would be applicable only where the I.T.O. finds than the assessee has expended more amount for making the investment or acquiring the valuable article than the amount recorded in the recorded books of accounts maintained by the assessee or shown in the wealth statement furnished under section 58 of the Ordinance.

7. Coming to the merits of the case he argued that besides difference in area, the referred plot is two Kms. away from the impugned plot. In this regard in his opinion the plot referred by the assessee being of the same size and situated in the same lane was more relevant. On the question that the same was pitched to a lower figure by learned CIT(A) and that the departmental appeal in respect there to having been rejected on the basis of a legal lacuna in the appeal how can the same be considered to have attained finality in respect of estimate by the I.T.A.T. He replied that the value adopted by the learned CIT(A) was also after considering facts and circumstances of the case and the value has neither been contested to be lower in any other forum nor it has been adopted at a higher rate in any other parallel case.

8. He also argued that even otherwise adoption of value at Rs.5,49,667 was not tenable in the eyes of law as no mandatory notice required under sections 13(1)(d) and 13(2) for making addition of Rs.5,54,667 was issued by him asking for explanation regarding source of investment for the additional amount which was a pre-condition before making assessment under section

13. The summary of above discussion is as follows:

(i) That the plot referred by the department besides being smaller in size is also not comparable even otherwise being in a different phase and also away by two Kms. from the impugned property. (ii) That the reference given by the assessee is of some help to the assessee being a plot of the same line where the impugned plot exists and also for the reason that the same is identical in size, but r we still cannot rely upon the same as the Tribunal rejected departmental appeal on technical flaws and issue of valuation has not been thrashed out in keeping view the facts of that case. (iii) The word "definite information" as defined by the Superior Courts and used in section 65 presupposes the existence of such evidence which cannot be controverted with arguments. In the impugned case it is established that the case referred by the department was not a parallel case. This fact is also established by the action of learned CIT(A) who reduced the value through partially. By discarding I.T.O's. base of estimate the learned CIT(A) has supported the assessee's plea that the value adopted at Rs.28,000 per marla in the case of the plot which became base of reopening was not at all relevant. Even otherwise the fact that the department has adopted a different value of some other plot cannot be considered as definite information. The re-opening of assessment under section 65 is bound to end in enhancement in the income of the assessee and may also end in penalty. This is why the legislature has used the word "definite" (underlining is ours for emphasis) so as to qualify the word information with it. Since the superior Courts have already threshed out the definition, of the word "definite information", in the above-referred judgments, we need not go into it once again. We shall only add that the department should work hard before re opening assessment under section 65 so that the proceedings initiated thereof may stand the test of appeal and well-deserved no one should be penalised only on the basis of estimates gossips and surmises. The above referred judgment in term of acceptance of agreement between two Muslims, acceptance of registered deed etc., by the I.T.A.T. and still higher judicial forums is pointer of the fact that the Courts wish to put their foot down on the arbitrary use of discretion and to give benefit of doubt to the assessee on the questions relating to rejection of the agreements and of registered deeds. There is now unanimity in opinion of the Superior Courts that the same should not straightway be rejected without having evidence in contrary. We also do not have any doubt in our mind that the law has development to the extent and have almost attained now finality in respect of above issues. Applying the same on the present case we give our finding as follows:

That the I.T.O. should not reopen the assessment under section 651 on the basis of estimates and must bring evidence which cannot be refuted by arguments as the requirement of law in term of evidence cannot be fulfilled by relying upon the value of some outer plot being different from the declared by the assessee. We, therefore, do not agree that there was some definite information available for reopening of assessment under section

65. We also cannot support discarding of registered deed without having some evidence that the same was incorrect. These two lacunas coupled with the defect of not ticking the such provision of section 65 so as to determine whether the assessee is under assessed or escaped assessment, made the whole proceeding as illegal. The notice under section 65 as such is cancelled. The effect of our finding is that original order prior to reopening shall stand in the eyes of law. The appeal is disposed of in the manner and to the extent as mentioned above. C.M.S./359/Trib. Order accordingly.