[The Order was passed by Jawaid Masood Tahir Bhatti, Chairperson.] - Through these two cross appeals both the parties have objected against the impugned order of the learned CIR(A) dated 20-03-2011 for the tax year 2010. The taxpayer in his appeal has objected against the impugned order on the following grounds:- "1. That, the impugned order passed by the learned Commissioner (Appeals) is bad in law and contrary to the facts of the case, biased, non judicial, unjust and without lawful jurisdiction.
2. That the learned commissioner Inland Revenue (Appeals) has erred in law to uphold the amendment made by the deputy Commissioner Inland Revenue u/s 122(1) (5) instead of section 122(4) of the income tax ordinance hence not tenable in the eyes of law
3. That the order passed both the below authorities is neither countenanced by law nor does it fit into broad contour of the ordinance hence not tenable in the eyes of law.
WITHOUT PREJUDICE TO THE ABOVE
4. That the learned Commissioner Inland Revenue (Appeals) has erred in law to uphold the ignorance of income in the revised return deemed to be an order of this Ordinance hence not tenable in the eyes law.
5. That the additions made u/s 11(1)(b) of the Ordinance amounts to Rs,6000,000/- is duplication hence not tenable in the eyes of law. i. That the Reconciliation statement filed by the taxpayer for the year under appeal is detailed below:- ii. Net Assets as on 30-6-2005 Rs, 20,358,511/- iii. Income earned from the year 2006 to 2010 Rs, 2,318,223/- iv. Foreign encashment Received Rs, 6,006,198/- v. Gain on sale of Residential House Rs,12,200,000/- vi. Less expenses Rs,1,800,000/- vii. Net wealth 20-6-2010 Rs,39,062,932/-
6. That the modification made by the commissioner Inland revenue (Appeals) on account of balance addition made amounting to Rs,6,306,198/-
2. While the department has objected against the impugned order on the following grounds:- "1. That the impugned order is bad in law and against the facts of the case.
2. That the CIR(A) was not justified to give credit of sale proceeds of house to the taxpayer amounting to Rs,11,900,000/- for explanation of accretion in wealth on the basis of un-registered document i,e, Iqrar Name dated 4-8-2009 which has no legal value as per section 23 and section 29 of the Registration Act.1908.
3. That the CIR(A) was not justified in giving full credit of the sale proceeds of the house, whereas the Iqrar Nama mentioned above shows him 1/3 owner of the said house and wealth statement fired by the taxpayer on 30-06-2005 shows him owner of % share of house.
4. That the CIR(A) was not justified to delete addition of Rs,6,000,000/-in respect of the amount the taxpayer gave to Mr. Mohammad Ismail the other member of the AOP through a cheque as admitted by himself vide affidavit available on record despite the fact twit no verifiable evidence was produced with regard to sources of such money.
5. That the CIR (A) was not justified in accepting income of Rs,1,000,000/-without any evidence of tax payment thereon.
6. That the CIR (A) was not justified to appeal accept various documents not presented by the taxpayer during the assessm ent proceedings in violation of section 128(5) despite the fact that sufficient opportunity of being heard was granted to the taxpayer on 16-6-2013, 18-062013,26-06- 2013, 25-07-2013 and 16-08-2013."
3. The Appellant/taxpayer in this case is a Doctor derives Professional income, Property Income and Agriculture income. The return for the year under review was filed on 29-10-2010, later on same was revised on 29-0-2013 by increasing the Property Income and professional Income along with Agriculture income. The amended order was further amended by the Deputy Commissioner Inland Revenue u/s 122 (1) read with section 122 (5) and addition made u/s 111(1)(b) on the date 16-08- 2013. The amended order was agitated before the learned CIR(A) who has allowed partial relief on some issues, has upheld the treatment of the Taxation officer regarding some of issues and has remanding' back the matter to the Taxation Officer regarding some of the issues. Therefore, both the parties the taxpayer and the department are in appeal before the Tribunal against the impugned order of the learned CIR (A).
4. Learned counsel representing the taxpayer, in addition to his arguments on factual grounds, has also raised legal issue. His first legal argument is that order passed without lawful jurisdiction as according to him:- i. The taxpayer filed his return on the day 29-10-2010, deemed to be an assessment order u/s 120.
Section 120(1)(b) the return shall be taken for all purposes of this ordinance to be an assessment order issued to the taxpayer by the commissioner on the day the return was furnished.
4. Learned counsel representing the taxpayer, in addition to his arguments on factual grounds, has also raised legal issue. His first legal argument is that order passed without lawful jurisdiction as according to him:- i. The taxpayer filed his return on the day 29-10-2010, deemed to be an assessment order u/s 120.
Section 120(1)(b) "the return shall be taken for all purposes of this Ordinance to be an assessment order issued to the taxpayer by the commissioner on the day the return was furnished."
(ii) The taxpayer filed revised return on the day 29-013-2013, Section 122(3)(b) "the taxpayer's revised return shall be taken for all purposes of this Ordinance to be an amended assessment order issued to the taxpayer by the commissioner on the day on which the revised return was furnished." iii. The DCIR passed an order against the Taxpayer on the Date.16-08-2013 by ignoring the amended order on the Date.29-06-2013 U/s 122(1) read with Section 122(5) of the Income Tax Ordinance, 2001. He further contended that DCIR illegally passed order on the footings of Show cause Notice No, 234 dated.01-01-2013 which became infructuous after the amended order on the date 29-06-2013. He argued that this is a foundational illegality in this order and the same was not {{FOOT NOTE}} The intended Word is remanded {{FOOT NOTE}} considered by the CIR (Appeals). He stated that the DCIRs have power to further amend but in this regard provide authority to the taxation officer U/s 122(4). "Where an assessment order (hereinafter referred to as the "original assessm ent") has been amended under-section (1) [,] [or (5A)], the Commissioner may further amend [, as many times as may be necessary,] the original assessm ent within the later of: The Learned Counsel of the taxpayer/appellant vehemently argued that the DCIR passed order u/s 122(1) in an illegal manner which is not permissible under the law and against the principles settled by the higher courts, unfortunately this treatment of the department was ignored by the CIR (Appeals) which is not curable under the law.
The Second legal objection raised by the Learned Counsel of the taxpayer is that the taxation officer never issued the show cause notice u/s 122(9) in this regard he violates the mandatory provision of law by abiding to issue a fresh show cause Notice U/s 122(9) when an amended order is already in field. "SECTION 122(9) "No assessment shall be amended, or further amended, under this section unless the taxpayer has been provided with an opportunity of being heard."
The Counsel of the taxpayer/appellant further argued that it is a settled principle of law that where opportunity of being heard is required to be given by the statute is a mandatory condition then failure to comply with the requirement of the statute would render the act void ab-initio as being an act performed in disregard of the provision of the statute. Furthermore any further action taken on the basis of such void order would also be vitiated and defect at the initial stage would be incurable by a hearing at a subsequent stage. He placed Reliance on the judgment of honorable Supreme court (1971 SCMR 681). He also tendered a judgment of Supreme Court in favor of his view point where basic order is without lawful authority then the resultant superstructure is bound to fall on the ground automatically in term of law laid down by the apex court in Yousaf Ali case. (PLD 1958 SC 104).
The learned counsel on the point of revised return u/s 114 (6) tendered a judgment of full bench of honorable tribunal 2010 PTD (T rib) 2602 (Full Bench Decision) we thoroughly observed this full bench judgment in this judgment this issue has been settled for a guideline to us.
Similarly in case of a revised return filed under sub-section (6) section 114 it was treated to be an amended assessm ent order under the provisions of subsection (3) of section 122 it was treated to be an amended assessm ent order under the provisions of subsection 122 of the Income Tax Ordinance, 2001.
This issue was also discussed in the judgment of this Tribunal 2013 PTD (Trib) 1749. Filing of revised return there was a new amended assessment order u/s 122(3) of the Income Tax Ordinance, 2001.
Provision of S. 114 of the Income Tax Ordinance, 2001 did not restrict the taxpayer for filing a revised return during the audit proceedings and if any revised return was found incomplete that did not become invalid automatically - For passing of an order to frame the assessment of income on the basis of result of audit the department had to keep in mind the concept and procedure of assessm ent provide under the Income Tax Ordinance,2001-Under the new scheme of assessment a valid return of income in all the cases of taxpayer was deemed to be an assessment order under the provision of S. 120(1) of the income Tax Ordinance, 2001 on the day it was furnished without there being any exception - In case of a revised return filed under Section 114(6) of the Income Tax Ordinance, 2001 same was to be treated an amended assessment order under the provision of section 122(3)of the income Tax Ordinance, 2001--- Revised return filed by the taxpayer for all purposes were the assessm ent order which included the audit proceedings under 5.177 of the Income Tax Ordinance, 2001 amendment under 5.122 of the Ordinance---making an assessment in ignorance to the amended assessm ent order/revised retur4 r by implication of the provisions of section 122(3)(b) of the Income Tax Ordinance, 2001 an amended order on the basis of earlier assessm ent order could not stay in the field - No justification existed for amending the assessment without considering the Revised Return filed by the taxpayer---Assessment in the present case was made by ignoring amended assessment in the shape of revised return which had been filed after the prior approval of the department in accordance with law---Order of First Appellate Authority was vacated and the order passed by Taxation Officer was annulled by the Appellate Tribunal.
The Learned counsel Further placed reliance on judgment:- (2011 PTD 2389) .... The revisions of returns culminate the audit proceedings and the as reported as (2009) 99 Tax 350=2009 PTD
(Trib) 749 in which it has been categorically mentioned by the ITAT, that tax authorities cannot refuse to accept a revised return, under any circumstances.
"In our opinion, scope of omission or wrong statement is very wide 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" included "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 assessm ent. Similarly, this right continues to remain legally dun, even after pointation of any "omission or "wrong statement" from the department. Lice law does not stop any to him by the statute, Power 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 does not fulfill all, legal requirements. But tax authorities cannot refuse to accept a revised return, under any circumstances.
The learned counsel of the taxpayer further argued I hat the treatment of the department in this case/order is not sustainable in the eyes of law and is against the principles of natural Justice, Violation of the principles of natural justices amounts to violation of law he has in this regard placed reliance on the judgment of the Apex Court (1994 SCMR) and both the below authorities ignore this legal point.
The 3rd legal objection raised by the learned counsel of the taxpayer is against the remand back of the case by the CIR(A) he vehemently agitated this action of the CIR(A).
The AR argued that due to ex-parte order the taxpayer filed documentary evidence before CIR (Appeals) at the time of hearing of the case, the AR further stated that it is a fact that learned CIR (Appeals) verbally accepted the case of the appellant but when appellant received the order it transpires that CIR(A) partially accepted the version of the appellant on the basis of factual grounds supported by concrete documentary evidence. The learned CIR (Appeals) accepted the appeal of the appellant on the basis of facts and deleted the illegal addition to the tune of Rs,11.90 million and for remaining additions remanded back the matter to the DCIR which have lacked jurisdiction. The CIR was not justified to remand the matter as this way allowed to DCIR to fill in the legal lacunas in the order which was otherwise not maintainable in the eyes of law. The CIR (Appeals) did not act judicially rather transgressed his jurisdiction. Even otherwise remand order was legally unsustainable as the impugned orders were void ab initio and liable to be annulled.
Indeed, the mere fact that the legislature enacts amendment is of itself an indication, as a general rule, to alter the preexisting law" of an intention. The amendment in section 129 of the ordinance and the provisions empowering the First Appellate authority to set aside the assessment order with the directions to make new assessment order had been deleted. Besides, the amendment conferred extensive powers to the commissioner (Appeals) to examine evidence and to undertake further enquiries to decide the case instead of remanding it for de novo assessment proceedings.
The learned Counsel of the Taxpayer argued that the taxpayer tenders himself before the 1st appellate authority with clean hands and explained his case with documentary evidence but the treatment of both the below authorities are not only glaringly unlawful but, patently absurd. The provisions of Section 111(1)(b) were evidently misapplied in the presence of documentary evidence provided before the CIT (Appeals) at the time of hearing to explain his case.
The learned counsel also provided the documents regarding the wealth statement and wealth reconciliation issue in which it reflects that:- Net assets as on 30-06-2005 Rs,20, 358,511/- are admitted by the department, he explained the position why the wealth increased during the years from 2005 to 2010. i. He submitted that the taxpayer sold his Residential House amounting to Rs,Rs,12,200,000/-all amount received through banking channel. ii. Foreign Remittance Certificate provided which was issued by the scheduled. Bank Rs, 6,006,198 and certificate from bank provided to support his version. iii. Income declared from 2006-2009 Rs,1,786,023/- iv. Income declared only for the taxyear.2010 Rs,2,490,670/ Total Assets Declared at the time of filing of wealth statement before the DCIR 10-01-2013 before amending the order u/s 120(1) AS ON 30-06- 2010 Rs,41,047,401/- i. Additions made by the DCIR u/s 111(1)(b)on account of unexplained amount Rs,6,000,000/- ii. Addition made u/s 111(1)(b) on account of unexplained accretion of wealth as on 30-6-2010 Rs,18,206,198/- The learned counsel diverted our attention to the fact that the DCIR himself admitting that accretion in wealth as on 3006-2010 is Rs,18,206,198/- The learned counsel vehemently contended that if accretion in wealth as on 30-06-2010 is Rs,18,206,198/- then the addition of Rs,6,000,000/- is a double addition which is already included in the accretion of wealth. Rs,18, 206,198/-The CIR (appeals) also ignored this fact which is not justifiable and is against the principles of natural justice.
The Counsel of the taxpayer stated that without confronting/issuing any specific notice on this point the DCIR refused to accept the declared income of the taxpayer regarding below heads.
Property Income Rs, 1,000,000/- Agriculture income Rs, 500,000 The DCIR on Page No,4 of the assessment order stated as under:-Legally the above declarations are unsubstantiated and unverifiable, as neither books of accounts have been produced in their support nor any documentary evidence annexed herewith, especially, the following sources of income undocumented, unsubstantiated and unverifiable:- The Property income declared by the taxpayer in his return at Rs,1,000,00,0/-is not supported by any certificate of deduction of fixed income tax by the withholding agent or cash payment receipt of tax deposited by the taxpayer on this income, hence not verifiable.
We thoroughly thrash out the documents provided by the Counsel of the taxpayer that: the taxpayer deposited the amount Rs,200,000/ against the declared property income and tendered tax return along with CPR.No,IT.20130629-0397 2385714 Rs,200,000/-and this CPR was filed along with the Tax return and is part of the record then how the DCIR is saying that the taxpayer not provided tax certificate regarding this declared income. We found that the DCIR not bother to check the tax return filed by the taxpayer.
It is very strange and very unfortunate that the DCIR on the other side accepted the business income in which it was also necessary to ascertain the accounts of the declared Business Income Rs,888,670/-But this amount accepted without any hesitation. This treatment reflects the arbitrary action of the DCIR. The learned CW (Appeals) also failed to ascertain/dig out this fact of the case.
The learned counsel of the taxpayer contended that the order which is liable to be cancelled/vacated cannot be remanded back by the OR he has in this regard placed reliance on the judgment of the Honorable Apex Court. (1999) SCMR 230), (1993 SCMR 1134) and (2007) 95 Tax 35 (H.C. Lah.)=(2006 PTD 2654).
We examine and feel that the main thrust of the Counsel of the taxpayer is that the CIR(A) partially accepted the case of the appellant on the basis of tendered Bank account statements copies of cheque but he absolutely ignored and not bother to touch any legal ground of the case he vehemently prayed that the order of the below authorities may kindly be declared as illegal, vacated, cancelled declared void ab initio because the taxpayer proved his case on the bases of clear cut facts with supporting documentary evidence. On his turn the DR supported the decisions of both the below authorities.
5. Keeping in view all above stated facts and the legal position of the case we are of the view that there was no justification for amending the assessment without considering the revised return filed by the taxpayer and same remanding by the learned CIR(A). The taxpayer proved his case on the bases of facts with documentary evidence that he tendered himself with clean hands. We, therefore, going into the merits of the case and legal. Position of the the appeal that the assessm ent in this case is made by ignoring amended assessment in the shape of revise d return which has been filed by the taxpayer and is in the knowledge of the DCIR. Consequently, the impugned order of the learned CIR(A) is vacated and the order passed by the Taxation officer is, cancelled and declared without any lawful authority.
6. As a result, the appeal filed by the taxpayer is allowed while the cross appeal filed by the department is dismissed.