ORDER Titled appeal has been filed at the instance of the assessee for the assessment year 1994- 95 assailing the impugned order dated 31.10.1996 passed by the learned A.A.C., Lahore. The assessee/appellant through this appeal has objected to the order of the learned A.A.C., Lahore on the ground that the learned CIT(A) was not justified to set aside addition make u/s. 13(1)(aa) in- spite of observing that the same was made on the basis of conjectures & surmises and without appreciating the fact that it was a gift transaction made by father in law.
2. Briefly stated the facts of the case are that the appellant lady acquired a room No. 3 on second floor, Mashallah Block, Alamigir Market, Lahore measuring 99 sq. Ft, for registered consideration of Rs. 15,000/- vide registered sale-deed dated 10.10.1993. On receipt of information regarding purchase of property, the Assistant Commissioner of Income/Wealth Tax, Circle-19, Zone A. Lahore initiated the proceedings in the case Initially notices u/ss. 56, 58(1) and 61 of the repealed Income Tax Ordinance, 1979 were issued but remained un-complained with. Finally notice u/s. 13(2) read with section 13(1)(aa) bearing No. 242/TR, dated 16.2.1995 of the repealed Income Tax Ordinance, 1979 was issued wherein the registered value of the property at Rs: 15,000/-, giving average rate of Rs. 152/- per sq. Ft, was considered as grossly understated and in the light of some other case quoted in the notice, the assessee was confronted with the adoption of value of room at Rs, 6,93,000/- She was also confronted that why an amount of Rs. 6,93,000/- may not be treated as unexplained investment and added in her income u/s. 13'(1)(aa) of the repealed Ordinance of 1979.
3. in response to the said notice, the assessee submitted her Income Tax Return for the assessment year 1994-95 declaring Nil income and wealth statement for the period ended 30.6.1994 declaring Nil value of the room, it was contended before the assessing officer that the said room has been gifted out by the father-in-law of the assessee and the registered sale-deed was executed only to secure from the further litigation, in support thereof, an affidavit of the donor as well as unregistered deed of declaration dated 22.9.1993 were also submitted Contentions raised by the assessee lady could not find favour with the assessing officer who proceeded to make addition of Rs. 6,93,000/- u/s. 13(1)(sla) of the repealed Income Tax Ordinance, 1979,
4. Against the above said treatment, the assessee preferred appeal before the learned A.A.C., Lahore who set aside the case with the following observation vide his order dated 31.10.1995:- "I have looked into pros and cons of the case and hold the view that the assessing officer while finalizing the proceedings has completely lost sight of the fact that under Muhammadan Law a gift to the Muslim can be made verbally or in writing, it is worth mentioning that addition u/s. 13(1 )(aa) is also illegal as appellant shown Nil value (being gifted property) in the wealth statement and as such the alleged difference in value if any could only be made u/s. 13(1 )(d) and not u/s. 13(1)(aa).
In the light of foregoing facts the assessment framed by the A.C.I.T. Is set-aside for de novo proceedings with the directions that proper opportunity of being heard be given to the appellant and re-assessm ent framed after looking into the relevant facts of the case."
5. Being dissatisfied with the order of the learned A. A.C., Lahore the assessee has preferred the present appeal.
6. Mr. Tahir Mahmood Butt, Advocate has appeared on behalf of the appellant and has argued the case at length on facts as well as on law raising manifold objections. At the very outset he challenged the legality and validity of the impugned order which according to him is without assumption of jurisdiction, it has been stated that the appellant lady is a house wife and is residing at 651, Shadman Colony, Lahore. Further contended that she does not have any business concern anywhere. He has drawn the attention of this Court to section 5(3)(a) of the repealed Income Tax Ordinance, 1979 which is reproduced here under for facility of reference:- Section 5.
(3) 'Within the area assigned to him, the 1 [Deputy Commissioner] shall have jurisdiction,-
(a) in respect of any person carrying on business or profession if the place of business or profession is. Situated within such area, or where the business or profession is carrying on in more places than one, if the principal place of the business or profession is situated within such area; and."
7. The A.R. Has contended that as the appellant lady was neither residing nor carrying on any business activity, within the area assigned to the Assistant Commissioner of Income Tax Circle-19, Zone-A, Lahore, so the assessm ent finalized by the said officer is without jurisdiction hence liable to be cancelled. Reliance in this respect was placed by the learned counsel on the following case- laws:-
(1) 2004 PTD (Trib) 769.
(2) P.T.C.L 2000 CL III (H.C. Karachi).
(3) (1987) 56 TAX 35 (H.C. Karachi).
(4) WTA No. 976/LB/1997.
(5) 2005 PTD (Trib) 517. .
8. The next argument of the learned A.R. Is that the subject property was gifted out by the father-in- law of the appellant lady and the registered deed was only executed to secure the donee from any sort of further litigation. The assessing officer was thus not justified to make addition of Rs.
6,93,000/- being the estimated value of the room after rejecting the contents of deed of declaration dated 22.9.1993. in this respect he has referred the case at Moulvi Abdullah and others vs. Abdul Aziz and others reported as 1987 SCMR 1403.
9. The addition of Rs. 6,93,000/- has also been challenged on the ground that the assessing officer has made the addition u/s. 13(1)(aa) of the repealed Income tax Ordinance, 1979 whereas, the said provisions are not attracted in the case and the same could have been made u/s. 13(1 )(d). The contention of the learned A.R. Is that where wealth statement has been furnished, The addition could have only be made under section 13(1)(a) and not under section T3(1)(aa) of the repealed Income Tax Ordinance, 1979. it has further been argued that the A.A.C. Was also not justified to set- aside the assessm ent particularly after admitting the deficiency on this issue. Reference in this regard was made to the reported judgment cited as (2003) 87 TAX 19 (Trib.) wherein dealing with the same proposition it has been held:- "We do not subscribe to the findings of the appeal Commissioner that by quoting incorrect provisions of law the addition could not be held to be not tenable in law for the simple reason that the legislature has intentionally catered six eventualities in section 13 of the Ordinance, 1979, i.e. (a), (aa), (b), (c), (d) and (e) in order to treat the tax deemed income of the assessee in this section.
Otherwise only a single section i.e. Section 13 could have been introduced by the legislature to cover up all the situations referred to in those clauses."
10. The next argument of the learned A.R. Is that the assessment is also not, sustainable for the reason that the assessing officer has failed to identify the sources where from the investment was made as required under section 13 of the repealed Ordinance, 1979 particularly when the appellant lady has submitted her return declaring nil income. Reliance in this behalf has been placed on the following cases:- -
(1) (2003) 88 TAX 119 (H.C: Lah.)
(2) . (2003) 87 TAX 156 (H.C. Lah.)
(3) (2003) 88 TAX 119 (H.C. Lah.)
(4) (2004) 89 TAX 332 (Trib.)
11. it has further been submitted that the entire addition of Rs. 6,93,000/- has been made u/s. 13(1)
(aa) of the repealed Ordinance, on the basis of alleged parallel cases and no independent material has been brought on record to justify addition.
12. it has further been contended by the learned A.R. That the assessing officer even otherwise was not justified to make the addition u/s. 13(1)(aa) while accepting the inculpating parts of the registered deed and discarding the exculpatory parts thereof. The contention of the A.R. Is that if the registered deed was to be taken as material evidence, then the value recorded in the same deed should have also been accepted, in this regard he has referred the following cases:-
(1) 1992 SCMR 2047
(2) 1983 SCMR 76 13: The last objection of the A.R. Is that the A.A.C.
Was also not justified to set-aside the assessment particularly after accepting the deficiencies pointed out at the time of hearing while recording the order in appeal. The contention has been supported with the following cases:-
(1) (2003) 87 TAX 29 (Trib./
(2) (2003) 87 TAX 129 (Trib.)
(3) (2003) 88 TAX 243 (Trib.) .14 The learned D.R. On the other hand opposed the arguments advanced by the learned A.R. And submitted that the learned AAC has already given an opportunity to the assessee to prove his case. Hence no further relief is due to the assessee.
15. We have heard both the parties and have gone through the relevant orders as well as case law cited at the Bar. We are inclined to agree to the submissions made by the learned A.R. And observe that the contentions of the assessee are correct. The learned AAC in-spite of observing that "the assessing officer while finalizing the proceedings has completely lost sight of the fact that under Muhammadan Law a gift to the Muslim can be made verbally or in writing, it is worth mentioning that addition u/s. 13(1)(aa) is also illegal as appellant has shown nil value (being gifted property) in the wealth statement and as such the alleged difference in value if any could only be made u/s.- 13(1)(d) and. Not u/s. 13(1)(aa)" proceeded to set aside the case for de novo consideration, in a number of cases the Tribunal as well as the apex Courts have held that in-spite of the fact nothing has been brought on record by the assessing officer for making addition, hence setting aside is .
Not justified since it means to give the assessing officer premium to make up his deficiencies. Even otherwise neither the assessee is residing in the alleged property nor any business is being conducted thereof as evidently not established by the assessing officer, hence the addition made under Section 13(1)(aa) without lawful jurisdiction is hereby deleted.
16. Appeal of the assessee succeeds in the manner indicated above.