NASIM SIKANDAR, J. At the instance of C.I.T. Zone-A, Lahore Bench of the Income Tax Appellate Tribunal has stated the case and has framed the following question of law for our consideration and reply:-- "Whether on the facts and circumstances of the case the learned ITAT was justified in holding that the amounts credited in the books maintained by the assessee and shown as liability in the balance sheet for which the assessee did not offer any satisfaction explanation falls within the ambit of clause (c) of sub-section (1) of section 13."
2. The respondent is a registered firm and at the relevant time derived income from the construction business. For the assessment year 1988-89 as against returned income of Rs.
9,03,246/-, the assessing officer framed an assessment at total income of Rs. 33,35,968/-. In the process two additions of Rs. 8,64,700/- and Rs. 11,05,300/- were made by report to the provision of section 13(i)(a) of the Ordinance. The first amount was claimed by the assessee on account of "bills payable" and the second amount on account of "suppliers". The treatment so meted of by the assessee was maintained by the Commissioner of Appeals. The learned Tribunal on further appeal however, concluded that the addition of the kind could only be made under sub-clause (e) of sub- section (1) of section 13 which required prior approval of the IAC. Noting that in this case the assessing officer had not obtained such approval both the additions were directed to be deleted.
3. After hearing the learned counsel for the revenue we will readily agree that both sums added towards income were shown as liabilities, and therefore, sub-clause (e) of sub-section (1) of section 13 was not at all attracted. That clause required addition as of income where an assessee had, during that income year, incurred any expenditure. The learned Tribunal clearly lost sight of the fact that both amounts were shown as available with the assessee but kept of of the sums offered for assessm ent on the ground that the firm owed them to suppliers as also to various persons from whom either purchases were made or some work was got done. The ose of word "credited" in sub- clause (a) of sub-section (1) of section 13 means the availability of the amount with an assessee in his accounts maintained for any income year. Without an iota of doubt both the aforesaid sums were admitted to be available though these were claimed to have been disbursed subsequently. 0n the other hand sub-section (e) refers to an expenditure which is generality not claimed by an assessee but is found to have been incurred by his who fails to make an explanation about the nature and source from which such expenditure was met. As rightly pointed of by the I.T.O., the provisions of sub-section (e) are attracted only where an assessee fails to show where from an expenditure was made. The present assessee however had the source and in fact was in possession of the amounts at some time during the assessment period which were claimed to have been disbursed to various persons to whom these were payable. None of these persons to whom any of the aforesaid sum were allegedly payable were ever produced. The assessee expressed his inability to produce them on the ground of elapse of two years while no one responded when the assessing officer addressed them for appearance. Therefore, both the assessing officer as well as the CIT (Appeals) agreed that no such amount was ever paid as claimed by the assessee. In other words both amounts added towards income in fact belonged to the assessee which were credited in the books to justify an expense. The difference therefore, boils down to the fact that the Tribunal though it to be a case where the assessee had failed to explain the source while the revenue had made the addition on the ground that the assessee had failed to establish expenditure.
4. Therefore, as said above, their view that sub-clause (e) was attracted which required the approval of the IAC is not sustainable at law. The addition was rightly made under sub-clause (a) of sub-section (1) of section 13 which did not required that approval.
Our answer to the question is, therefore, in the negative.