These departmental appeals assail a common order recorded by CIT(A)-Zone-III, Lahore on 21-07- 1993.
2. The respondent is an individual and an Ex-Secretary Punjab Text Books Board Lahore.
Proceedings against him were initiated on the basis of a complaint and he was served with notices u/Ss. 56 and 58(1) of the Income Tax Ordinance, In reply to notices returns were filed for the years 1990-91 and 1991-92 declaring property income, at Rs.3,840/- each for both years. From the wealth statement ending on 30-6-1990 and on 30-6-1991 the Assessing Officer found ownership of a 2 kanal plot purchased on 15- 1-1990 for a total consideration of Rs.8,00,000/-. The value of the plot as on 30-6-1990 was shown at Rs.2,00,000/- and the value of construction till that time at Rs.2,65,000/. The Assessing Officer on the basis of alleged iqrar Nama found that the plot in question was purchased for a sum of Rs.8,00,000/- working out to Rs.4,00,000/- per kanal which was also found to be understated, In the notice confronting the assessee parallel cases from Jouhar Town and Model Town, Lahore were maintained to show that the disclosed value of the house had been understated. The same house as on 30-6-1991 was disclosed, at Rs. 19,00,000/- and declared to be still under construction. On usual proceedings the Assessing Officer proceeded to value the 2 kanals plot under the house at Rs.8,00,000/- per kanal and therefore the difference between the disclosed value at Rs.8,00,000/- and estimated at Rs.16,00,000/- was considered as deemed income of the assessee by resort to the provisions as contained in Section 13(1 ){d) of the Ordinance, In the year 1990-91 another addition of Rs.1,00,000/- was made u/S. 13(1)(aa) of the Ordinance after finding that the assessee had incurred huge expenses on the marriage of his daughter and household expenses, In the year 1991-92 total value of the constructed area at 7330 sq.Ft, was disclosed at Rs.11,00,000/-. The worked out per sq.Ft, cost at Rs.150/- was again found to be understated and on the authority of an alleged parallel case the Assessing Officer computed the total cost at Rs.21,99,000/-. The difference between the disclosed and estimated value at Rs.
10,99,000/- was brought to tax as unexplained income u/S. 13( 1)(d) of the Ordinance. Also an addition of Rs.81,975/- was made in the year 1991-92 u/S. 13(1 Maa) after finding that the assessee was not possessed with 60 tolas of gold as shown in the wealth statement. Further that the wealth statement as on 30-06-1995 indicated jewellery in the name of his wife at 15 tolas while subsequently the figure was tempered with from 15 tolas to 75 tolas. Since allegedly the cash was introduced in re-conciliation from undisclosed sources an addition of Rs.81,975/- was made after the assessee failed to comply with notices issued in this behalf. Finally, total income for the year 1990-91 was computed at Rs.9,03,840/- and at Rs.11,84, 815/- for the year 1991-92.
3. The consolidated assessm ents so farmed on 28-02- 1993 successfully assailed before the first Appellate Authority which found that the value of t&e plot disclosed by the assessee was rather more than the usual transactions carried out during that period in the area. Also that the Assessing Officer had not properly considered the facts of the case. The reliance of the assessee at an existing case at NTN: 06-14-1185446 was found pertinent where the value of 2 kanals plot located at Phase-I Township Lahore was adopted by the department at Rs.5,00,000/- per kanal during the Assessm ent Year 1990-91. Also finding that the plot so transacted was better located as compared to the one owned by the assessee the addition of Rs.8,00,000/- made u/S. 13( 1 ){d) was found uncalled for and therefore deleted. The other addition of Rs.1,00,000/- u/S. 13(1 )(aa) was also found to be totally baseless, It was in this regard further observed that serious procedural defects marred the proceedings inasmuch as in the notices confronting the assessee no amount of proposed addition was ever mentioned. Finally it was recorded that the facts available on record were not properly considered by the Assessing Officer. Therefore, the addition was deleted, In the year 1991- 92 ex parte action was found totally unjustified. While considering the addition' u/S. 13(1 )(d) the learned first Appellate Authority found that the finding of the Assessing Officer with regard to completion of the house, its self occupation of lower portion and of renting out of upper portion was completely against factual inquiry as reported by the Circle Inspector. According to the learned first Appellate Authority the Circle Inspector expressly reported that building in question was incomplete as on 30-06-1991 while the addition under the said provision was made after holding that the house was completed in all respects before 30-06- 1991 and that the lower portion was self-occupied while the upper portion was rented out. As a finding of fact it was also recorded that no notice u/S. 13( 1 )(d). Was issued after issuance of notice u/S. 13(2) on 16-4-1992. Therefore, the addition under this head was also deleted, In case of addition Rs.81075/- u/S. 13(1 Maa) again it was found that no specific notice u/S. 13(1 Maa) was ever issued. The narration in the assessment order that the A.R. Of the assessee was properly confronted vide order sheet entry dated 28-4-1992 was found to be an inadequate opportunity and improper way to confront the assessee. The narration was rather found totally irrelevant as for the addition was concerned inasmuch as the same was made on account of alleged manipulation in the record as well as non-availability of sufficient resources with the assessee while the alleged confrontation was made "for addition of sale of Jewellery". The addition in this head was accordingly also deleted. This has grieved the Revenue.
4. Parties have been heard. Learned D.R. In terms of grounds of appeal describes the relief allowed to be excessive and unjustified, It is stated that the Assessing Officer successfully brought home the additions as well as the invocation of the deeming provisions in both years. Therefore, in the view of the learned D.R. Relief allowed was allowed was totally unjustified and without any basis.
Learned counsel for the assessee at the out set of the proceedings raises a preliminary objection that both the Departmental appeal have become infructuous, It is claimed that after the decision of the first Appellate Authority the Assessing Officer reopened the earlier assessments framed on the ground of concealment of salary alleged to have been received by the assessee as an employee of the Text Book Board till 15-03-1991. The reopening was again a sequal to a complaint that the assessee had received salaries at Rs.35,018/- and Rs.59,599/- in the two years involved but had failed to disclose them in the aforesaid returns filed in reply to notices u/S. 56 of the Ordinance.
According to the learned counsel finally the alleged salaries were added to the aforesaid additions already made to frame assessm ent at Rs.9,38,158/- in the year 1990-91 and at Rs.12,44,414/- in the year 1991-92. It is claimed that the earlier order of the Assessment Officer having merged in the subsequent order framed u/S. 65 of the Ordinance both the aforesaid departmental appeals have become infructuous. Further informs that against the assessment framed u/S. 65 of the Ordinance the assessee again approached the first Appellate Authority CIT(A) Zone-IV, Lahore which by way of its order dated 13-01-1996 disapproved repeating of the additions made in the original assessm ent order.
5. On merits learned counsel for the assessee supports the impugned order for the reasons stated therein. Having considered the rival submissions made at the bar we find no justifiable reason to interfere for the Revenue. To us it appears that the Assessing Officer stretched himself unnecessarily to make the impugned additions in both the years by resort to the provisions as contained in Section 13 of the Ordinance. The valuation of the plot was enhanced by reference to the properties located at Jouhar Town and Model Town while the locality in which the plot in question was situated was a private Housing Scheme run by a Cooperative Housing Society and was still in its earlier stages. Therefore, the area in question could not have been compared with the developed Schemes like Jouhar Town and Model Town. On the other hand the parallel case relied upon by the assessee before the first Appellate Authority was more relevant and pertinent.
The three other cases mentioned in the body of the first appellate order are also indicative of the fact that the value disclosed by the assessee was neither understated nor there had been any kind of concealment on his part, In a number of cases we have decided that the kind of addition should not be made as a matter of course, In NTR 1995-Trib-100 a Division Bench of this Tribunal found that an addition of the kind could not be made unless the Assessing Officer could prove that the consideration shown in the deed was too low and that the assessee had in fact acquired the property by expending more money. No such finding having been recorded nor any material brought on record to support the same the relief allowed by the first Appellate Authority is clearly not open to exception. The other addition u/S. 13(1)(aa): was all the more unjustified and frivolous.
Learned first Appellate Authority rightly deleted the addition both on account of procedural defects which resulted into prejudice to the assessee as well as the attending facts as prevailing on record.
The addition was made on general remarks that the "assessee had expended huge amount on the marriage of his daughter and also on house-hold expenses etc". No material worth the name was brought home to justify the addition on this account. 1h almost similar situation we disapproved making of an addition by resort to general remarks. The decision so made in (1985)-52-Tax-54 was followed in (1987)-55-Tax-119 (Trib). The finding of the appellate authority being in line with the view adopted by this Tribunal in the aforesaid reported judgments the relief allowed cannot be disturbed, In the year 1991-92 the first addition at Rs. 10,99,000/- u/S. 13(1)(d) was again rightly deleted inasmuch as there existed serious discrepancies in the report dated 24-03-1992 made by the Circle Inspector after spot inquiry and the addition based upon such report. The Circle Inspector reported incompletion of the house as on 30-06-1991 while the Assessing Officer relying upon the same report held that not only the house was completed by 30-06-1991 but was also rented out partly to a tenant namely Mr. Muhammad Naeem. The discrepancy was never explained. Also the Revenue has failed to controvert the finding of fact which were based upon the appreciation of the record before the CIT(A). The last addition of Rs.81,975/- u/S. 13(1 )(aa) also appears not only unjustified but also made on considerations totally extraneous to those which, could merit such an addition, In the first instance the alleged interpolation in record which laid with the Assessing Officer was never brought home as a matter of fact. That the official record was manipulated by an outsider was a serious allegation which rather reflected adversely on the maintenance of record by the Revenue Officials. No inquiry in this regard appears to have been made nor even at this stage of second appeal the learned D.R. Was in a position to inform us if the responsibility was fixed upon any person entrusted with the custody of record. To hold that a figure was manipulated afterwards needed an in-depth probe which was never made. Mere observation that the figure of 15 tolas was changed to 75 tolas by adding a hyphen at the top of figure one hardly meant anything. Law does not allow recording of finding in a void and without considering the matter from all possible angles. To say that the official record was manipulated by an outsider is too wild an allegation to be believed on its face value. The turbidity in the procedure adopted in this regard was also rightly taken by the first Appellate Authority as till the time of making an addition the assessee was never made aware of the amount which was being considered as addition. The Revenue again having failed to support these findings as recorded by the Assessing Officer we will find the relief allowed by the first Appellate Authority to be perfectly in accordance with law as well as the facts prevailing on record.
6. As far the objection of the learned counsel qua merger of the first order into the second order is concerned we are not persuaded to agree, In the second round learned first Appellate Authority by way of its order dated 13-01- 1996 rightly disapproved repeating of earlier additions which had already been deleted in the first round. The principle is that the order made by an Assessing Officer or a lower authority after decision in appeal merges in the order of the higher authority while the learned counsel wants us to believe the vise versa, It cannot be accepted as correct.
7. However, since we have maintained the relief allowed by the first Appellate Authority by way of the impugned order before us, both the departmental appeals shall be dismissed in toto.