This appeal has been filed by the Taxpayer against the Impugned order dated 18.03.2024 recorded by the learned CIR (Appeals), Lahore.
2. The taxpayer, an individual filed income tax return to declare income from property at Rs.264,000/- prize on prize bonds at Rs.2,918,000/- and amnesty of Rs.200,000,000/-. The return was deemed to be an assessm ent order under section 120(1). The learned Additional Commissioner considered it to be erroneous in so far as prejudicial to the interest of revenue on the ground that sources of investment in properties and prize on prize bonds have been declared without documentary evidence, therefore, documents in support of these assets were required from the taxpayer and in case of failure of the taxpayer to submit the documents, intention was shown to make additions in the income. Owing to failure of taxpayer to produce the documentary evidence by the taxpayer required in respect of the above mentioned assets, additions were made under section 111. Aggrieved with this order the taxpayer filed appeal before the tribunal.
3. Case was fixed for hearing by issuance of notices in response to which the learned AR re resented the taxpayer and the learned DR represented the department. The learned AR at the very outset contended that the learned Additional Commissioner was not justified in invoking provisions of section 122(5A) without proving erroneous and prejudice to the interest of revenue. He further asserted that after omission of power to conduct inquiry by the Additional Commissioner vide Finance Act, 2021 the learned Additional Commissioner was not justified in conducting inquiries and requiring various documents. He insisted that the learned Additional Commissioner could have proceeded after selection of case under section 177 by the learned Commissioner.
Without prejudice to the above the learned AR produced copies of challans of payment on, prizes on prize bonds as follows: Prize on prize bondDate Prize moneyTaxes Balance Cheque No.106485128.12.2017 93,000 13,950 79,050 Cheque No.094920828.12.2017 93,000 13,950 79,050 Cheque No.106487828.12.2017 93,000 13,950 79,050 Cheque No.106484828.12.2017 93,000 13,950 79,050 Cheque No. 106477128.12.2017 500,000 75,000 425,000 Cheque No. 106488728.12.2017 185,000 27,750 157,250 Cheque No. 106483328.12.2017 312,000 46,800 265,200 Cheque No. 106482727.12.2017 312,000 46,800 265,200 Cheque No. 106482427.12.2017 312,000 46,800 265,200 Total 1,993,000 298,950 Prize on prize bondDate Prize moneyTaxesBalance Cheque No.113555714.03.2018 185,000 27,750 157,250 Cheque No.113554014.03.2018 185,000 27,750 157,250 Cheque No 113553914.03.2018 185,000 27,750 157,250 Cheque No.113556214.03.2018 185,000 27,750 157.250 Cheque No. 113556114.03.2018 185,000 27,750 157,250 Total 925,000 138,750 1,993,000 925,000 2,918,000 He also produced copies of Amnesty Declaration for 2018 and 2019 at Rs.200,000,000/- and Rs.6,300,000/- respectively and he prayed for vacation of order of learned Additional Commissioner. The learned DR contended that taxpayer did not attend the proceedings, otherwise creation of demand under section 122(5A) could have been avoided. He further contended that the learned Additional Commissioner did not have authorization to check the Amnesty Declarations of 2018 and 2019 therefore, the taxpayer should have produced the same before the learned Additional Commissioner. He supported order of learned Additional Commissioner and prayed for dismissal of appeal of the taxpayer.
4. We have considered the arguments and perused the record. We are of the view that the learned Additional Commissioner was not justified in making fishing inquiries nor was he justified in requiring documents while conducting proceedings under section 122(5A). He could have requested through proper channel sharing with him Amnesty Declarations by the learned Chief Commissioner who could have obtained them from the Member Operations. It is interesting to note that amnesty declared in the wealth statement at Rs.63,000,000/- through Amnesty Declaration of 2019 was accepted whereas amnesty of Rs.200,000,000/- for 2018 was not accepted by the learned Additional Commissioner when, in fact, both of them were declared in the wealth statement for the tax year 2018 which proves that the learned Additional commissioner passed the impugned order without application of mind. Therefore, the Order under section 122(5A) passed by learned Additional Commissioner is vacated for being illegal and against facts of the case and appeal of the taxpayer is accepted.