The titled appeal is directed against the order dated 02.01.2006 mainly to contest the application of gross-profit addition u/S. 25(c) of the Repealed Income Tax Ordinance, 1979 and also the other add backs out of P&L expenses.
2. So far as the. Legality of assessm ent proceedings for the assessment year 2002-03 being outside the scope of Repealed Ordinance as well as of the present Ordinance, 2001, thd matter when was referred by Honourable Chairman to a Larger Bench that it was disposed of by an order dated 19.5.2007 with findings that income tax assessment has rightly been framed under the Repealed Income Tax Ordinance, 1979.
3. Presently we are required to adjudicate upon the issues as specified in -the opening para i.e.- para (1) as rest of the grounds have not been pressed here. Facts which could be gathered from record as well as out of submissions made before us are that addition was made by revoking the provision of 25(c) of the Repealed Ordinance, 1979 for the figure appearing from the year ending from 30.6.1998 to onwards till the expiry of the three years i.e. How it is for the income year ending on 30.9.1989 falling in the impugned assessment year 2002-03. The addition has been made statedly on the failure of the assessee to provide against the total amount shown as on 30.6.1998.
Before us the learned A.R. Has challenged the addition firstly on the basis that the word appearing as three years and thereafter the income year which has lead to a confusion, as to whether it is because word year has not been defined in the Income Tax Ordinance so to interpret the same its definition has given in general clauses is to be followed. The learned Legal Adviser on this submission has counter acted by referring to citation as (1997) PTD (Trib.) 1727, by elaborating that such conclusion has been resolved. On this preliminary objection, we record our findings in the manner that interpretation is not to be made in the manner making his redundant or to promote absurdity. Firstly the word appearing in three years and thereafter the income year has itself clarified that three years means the income years as has been directly explained in the same sentence. The objection of' the learned A.R. Is not tenable'"which is turned down by holding that proceedings were quite proper, legal and free from confusion. The learned A.R. Has secondly argued that assessm ent, in the instant case for the preceding years till it was exempt under 2nd Schedule had been assessed at nil income by ignoring the loss declared, meaning thereby that earlier expenses have not been allowed against which payable amount is appearing payable as liability till. 30.6.1998. Learned A.R. Has argued .That when expenses which has not been allowed and income has been assessed as nil then in subsequent year calling in question such amount for action u/S. 25(c) is not legal by drawing support with citation (1997) PTD (Trib.) 3478 = (1998) 78 Tax 4 (Trib.) and the other (2007) PTD (Trib.) 345. Learned A.R. Has submitted that second citation is by following the earlier orders. Learned A.R. Has read out para-15 from first cited order of the Tribunal.
Learned A.R. Has also referred to order cited as (2007) PTD 698 by referring to para marked "B" to support the everment that Section 25(c) will be attracted only when in the earlier year the amount has been allowed as deduction u/S. 23 in the preceding years which remained unpaid which could be deemed to be income as specified in Section 25(c). The learned Legal Adviser has opposed such submissions but failed to dislodge the settled ratio upto the level of this Tribunal as cited by learned A.R.
4. On this issue we have heard both the learned representatives, the available record has been perused.
5. Anxious thoughts has been given to the arguments placed at bar before us. Ratio has been settled to the extent that in the earlier year where the amount has been allowed as deduction u/S. 23 then provisions of Section 25(c) ibid would not be attracted., but here in the instance case before us neither the appellant-assessee nor the department has produced the assessment record, so we have been handicapped, therefore, we find it fair, just, proper to remit the matter back to the Assessing Officer to the extent that he should verify from the record that for the amount of addition if in the earlier year income has been assessed as nil by ignoring the last declared then no addition shall be made u/S. 25(c). The Assessing Officer is strictly directed to continue its proceedings to this extent and not to cross the scope of remand which has been specifically assigned. As far as the rest of the add backs are concerned, we have found that these has been made arbitrarily on the basis of stock phrases which cannot be approved by this appellate forum.
Hence it is directed that same shall be deleted. Assessee's appeal disposed of an indicated above.
No other ground has been pressed before us.