DR. MANZOOR AHMED, ACCOUNTANT MEMBER.---The instant appeal has been filed by the taxpayer/appellant assailing the order No.164-S, dated 30.12.2015, passed by the learned CIR (Appeals), Quetta. The order passed by the learned CIR(A) is on the appeal filed by the taxpayer/appellant against order passed under section 122(5A) of the Income Tax Ordinance, 2001 by the Additional Commissioner IR, Audit RTO, Sukkur. The appellant/taxpayer has agitated against the order of learned CIR(A), Quetta through the following grounds of appeal: 1) That the learned CIR(A), Quetta vide Order No.164-S, dated 30.12.2015 in Appeal No.56 has erred to upheld the Amended. Assessm ent under section 122(5A) of the Income Tax Ordinance passed by the Addl. Commissioner IR, Sukkur.
Limitation 2) That for Tax Year 2009, the Additional Commissioner IR, Sukkur without lawful jurisdiction, has amended the assessm ent under section 122(5A) of the Income Tax Ordinance.
3. Deemed Original Assessm ent Order was issued on 03.02.2010 whereas the issuance of Notice under section 122(9) vide No.841 dated 16.05.2015 and amendment of assessment under section 122(5A) vide No.54/07 dated 24.06.2015 were hit by subsection (2) to section 122 (as stood before substitution).
Jurisdiction under section 122(5A)
4) That Notice under section 122(9) bearing No.841 dated 16.05.2015 was fishing one, seeking the enquiry indulging into fishing exercise by calling the books of account and evidence from the appellant. There was material available with Add. Commissioner for initiating the action under section 122(5A).
5) That the action under section 122(5A) was based on possibilities and assumption while leveling the cash withdrawn towards purchases only.
Disallowance of Expenses under section 21(L)
6) That the provision of subsection (L) to Section 21 does not apply to the expenses falling under Manufacturing/Trading Account.
Estimate of Income 7) That credit of 80% purchases falling under the thresh-hold of Rs. 10,000/- and balance 20% being above the thresh-hold was an assumed act by the Add. Commissioner.
8) This exercise amounts to estimate of expenses resulting into estimate of income. There is no scope of any estimation under section 122(5A).
Without Notice to Appellant
9. That Add. Commissioner, having been satisfied with the explanation dated 11.06.2015, did not again confront the appellant for the treatment as given in Amended Assessment Order.
2. Brief facts as gathered from record, are that the taxpayer/ appellant is an AOP engaged in the business of Rice Mills. The taxpayer e-filed return of income for the Tax Year 2009. The Taxpayer has also claimed payment of advance tax under section 231A on cash withdrawal at Rs.1,65,513/- which means the taxpayer has withdrawn cash from Bank at Rs.55,171,000/- during the period 2008-2009.
The huge amount of cash withdrawal pointed towards incurring expenses especially purchases without banking channel in violation of terms of section 21(1) of the Income Tax Ordinance, 2001.
Therefore, the proceeding culminated in passing of amendment order under section 122(5A) of the Income Tax Ordinance, 2001 by Assessing Officer.
3. The appellant/taxpayer went in first appeal before the learned CIR(A), Quetta, who vide order dated 30.12.2015, confirmed the action of the ACIR, Sukkur. The appellant being aggrieved and dissatisfied with the treatment meted out by the learned CIR(A), Quetta. Hence, the appellant has filed appeal before this forum.
4. On the date of hearing, Mr. Udha Ram, Advocate appeared on behalf of the taxpayer/appellant while Mr. Fayyaz Hussain Abro, D.R. appeared on behalf of the Department.
5. The learned AR, argued his appeal on the basis of his grounds of appeal filed by him against the order of the learned CIR(A), while the learned DR vehemently supported the order of the learned CIR(A).
6. We have heard both rival parties patiently and our findings are as under:
7. The learned AR argued on the issue of time limitation for passing the impugned order in following words: Quote Deemed Original Assessm ent Order was issued on 03.02.2010 whereas the issuance of Notice under section 122(9) vide No.841 dated 16.05.2015 and amendment of assessment under section 122(5A) vide No. 54/07 dated 24.06.2015 were hit by subsection (2) to Section 122 (as stood before substitution).
Unquote In support of his argument, the learned AR produced latest case laws cited as under: Quote Although there is series of case laws of the Tribunal on this score but the Sindh Court has also made the same endorsement. The case law are as under:-- 1 AmendmentScheme of Law2015 PTD (Trib.) 589Date of judgment
20.06.2013 2 AmendmentEffective 2013 PTD (Trib.) 168405.03.2013 3 AmendmentEffective 2015 PTD (Trib.) 43429.08.2013 4 AmendmentEffective 2015 PTD (Trib.) 162516.04.2014 5 AmendmentEffective 2015 PTD 2562 (2570/Para-B of Sindh High Court10.07.2015 Unquote We have perused the case-laws, which are relevant to the issue in discussion. Here we would like to quote the relevant excerpt of Hon'ble Sindh High Court's decision produced by the learned AR, which reads as under: Quote The very nature of the proceedings under section 122(5A), are aimed towards enhancement of tax liability of an assessee or to create additional burden of a tax upon an assessee, therefore, such amendment cannot be termed as a procedural amendment, therefore, we are also of the considered opinion that the provisions of section 122(5A) of the Income Tax Ordinance, 2001 are substantive in nature, therefore, unless it has been specifically defined by the legislature to apply the same retrospectively, the said amendment is to be applied prospectively for the tax year in which, it has been introduced through Finance Act.
Unquote Respectfully, following the decision of Hon'ble Sindh High Court and other case-laws produced, we feeljhe impugned assessm ent order under section 122(5A) is barred by time limitation and not tenable in the eyes of law. We, therefore, annul the order of both forums below on this point.
8. Although, we do not find any need to discuss any other grounds after the annulment of order on legal grounds above but since the learned AR has agitated the order of the learned CIR(A) through other grounds too with the support of case laws etc., so we deem it appropriate to briefly discuss them also.
9. The next objection of the learned AR is regarding fishing enquiries and estimation made by ACIR in the impugned order under section 122(5A).
As mentioned in fact, the learned Assessing Officer noted that cash drawls were made from bank by the taxpayer and he 10% took the same as against the provisions of section 21(1) and hence added them to the declared income, after calling for details and books of accounts etc. Against the fishing enquiries, the learned AR produced the finding in a case law cited as 2014 PTD (Trib.) 1241, against disallowance under section 21(1), the AR produced a case law cited as 2015 PTD (Trib.) 2241, against estimate of disallowance the AR produced a case law cited as 2016 PTD (Trib.)
189 and against assumption in respect of additions under section 21(1); the AR produced order on appeal vide I.T.As. Nos.1004, 1003/KB of 2011 dated 27.02.2013.
We find that the case laws are relevant to the facts of present appeal, particularly when viewed in the back ground of order passed under section 122(5A), which has its own limited scope as held by superior courts in a plethora of case laws.
11. Finally, the learned AR, also agitated that even the final treatment of addition of 10% of the total withdrawal was not confronted to the taxpayer. This fact is also verifiable from body of impugned order under section 122(5A).
12. The upshot of above discussion is that the impugned order is not sustainable in view of detailed findings made by us and same is hereby annulled.
13. The appeal is disposed off in the manner indicated above.