SHAHID MASOOD MANZAR, CHAIRMAN .---Through this appeal, the appellant has objected against the impugned order of the learned CIR(A) dated 06.04.2016.
2. Facts of the case are that the taxpayer is an individual who filed return for tax year 2013, declaring income at Rs,36,80,000/- including salary and exempt income. As per the amended order , the Department received definite information regarding investment in plaza in the name and style of Multan Trade Centre, Multan. The OIR observed that the investment made in purchase of land and subsequent construction of plaza thereon did not commensurate with the declared source of income of the taxpayer . On the basis of aforementioned facts statutory proceedings were initiated for amendment of assessment under section 122(1) read with section 122(5) of the Income Tax Ordinance, 2001. Accordingly , show-caus e notice dated 08.10.2015 was issued. The reply submitted in response to above show-cause notice found unsatisfied. The taxpayer declared the cost of construction of building at Rs,78,299,960/- whereas the OIR estimated it at Rs,98,244,600/-, therefore, the residual amount of investment at Rs,1,99,44,640/- was determined as an unexplained investment in the commercial building. In view of the above facts total income was determined under section 122(1) read with Sections 122(5), 111(1)(b) and 111(2) of the Income Tax Ordinance, 2001 as a result of amendment of income as under:-- Salary income 180,000/- Exempt income 3,500,000/- Taxable income 180,000/- Add unexplained income 19,944,640/- Total income determined under section 122(1)20,124,640/- Income tax payable 4,753,660/-
3. The taxpayer filed appeal, against the said order of the OIR, before the learne d CIR(A) who has annulled the order of the OIR remanding back the same with certain directions. The taxpayer filed instant appeal, against the impugned order of the learned CIR(A), before this Tribunal on the following grounds:-- 1) That order passed under section 122(1) of the Income Tax Ordinance, 2001 as well as CIR (Appeals) is illegal, arbitrary and against the facts of the case and without possessing any definite information which is not tenable in the eyes of law .
2) That in response to show-cause notice, full facts were explained, but the DCIR as well as CIR(A) ignored the same without any rhyme and reason.
3) Hence without selection of FBR through computer random balloting as well as without issuance of AUDIT REPOR T and then framing of impugned order are without any valid basis and liable to be knocked down.
4) That there was no valid justification of the selection of the case. That amended order under section 122 of the Ordinance is without possessing any definite information and is not tenable in the eyes of law .
5) That proper opportunity of hearing was not provided to the appellant in whom maximum 5 days were given to reply/documents which is against AUDI ALTERAM PARTEM, in which clear fifteen days should be given. Hence the appellant condemned unheard which is against the maxim of audi alteram partem as ATIR in I.T.A.
No,1037A/LB/2012 in the case of Abdul Rasheed Prop: Modern Steel Gous e, Layyah v. CIR, RTO, Multan dated 07.11.2012 which is also against the fundamental rules of natural justice since no one can be condemned unheard as held in the reported judgment cited as 1994 SCMR 2232 . **** Principle of "no taxation without representation", embodied in Article 77 read with Article 162 of the Constitution, is violated by the Respondent (tax department).
6) That DCIR failed to meet the requirement of section 122(5). He failed to mention the relevant clause of section 122(5) under which he intend to proceed. The DCIR was not justified to pass an adverse order when he was not aware of the violation of law made by the appellant and without fulfilling the mandatory requirement of Section 122(5) of the Ordinance. This illegal act of the DCIR makes all the proceedings without jurisdiction, null and void being contrary to the ratio settled in 2011 PTD 2435 and 2007 PTD 2601 .
7) Issuance of simultaneous Notices under sections 122(5) and 122(9) make all the proceedings illegal and without jurisdiction. It was mandatory on the DCIR first to issue notice under section 122(9) and in case of unsatisfactory reply initiate proceedings under section 122(5) without being provided any oppo rtunity of hearing under section 122(9), reliance is placed on 2010 PTD (T rib.) 819 and 2010 PTD (T rib.) 2602.
8) Proceedings under section 122(5) can be initiated only on the basis of "DEFINITE INFORMA TION" or Escapement or under assessment. All the notices are investigative which shows that there was no "DEFINITE INFORMA TION" with DCIR and he was trying to fish out the mater ial from the taxpayer through alleged notice under section 122(5). All this shows that there was no "definite information" with DCIR and the completed all the proceedings without any lawful jurisdiction and contrary to section 122(5). Reliance is placed on 2013 PTD (Trib.)
884, 2011 PTD (T rib.) 187 and 2012 PTD (T rib.) 1593.
9) Such a huge addition without going into the legal as well as factual realities of the case. That in concealment cases burden of proof rests on shoulders of the department to prove that any wrong doing has been done. It is noted that dismay that the said burden has not been properly been discharged by the department. It is a basic rule in a democratic form of Government that no tax can be levied or collected except under the constitutional authority of Islamic Republic of Pakistan, 1973, which reads as under :- "Article 77. Tax to be levied by law only:- No tax shall be levied for the purpose of the Federation except by or under the authority of Act of Parliament." The law does not intend to bring any and everyone or all within its mischief. It is only as prescribed clearly in the Act.
10) The CIR (Appeals), should delete, annul the assessment and should not be given space to Revenue department to fill the lacuna while framing illegal assessment as per given reference of the Ordinance:--
129. Decision in appeal.-(1) In disposing of an appeal lodged under section 127, the Commissioner (Appeals) may- -- [(a) make an order to confirm, modify or annul the assessment order after examining such evidence as required by him respecting the matters arising in appeal or causing such further enquires to be made as he deems fit: or]
4. The learned AR of the taxpayer at the very outset contended that the proper opportunity of being heard has not been provided to the taxpayer which is against the principles of natural justice i,e, Audi Alteram Partem. In this regard reference was made to a reported judgment cited as 1994 SCMR 2232 wherein it has been held that principle of 'no taxation without representation', embodied in Article 77 read with Article 162 of the Constitution, is violated by the respondent (tax department).
Another objection has been raised that the OIR while making the amended assessment did not bother to mention relevant clause of section 122(5) under which he intended to proceed which is against the mandatory requirement of section 122(5) of the Ordinance and also against the legal pronouncements such as 2011 PTD 2435 and 2007 PTD 2601 .
On the issue of simultaneous notices under sections 122(5) and 122(9), it was argued that the OIR was under legal obligation first to issue notice under section 122(9) and in case of unsatisfactory reply initiate proceedings under section 122(5) which was not done, hence impugned order is not tenable in the eye of law as has been held in reported judgments cited 2010 PTD (T rib.) 819 and 2010 PTD (T rib.) 2602.
The next objection is that proceedings under section 122(5) can be initiated on the basis of "Definite Information" or escapement or under assessment. Since all the notices were investigative which means there was no definite information available with the OIR, hence proceedings were initiated without lawful jurisdiction and contrary to section 122(5) of the Ordinance. Reliance in this regard was made to reported judgments cited as 2013 PTD (Trib.)
884, 2011 PTD (T rib.) 187 and 2012 PTD (T rib.) 1593.
Last objection of the taxpayer is that huge addition without going into the legal as well as factual realities of the case has been made. Burden of proof, in case of concealment cases, always rests on shoulders of the department to prove that any wrong doing has been done. It is argued that the department has failed to prove the said charge properly .
It was contended by the learned AR that in spite of furnishing required documents as well as explaining the position, both the DCIR as well as the learned CIR(A) ignored the same without rhyme and reasons. The learned CIR(A) also not discussed the issues in detail and annul the amended order . Learned AR has requested to cancel the impugned orders of the of ficers below .
5. On the other hand learned DR is supporting the impugned' orders of the officers below . He has contended that the appellant has enough opportunity to explain his position before the Assessing Officer and requested to uphold the impugned order of the learned CIR(A).
6. After hearing both the parties and going through the relevant orders, we are of the view that a number of mistakes have been made by the OIR while amending the already finalized assessment of the taxpayer . The learned CIR(A) also passed a non-speaking order and annul the amended assessment with the direction of reappraisal of the case meaning thereby the department was provided with another opportunity to fill in the lacuna which is against the legal pronouncement s of the higher legal fora. Therefore, in view of the above discussion and in the light of case law cited supra, the amended order dated 08-01-2016 passed by the OIR was without lawful authority and jurisdiction. It is settled law that if the basic order is void, then any superstructure built thereon is also liable to fall. On merit also, the arguments advanced by the learned counsel are weighty . Hence, the orders passed by both the DCIR and the learned CIR(A) are vacated.
Appeal of the taxpayer succeeds. revisions by the competent authorities. Therefore, it is advisable to consult the official sources or legal professionals for the most up-to-date and accurate information.