2006 PLP (Trib (PTD)

MUHAMMAD MUNIR QURESHI (ACCOUNTANT MEMBER).

This appeal by an individual arises out of order passed by the CIT(A) who has remanded assessment for the year back to the Assessing Officer for de novo appraisal.

2. It is the appellant's contention before us that the Assessing Officer having failed to issue any notice under sections 13(1)(aa) & 13(1)(d) at the time of reassessment made under sections 62/132 cannot be allowed to make any reappraisal with regard to these additions and the CIT(A) has erred in failing to properly dispose off assessee's Grounds Nos.3 & 6 raised before the first appellate authority.

3. The AR of assessee has referred to the following case law: 2004 PTD (Trib.) 2352, 1985 PTD (Trib.) 178, 1989 PTD (Trib.) 150, 1997 PTD (Trib.) 1102 and 1991 PTD (Trib.) 758.

4. The DR submits that the appellant's contention is misconceived and the appellant had already been properly confronted with regard to the additions made under sections 13(1)(aa) & 13(1)(d) at the time when original assessment was finalized under section 62 and hence according to the DR the assessee was well aware of the facts and circumstances leading to these two additions under sections 13(1)(aa) & 13(1)(d).

5. We have heard both sides, have examined the available record and have perused the cited case law and in our considered judgment, the Assessing Officer has clearly failed to formally confront the assessee as regards the proposed addition under sections 13(1)(aa) & 13(1)(d) amounting to Rs.10,74,200 & Rs.10,59,800 respectively. DR's contention that the assessee had already been confronted earlier on the matter at the time that original order under section 62 was passed on 30-6-2001 does not exempt the Assessing Officer from carrying out statutory requirement of formal confrontation before making the proposed additions. Proceedings under sections 62/132 are fresh proceedings and there can be no "carry forward" of earlier proceedings under section 62, dated 30-6-2001 with regard to proposed additions under sections 13(1)(aa) & 13(1)(d). The Assessing Officer was bound under the relevant provisions of law to make fresh confrontation under sections 13 (1)(aa) & 13(1)(d) before resorting to additions to the total income under these provisions. The fact that approval has been duly obtained from the IAC is of no consequence and failure to formally confront the assessee with the proposed additions under sections 13(1)(aa) & 13(1)(d) is a lapse on the part of the Assessing Officer that is fatal and no further action in this context can be taken at the time of reassessment ordered by the CIT(A). It has been held by the Tribunal in 2003 PTD (Trib.) 2547 that section 13 is an independent charging section. That being so, where the Assessing Officer has failed to make addition under section 13 strictly in the manner stipulated in the statute, the addition is rendered void in law and is required to be struck down. The Assessing Officer cannot be given a 2nd chance to make good his lapses by passing fresh order after remedying the noted defects/ deficiencies. The Assessing Officer will therefore restrict his action to fresh determination of assessee's turnover only and will make no additions under sections 13(1)(aa) & 13(1)(d) on account of alleged understatement is cost of construction and alleged unexplained investment in the property known as Marhaba Hotel, Aslam Khan Road, Railway Station, Lahore.

6. The appeal succeeds to the extent and in the manner stipulated Supra. C.M.A./10/Tax (Trib.)????????????????????????????????????????????????????????????? Appeal accepted.