ORDERCH. MUHAMMAD ISHAQ, JUDICIAL MEMBER. - This appeal, preferred at the instance of the assessee/appellant, pertains tojhe Assessment Year 1986-87. It calls in question the Order dated.1:3,1995 passed by the Commissioner of Income Tax, 124 CM- Pakistan Company & Tax Law ReportsVl996 1997 Appeal Zone-III, Lahore on various grounds Which, are taken fordecision hereunder.
2. Firstly, the learned Counsel for. The assessed argues that the service of notice under section 65 was defective. Subsequent proceedings taken thereon, therefore, were nullity in the eye of law. He submits that the notice is dated as 29.6.1992. It1 was allegedly served by affixture on 30.6.1992. This notice directed the assessee to appear on 13.7.1992 but before the due date, the^ assessm ent proceedings under section 65 of the Income Tax. Ordinance, 1979 was finalized on 30.6.1992 which in fact was the; last date of limitation for finalizing the assessment. According to the learned counsel, this resulted into mis-carriage of justice as there was no due service of notice in accordance with law. The learned D.R., on the other hand, points out that the assessment framed under section 65 was just and legal and that the I.T.O, was justified to frame the assessment. He, therefore, pleaded that the Order for Assessment be declared valid in law.
3. We have examined respective contentions with the assistance of the learned D.R. And the learned. Authorised Representative. We really fail to find out as to whether the procedure for service of notice under the law was correctly followed? Service of notice by affixture can be effected only when the Revenue fails to effect service on the person of the individual, failingjWhich on his Authorized Representative, failing which on the adult male member of the family usually residing with him. The procedure prescribed for the service of the notice having not been followed, the service of the notice, under the circumstances of this case, therefore, does not warrant any sanity.
Accordingly, we hold that the service of notice under Section 65 of the Income Tax Ordinance, 1979 is defective. The proceedings taken thereafter, in the circumstances of this case, are nullity in the eye of law.
4. It is noticed from the record that the learned first- Appellate Authority did not apply its mind to this vital issue. The impugned Order, therefore, cannot be supported. Accordingly, we hold that the observations of the learned C.I.T. (Appeals) in respect of the action under section 65 do not apply the law correctly. The same, therefore, cannot be supported. In View of these reasons, we declare the action under section 65 as comm nopjudice
5. The next contention of the learned A.I. Is that the addition under section 13(l)(d) is not justified under law. It is noticed that the addition has been made in respect of the cost of the plot to the extent of 1 /3rd of the assessee'e share purchased by him..Although, it is unnecessary to go into the details of this transaction, yet, we feel inclined to make some observations in this respect also in the interest of justice. The learned A.R. Submits that the assessee paid only Rs. 1,10,000/- as shown in the Statement Of Assets & Liabilities submitted by the assessee. Subsequently, however, it was ascertained that the market value declared and accepted by the assessee amounting to Rs.
6,40,000/. Accordingly, Rs. 1,03,333/- was added to the income of.The assessee as the balance amount undeclared. The appellant/assessee explains that although the property was jointly purchased by his brothers for a consideration of Rs. 6,40,000/-, yet, he paid only Rs. 1,10,000/- for his share. In support thereto an affidavit was also submitted.
6. The learned C.I.T. (Appeals) upheld the addition of Rs. 1,3,333/- under section 13(l)(d). However, the examination of the impugned order shows that the explanation offered by the assessee was not considered. The question now arises as to whether the assessee could purchase the said share of the property for a consideration of Rs. 1,10,000/-. In order to ascertain this what was important for the Assessing Officer under.Law to ascertain was the amount expended in the purchase of the share by the assessee. Instead of going into this fact, the entire time was lost in finding out the value of the property. The law clearly commands that the Assessing Officer is to ascertain the investment made or the amount expended on the purchase of the asset by the assessee.
Unfortunately, this is not spelt out in any of the orders below. We are of the view that there is nothing wrong in purchasing an asset for a value as declared by the assessee to the extent of the share indicated in the same deal. More particularly so when the statement is collaborated by an affidavit which continues to remain unreputted. The Authorities below do not seem to have proceeded on the proper lines for creating additional liability on the assessee against his declared purchase value. The record also is completely silent on this account. In fact, wrong direction was taken up in creating the additional liability saying that the and additional amount was not being shown either as loan or as gift by the assessee from his brother. In our view, it was absolutely unnecessary for the assessee to show the aljeged additional amount either as gift or as loan. When the assessee is establishing a fact that he had expended only Rs. 1,10,000/- for the purchase of the share of the property, there was no additional amount that he was required to show as wrongly required by the authorities below. What was expended was shown and duly accounted for. In view of these reasons, we are not inclined to support the addition made under section 13(1 )(d) of the Income Tax Ordinance, 1979. Accordingly, the entire addition is cancelled as having been made without any basis.
7. Consequently, the appeal succeeds and is hereby allowed. 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.