' NAZIR AHMAD, JUDICIAL MEMBER. -- The titled further appeal filed at the instance of the taxpayer has been directed against the appellate order dated 31.3.2015 recorded by CIR (Appeals-Ill), Lahore.
2. The facts in narrow compass are that the taxpayer, an individual, filed return for the year under consideration declaring income at Rs, 1,75,000/-, which treated to be an assessment order in terms of Section 120(1) of the Income Tax Ordinance, 2001 (hereinafter called 'the Ordinance').
Subsequently, on the basis of an information, the Taxation Officer came to know that the taxpayer executed agreement to sell with Rana Kamran Altaf (seller) son of Altaf Hussain, for the purchase of immovable property situated at House No, 467-K, Sabza Zar Scheme, Lahore for a consideration of Rs, 37,50,000/- and payment was made through cash and banking channel. Therefore, amendment proceedings were initiated by way of issuance of show-cause notice 122(9) read with 122(5)/122/(1)/111(1)(b) of the Ordinance, against which explanation tendered by the taxpayer was treated unsatisfactory. Resultantly, the proceedings culminated in passing of assessment order u/S. 122(1)/122(5)/111(1)(b) of the Ordinance dated 17.10.2014, were tax demand of Rs, 9,75,536/- was created by making an addition of Rs, 37,50,000/- u/s. 111(1)(b) of the Ordinance. Feeling aggrieved, the taxpayer preferred appeal before CIT (Appeals-Ill), Lahore, which was rejected by way of confirmation of the treatment meted out by the Taxation Officer. Still discontented, the taxpayer has come up in further appeal before this Tribunal.
3. The learned counsel appearing on behalf of the taxpayer submits that addition u/S. 111(1)(b) of the Ordinance by amending the assessment u/S. 122(1)/122(5) of the Ordinance is altogether illegal and unjustified. He submits that plot in question was no doubt purchased by the appellant through agreement to sell by paying advance of Rs, 10,00,000/- and remaining amount was promised to be paid later on but due to unavoidable circumstances, the deal could not be finalized and was cancelled, therefore, the plot was sold by the owner to someone else, which was transferred in the LDA record on 14.1.2011, which sufficiently proves that deal between the seller and appellant could not be finalized. As regards, the source of investment of one million, the learned counsel submits that it was made through sources available with the appellant by receiving compensation from Government of Punjab against demarcation of shop at Multan Road, Lahore. He, therefore, prays for acceptance of appeal and deletion of addition.
4. On the other hand, the learned D.R. While supporting the orders of the authorities below has submitted that the department has got definite information in the shape of agreement to sell between the appellant and seller of the property dated 27.12.2010 in which the appellant has paid an amount of Rs, 10,00,000/- in cash and one pay order amounting to Rs, 20,00,000/- and balance amount to be paid at the time of transfer of plot. However, the learned counsel submits that the appellant even could not provide source of investment of one million paid in cash to the seller of plot. He, therefore, prays for rejection of appeal.
5. Arguments heard and record perused.
6. The department, in the case in hand, initiated proceedings after receiving information regarding purchase of plot by the taxpayer in the shape of photocopy of agreement, to sell. In response to notice u/S. 122(9) of the Ordinance, the appellant explained that agreement to sell was made in respect of plot in question with the seller and cash amount of rupees one million was paid but the deal could not be materialized and the sale agreement was cancelled, therefore, the amount paid as advance was returned. Moreover, this amount of one million was paid out of available funds, which were received from Government of Punjab. However, the order is silent regarding any proof was submitted in this respect. In the absence of filing of any proof, the Taxation Officer added the whole amount u/S. 111(1)(b) of the Ordinance by amending the assessment u/S. 122(1)/122(5) of the Ordinance. We have examined the departmental record with the help of learned D.R., which shows that a photocopy of agreement to sell is available on record file on the basis of which the proceedings were initiated. However, it is astonishing that the Tax Department has not bothered to verify the contents of this photocopy of agreement to sell from the seller of plot, marginal witnesses or from the bank from whom the pay order was issued. Without verifying the authenticity of this document, it cannot be treated as definite information 1. Although, the appellant has admitted that an amount of rupees one million in cash to the seller of the plot and also admitted the cancellation of agreement to sell but no proof in respect of payment of one million and cancellation of agreement to sell has been provided to the Taxation Officer.
7. Keeping in view of the above, we annul the order passed u/S. 122(1)/122(5) of the Ordinance and direct the Taxation Officer to reinitiate proceedings by requiring the taxpayer to provide proof of rupees one million and cancellation of agreement to sell if any. We .