MUHAMMAD JAWED ZAKARIA, JUDICIAL MEMBER .---The appeal in this case was filed by the Commissioner Inland Revenue, Karachi, against the Commissioner (Appeals-II), Karachi order in Appeal No. 03/A-IV dated 08.09.2014.
BRIEF F ACTS
2. Brief facts of the case are that the respondent is an individual and director of M/s. Al-Abbas Sugar Mills Limited, filed return of income for tax year 2011 u/s. 114 of the Income Tax Ordinance, 2001 which was amended u/s. 122(1) of the Income Tax Ordinance, 2001 by the Deputy Commissioner Inland Revenue vide order No. 25/04 dated 20.06.2014 against which respondent filed appeal u/s. 127 of the Income Tax Ordinance, 2001 before the learned Commissioner Inland Revenue, Appeals4V , Karachi appeal was allowed. Being aggrieved with the order of CIT Appeals the department filed appeal before this forum on the following grounds:
1. That the order passed by the CIR (Appeals), against the order passed u/s. 122(1) of the Income Tax Ordinance, 2001 is bad in law and on facts of the case.
2 The learned CIR (Appeals) has grossly erred in law by deleting the addition made u/s. 111(1)(a) of the Income Tax Ordinance, 2001 amounting to Rs. 146,682,917/-.
3 That the learned Commissioner Inland Revenue,(Appeals) misdirected himself in law by not appreciating that only Pak Rupees were remitted instead of foreign exchange in pursuance to the provisions of Section 111(1)(4) read with Section 1 11(1)(a) of the Income T ax Ordinance, 2001.
4. That the learned Commissioner Inland Revenue, (Appeals) has omitted to appreciate that onus of proving an income, claimed to be exempt from. tax lies with the taxpayer and not the assessing officer .
5. That the learned Commissioner Inland Revenue (Appeals) was not justified in deleting the addition made u/s. 111(1)(b) of the Income Tax Ordinance, 2001 amounting to Rs. 25,000,000/- and 27,700,000/- as the taxpayer had failed to explain the source of investment made on the relevant dates.
6. That the appellant craves permission to add, alter or amend all or any of the ground(s) of appeal on or before or at the time of hearing of appeal.
3. On the date of hearing Mr. Abdul Hameed Shaikh, D.R., appeared on behalf of department and respondent was represented by Mr . Abdul Rahim Lakhani. Advocate.
ARGUMENTS OF THE LEARNED D.R.
4. During the course of hearing learned D.R. for the department/appellant submitted that the learned Commissioner Inland Revenue Appeals was not justified in remanding the issue of foreign remittance which was received from "Emirates Bank Intl Dubai" in the account of the taxpayer in Pak rupees instead of any foreign exchange therefore he was not entitled for the benefit of Section 111(4) of the Income Tax Ordinance, 2001 as neither foreign exchange was remitted into Pakistan nor encash in Pak Rupees and taxpayer was failed to explain the source of income in view of the above, the officer has rightly made additions u/s. 111(1)(a) ibid on this count, further he argued that learned Commissioner Inland Revenue, Appeals was not justified in deleting the addition made on account of bank deposits amounting to Rs. 25,000,000/- and 27,700,000/- u/s. 111(1)(b) of the Ordinance, 2001 whereas no explanation was submitted by the respondent taxpayer about source of that investment during the proceedings. He contended that in view of these grounds, the officer was justified to make the addition, further it was submitted by the departmental representative that the learned Commissioner Inland Revenue, Appeals was not justified in inferring the order of Officer Inland Revenue instead of confirming the same further he prayed that the order passed by CIR (Appeals) may kindly be vacated.
ARGUMENTS OF THE LEARNED A.R.
5. The learned counsel for the taxpayer , on the other hand, supported the order of the learned CIR (A). The learned counsel vehemently challenged the validity and legality of the order passed u/s. 122(1) by the Additional Commissioner .
6. The learned counsel for the respondent/taxpayer submitted that the foreign exchange was duly received as evident from the encashment certificate issued by the Scheduled bank namely Standard Chartered Bank Limited showing to report the transaction in question to the Senior Deputy Director State Bank of Pakistan Foreign Exchange Department 1.1. Chundrigar Road, Karachi. It is self-evident that foreign remittance has been received which is duly qualified for immunity given u/s. 111(4) of the Income Tax Ordinance, 2001, it was further submitted that no separate specific mandatory notice u/s. 111 of the Income Tax Ordinance, 2001 was issued by Officer Inland Revenue, which is sine qua non for invoking section 111 of the Income Tax Ordinance, 2001 therefore the addition is liable to be deleted. He placed reliance on the reported judgment of Honourable High Court of Sindh, Karachi as 2017 PTD 1839 (HC) and of this Tribunal.
7. As regard addition u/s. 1 11(1)(b) of the Income Tax Ordinance, 2001 on account of cash deposit it was submitted that the Taxpayer had sufficient cash amount in hand on 1st July, 2010 as evident from Wealth Statement available with the department duly mentioned in assessment order which was ignored by Officer Inland Revenue, and further the issue was not confronted in the specific show- cause notice therefore, the CIR(Appeals) has rightly deleted the addition.
8. As regard addition of Rs. 25(M) u/s. 111(1)(b) it was submitted that the amou nt was received from verifiable person namely from Mr. Salman Rasheed having NTN No. 0994420-6 vide pay order # 255124 deposited into bank namely as Allied Bank of Pakistan having Account # 01-200-0007-7, through proper banking channel which was ignored by the Officer Inland Revenue , since the credit entry was fully known explainable accordingly the CIR(Appeals) has rightly deleted the addition.
9. On legal plane the learned counsel further objected/rebutted that: No definite information, neither furnished nor proved and no addition is based on definite information. Mandatory requirement of sections 177(6) and 122(5) not fulfilled.
Mandatory requirement of section 122(5) and Clauses (i), (ii) and (iii) of section 122(5) failed to fulfill.
Before modification u/s. 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, 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. The selection of the audit and conducting audit in itself does not mean an assessment or modification of assessment.
That the DCIR/OIR has not given mandatory notice(s) u/s. 122(5)(0, 122(5)(ii) and 122(5)(1 10 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 u/s. 122(1) and 122(5) the availability of the "definite information" is the precondition and subm itted that sub-section 122(5) provides that an assessment order shall only be amended u/s. 122(1) and 122(5) read with section 177, where "definite information" has been acquired through audit u/s. 177. In the instant case no such definite information was acquired by the DCIR/OIR.
Without prejudice ,to above, the deemed order . u/s. 122(1) can be amended either under sub-sections (4), (5) read with Section 177 of the Income Tax Ordinance, 2001 subject to sub-section (5) of section 122 of definite information.
That impugned assessment having been framed u/s. 122(1) without fulfilling the requirement and without invoking the provision of section 122(5).
That no assessment could be made u/s. 122(1) alone without invoking sub-sectio n (4), (5) or (5A) of the Income Tax Ordinance, 2001. Assessemnt has been amended only u/s. 122(1) and not with section 122(5) thus, ab initio void and illegal order .
The Audit Policy has not been followed and mandatory requirement of section 177 has not been fulfilled. After selection of the case for audit, audit is conducted u/s. 177 and then Audit Report u/s. 177(6) is to be confronted to the taxpayer and if the reply is satisfactor y then the audit proceedings may be dropped. However , after perusal of the reply , if the Commissioner considers that the deemed assessment needs some modification then he proceeded to amend the assessment u/s. 122(1) subject to section 122(5) (definite information is mandatory) of the Income Tax Ordinance, 2001.
As steps-wise procedure for selection of the case for audit and conducting the audit was not followed and no opportunity provided for rebuttal of so-called audit report/Observations. Hence entire proceedings/exercise is void ab-initio.
No, definite information, neither furnishednor proved and nO addition is based on definite information. Mandatory requirement of sections 177(6), 122(5) not fulfilled.
That the mandatory independent separate specific notice u/s. III had not been issued to the taxpayer , therefore, the action of the DCIR is not within the parameters set by the superior Courts. In this regard he placed reliance on the judgment of the Honourable High Court of Sindh in the case reported as 2017 PTD 1839 (H.C. Sindh).
In support of his contentions he also placed reliance on the judgments bearing ITA No. 51/KB/2014 dated 3.10.2014 CIR vs. Dewan Steel Mills Karachi, ITA No. 2505/LB/2015 dated 28.4.2016 and ITA No. 373/K13-2012 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).
OPINION OF THE COURT
10. We have heard both the learned representatives and have also gone through orders of the authorities below and perused the records of the case.
11. Further perusal and examination of the amended order passed u/s. 122(1) of the Income Tax Ordinance2001 reveals that the DCIR while passing the order had not adhered to the requirements of law. The words used in section 122 if he considers necessary that the same is required to be amended on the basis of definite information then he may invoke sub-sect ion (1) of Section 122 for acquiring jurisdiction to amend the order under sub-section (4) read with sub-section (5) as the case may be. However , the DCIR has not followed the requirement of law in letter and spirit and passed the order u/s. 122(1) of the Income Tax Ordinance, 2001. The DCIR had passed the amended assessment only u/s. 122(1) without fulfilling the mandatory conditions of section 122(5), we may observe that what to speak of mandatory conditions of section 122(5), it appears he has not invoked the main provisions of section 122(5). 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(5). The CIR/DCIR/OIR, may amend the assessment u/s. 122(1), (4)/(5) (as the case may be) after fulfilling all requirement of law subject to definite, information and fulfilment of further condition of clause (i), (ii) or (iii) of sub-section (5) of Section 122.
12. Adverting to 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) 107 Tax 41=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 infor mation but definite enough to satisfy the concerned officer that `throw 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 leaving 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 exists and has to be picked up from the records or documents. This acquisition provides no marg in 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 requir es further processing falls outside the domain of definite information and can best pass for a departmental opinion, judgment, guesstimate, approximation or estimate."
13. 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 statute 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 sub-secti on (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 provision 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 provision while all other sub-sections 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 sub-section 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 sub-section (5) of sub-section (5A) 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 questions 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 section 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. Its 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".
14. We may further seek support from the judgment of Appellate Tribunal vide order 2013 PTD 1083 = (2013) 107 Tax 389 (Trib.) 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 assessment 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 favourable 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."
15. We, therefore, hereby hold that it is a trite law that the provisions of sub-se ction (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 sub-section
(5) of section 122 of the Income Tax Ordinance, 2001 highlighting the fact under which category appellant's case falls. Non-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 u/s. 122(9) even in this particular case before condueting audit of the taxpayer and what to speak of prior to confrontation audit report/objection/charge-sheet for obtaining rebuttal/Explanation by the taxpayer was not enough to further proceed in the matter for amending u/s. 122 already completed under law. Before making any additions and disallowances to the assessed income under the grab of audit u/s. 177 and, amended assessment u/s. 122(1). 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 valid as it appears that there was no grave error in deemed 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 u/s. 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 requirements 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 misclassified.
16. 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 u/s. 1 1 1 can be made without independent, specific and separate notice u/s. 111 with specification of relevant clauses and sub-section of section 111 of the Income Tax Ordinance.
17. 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 u/s. 111(a) 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 u/s. 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 u/s. 111(1) of the I.T. Ordinance, 2001 has been issued and served upon the appellant. Therefore the addition made u/s. 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 cancell ed the order passed u/s. 122(1) by the DCIR as statutory notice was not served upon the taxpayer . The relevant portition of which is reproduced below: "Ss. 111 (1) (b), 122 & 128. Unexplai ned 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, 2001 as improper and annul the order passed under S. 122 (1) of the Income Tax Ordinance, 2001 merely on technical grounds. Mxpayer 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 properly served and the assessment had been made without providing reasonable opportunity of being heard to the taxpayer . Assessing Officer failed to serve statutory notice in accordance with law---First Appellate Authority was justified to cancel the assessment made under S. 122(1) of the Income T ax 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 Validity . Without issuance of separate notice no addition could be made--Addition was deleted by the Appellate T ribunal being wrongly made by the T axation Officer ."
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 PTCL 2008 CL 337 (Sc,). In another case, the honourable Supreme Court of Pakistan in 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 statute." 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."
In another case reported as (1993) 67 TAX 74 = NTR 1993 TRIP 143 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 IT 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 incotne of the appellant which was later annulled by the learned CIRCA). 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 unverifiability . 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 mered 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 whe a seen with particular reference to the provisions of section 12 of the Ordin ance. 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 sub-section (5) of section 122 which gives powers to make necessary amendments on the basis of some 'definite information' from an audit or otherwise in the following --- 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 sub-section (8) of section 122 as under:---
(8) For the purpose of this section, "definite information" includes informat ion 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..,...
I0....... 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 deal; with unexplained income or assets is hope lessly .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."
18. 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 Vs. Mis. Rabi a ur 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 u/s. 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 Tai 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 Loy lawful authority . While confronted with above factual and 1,- 1 position as emerged in the instant case, learned counsel jot 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 circumstances the impugned order passed by the learned CIR(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 Article 10A of the Constitution and Section 24-A of the General Clauses Act, every public functionary , including the Taxation Authorities, are required to provide fair opportunity of being heard to any person before taking an adverse action against him, or passing 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 there in.
6. In view of hereinabove facts and circumstances 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."
19. Here, it would not be out of place to mention that where 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 vs. Shamin Rizvi reported as 2003 SCMR 1505 the Hon'ble 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.
20. On factual plane also we see no reason to interfere with the order of the learned CIR (A). The factual issues are discussed hereunder:
(i) Claim of Foreign Exchange Remittance: The issue was remanded with direction-to pass speaking order after providing opportunity of being heard, the operating part of the CIR (Appeals) order is reproduced as under:-- "I have considered written as well as verbal submission of the learned counsel for the appellant and record perused. The question is as to whether remittance by the appellant is foreign remittance or not.
In order to verify the foreign remittance. the following conditions are required to be met:
1. Amount has to be remitted from foreign country .
2. Whether remittance if foreign remittance the transaction has been reported to the State Bank of Pakistan.
3 Amount remitted has been credited the Pak. Rupees amount maintained by the person.
4. If transaction in questions is tested with reference to the above criteria, the result come out as under:
(1) It is admitted fact beyond any reason able doubt, that amount remitted has been received from UAE through EMIRA TES BANK INTL., DUBAI.
(ii) The transaction has been reported to the foreign exchange department of the State Bank of Pakistan, which is also confirmed from encashment certificate of the Standard Chartered Bank of Pakistan vide letter date 29th Nov., 2010.
(iii) The amount remitted has been credited to Pak Rupees account of the appellant.
(iv) Encashment certificate duly issued by authorized dealer i.e. Standard Chartered Bank.
It is established from the above that the instant foreign remittance was duly received to the appellant. The reservation of the department that foreign currency has not been mentioned in the certificate is not the fault on the part of the appellant. Since the encashment certificate in question duly reflects that the requisite compliance of State Bank of Pakistan in case of foreign remittance has been made.
The assessment is however set aside with directions that the Officer Inland Revenue must verify the Veracity of the documents submitted to the State Bank of Pakistan and also make independent confirmation of certificate issued by the Standard Chartered Bank.
No adverse inference shall be drawn till such confirmations are received from SBP and Standard, Chartered Bank.
The situation requires that a speaking order should be passed with due diligence and after providing proper opportunity of being heard to the appellant."
21: As the issue has been remanded back with certain directions, and no appeal has been filed by the taxpayer , against remand back the issue by the learned CIR (A), and if there would have been appeal of the taxpayer , we would have allowed the appeal, in these circumstances, we see no reason to interfere with the order of the learned CIR (A) which is hereby maintained.
(ii) Bank Credit Ent Rs. 25 000 000/- Addit ion Made U/S. 111(1)(b) of the Income Tax Ordinance, 2001 : The appeal was allowed on this score and demand was deleted, the operating part of the order of the CIR (Appeals) is reproduced below: '..Having given due consideration to the submission of the learned Counsel of appellant of the above issue and record perused.
Firstly , the issue was never confronted to the appellant. Secondly , the amount of Rs. 25(M) was received from Mr. Salman Rasheed having NTN No. 0994420-6 vide pay order # 255124 deposited into bank named as Allied Bank of Pakistan having Account # 01-200-00 07-7, which was produced during the proceeding and ignored by the department. the said evidence also produced before- me which is support contention of the appellant."
22. From perusal of the above findings of the learned CIR (A), it is abundantly clear that the learne d CIR (A) has deleted the addition on the cogent grounds, as firstly the taxpayer has not been confronted and secondly the payment was received through normal banking channel from the person borne on National Tax Number .
(iii) Cash Deposit Rs. 2,770,000/- Addition Made U/S. 111(1)(b) of the Income Tax Ordinanace, 2001 : The appeal was allowed on this score and demand was deleted, the operating part of the order of the CIR (Appeals) is reproduced below: "As regard addition of Rs. 27.7(M) on account of cash deposit, on various dates, it was demonstrated that the appellant had enough cash available as on 1st July, 2010 duly reflected in Wealth Statement which was also available with the department. The fact has been totally ignored while passing the impugned amended order .
For the forgoing reason I order to delete addition of Rs. 25,000,000/- and Rs. 27,700,000/- made u/s. 111(1)(b) of the Income Tax Ordinance, 2001."
23. From the above findings it is established that the taxpayer has furnished the evidence regarding availability of cash not only before the officers below but before the appellate forum, therefore, we see no reason to interfere with the order of the learned CIR (A) which is hereby maintained.
24. Resultantly , the departmental appeal fails being without any merit.