Through this appeal the Appellant/Taxpayer Company has objected against the impugned Order No.1358/2011 dated 22-9-2011 of learned CIR(A) for Tax Year which is arising out of order passed by the Taxation Officer under section 122(5) of Income Tax Ordinance, 200] dated 31-8-2010. Brief facts of the case are that the taxpayer is Private Limited Company. The principal activity of the taxpayer is to provide Management Consultancy Services. The assessing officer while proceeding under section 122(5) considered that the company has claimed Rs.21,169,927 as expenditure on account of stationary/supplies. Repair and Maintenance Selling Expenses and other expenses whereas as per withholding statement filed tax deducted on the amount of Rs.7,106,025 balance Rs.14,063,903 attract the provision of section 21(c) of Income Tax Ordinance, 2001. Addition under section 21(c) of Income Tax Ordinance 2001 was made which was also confirmed by the learned CIR(A). The taxpayer has not contested the additions before this Tribunal on the following grounds:-- "(2) That the addition under section 21(c) amounting to Rs.14,063,902 was unjustified and made without lawful authority. The Commissioner Inland Revenue (Appeals) should have deleted the additions.
(3) That proceedings under section 122(1) had wrongly been initiated by the Assistant Commissioner as there was no definite information and Commissioner Inland Revenue (Appeals) should have cancelled the order.
(4) That the addition made on stationery/office supplies, Repair and maintenance, selling expenses and other expenses had been made without considering, that these additions cannot be made under section 21(c) and Commissioner Inland Revenue (Appeals) has also wrongly confirmed the additions.
(5) That additions made under the head, stationery / office supply, repair and maintenance, selling expenses and other expenses should have been deleted by Commissioner Inland Revenue (Appeals) as these were made without any definite information.
(6) That additions under section 21(c) had wrongly been made and Commissioner Inland Revenue (Appeals) should have deleted the additions as the assessing officer had not established that these additions fall under the scope of 21(c).
(7) That additions under the heads stationery/office supply, repair and maintenance, selling expenses and other expenses should have been deleted by the Commissioner Inland Revenue (Appeals) as the same had been made by supposing that all payments were liable to deduction of tax.
(8) That Commissioner Inland Revenue (Appeals) should have cancelled the order as no specific default was alleged in the show cause notice dated 21-7-2010."
2. The learned AR of the appellant argued that addition made under section 21(c) of Income Tax Ordinance, 2001 is liable to be deleted as the same has been made without definite information.
The learned AR of the appellant further argued that addition under section 21(c) of Income Tax Ordinance, 2001 has wrongly been made on the following head of accounts:-
(i) Stationary/Office Supplies
(ii) Repair and Maintenance
(iii) Selling Expenses
(iv) Other expenses The learned AR submitted that Section 21(c) of Income Tax Ordinance, 2001 has wrongly been applied on these expenses which does not come under section 21(c) of Income Tax Ordinance, 2001 therefore the above addition is liable to be deleted. Section 21(c) is reproduced hereunder:
21. Deductions not allowed.---Except as otherwise provided in this Ordinance, no deduction shall be allowed in computing the income of a person under the head "Income from Business"for--
(a) ...................
(b) ---------------
(c) any salary, rent, brokerage or commission, profit on debt, payment to non-resident, payment for services or fee paid by the person from which the person is required to deduct. Tax under Division III of Part V of Chapter X or section 233 of chapter XII, [unless] the person has [paid or] deducted and paid the tax as required by Division IV of Part V of Chapter X; The learned AR of the appellant placed reliance on case law reported as "2013 PTD 884 (Lahore High Court)". Relevant Para Nos. 12 and 13 read as under in support of his argument relating to definite information: "12. The term "definite information" in section 122(5) of the Ordinance is not just any information but definite enough to satisfy the concerned officer that income chargeable to tax of an assessee has escaped assessment or total income of 'an assessee has been under assessed, etc. "Definite" means indisputable, known fo' certain, explicitly precise, clearly defined, leaving nothing to established beyond doubt and cut and dried. Definite information is, therefore, that select information which falls within the restrictive meaning of the word "definite" explained above. The law also provides that definite information must be acquired from audit or otherwise. Applying the interpretative tool/doctrine of ejusdem generis which literally means "of the same kind or class" and the doctrine provides that where general words follow an enumeration of two or more things, they apply only to persons or things of the same general kind or class specifically mentioned the word "otherwise" appearing next to the word "audit" in section 122(5) of the Ordinance on the basis of the above doctrine means a methodology akin or similar to audit where some determined, final, certain, indisputable, calculated information is picked up from any available record of the assesses. "Otherwise," therefore, does not mean putting information through further process of calculation by the department. The word "acquired" used in section 122(5) of the Ordinance which literally means to "gain possession of" in the present context connotes that the information already exits and has to be picked up from the records or documents. This acquisition provides no margin for incomplete, imprecise and inexact information to be completed through further calculation or processing as that would not be acquiring information but analyzing it.
13. Reading of section 122(5) of the Ordinance, therefore, shows that information in a definite, final and conclusive form must already exist in some document or record at the time of acquisition, Any information which is incomplete or requires further processing falls outside the domain of definite information and can best 'pass for a departmental opinion, judgment, guesstimate, approximation or estimate."
The learned AR of the appellant argued that addition is liable to be deleted as in this case also the exact amount was not confronted to the appellant. As per notice under section 122(9) of Income Tax Ordinance, 2001 dated 21-7-2010 addition was confronted at Rs.21,169,927 whereas as per order dated 31-8-2010, addition of Rs.14,063,902 was made. He in this regard placed reliance on the judgment of the Tribunal decided vide I.T.A. No 1468/LB/2009 dated 23-1-2010. Relevant Para reads as under:-- "The learned DR explaining the defect stated that the figure confronted is higher than the figure adopted implying thereby that the assessing officer was justified in manipulating the figures of his liking. In our view, the law does not permit this treatment. We, therefore, hold that the amount proposed to be adopted must be the one confronted to the assesse under notice. The failure on the part of the assessing officer shall vitiate the addition altogether as running against spirit of the Section 122(9) of the Income Tax Ordinance, 2001."
Reliance is also placed on the decision of the Hon'ble High Court in the case law reported as 2010 PTD 704. Relevant page 707 para 7 is reproduced as under:- "It is a trite law that before making any addition the aggrieved party has to be given an opportunity of hearing as enunciated in the principle "audi alteram partem". As no such notice was given by the A.C. The Tribunal was not justified in deleting the said addition made under the provisions of section 111(1)(c) of the Ordinance by the A. C. The tribunal has further observed that the addition in respect of inadmissible expense claimed against rental income was also not correct since on the face of the record no such expense has been claimed by the respondent company. The decision therefore given by the Tribunal in our view is based upon ascertainment of the facts only"
On the basis of these arguments the learned AR has requested for the deletion of additions.
3. On the other hand the learned Departmental Representative supported the impugned orders of the officers below argued that Additional Commissioner has rightly made the additions under section 21(c) of Income Tax Ordinance, 2001 as all the heads come under the ambit of services on which the taxpayer was required to deduct the tax and the Commissioner Inland Revenue (Appeals) has rightly maintained the addition under section 21(c) of the Income Tax Ordinance, 2001. He however, could not substantiate that expenses claimed on account of stationary and office Supplies, repair and maintenance, selling expenses and other expenses attract the provision of section 21(c) of Income Tax Ordinance, 2001.
We have heard the learned Representatives from both the sides and have also perused the impugned orders of the officers below, case law referred and the available record of the case. After hearing both the parties and perusing the assessment record available before us and considering the arguments and case laws referred supra, we are of the view that addition under section 21(c) of Income Tax Ordinance, 2001 has wrongly been made which is ordered to be deleted as the addition made do not come under the ambit of section 21(c) of Income Tax Ordinance, 2001. The addition under section 21(c) of Income Tax Ordinance, 2001 is also not maintainable as the same was not specifically confronted to the appellant and has been made without referring any definite information .In this regard, reliance is placed on the decisions of the Hon'ble High Courts reported as 2013 PTD 884 (Lahore High Court), 2010 PTD 704 and decision of this Tribunal dated 23-1-2010 in ITA No.1468/LB/2009 discussed above. Hence orders of the authorities below are hereby cancelled.
The appeal of the taxpayer is accepted in the manners referred above.