This appeal has arisen after the appellant failed to have his appeal accepted before the learned CIR(Appeals). The main grounds of the appellant are as under:-- "(1) That the appeal of the taxpayer has wrongly been remanded back instead of annulment of assessm ent framed by the learned Commissioner Inland Revenue.
(2) That the case was wrongly selected for audit by the CIT, MTU, Lahore. The case was already selected for audit for tax year 2003 and thus could not be selected for audit for tax year 2004.
(3) That the addition of Rs.40,25,000 under head income of sales of files/plots under section 18(1) is absolutely illegal and wrong. The appellant contended through its counsel that his reply was not consider by the. Taxation Officer.
(4) The addition made under the profit and loss account were illegal, wrong and without any basis.
Mr. Muhammad Waseem Ch., Advocate attended for the appellant and the department was represented by Mr. Sajjad Tasleem."
2. The brief facts of the case are that the taxpayer filed return of income for tax year 2004 declaring income of Rs.5,71,164. The case was ,selected for audit under section 177(4) of the Income Tax Ordinance, 2001 by CIT MTU, Lahore. Various details and documents was filed by the taxpayer in response to queries raised by the Revenue and finally a notice under section 122(9) was issued on 4-5-2009 confronting the taxpayer with the observation that the taxpayer was involved in the business of purchase and sale of real estate. The taxpayer furnished reply as required. This reply did not find acceptance with the Taxation Officer who proceeded to estimate income of the taxpayer at Rs.56,09,937 which included estimation of receipts from embroidery business, disallowances from the profit and loss account and addition on gain on sale of plots of Rs.40,25,000. The taxpayer being aggrieved filed an appeal before the CIR(Appeals) who after considering the merits and arguments of the appellant and the department remanded the case back to the Taxation Officer for de novo proceedings. The taxpayer has come before the Tribunal against such remand.
3. The record has been perused. The main contention of the appellant was that he was not engaged in the business of real estate at all. It has been contended that two files were purchased in tax year 2004' as has been stated above and sold during the same financial year and after this sale Plot No.E-248, phase-V, DHA, Lahore was purchased for a consideration of Rs.55,80,000. During its pleadings the appellant through its counsel argued that the taxpayer has never indulged in the business of real estate and his main business was embroidery receipts from the installation of embroidery machines. The plot which was purchased after sale of two files in phase-VI is still owned by the appellant and has been accepted by the department in tax year 2005 when his case was again selected for audit which was incidentally the third consecutive year for which the order was conducted. The counsel of the appellant argued that the CIT(Appeals) was not justified in remanding the case back to the Taxation Officer after he had reached the conclusion that the entire action of the Taxation Officer was hasty and he did not consider the evidence provided by the taxpayer and the facts which were abundantly available on record. The D.R on the contrary argued that the case was rightly set aside by the CIT(Appeals) and that the appellant should furnish all the facts and evidence and argue his case again before the first assessing authority.
4. We have heard the arguments of both the appellant and the Revenue and have reached the conclusion that the department erred in holding the taxpayer to be carrying on the business of real estate because the amendment orders for tax years 2003 and 2005 reveal that no such dealings were made by the taxpayer and the Revenue also did not determine any income from this source.
The department could not establish any intention on the part of the appellant to establish that the sale and purchase of plots was indeed an adventure in the nature of trade. At the most it could be said that it was an odd transaction. By selling the two files in phase-VI the taxpayer purchased a plot in phase-V, DHA, Lahore which is still owned by the appellant as has been contended by the taxpayer by making a statement at bar. Therefore, we do not find ourselves to agree with the addition of Rs.40,25,000 in the income of the appellant and accordingly order it could be deleted.
Even otherwise gain on immoveable assets is not a domain of this Federal Government. The taxpayer did not press its grounds of estimation of receipts and withdrew it during the course of proceedings. As far as the addition of Rs.5,00,000 under the head wages is concerned. It was argued by the counsel of the taxpayer that the salary register along with copies of CNICS was produced before the first assessing authority and without confronting him on any non-verification this addition was made. After hearing the arguments of both the appellant and the Revenue we find that the addition of Rs.5,00,000 in the -wags account has been made summarily and without any basis. We accordingly order it to be deleted. The appeal succeeds to the extent and in the manner stated above. .