IJAZ ANWAR, J.---Through this judgment, we intends to answer the tax reference, wherein the following questions of law have been formulated by the appellant(s):--
(a) "Whether under the facts and circumstances of the case, the ATIR was justified to delete the addition made under section 111(1) (b) as unexplained investment by ignoring the facts that the taxpayer failed to produce any documentary evidence to the taxpayer officer at the time of assessment proceedings to explain the source of investment inspite of repeated statutory notices issued to him? "
(b) "Whether on the facts and circumstances of the case, the learned ATIR was justified to rule that the learned CIR (Appeals) has not violated Section 128(5) of the Income Tax Ordinance, 2001 by admitting evidence in appeal which was not produced in the original proceedings despite there being no sufficient cause which prevented the taxpayer from producing the same in the original proceedings?"
2. The relevant facts as narrated by the appellant in the Tax Reference and are necessary for the disposal of this case, that the taxpayer is an individual and derives income from other sources.
Return declaring net income at Rs.760368/- filed which was deemed to be assessment under section 120(1) of the Income Tax Ordinance, 2001. Later on the Taxation Officer received definite information that the taxpayer has purchased vehicles to the tune of Rs.1,462,000/- + Registration fee of Rs.50000/- (total Rs.1,512,000/-), therefore, initiated proceedings by issuing statutory notices to explain the source of investment, however, no compliance was made. Therefore, the taxation officer amended the assessm ent under section 122(1) of the Income Tax Ordinance, 2001 and an amount of Rs.1,511,174/- was added under section 111(1)(b) of the said Ordinance. Total income was assessed at Rs.2,271,542/-. The taxpayer did not comply with the statutory notices issued from time to time and despite proper services of notices as well as show-cause notice he did not comply. The taxpayer submitted details before the CIR (Appeals) and the CIR (Appeals) deleted the addition by requisitioning the wealth statement. The department filed second appeal before the learned ATIR.
The learned ATIR vide I.T.A. No.237(PB) of 2013 dated 08.05.2014 rejected the department appeal by holding that "The learned CIR (Appeals was justified in deletion of addition under section 111(1) (b) of the Ordinance and that the departmental objection that learned CIR(A) has violated the provisions of Section 128(5) of the Ordinance is not correct.
3. The learned counsel for the appellant argued that the learned Commissioner Inland Revenue (Appeals) Peshawar {CIR(A)} has by accepting the appeal of Taxpayer, deleted addition made in the assessm ent orders and based his finding on certain additional documents produced by the taxpayer during hearing of the appeal, and those documents were not produced before the Deputy Commissioner Inland Revenue (Audit-III) Zone-1 Regional Tax Office, Peshawar (Assessing Authority). The learned counsel made specific reference to section 128(5) of the Income Tax Ordinance, 2001 and argued that the CIR(A) while admitting additional documents have not given any reasons. Learned counsel placed reliance on a judgment of this Court rendered in Tax Reference No.40/2014 titled CIR v. Khalid Umar Khan decided on 9.9.2015 that has dealt with similar question.
4. The learned counsel representing the respondent argued that the Assessing Authority has not allowed the taxpayer to explain his position and to produce the relevant documents, and that assessm ent was made at the back of the respondent. The CIR(A) has rightly admitted those documents and has given reasons for the same.
5. Arguments heard and record perused.
6. This Court has in the case of CIR v. Khalid Umar Khan Tax Reference No.40/2014 discussed the import of Section 128(5) of the Income Tax Ordinance, 2001 and gave the following opinion:-- i. Section 128(4) invest the Commissioner (Appeals) with the power to call for the required particulars being necessary for arrival at just and proper conclusion in appeal and also make further inquiry in the matter involved in the appeal. ii. The first part of section 128(5) places absolute bar on the Commissioner not to admit any documentary material or evidence which was not produced at the time of initial proceedings while the 2nd part empower the Commissioner to exercise discretion for admitting additional documentary material if the appellant satisfy the CIR(A) that he was prevented by sufficient cause from doing so. iii. The CIR(A) is under legal obligation to state reason for its satisfaction while admitting the additional material or evidence.
7. The relevant subsection (5) of Section 128 of the Ordinance is reproduced for convenience:-- "128-Procedure in appeal.
(1)..................................................
(2)..................................................
(3)..................................................
(4)..................................................
(5)The Commissioner (Appeals) shall not admit any documentary material or evidence which was not produced before the Commissioner unless the Commissioner (Appeals) is satisfied that the appellant was prevented by sufficient cause from producing such material or evidence before the Commissioner".
8. From the perusal of the order of CIR(A), it transpired that the necessary reasons for admitting the additional documents were given to the effect that, "though the Assessing Officer has given notices to the taxpayer under section 122(1) but their service on the taxpayer could not be verified".
Similarly, the additional documents were annexed with the appeal and the appellant was sufficient notice of the same. Moreover, the very wording of Section 128(5) is very clear, because in the instant case, the respondent taxpayer was prevented by sufficient cause from producing the additional documents before the Assessing Officer, for being proceeded ex-parte. This law point has also been explained by the Appellate Tribunal Inland Revenue, Peshawar in its judgment dated 8.5.2014 in the following words:-- "From the above it is very much clear that the learned CIR(A) was satisfied that the service of notice could not be verified and in view of this aspect, the submission of the documents were admitted in the interest of justice, therefore, in my view the departmental objection that learned CIR(A) has violated the provisions of section 128(5) of the Ordinance is not correct, therefore, his order on this score is confirmed".
9. Thus taking wisdom from the judgment and order dated 9.9.2015 of this Court in Tax Ref.
No.40/2014, we came to the conclusion that the CIR (A) has taken note of section 128(5) of the Income Tax Ordinance, 2001, which was further upheld and discussed by the Appellate Tribunal (IR), therefore, we hold that section 128(5) was never violated by the CIR (A).
10. In view of the above discussion, the Tax Ref.No.33-P/2014 is answered in negative, which is accordingly dismissed.