MUHAMMAD JAWED ZAKARIA, (JUDI CIAL MEMBER).-- -By this consolidated order , we intend to dispose of above titled appeals filed by the appellant/taxpayer against the impugned Orders No, 29 dated 12.2.2018 [order passed under section 122(1)] and the Order No, 34/2018 dated 30.4.2018 (against-order under section 161/2015).
First we take up the main appeal agains t the order passed under section 122(1) of the Income Tax Ordinance, 2001.
ITA No,348/KB/2018 (Appeal against order passed under section 122(1))
The Taxpayer agitated the following grounds:
1. "That the order of the learned CIR (Appeals-IV), is bad in law and against the facts of the case.
2. That the addition made under section 1 11 is baseless, unjustified and against the facts of the case.
3. That there was no notice of hearing on the date of passing the impugned order by the DCIR.
4. That the appellant has been condemned unheard which is against the principles of natural justice.
5. That the show-cause notices issued under section 122(9) of the Income Tax Ordinance is defective in nature and any super structure built on wrong foundation is also illegal.
6. That no specific notice under section 1 11(1) (b) was issued which is pre-requisite for making any addition.
7. That the learned Authorities below were not justified to ignore the explanation of the appellant.
8. That the impugned Order passed under section 122(1) and upheld by the learned CIR (Appeals) is without jurisdiction.
9. That issuing of show-cause notice under multiple Sections/ provisions of law is illegal, and as such impugned show-cause notice is void ab initio-and any super structure built on the basis of such illegal show-cause notice is also illegal, void ab initio.
10. That the impugned order passed by the DCIR and endorsed by the learned CIR (A) is full of contradiction and completely in deviation from show-cause notice issued.
11. That the learned CIR (A) was not justified to ignore illegality of the impugne d order passed by the learned DCIR.
12. That the property in question has already been declared by the appellant and is fully explained.
13. That the additions made under section 1 11 may kindly be deleted.
14. That the Appellant may kindly be allowed to submit: any other additional ground of appeal at the time of hearing."
FACTS
2. Brief facts of the case as gathered from the record are that the appellant is an individual, engaged in import and subsequent sale of textile items. Income tax return for the year 2016 was e-filed which attained the status of deemed assessment order under section 120 to have been issued by the Commissioner . Proceedings under section 122(5) were initiated against the tax payer appellant on the basis of inform ation received that the appellant has purchased a property worth Rs,23,000,000/- which was not declared in the wealth statement for the year ended 30-6-2016. During proceedings before DCIR copies of Conveyance Deed along with revised income tax return and wealth statement were filed which could not satisfy the DCIR and he made additions of Rs,23,000,000/- and 230,000/- by assuming jurisdiction under sections 111(1)(b)/1 11(1)(c) of the Income Tax Ordinance, 2001.
Being aggrieved with the treatment awarded by the DCIR, an appeal was preferred before the learned CIR(A) which was also dismissed and order of the DCIR was confirmed.
3. Feeling aggrieved and dissatisfied with the impugned order passed by the learned CIR(A) now the Appellant has come up in appeal before this Tribunal.
4. On due date of hearing, Mr. Abdul Khaliq Khan, ITP appeared on behalf of the Taxpayer while Mr. Azhar Erum Memon appeared on behalf of the department.
ARGUMENTS/SUBMISSIONS LEARNED A.R'S ARGUMENTS
5. The learned counsel for the taxpayer has strongly opposed the order of the learned CIR(A). The learned A.R. vehemently contended that both the impugned orders passed by the lower author ities are bad in law and against the facts. He contended that the property in question was actually purchased by Mrs. Shaista Begum and entire payment was deposited by her before Nazir of Hon'ble High Court of Sindh on different dates. An amount of Rs,4,600,000/- was paid on 1-10-2012 and Rs,41,400,000/- were paid on 10-12-2 013. The learned A.R. produced copy of Conveyance Deed which shows that entire amount was paid by Mrs. Shaista Begum and that too during the period relevant to tax years 2013 and 2014. The learned A.R. contended that the impugned orders of the authorities below are not maintainable on this sole factual ground.
6. The learned A.R. further contended that learned DCIR has not issued specific separate independent notice under section 111 which was mandatory before making any addition under section 111. In support of his contentions he also placed reliance on the judgments bearing I.T.A. No,51/KB/2014 dated 3.10.2014 CIR v. Dewan Steel Mills Karachi, I.T.A. No, 2505/LB/2015 dated 28.4.2016 and I.T.A. No, 373/KB-2012 dated 5.4.2017, Dr. Azeeem Alamani reported as 2015 PTD 1242 and on the reported judgment of Hon'ble High Court of Sindh reported as 2017 PTD 1839 (H.C. Sindh).
7. The learned A.R. drew our attention to another legal infirmity . He contended that the income tax return was revised on 15-12-2016. The return was filed manually as due to last date for e-filing of income tax returns for tax year 2016, E-portal was not functioning. He produced copy of Circular No, 17 of 2016 dated 30th November , 2016, according to which date for filing of annual income tax returns was extended till 15-12-2016. The learned A.R. contended that revised return filed by the appellant attained the status of amended assessment order to have taken place under section 122(3) and any order on the basis of deemed assessment Order under section 120 is totally illegal as the said deemed assessment Order under section 120 was no more in existence. He made reliance on reported judgment of Tribunal cited as 201 1 PTD (T rib.) 2389 and 2013 PTD 1749 .
1. The learned A.R. while concluding his arguments stated that if for argument sake it is presumed that the investment was made by the appellant even then the appellant is a commercial importer and during the last 6 years has paid Income Tax to the tune of Rs, 54,109,510/- and has sufficient funds to make such investment. He produced copies of Income Tax Returns e-filed for tax years 2011 to 2016 which have been perused and are in conformity of the contention of the learned A.R. The appellant during last 6 years paid income tax under FTR as under:- TAX YEAR IMPOR TS DECLARED TAX P AID 2011 492,615,021/- 05,159,601/- 2012 517,491,320/- 05,454,982/- 2013 295,817,353/- 05,259,061/- 2014 423,368,883/- 12,829,584/- 2015 698,912,450/- 20,975,987/- 2016 300,387,681/- 09,070,303/- TOTAL TAXES P AID 54,109,510/- 7.1. The learned A.R. submitted that the Assessing Officer was confused with the payment of Rs,2,30,000/= under section 236K, it was paid by the appellant as a "Nominee" on behalf of Mst. Shaista. The whole controversy revolves around this misconception. This cannot be termed as "definite Information" rather it is "misinformation". It was clarified before the Assessing Officer and Conveyance Deed was also submitted which stands resolved who is the real investor. If the department wants to ascertain they ought to find out the real owner and investment made by such owner.
8. The other lengthy arguments of the learned counsel may be summarised as under: No definite information, neither furnished nor proved and no addition is based on definite information. Mandatory requirement of section 122 (5) was not fulfilled. Mandatory requirement of section 122(5) and Clauses (i), (ii) and (iii) of section 122(5) failed to fulfill. Before modification under section 122(5) the finalized deemed assessment/ amended deemed order must be cancelled for the purpose of modification. If deemed order existing in the field and not cancelled before invoking Section 122 (5), the alteration and modification is illegal. Before embarking upon proceedings under section 122, the requirements of section 122(5) are to be fulfilled in letter and spirit. That the DCIR/OIR has not given mandatory notice(s) under sections 122(5)(1), 122(5)(ii) and 122(5)(iii) read with section 122(5) and 122(8) of the Income T ax Ordinance, 2001. That on plain reading of section 122(5) for passing order under section 122(1) and 122(5) the availability of the "definite information" is the precondition and submitted that subsection 122(5) provides that an assessment order shall only be amended under sections 122(1) and 122(5) where "definite information" has been acquired without shadow of doubt. In the instant case no such definite information was acquired by the DCIR/OIR. That impugned assessment having been framed under sections 122(1)1 122(5) without fulfilling the requirement and without "definite information" as per provision of section 122(5). That no assessment could be made under section 122(1) alone without invoking subsections (4), (5) or (5A) of the Income T ax Ordinance, 2001. No definite information, neither furnished nor proved and no addition is based on definite information. Mandatory requirement of section 122(5) has not fulfilled. That the deemed order amended under section 120 was no more existed after filing within time revised return and wealth statement under section 114 and attained the status as amended assessment under section 122(3) and ought to have been further amended the same while the DCIR had amended the deemed order under section 120 which was no more in the field. In support he placed reliance on the judgment reported as 2011 PTD 2389 (Trib) and 2013 PTD 1749 .
The taxpayer being the nominee of Mrs. Shaista Begum wife of Nafees Ahmed who deposited the entire amount of sale consideration of Rs,4,60,00,000/= before the Nazir of the Honorable High Court of Sindh in pursuance of compromise allowed the same vide order dated 22.12.2015. Therefore, the taxpayer being the nominee had not paid the amount and the entire amount was paid by Mrs. Shaista. Copy of the Registered sale Deed dated 25.4.2016 was produced before this bench also. No question of concealment of property or investment made by the Taxpayer arises and there is no reason to invoke section 1 11 of the Ordinance, 2001. That investment made by Mrs. Shaista in the tax years 2013 and 2014, no addition could be made in the hands of "NOMINEE" IN THE T ax Year 2016. That the mandatory independent sepa rate and specific notice under section 111 had not been issued to the taxpayer , therefore, the action of the DCIR is not within the parameters set by the superior courts.
In support of his contentions he also placed reliance on the judgments bearing I.T.A. No, 51/KB/2014 dated 3.10.2014 CIR v. Dewan Steel Mills Karachi, I.T.A. No, 2505/LB/2015 dated 28.4.2016 and I.T.A No, 373/KB-2012 dated 5.4.2017, Dr. Azeem Alamani reported as 2015 PTD 1242 and I.T.A. 64/KB/2015 dated 6.6.2018 in the case of CIR v . Jawed Metal .-- D.R's Arguments
9. The learned D.R., on the other hand, supported the orders of the officers below and had strongly opposed the contention of the learned A.R. by reading Provisions of Section 114(6) of the Income Tax Ordinance; 2001 and contended that prior approval of the Commissioner was necessary before revising the income tax return.
Rebuttal of the arguments of the D.R. by the A.R. of the Taxpayer
10. The learned A.R. while rebutting the contention of the learned D.R. drew our attention to the provisions of Section 1 14(6)(ba) and second proviso which reads as under:-- "Provided further that the condition specified in clause (ba) shall not apply if revise d return is filed within sixty days of filing of return"
The learned A.R. contended that there was no need to obtain prior approval of the Commissioner as the revised return was filed before 60 days and that too within extended last date of filing of annual tax returns as announced by Federal Board of Revenue vide Circular No, 17 of 2016 dated 30th November , 2016.
OPINION OF THE COUR T
11. We have heard both the learned representatives and have also gone through orders of the authorities below and perused the records of the case.
12. Perusal and examination of the amended order passed under sections 122(1) and 122(5) of the Income Tax Ordinance, 2001 reveals that the DCIR while passing the Order had not adhered to the requirements of law as envisaged under sections 122(5) and 111 which stipulates that the same is required to be amended on the basis of definite information then he may invoke subsection (1) of Section 122 for acquiring jurisdiction to amend the order under subsection (4) read with subsection (5) as the case may be. Hence, the amended assessment in this case has been framed in total ignorance of the law and in violation of the prescribed procedure and legal and mandatory requirements. The CIR/DCIR/OIR, in total oblivion of the mandatory requirement/ condition precedent has been set out for the amended assessment under the provisions of section 122(1).
13. The other aspect of the impugned order passed by the officers below that no definite information was found to have been available with the DCIR within the meaning of section 122 (5) read with section 122(8) of the Income Tax Ordinance, 2001. The Hon'able Lahore High Court in its recent decision 2013 PTD 884 (H.C.Lhr) on the subject of "definite information" with reference to section 122(5) of the Income Tax Ordinance, 2001 has held as under:-- "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 for certain, explicitly precise, clearly defined, leaving nothing to implication, 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 too/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 assessee. "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. 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."
14. We may also rely on the judgment reported as 2007 PTD (Trib.) 2601. The relevant extract of which is reproduced as under:-- "15. In most of the cases the Courts try to implement the provisions of law and avoid declaring it as redundant. It is obviously under the spirit that laws are always made for implementation and not to just remain as part of the statue without being of any benefit to the public at large. However , this Tribunal has in many cases not allowed issuance of notices in slipshod manner without indicating the actual reason of issuance thereof. The Hon'ble Lahore High Court has even gone to hold that issuance of a notice under section 65 without indicating the reason of issuance of notice in terms of subsections (1), (2) or (3) or (a), (b) or (c) of the said section to be as illegal. In this case notice under section 62 is statedly issued which provisions does not exist in the scheme of new law. There is a provision under the title "amendment of assessment" and the same is 122(1) and all other provisions are subject to the said section 122. In the earlier part of our discussion we have already held that section 122(1) is the mother provisions while all other subsections are helping and the same determine the fitness of the amendment of the assessment to be made under section 122(1). The Assessing Officer in this case has not even bothered to mention the subsection in its notice. Hence even if one is confident that section 122 could be enough for acquiring jurisdiction, non- mentioning of the other provision in terms of subsection (5) of subsection (SA) is fatal as the parameters for each of the said provisions are entirely different from the other . Besides, erroneousness of the assessment for determining prejudice to the interest of revenue in a deemed assessment order shall also need a good deal of dilation and discussion. There are certain more questi ons which would require answer in a case like this, The Assessing Officer has proceeded to make the assessment under section 120. The provision of section 122 which has been titled as assessments and as a sub-title as an amendment of assessment, provides full authority for making an assessment.
These provisions in fact are para meteria to the assessments under sections 62 as well as 63 in addition to 65 and 66(A) etc. Section 120 does not come into picture for amendment of an assessment. It supplication is only upto the deemed assessment order and has no extension beyond the said language.
16. The upshot of the above discussion therefore is obvious. The jurisdiction in this case could only be acquired by the Taxation Officer after receiving of an information from the audit department by issuance of an notice under section 122(5). Since said notice have not properly been issued for acquiring jurisdiction over this case, one cannot agree with the department that the subsequent proceedings are justified".
15. We may further seek support from the judgment of Appellate Tribunal vide order 2013 PTD 1083 in the light of various cases decided by the Hon'ble Supreme Court on the subject of "Definite Information" has held as under:- "We are persuaded to agree with the arguments of learned AR that pre-requisite for invoking section 122(5) of the Ordinance was definite information with regard to escapement or under assessm ent of income or assessment at too low a rate or subjection of excessive relief or refund. Further , the definite information must have come in the possession of Department after completion of assessment this dictum is elaborated in detail by the honourable Supreme Court in CIT v. Eli Lilly Pakistan (Pvt.) Ltd. 2009 SCMR 1279 = 2009 PTD 1392 and Central Insurance Co. and others v. CBR, Islamabad and others 1993 SCMR 1232 = 1993 PTD 766. We are also in agreement with the arguments of learned AR that in the presence of favorable judgments of higher courts on the issue the department could not invoke section 122(5) as mere disagreement with the decisions of higher courts did not constitute definite information. The honourable Lahore High Court in Saitax Spinning Mills Ltd. v. Commissioner of Income Tax 2003 PTD 808 disapproved reopening of a completed assessment for want of definite information.
Moreover , mere disagreement over legal interpretation of section 67 and estimation of life of computer software was not definite information as wrongly assumed by the Department. We therefore decide the appeal for this year in favour of taxpayer by declaring invoking of section 122(5) of above issues as unlawful"
16. We, therefore, hereby hold that it is a trite law that the provisions of subsection (5) of section 122 of the Income Tax Ordinance, 2001 allows amendment of any assessment only when the department is in possession of definite information and not otherwise, and in this context the DCIR was under legal obligation to specifically identify the nature of suppressed income and issue notice in terms of clauses (i), (ii) and (iii) of subsection (5) of section 122 of the Income Tax Ordinan ce, 2001 highlighting the fact under which categor y appellant's case falls.
None issuance of such notice clearly meant that while passing the amended assessment order DCIR was not in possession of definite information and the reason assigned for additions/disallowances while passing the amended assessment order , cannot be termed as definite information. Thus the law has rendered the entire proceedings void ab initio, and illegal. Even otherwise the simple issuance of notice under section 122(9) even in this particular case before conducting audit of the taxpayer and what to speak of prior to confrontati on audit report/objection/charge sheet for obtaining rebuttal/Explanation by the taxpayer was not enough to further proceed in the matter for amending under section 122 already completed under law. Before making any additions and disallowances to the assessed income under the grab of audit under section 177 and amended assessment under sections 122(1)/ 122(5). The tax department is required to acquire legal jurisdiction under the provisions of section 122(5). This can only be done to modify or alteration or amend the already assessed income only by establishing that taxpayer's income is either under assessed or assessed at too low rate or subject to excessive relief or refund and to be based on definite information. However , we also find that there is no specific finding in terms of "definite information". It appears the findings of the learned CIR (A) are legally not valid as it appears that there was no grave error in deemed amended assessment. The IR Department has to qualify through audit that the deemed assessment is under assessed or as the case may be in terms of Section 122(5) [subject to definite information].
The requirement of section 122(5), are to be strictly fulfilled in letter and spirit. The initiation of conducting audit of assessment through notice under section 122(9) prior to audit tantamount to amend assessment before audit which is legally not justified and order is passed in consequence thereof being unlawful are not sustainable and ab-initio void. Unless any definite information acquired in the possession of the DCIR/OIR as a result/finding of audit conducted by the CIR under section 177 and the OIR/CIR is satisfied that on the basis of "Definite information" and not on the basis of "Mis-information" or "Doubtful information" that these further three pre-requisite requirement to be stretch in pursuance to definite information but these are not cumulative or to be established together:
(i) Any income chargeable to tax has escaped; or
(ii) Total income has been under-ass essed, or assessed at too low rate, or has been the subject of excessive relief or refund; or
(iii) Any amount under a head of income has been mis-classified.
17. It is also opined that additions under Section 111 have been made without issuing specific and separate notice under Section 111 which is sine qua non and no addition under section 111 can be made without independent, specific and separate notice under section 111 with specification of relevant clauses and subsection of section 111 of the Income Tax Ordinance. Furthermo re, the "Definite Information" is missing from the amended order while making addition under sections 111(1)(b) and 111(c) therefore, the additions made under section 111 are hereby deleted .
18. The DCIR has not given independent specific, separate notice or disclosed his mind under separate notice which clause apply . Each clause has different eventuality . Hence the aforesaid additions under sections 111(1)(b) and 111(1)(c) [as envisaged in amended order under section 122(1)/(5)] are without filling the legal requirement of said clauses and specific separate notice is illegal, unwarranted and uncalled for, ab initio void. That in numerous cases it has been held by the higher appellate courts that specific, separate and independent mandatory notice under section 111 of the I.T. Ordinance, 2001 specifying and invoking a relevant subsection and particular clauses be issued prior to making addition. However , in the instant case no specific, separate and independent mandatory notice under section 111(1) of the I.T. Ordinance, 2001 has been issued and served upon the appellant. Therefore the addition made under section 111 of I.T. Ordinance, 2001 is unjust, unfair , illegal and rightly deleted by the learned CIR (A). Reliance may be made on judgment of the Tribunal reported as 2012 PTD (Trib.) 312 whereby the learned Tribunal has cancelled the order passed under section 122(1) by the DCIR as statutory notice was not served upon the taxpayer . The relevant partition of which is reproduced below: Ss.111(1)(b), 122 & 128---Unexplained income or assets---Proper service of statutory notices---Revenue contended that First Appellate Authority was not justified in treating the service of statutory notices under S.218 of the Income Tax Ordinance, 2011 as improper and annual the order passed under S.122(1) of the Income Tax Ordinance, 2001 merely on technical grounds---T axpayer contended that notice issued were not properly served and opportunity of being heard was not provided to explain the source of investment: and taxpayer had valid source to explain the source of investment; and taxpayer had valid source to explain the investment---First Appellate Authority had given a categorical finding that the notice issued were not property served and the assessment had been made without providing reasonable ' opportunity of being heard to the taxpayer--- Assessing Officer failed to serve statu tory notice in accordance with law---First Appellate Authority was justified to cancel the assessment made under S.122(1) of the Income Tax Ordinance, 2001---Appeal filed by the Revenue was dismissed being devoid of any merit. In arriving at this conclusion our view is fortified with the judgment of ATIR 2012 PTD (Trib.) 790; wherein it has been held that "that no separate notice under S.111(C) of the Income Tax Ordinance, 2001 was issued; and that addition was not sustainable in the eye of law--V alidity--W ithout issuance of separate notice no addition could be made---Addition was deleted by the Appellate Tribunal being wrongly made by the Taxation Of ficer," The DCIR has failed to comply with the requirement of law and if the law had prescribed method for doing of a thing in a particular manner , such provision of law is to be followed in letter and spirit and achieving or attaining the objective of performing or doing of a thing in a manner other than provided by law would not be permitted. Reliance is placed on 2006. SCMR 129. In anothe r case, the honourable Supreme Court of Pakistan Collector , Sahiwal v.
Muhammad Akhtar 1971 SCMR 681 their lordships observed as under: "The principle so far as this country is concerned, is accordingly well-settled that where the requirement to be fulfilled to be given by the statute is a mandatory , then the failure to comply with such a mandatory requirement of the statute would render the act void ab initio as being an act performed in disregard of the provisions of the statutes" It was further observed by their lordship that any further action taken on the basis of such a void order would also be vitiated and the defect at the initial stage would be incurable by a hearing at a subsequent stage. 44 In another case reported as 1993 PTD (Trib.) 266 it has been held that no addition is legally sustainable if mandatory requirement had not been complied with. Further it has been held in many cases that if the law requires a thing to be done in a particular manner , it would be legal and valid only if it was done in the manner and not otherwise. Reliance is placed on the judgment of the honourable Peshawar High Court reported as 2005 MLD 1329 ."
Recently the Division Bench of this Tribunal vide order passed in the case of CIR v. Pharmaceutical, Karachi bearing I.T .A. No, 65/KB/2018 dated 24.9.2018 has resolved the controversy at rest by observing that: "We will now see the manner in which each and every addition was made by the ACIR towards the income of the appellant which was later annulled by the learned CIR(A) . The first addition is for Rs,6,931,024/- which was made out of declared purchases to the extent of 20 percent on account of unverifiabi lity. In addition thereof, another addition of Rs, 2, 745, 682/- was made out of manufacturing expense by curtailing the same by 50 percent. Lastly , an amount of Rs, 4, 385, 341/- was added back out of the expenses debited to the profit and loss account to the extent of 50 percent of the claim.
7. Having discussed the extent and manner in which said additions were made towards the income of the respondent taxpayer , we are inclined to agree with the treatment meted out to such addition by the learned CIR(A).
Even a passing glance towards the original order clearly indicates that all these additions were made on the basis of pure guesswork and conjecture which by no stretch of imagination can be allowed to hold field when seen with particular reference to the provisions of section 122 of the Ordinance. This section which enables the revenue authorities to amend an assessment order provides modalities for making the intended amendments. Under normal circumstances, correct manner to which the ACIR could have based his action was to invoke provisions of subsection (5) of section 122 which gives powers to make necessary amendment s on the basis of some 'definite information' from an audit or otherwise in the following eventualities:-- i. Any income chargeable to tax has escaped assessment, ii. Total income has been under -assessed, or assessed at too low a rate, or have been the subject of excessive relief or refund, iii. Any amount under a head of income has been misclassified.
8. Moreover , the term 'definite information' has also been defined in subsection (8) of section 122 as under:--
(8) For the purpose of this section, "defin ite information" includes information on sales or purchases of any goods made by the taxpayer receipts of the taxpayer from services rendered or any other receipts that may be chargeable to tax under this Ordinance and on the acquisition, possession or disposal of any money , assets, valuable article or investment made or expenditure incurred by the taxpayer .
9. After discussing the above facts of the case, we are of the view that the law has provided a mechanism when a taxpayer after selection of his income tax affairs for audit fails to furnish required details and documents considered necessary for completion of audit ......
10......It may be appropriate to reiterate that resorting to mere guesswork while proceeding within the periphery of section 122(1) is not permissible under the law and is liable to be discarded. Simila rly, resorting to the provisions of section 111 of the Ordinance which deals with unexplained income or assets is hopelessly misplaced in the wake of given circumstances of the case. We accordingly agree with the findings of the learned CIR(A) that the order under section 122(1) is unlawful and not sustainable. The departmental appeal therefore fails."
19. Last, but not the least, we may also rely on the latest judgment of Hon'ble High Court of Sindh at Karachi reported as 2017 PTD 1839 titled as The Commissioner Inland Revenue, Zone-I, RTO, Sukkur v. Messrs Ranipur CNG Station, Sukkur whereby the Hon'ble Judges their lordships Mr. Justice Aqeel Ahmed Abbasi and Mr. Justice Nazar Akbar , observed that no separate, independent notice under section 111(1) was given to the taxpayer , the addition so made was deleted, the relevant portions of which read as under: "4. From bare perusal of the above statutory provisions, it is clear that the addition under section 111 of the Income Tax Ordinance, 2001, can be made, only if an opportunity is provided to the taxpayer through specific Notice, whereby , the taxpayer is confronted with any of the aforesaid eventuality as visualized under section 111 of the Income Tax Ordinance, 2001, whereas, if the taxpayer fails to offer any explanation about nature and source of the amount credited or the investment made, money or valuable articles, or funds from which the expenditure was made; only then, such addition can be made in the income of the taxpayer . In the instant case, it appears that no Notice under section 111 of the Income Tax Ordinance, 2001 was issued to the taxpayer , nor the taxpayer was specifically confronted with such proposed addition by the taxation office so that the taxpayer could have offered some explanation in this regard. In view of above undisputed facts, the addition made by the taxation officer under section 111 in the instant matter appears to be without any lawful authority . While confronted with above factual and legal position as emerged in the instant case, learned counsel for the applicant could not controvert the same nor could point out any error or illegality in the order passed by Appellate Tribunal. Whereas, the Appellate Tribunal in the instant case, after having taken cognizance of the above factual as well as the legal provisions as contained in Section 111 of the Income Tax Ordinance, 2001, relating to providing an opportunity to the taxpayer to explain the unexplained income or assets, has been pleased to hold as under: "We have heard both the learned representatives and have gone through the record of the case. On perusal of the impugned order it transpires that the CIR(A) has discussed the issues in detail. Before making addition under section 1 11(1) of the Income T ax Ordinance, 2001, the ACIR had not adhered to condition as laid down by the law .
No specific notice under section 111 of the Ordinance, 2001 was issued by the ACIR, hence, the learned CIR(A) was justified in deleting the addition made under section 1 11(1) of the Ordinance, 2001.
In view of the above facts and circumsta nces the impugned order passed by the learned C1R(A) is legal, lawful and in accordance with law, therefore, no interference is required in the impugned order of the learned CIR(A) which is hereby upheld.
5. It may be further observed that in view of the' Article 10A of the Constitution and Section 24-A of the General Clauses Act, every public functionary , including the Taxation Authorities, are requir ed to provide fair opportunity of being heard to any person before taking an adverse action against him, or pass ing any order of assessment or creating any additional liability of tax, by confronting such person with the proposed action in writing. The fair trial and right of hearing is regarded as a cordinal principle of Natural justice, which has to be read into every Statute, even if it may not be specifically provided therein.
6. In view of hereinabove facts and circum stances of this case. We are of the opinion that impugned order passed by the Appellate Tribunal Inland Revenue , in the instant case, does not suffer from any error and illegality , which otherwise depicts correct legal position. Accordingly instant reference application being devoid of any merits is hereby dismissed, and the question of law as proposed here in above is answered in affirmative against the applicant and in favour of the respondent."
20. On factual plane, we have also observed that the taxpayer being nominee of Mrs. Shaista has not made any investment. The taxpayer had only acted on behalf of the said lady . The word "nominee" is defined as under: "i) A person or entity who is requested or named to act for another , such as an agent or trustee. ii) A potential successor to another's rights under a contract."
The word "Nominee" has further been defined in the case of Baksh Ali Lakho v. Executive District Officer (Education) reported as 2015 MID 1638 as under: "Nominee means: "to designate , name, to select or propose for appointment to an office or place".
In Black's Law Dictionary the meaning of the word "nominee" has been defined as under: "Nominee means one who has been nominated or proposed for an office. One designated to act for another in his or her place. It is used some times to signify an agent or trustee. It has no connotation, however , other than that of acting for another , in representation of another , or as the grantee of another ."
It is however , not denied by the departm ent that Mr. Muhammad Faisal was not the "Nominee" and it is also undeniable fact that the said person acted as an nominee for Mrs. Shaista who was the owner of the plot. It is also not disputed by the department that the "Nominee" must be real son/daughter or a real relative. All the investment made by the said lady from time to time in pursuance to the order of the Hon'ble High Court mentioned supra, hence no proceedings can be initiated against the taxpayer under sections 111(1)(b) and 111(1)(c) in respect of alleged investment made by the taxpaye r as the taxpayer had not invested any amount in the said property . In support of his contention the learned counsel submitted the copy of Registered Sale Deed dated 25.4.2016.
Therefore, the alleged addition under sections 111(1)(b) and 111(1)(c) is not main tainable. Reliance is placed on the judgment of the Tribunal reported as 2014 PTD 2009 ., the relevant extract from the order of the Tribunal is reproduced hereunder: Income Tax Ordinance, 2001, Ss. 111(1)(b), 122(5), 182---Unexplained income or assets---Investment made by tax-payer's deceased father---Claim of the taxpayer was that investment having been made by her late father which she received as inheritance was rejected and she was asked to furnish details of legal heirs of her father and the evidence regarding making of investment by her father; and addition was made on non-production of such evidence---T axpayer contended that she was the sole nominee and there was no dispute amongst the legal heirs; and point raised by the Taxation Officer had no validity at all; the investment in question was received as a nominee after the death of her father---V alidity---Reassessment was finalized without appre ciating the facts and examining the evidence produced by the taxpayer---T axpayer had enough evidence in support of his contention that she had received the amount in question as inheritance being nominee of the investment made by her father and the objection raised by the Taxation Officer that nothing had been adduced to substantiate the contention was also contrary to the facts and circumstance of the case---Investment was made out of explainable sources which she had received as inheritance after the death of her father---Documentary evidence produced by her at the assessment stage was deliberately ignored in order to burden her with a huge amount of tax liability which could not be termed as justified by any stretch of imagination---First Appellate Authority had also upheld the treatment accorded by the Taxation Officer in a summary manner without consulting the evidence produced before him--- Addition made by the Taxation Officer was not sustainable and the First Appellate Authority had erred in law to upheld the same---Addition made under S.111(1)(b) of the Income Tax Ordinance, 2001 was deleted by the Appellate Tribunal and the appeal of the taxpayer was accepted."
21. Lastly , we may observe that the taxpayer had revised its income tax return on 15-12-2016. The return was filed manually as due to last date for e-filing of income tax returns for tax year 2016, E-portal was not functioning. He produced copy of Circular No, 17 of 2016 dated 30th November 2016, according to which date for filing of annual income tax returns was extended till 15-12-2016. The learned A.R. contended that revised return filed by the appellant attained the status of amended assessment order to have taken place under section 122(3) and any order on the basis of deemed assessment Order under section 120 is totally illegal as the said deemed assessment Order under section 120 was no more in existence. He made reliance on reported judgment of Tribunal cited as 2011 PTD 2389 (Trib) and 2013 PTD 1749 .
22. Here, it would not be out of place to mention that where a law requires a thing should be done in a particular manner unless the same is done in the prescribed manner the same shall be illegal. In case of Khalid Saeed v.
Shemin Rizvi reported as 2003 SCMR 1505 the Hon Supreme Court of Pakistan while considering the impact of violation or non-observance of method prescribed by law for doing any act in particular manner or mode observed that if the law had prescribed method of doing a thing in a particular manner such provision of law is to be followed in letter and spirit and achieving or attain ing the objective of performing or doing of a thing in a manner other than provided by law would not be permitted and would be illegal. In addition thereof the amended assessment is not in strict compliance of the provision and the procedure provided in statute and lacks jurisdiction.
23. On factual plane also we find a lot of force in the arguments of the learned counsel for the taxpayer that the Taxpayer is a nominee of Mrs. Shahida Khalani who deposited the entire amount through Nazir of the Hon'ble High Court of Sindh at Karachi under the order dated 22.12.2015 passed in Suit No, 1771/2012 and Suit No, 43/2013.
The said property has already been disclosed in the Wealth Statement, thus, there is no reason to invoke the provisions of section 111 of the Income Tax Ordinance, 2001. Further the taxpayer had revised the return under section 114(6) of the Income Tax Ordinance, 2001 which attained the amended assessment and no order under section 120 is existed which could be amended.
24. The above findings may be summarized as under: Provisions of Section 122 of the Income Tax Ordinance, 2001 start with the language "subject to this section".
Such language restricts all further proceedings for amendment of an assessment which means it could only be amended if they were covered by the provisions of this section. Amendment of assessment for which this section has been prescribed cannot be made if the requirements and qualifications prescribed in this section were not completed before making such amendment of the assessment. That amendment was required to be made under section 122(5), assumption of jurisdiction under section 122(5) was a condition precedent for amendment i,e, "Definite Information" which is missing in this case. DCIR failed to fulfill pre-requisite requirement under section 122(5) and has not brought on record "definite information" What to speak of "definite information" clauses (i),(ii) and (iii) of subsection (5) of section 122 further stipulate three conditions for issuing of a notice that is i,e, any income chargeable to tax has escaped assessment; or total income has been under-assessed, or assessed at too low a rate, or has been the subject of excessive relief or refund; or any amount under a head of income has been misclassified.
The pre-requisite requirement of "definite information" under subsection (5) of Section 122 and subject to execution of conditions of clauses (i), (ii) and (iii) of section 122(5) is missing. No proper and valid notice issued under section 122(5) and no notice issued under which clause the DCIR had amended order under section 122(5) and what was the specific "definite information" No specific, separate and independent valid notice under section 111 issued for additions under section 111(1)(b) and under section 111(1)(c). Moreover , there was no unexplained income or expenditure proved by the DCIR without any shadow of doubt. As while making the additions under sections 111(1) and 111(1)(c) legal requirements have not been followed and definite information is missing. Additions and disallowances are not tenable on merit even on factual scores.
25. In view of the foregoing discussion, we vacate the orders of the officers below and allow the appeal filed by the taxpayer .
I.T.A. NO. 790 AGAINST ORDER UNDER SECTIONS 161/205.
26. The learned A.R. contended that the appellant is a commercial importer of Textile items which are sold on whole sales basis and was required to deduct/withhold transitional advance tax as provided under section 236G instead of 2361-I of the Income Tax Ordinance, 2001. The matter is remanded back to the ACIR with consent of both the parties and ACIR is directed to proceed afresh and pass a speaking order after providing reasonable opportunity of being heard to the appellant.
27. Before parting with this judgment we may observe that: No tax shall be levied or collected except by authority of law. A tax can only be imposed by a legislative Act and not on executive order . It thus embodies the democratic principle "No taxation without representation". The law imposing a tax must be a valid law, that is, it should not violate any provision of the Constitution and should be within the legislative competence of the legislature. It will be valid only if it is made in accordance with the procedure prescribed by the statute . This Court cannot hold that the revenue Departments was constitutionally free to ignore all the procedure s of the law and power to tax is not power to destroy . Who will sympathize with the Revenue Officers for impatient commitment to their cause for achieving the budgetary target and ought not to try culled out budgetary targets of revenue from arties of taxpayer but must respect to judicial process which rightly termed a small price to pay for the civilizing hand of law, which alone can be given abiding meaning to constitutional freedom. "The law makes no difference between great and petty officers; thank God, they are all amenable to justice."
28. Consequently , the appeals filed by the taxpayer are hereby accepted accordingly .