' MIAN MUHAMMAD JAHANGIER, (MEMBER (JUDICIAL)).---By this consolidated judgment appeals bearing No,610/LB of 2006, 609, 608 607 and 606/LB of 2006 directed against Order in Appeals Nos.
124 to 128 of 2006 passed by Collector of Customs Sales Tax and Federal Excise (Appeals) Customs House, Lahore dated 21-6-2006 are being disposed of together as learned Collector disposed of five appeals filed by Nighat Zahid, Mst. Kishwar Nasim, Mst. Robina Shaheen, Qesra Shakoor and Mst. Sarwar Begum, the appellants before him directed against Order-in-Original No,49 of 2006 passed by Additional Collector (Adjudication) Lahore dated 30-3-2006 by single judgment. The judgment in detail was recorded in the case title as Mst. Kishwar Wasim v. Additional Collector.
2. It happened that Mr. Wasim Ahmad gifted one used Toyota Land Cruiser Prado bering (Chassis No,VZJ 120-0005597 model 2003 to his wife Kishwar Wasim, the present appellant. Some, documents were submitted by Kishawar Wasim for clearance of the vehicle. During this process an information was received from Islamabad that the vehicles A having chassis numbers of the vehicles SE3P-100623, UZJ-100-0144100, UZJ100-0145137, UZJ100-0143788 were stolen in Japan therefore, there is an act of mis-declaration on the part of the importers/appellants. Keeping in view the fake documents mis-declaration and on account of violation of different provision of law, the matter was referred for adjudication. After hearing both the sides the Adjudicating Authority confiscated the vehicles in question however, allowed to redeem the vehicles on payment of redemption fine equal to 30% of assessable value of the vehicles in addition to payment of duty and taxes leviable thereon under the law.
3. Being aggrieved from the order-in-original the department concerned filed the appeals before Collector (Appeals) Lahore who disposed of the appeals by single judgment as pointed above. The observations recorded by learned Collector in paras. Nos.6 and 7 are as under:--- "I have gone 'through the case record and have considered the oral and written submissions made by the appellants and the departmental representative. From the perusal of record it has been observed that the appellants plea that the subject vehicles had been brought into the country under proper documentation is not correct. It is also noticed that in the impugned order an option was given to the appellants for the release of the subject vehicles on payment of duty and taxes along with 30% redemption fine."
' In view of the above position the impugned order is set aside and the case is remanded back to the Adjudicating Authority with the .Direction that the subject cases be decided afresh after considering the fact that the subject vehicles had been reported stolen in Japan. In this regard the Interpol Agency in Pakistan has informed that these vehicles were first stolen from Japan and brought to Pakistan via Dubai. The Government of Pakistan is under obligation as per international laws to comply with the directions of Interpol. In one case i,e, Mrs. Sarwar Begum mother of Shujauddin Chaudhri Gali, Babu Tajdin Wali, Kot Murad Khan, Kasur, Pakistan it is clearly mentioned as under:--- "Under a theft information set up 2004 year December 27th center."
' It is also desired that the case may be decided after seeking clarification/NOC from NCB Interpol FIA, Islamabad.
4. After hearing the learned counsel for the appellant and learned D.R. For the respondent the point for determination before us at this preadmission stage is as to whether on the allegation of theft the vehicles as mentioned above can be confiscated or not. The learned counsel for the appellant argued that in case of number of vehicles imported from U.A.E. It transpired that the same have been reported to be stolen in Japan but since these vehicles were imported from UAE under different schemes therefore, the same were released against 30% redemption fine besides payment of duty and taxes and no such case was referred to NCB Interpol FIA Islamabad for seeking clarification but in case of the appellants,. This matter has been referred which is based on mala fide intention; that the allegation being raised is without any evidence; that the dispute is being remanded to the Adjudicating Authority just to cause delay in the release of the vehicles; that the vehicles in question were purchased by the relatives of the importer in UAE in accordance with law therefore, it is baseless to say that fake documents were produced for having cleared the vehicles. The relatives of the importers and the importers also are bona fide purchaser of the vehicles therefore the matter could not be referred back for fresh adjudication and that the chassis number of the vehicles were not found tampered by the Adjudicating Authority therefore, Order in Appeal cannot sustain in the eye of law.
5. He further argued that the latest position relating to the' dispute involved is that in the minutes of the Collectors Conference held on August 2006 by Central Board of Revenue Government of Pakistan as it exist on para. 4.4, it was held that the Collectors may clear such vehicles (stolen), under the relevant provision of the Customs Act, 1969, after imposition of 30% redemption fine and they should not initiate any action on alleged stolen vehicles unless recognized agency of a foreign country approaches the Government of Pakistan in this regard and no Collectorate shall directly correspond with the foreign agencies or Government in respect of stolen vehicles similarly the Collectorate will entertain the letters of FIA about stolen vehicles only through C.B.R. He produced photo copy of the minutes ,in support of his contention which have been placed on the record.
6. It appears to us that the learned D.R. Is not in position to oppose the minutes of the conference held on August 2006 para. 4.4 is reproduced as under:--- "Issue of stolen vehicles was discussed. It was reiterated that Collectorates may clear such vehicles under the relevant provisions of the Customs Act, 1969 after imposition of 30% redemption fine.
They should not initiate any action on alleged stolen vehicles unless a recognized agency of a foreign country approaches the Government of Pakistan in this regard. No Collectorate shall directly correspond with the foreign agencies or Governments in' respect of stolen vehicles.
Similarly Collectorates will entertain the letters of FIA about stolen vehicles only through C.B.R."
7. It means that on any sort of apprehension or an allegation of theft the Customs Authorities have no competency to resist in release of B the vehicle on payment of customs and duty and redemption fine which Customs Authorities have to release. In order to avoid further delay in clearance of the vehicle the learned counsel for the appellant argued that the appellants are prepared to make payment of taxes and duties and redemption fine equal to 30% as held in order- in-original passed by the Adjudicating Authority.
8: Now we are of the view that the allegation of theft is not an obstacle before the Customs Authorities to release the vehicles in accordance with law and at the most the competent authority i,e, FIA, Islamabad be informed in this connection and that the FIA at their own may take into custody such vehicles. Being so Order-in-Appeals Nos.124 to 128 of 2006 cannot,sustain in the eye of law.
' In view of discussion above Order-in-Appeal dated 21-6-2006 is set aside and that order-in- original passed by the Adjudicating Authority is intact and the vehicles shall be released in accordance with law.
9. Appeals are disposed of accordingly.
Appeal succeeded.
2007 P T I5 (Trib.) 2069 [Income-tax Appellate Tribunal Pakistan] Before Jawaid Masood Tahir Bhatti, Judicial Member and Ch. Nazir Ahmad, Accountant Member I.T.As. Nos. 3964/LB, 3965/LB, 4821/LB and 4822/LB of 2002, decided on 6th September, 2006.
(a) Income Tax Ordinance (XXXI of 1979)--- ----S.62---Assessm ent on production of accounts, evidence etc.---Rejection of accounts without pointing out defects---Validity--- Admittedly, books of accounts were maintained, produced before the Taxation Officer and had been examined but Taxation Officer without pinpointing any defect in the books of accounts had rejected the declared version---No justification existed for rejection of accounts after examining books of accounts and without pointing out any specific defects in the accounts---Where the assessee produced books of accounts as evidence in support of return, the Assessing Officer before disagreeing with such accounts shall give notice to the assessee of the defects in the accounts and will provide an opportunity to the assessee to explain his point of view about such defects and record such explanation on the basis of computation of total income of the assessee in the assessm ent order---Such having not been done the assessment orders were liable to be cancelled, as the requirements of the mandatory provisions of law had not been fulfilled---Order of First Appellate Authority was vacated and Taxation 'Officer was directed to accept the declared version of the assessee. [pp. 2072, 2073] A & D 2001 PTD 3369; 2002 PTD 407 and 2001 PTD (Trib.) 3369 ref.
(b) Income-tax--- ----Inspector's report---Inspector's inquiry report dated 23-10-2001 Was not relevant for the assessm ent years ending on 30-6-2000 and 30-6-2001. [p. 2072] B 2001 PTD (Trib.) 3369 rel.
(c) Income-tax--- ----Rejection of accounts---Adverse past history of the assessee could not be a correct ground to reject the accounts, as rule of res judicata was not applicable to the income tax proceedings and every year was an independent year. [p. 2073] C 2002 PTD 407 rel. Muhammad Younis Khalid for Appellant (I. T. As. Nos .3964/LB and 3965/LB of 2002).
Mrs. Sabiha Mujahid, D.R. For Respondent (I.T.As. Nos.3964/LB and 3965/LB of 2002).
Mrs. Sabiha Mujahid, D.R. For Appellant (I.T.As. Nos.4821/LB and 4822/LB of 2002).
Muhammad Younis Khalid for Respondent (I.T.As. 4821/LB and 4822/LB of 2002).
' Through these four cross-appeals, the consolidated impugned order of the learned C.I.T.(A) dated 9-7-2002 for the assessm ent years 2000-01 and 2001-02 has been assailed by the assessee for both the years under review on the following grounds:---
(i) That the rejection of accounts upheld by the learned C.I.T.(A) is not justified.
(ii) Treatment regarding estimated sales and disallowances in the following heads under review is not justified:- ' Travelling ' Printing & Stationery Telephone ' Rents Rates & Taxes Repair & Maintenance Vehicle Running ' Entertainment ' Misc. Expenses ' Computer Expenses Advertisement ' Packing Material
(iii) For the assessm ent year 2000-01 in addition to the above said grounds on behalf of the assessee, the treatment regarding disallowances out of "Repair and Maintenance" and "Advertisement" have been objected and the setting aside of additional tax under section 89 has also been objected.
' While the Department for both the years under review is aggrieved in respect of estimated sales as reduced by the learned C.I.T.(A). For the assessment year 2000-01, the Department has also objected the relief allowed reducing expenses from Rs,1,07,563 to Rs,50,000 ' Mr. Muhammad Younis Khalid, Advocate has appeared on behalf of the assessee and has contended that in this case, books of accounts have admittedly been produced before the Taxation Officer and it has been specifically mentioned in the assessment orders for both the years that the assessee is maintaining computerized books of accounts, which were examined. The assessee had also produced necessary documents and details in response to notices issued by the Taxation Officer, during the course of assessment proceedings. He has contended that the Assessing Officer without pinpointing any defects in the books of accounts has rejected the declared version without any justification and has made the assessment on the basis of Circle Inspector's Report which is not relevant for the years under review. He has contended that the Inspector's report is of 23-10-2001 while the assessment years under review end on 30-6-2000 and 30-6-2001. He has contended that the learned C.I.T.(A) in the impugned order has admitted that "Inspector's inquiry report dated 23-10-2001 does not reveal recording statement of the assessee nor any of his representative. No proper stock taking is evident either except for a one (1) page list produced quality/quantity, rates and amount worked out to a total amount in pencil writing", therefore, the learned C.I.T.(A) has observed that the basis taken for estimated sales on the basis of Inspector's report is not reliable. According to the learned counsel, the learned C.I.T.(A) instead of directing to accept the declared version has only reduced the estimated sales for the two years under review. The learned counsel in respect of his contention has placed reliance on the decision of this Tribunal reported as 2001 PTD 3369 and the decision of Hon'ble High .Court reported as 2002 PTD 407 (H.C. Kar.) wherein it has been held that the unverifiability of sales and purchases cannot be a ground for 'rejection of trading results and that the adverse past history of the assessee was not a correct ground to reject the book version, as rule of res judicata is not applicable in the income tax proceedings and every year is an independent year. The learned counsel is, therefore, of the view that the declared version may please be accepted.
' On the other hand, Mrs. Sabiha Mujahid, representing the Department has contended that the learned C.I.T.(A) without any justification has reduced the estimated sales and has allowed relief in respect of disallowances despite the fact that the Assessing Officer after properly confronting the assessee has rejected the declared version and has estimated sales and made disallowances out of Profit & Loss A/c. He is, therefore, of the view that assessments made for both the years under review may please be restored.
' We have heard the learned representatives of both the sides and have also perused the impugned urder of the learned C.I.T.(A) and the assessment orders.
We have found that the assessee, in this case, is an individual deriving income from sale of garments on retail basis. Admittedly, books of accounts are maintained, produced before the Taxation Officer and have been examined for both the years under review, but the Taxation Officer without pinpointing any defects in the books of accounts has rejected the declared version and has made the assessm ents on the basis of Inspector's inquiry report which has been made by the Circle Inspector on 23-10-2001 despite the fact that the assessment years under review ended on 30-6-2000 and 30-6-2001 respectively. We are of the view that Inspector's inquiry report is not relevant as has already been held by this Tribunal in a decision reported as 2001 PTD (Trib.) 3369.
We have further noted that although the history of the assessee is of rejection yet it has been contended by the learned counsel for the assessee that for the years under review, the assessee has properly maintained books of accounts and no specific defects have been pointed out by the Taxation Officer. We are, therefore, of the view that the adverse past history of the assessee cannot be a correct ground to reject the accounts, as rule of res judicata is not applicable to the income tax proceedings and every year is an independent year as already been held by the Hon'ble Karachi High Court in a decision reported as 2002 PTD 407.
In view of the above facts we are or the considered view that there was no justification for rejection of accounts after examining books of accounts and without pointing out any specific defects in the accounts in view of section 62 of the repealed Income Tax Ordinance, 1979 which says that where the assessee produces books of accounts as evidence in support of return, the Assessing Officer before disagreeing with such accounts shall give notice to the assessee of the defects in .The accounts and will provide an opportunity to the assessee to explain his point of view about such defects and record such explanation On the basis of computation of total income of the assessee in the assessm ent order. This being not done so, the assessment orders in this case are liable to be cancelled, as the requirements of the mandatory provisions of law have not been fulfilled.
' Both the appeals filed by the assessee are, therefore, allowed. The impugned order of the learned C.I.T.(A) in this respect is vacated and the Taxation Officer is directed to accept The declared version of the assessee.
' Consequently, both the cross-appeals filed by the Department *are dismissed.