This instant appeal has been filed by the taxpayer against the order dated 20-3-2011 passed by learned CIR(A-III) Islamabad for the tax year 2009 on the following grounds:--
(1) That the order passed under sections 122(1)/122(5) is illegal, arbitrary and unjustified.
(2) That the order passed under sections 122(1)/122(5) by the Assistant CIR is without jurisdiction hence illegal.
(3) To file the Revised Wealth Statement is assessee's entitlement and should have been considered as having been properly filed hence addition made under section 111(2) is illegal.
(4) That the learned Commissioner (Appeals) is not justified to confirm the action of the learned Assessing Officer.
2. Brief facts leading to this appeal are that the taxpayer, an individual, derives income from Jewellery business. The taxpayer filed return declaring income at Rs.131,000 for the tax year 2009.
Later on, the proceedings were initiated on the basis of definite information that the taxpayer had purchased a residential plot in Dina, Jhelum vide registered deed for a consideration of Rs.12,00,000. The appellant in compliance to statutory notice filed wealth statement without reconciliation statement declaring net wealth at Rs.68,50,000 along with necessary details. The taxpayer was asked to submit the reconciliation statement only to explain the source of investment for purchase of plot to the tune of Rs.1,200,000 but the AR of the taxpayer, at the relevant time got declared wealth of Rs.6,850,000 without his specific instruction. In response to which the taxpayer submitted revised wealth statement along with reconciliation statement declaring net wealth at Rs.17,18,174. But for the reason recorded in the assessment order, the Assistant Commissioner refused to accept the revised wealth statement and an amount of Rs.5,231,826 was added under section 111(1)(b) in the total income of the taxpayer. Being dissatisfied with the treatment given by the learned Assistant Commissioner, taxpayer preferred appeal before learned CIR(A), who after considering the facts upheld the amended assessment order passed by the learned Assistant commissioner with the following observations:-- "I have perused the available case record and considered the submissions of the learned AR. The Assessing Officer has observed in his order that revision of the original wealth statement as on 30- 6-2007 is an after thought as the taxpayer has failed to offer any explanation for the prize bonds worth Rs.1,000,000, jewellery worth Rs.2,500,000 and cash in hand at Rs.1,300,000 declared in the original wealth statement as on 30-6-2007. Revision of wealth statement cannot be accepted merely for the reason that the taxpayer has revised the said statement he has to justify and explain the revision with proper documentary evidence. I therefore tend to agree with the Assessing Officer that the taxpayer has revised the wealth statement without any proper evidence, just to escape the treatment under section 122(1) read with section 122(5). For the reasons stated above, the appeal is dismissed and the order passed by the Taxation Officer is upheld."
3. Being aggrieved with the action meted out by the learned CIR(A), the Taxpayer has come up in appeal before this Tribunal on the grounds raised supra.
4. Learned AR contends that the case was not selected for audit and proceedings finalized by the Assistant Commissioner Inland Revenue (Audit Division) were without jurisdiction. He has relied on the reported Judgment (2010) 102 Tax 509 (Trib.) and states that in the light of Circular letters regarding jurisdiction of CIT (Audit) and CIT (Enforcement and Collection) issued by the F.B.R., the Honorable Appellate Tribunal held that:-- "CIT (Enforcement and Collection Division) have been empowered to determine the income under Anti-avoidance provisions contained in Chapter-VIII i.e. For making addition under section 111 of the Income Tax Ordinance, 2001 in respect of cases other then those selected. For Audit."
Hence the order passed by the Assistant Commissioner (Audit Division) is without jurisdiction, which is nullity in the law.
On the other hand the learned DR states that the order passed by the Assistant Commissioner does not suffer from legal infirmities.
Revision of Wealth Statement
5. The appellant declared net wealth at Rs.68,50,000 in the original wealth statement. When the Assessing Officer asked the taxpayer to submit the sources of remaining wealth of Rs.52,31,826 the tax payer submitted revised wealth statement but the Assessing Officer refused to accept the revised wealth statement with the observation recorded in the order that it is an after thought just an effort to detract the department and escape from the proposed treatment. On the other hand learned AR of the taxpayer requested the/Assessing Officer to accept the revised statement as it is provided in subsection (3) of section 116 that any omission or discrepancy can be removed through revision of wealth statement. The taxpayer's contention was rejected and Rs.52,31,826 was added under section 111(1)(b) of the Income Tax Ordinance, 2001 in the taxable income of the taxpayer. The taxpayer filed appeal, which was rejected by the Learned CIR(A) vide his impugned order dated'
30-3-2011. Now the taxpayer is in second appeal before us.
6. Learned AR states that it has been statutory right of Taxpayer provided in the law that when a mistake occurs in a return/wealth statement or a wrong return/statement filed by the taxpayer, he can file revised return as well as wealth statement to remove the discrepancy and in support of his contention he has relied on two case-law reported as 2009 PTD (Trib.) 749 and 1998 PTD (Trib.) 13 and an unreported judgment bearing I.T.A. No. 1636 (IB) 1995-96 dated 15-5-1998. He argues that in the light of above referred decision revised wealth statement should be accepted.
7. Learned AR contends that action of the Assistant Commissioner for addition of very heavy amount and its confirmation by the Learned CIR(A) is unjustified. Learned DR states that taxpayer's version by all means is an after thought and he has failed to offer any explanation for the amount added under section 111(1)(b) of the Income Tax Ordinance, 2001. He argues that scope of revision is very limited: It can be revised only for correction of any omission or error. Moreover, it cannot be revised after pointation of any discrepancy from the department.
8. Learned DR also states that section 114(6) provides that return can be revised by any person, who having furnished a return discovers any "omission" or "wrong statement" therein. He states that revision of return after pointation from the department cannot be treated as discovery of "omission" or "wrong statement". He contends that law about revision of returns is very clear and it helps only those who furnish revised returns only by way of correcting "bona fide mistakes". He states that the word "discover" as per concise Oxford dictionary 9th edition means "to be the first to find or find out". He states that section 114(6) does not talk about "revision of income". It simply talks about revision of return after making correction of any "omission" or "wrong statement". He contends that if revised return of the taxpayer is accepted/treated as good as original return, it will tantamount to circumventing the penalty proceedings for concealment of income. He states that higher courts have clearly settled that if an issue is supported by substantive provisions and is legally well merited only then legal benefits can be achieved. No one can be allowed to circumvent the law. One who seeks equity should come with clean hands. No one can be allowed to take benefits of his mistakes. He asserted that this assessee revised the "income". It did not make correction of any "omission" or "wrong statement". The entire working of income was changed in the revised return. Therefore, this revised return cannot be treated as a valid return. The Assessing Officer was, therefore, fully justified to reject the revised return.
9. We have heard the arguments and perused the relevant record and case law. Objection raised by the learned AR regarding jurisdiction has been subsequently cured by the department by issuing a proper notification. We are inclined to agree with the arguments of the Learned AR that the law does not stop any taxpayer from revising his return, therefore, Additional Commissioner's action of refusal to accept revised return was legally not correct and scope of "omission" or "wrong statement" is very were and all encompassing. Revised Wealth statement was filed by the assessee before the completion of the assessment, it covered the discrepancy appeared to have cropped on account of inadvertence, there remains, therefore, no justification for the addition.
Taxpayer could legally revise the wealth statement and if any omission was made in the original wealth statement, he had a right to rectify that omission".
10. We have analyzed the facts of this case in the light of arguments of both the parties. Learned DR tried to argue that scope of revision of return is very limited. It can be revised only for correction of any "omission" or.Wrong statement". Moreover, it cannot be revised after pointation of any discrepancy from the department. We are not, inclined to accept this argument. In our opinion, scope of "omission or wrong statement" is very were and all encompassing. If a taxpayer after filing his return discovers that it is not correct and any part of taxable income has been omitted and not included in taxable income or a "wrong statement' including "wrong statement of accounts" has been filed, he is legally entitled to correct such "omission" or wrong statement". Contrary to the provisions of repealed Ordinance of 1979 the right of revision of return does not abate (during statutory limitation) even after the completion of deemed assessment or amended assessment.
Similarly, this right continues to remain legally due, even after pointation of any "omission" or "wrong statement" from the department. The law does not stop any taxpayer from revising his return. No bar can be put on the rights of a taxpayer granted to him by the statute. Powers of assessm ent of income conferred upon the tax authorities by law can nevertheless be exercised, in relation to the return so revised by a taxpayer and they are also empowered to declare a return as invalid, if it does not fulfill all legal requirements. But tax authorities cannot refuse to accept a revise return, under any circumstances. In this case, Additional Commissioner's action of refusal to accept the revised return was therefore, legally not correct.
11. Revised wealth statement filed is taxpayer's entitlement and should have been considered as having been properly filed and addition of Rs.52,31,826 made under section 111(1)(b) of the Income Tax Ordinance, 2001 stands deleted.
12. Assessee"s Appeal is accepted in the manner as indicated above. .