1985 PLP (Trib (PTD)

6. Mr. S.G.Y..., learned counsel for the appellant then challenged the order of the learned Appellate Assistant Commissioner in regard to the addition of deemed income on the following ground:‑ "That the learned Commissioner of Income‑tax (Appeals) having conceded in her order that no specific opportunity under section 13.(2) of the income‑tax Ordinance trade been given to the appellant for explaining the investment in purchase of shop, should have annulled the assessment instead of setting it aside." The learned counsel emphasised that the Income‑tax Officer did neither inform the assessee that value of the property as shown by him was in his opinion too low nor he confronted him with his own working for adopting the value of the property at Rs.1,50,

000. Relying heavily upon the decision of the Supreme Court of P... reported as L D 1964 S C 410 and 1971 S C M R 681 the learned counsel vehemently urged that the failure on the part of the Income‑tax Officer to give the statutory notice was vital, and incurable rendering the impugned order of the Wealth Tax Officer void ab initio. The learned Departmental Representative, on the other hand, submitted that sufficient opportunity of hearing was given to the appellant inasmuch as after obtaining the wealth statement on 30th January, 1982, the Income‑tax Officer, as per order‑sheet entry, dated 14‑2‑1982, called upon the assessee to produce the sale‑deed and evidence of sale of ornaments. On 25th February 1982 the assessee produced the photo copies of purchase‑deeds and receipts of jewelers. The Income‑tax Officer issued summons to the Jewelers and upon the failure to appear on the given date, the assessee was on 10‑5‑1982 directed to produce the parties (jewelers), with a clear warning that adverse inference would be drawn if he fails to do so. The Income‑tax Officer also made local enquiries, which revealed that no shop then existed at the given address nor the name of the jewelers existed on the National Tax Register in the relevant Circle of assessment. In reply, the learned counsel for the appellant submitted that the reply was duly made to the assessee on 18‑5‑1982 informing him that a new market '(Panorama Centre) had been constructed at the place where the shop of the jewelers to whom the jewellery was sold, existed.

7. Before considering the submissions of the parties' representatives, we deem it proper to reproduce provisions of section 13 of the Income‑tax Ordinance in so far as they are relevant for our purpose:‑‑ "Section

13. Unexplained investments, etc., deemed to be income.‑‑ (1) Where, in the course of any proceedings under this Ordinance,‑ (a) ................................ (aa) the assessee is found to have made any investment or is found to be the owner of any money or valuable article, in any year; or (b) The assessee is found to have made any investment in any income year, which is not recorded in the books of account maintained for that income year nor shown in the wealth statement furnished under section 58 in respect of that year, (c) ................. ........ ; (d) the assessee has made investment in any income year or is found in respect of any such year to be the owner of any valuable article and the Income‑tax Officer finds that the amount expended on making such investment or in acquiring such valuable article exceeds the amount recorded in this behalf in the books of account maintained by him or shown in the wealth statement furnished under section 58 in respect of that year. (e) ......... ................... and the assessee offers no explanation about the nature and source of such sum, investment, acquistion of the money or valuable article, excess amount or the money from which the expenditure was met, as the case may be, or the explanation offered by him is not, in the opinion of the Income‑tax Officer, satisfactory the sum so credited, the value of investment, the . money or the value of the article, the excess amount or the amount of the expenditure, as the case may be, shall be deemed to be the income of the assessee of such income year chargeable to tax under this Ordinance: Provided that in cases referred to in clauses (aa) to (e) such income shall not be chargeable to tax unless prior approval of the Inspecting Assistant Commissioner has been obtained. (2) Where the value of any investment or article referred to in clauses (b), (c) or (d), or the amount of expenditure referred to in clause (e) of subsection (1) is, in the opinion of the Income‑tax Officer, too low, the Income‑tax Officer may determine, after giving a reasonable opportunity to the assessee of being heard, a reasonable value or the amount thereof, as the, case may be, and all the provisions of subsection (1) shall ha effect accordingly." The Income‑tax Officer has patently taken action under clause (d) of subsection (1) of section 13 of the Ordinance. He was thus under a statutory obligation to give a reasonable opportunity to the assessee of being heard for determining the value of investment. The learned Departmental Representative was unable to urge before us on the basis available on departmental record that specific and reasonable opportunity of being heard in this behalf was actually provided to the assessee. The learned Commissioner of Income‑tax (Appeals) has also specifically held in the impugned order, as rightly pleaded by the, learned counsel for 'the appellant, that the appellant was not confronted with the estimates made by the assessing officer. In 971 S C M R 681 the Supreme Court of P... of page 684/685 of the report has held as under: "The Courts in P... have, however, taken the view that where the giving of a notice is provided for by the statute itself , then the failure to give such a notice is fatal and cannot be cured. But where there is no specific statutory provision anal reliance is only placed on the principles of natural justice and audi alteram partem, there if at some stage or other the person aggrieved has been given a fair opportunity of representing his point of view, then the defect, .if any, in the initial order may be deemed to have been cured. Thus, in the case of M.. . I. v. Dr. S... P L D 1959 Kar. 669 it was pointed out that each case will have to be determined on its own facts. If the statutory provision for notice be of a mandatory nature then an order without any notice would, be wholly void; but if there be no such provision or if the provision be merely of a directory nature, then, wherever a violation of this principle of natural justice is alleged, the Court may call upon the party, alleging the same to prove prejudice before it sets aside the order. Such prejudice would obviously not be there if it is found that the party had been actually given a full hearing by the appellate or revisional authority and afforded every opportunity of showing cause against the allegations made. To the same effect is the view of the P... High Court in the case of Charsaddah Sugar Mills, Ltd. v. Government of P... P L D 1971 Pesh. 210.

8. Facts of the other case relied upon by the learned counsel for the appellant i.e. P L D 1964 S C 410 are distinguishable and hence it has no relevance to the issue in hand. A reference to the provisions of section 13(2) of the Ordinance makes it absolutely clear that where the value of any investment referred in clause (aa) or (d) is,, in the opinion of the I.T. Officer, too low the I.T. Officer may determine, after giving reasonable opportunity to the assessee of being heard and with the prior approval o the Inspecting Assistant Commissioner a reasonable value or the amount thereof, as the case may be. The ratio decidendi of the Supreme Court case is squarely applicable to the facts of the instant case and hence there is no course open to us but to hold that the failure to comply with mandatory provision of statute with regard to giving reasonable opportunity to the assessee has rendered the impugned order in this behalf wholly void. We, therefore, modify the order of the learned Appellate Assistant Commissioner so as to annul the assessment instead of its being set aside in this behalf.

9. In the result, the appeal succeeds and is allowed as indicated above. M.B.A. Appeal accepted