2020 SLD 820 Equiv.

Citation: 2020 PTD 799 = (2021)124 TAX 543 = =

LAHORE HIGH COURT

I.T.R. No. 11845 of 2019, decided on 14-03-2019

PRESENT:
MUHAMMAD SAJID MEHMOOD SETHI, JUSTICE
MUZAMIL AKHTAR SHABIR, JUSTICE

PETITIONER(S): COMMISSIONER INLAND REVENUE

VS
RESPONDENT(S): M/S FORMANITE HOUSING SCHEME, LAHORE

Saeed ur Rehman Dogar for Applicant Department

Nemo for Respondent taxpayer,

ORDER

Through this Reference Application under Section 133 of the Income Tax Ordinance, 2001
("the Ordinance of 2001"), following question of law, arising out of impugned order dated
06.11.2018, passed by learned Appellate Tribunal Inland Revenue, Lahore Bench, Lahore
("Appellate Tribunal"), has been pressed and argued for our opinions:-

"Whether on the facts and in the circumstances of the case, the learned Appellate Tribunal
was justified to dismiss the departmental appeal holding that while making addition under
section 111(1)(b) of the Income Tax Ordinance, 2001 the department was not in
possession of definite information and no specific notice under section 111 was issued?"

2 Brief facts of the case are that respondent-taxpayer, an AOP, filed income tax return for
the year 2006 by declaring income at Rs. 400,000/- which was treated as an assessment
order in terms of Section 120(1) of the Ordinance of 2001. Subsequently, the Taxation
Officer observed that taxpayer was maintaining five bank accounts, deposits of which did
not commensurate with the declared income, On the basis thereof, show cause notice
under Section 122(9) was issued to respondent taxpayer, which culminated in passing
assessment order dated 30.06.2012, making addition under section 111(1)(b) of the
Ordinance of 2001 amounting to Rs. 786,56,388/-. Being aggrieved, respondent taxpayer
preferred appeal before CIR (Appeals), Lahore, which was allowed and addition made by
assessing authority was deleted. Feeling dissatisfied, applicant-department filed appeal
before learned Appellate Tribunal, which was dismissed. Hence this Reference Application.

3. Learned counsel for applicant department was confronted with the operative part of
impugned order that findings given therein are of facts. He could not rebut that findings
are not of law.

4. Heard. Available record perused.

5. Learned counsel for applicant department, at the very outset, was confronted with the
following underlined portion of impugned order passed by learned Appellate Tribunal,
wherein findings of facts have been given that disputed amounts appearing in the account
of respondent- taxpayer were on account of advances relating to succeeding year,
interbank transfer entries / reversal entries and cheques dishonored. The relevant part of
impugned order is reproduced hereunder:-

"5. Income for the tax year under consideration was declared at Rs. 400,000/- by the
taxpayer but the same was assessed at Rs. 786,556,388/- by the taxation officer by
making addition under section 111(1)(b) of the Ordinance amounting to Rs. 786,156,388/-
on account of credit entries lying in five bank accounts maintained by the taxpayer as
detailed in the body of impugned amended assessment order. However, careful perusal of
the impugned appellate order reflects that on examination of bank statements as well as
certificates regarding credit entries, it was observed by the learned CIR (Appeals) that out
of total credit entries of Rs. 786,556,388/-, an amount of Rs. 324,252/- was on account of
advances relating to succeeding year and the other amount of Rs. 170,300,888/-
presented interbank transfer entries, reversal entries and cheques dishonored leaving
behind balance deposits of Rs. 553,915,838/-. In view of such like observations made by
learned CIR (Appeals) being supported by plausible reasons, we are also of the considered
opinion that while making addition under section 111(1)(d) of the Ordinance, the
department was not in possession of definite information. Furthermore, before making the
addition in question, non-issuance of specific notice under sections 111 of the Ordinance
has also rendered the action of the assessing authority legally infirmed. In view of the
foregoing discussion, we find no plausible reason to interfere in the impugned appellate
order, which is upheld by way of dismissal of instant departmental appeal. We order
accordingly,"

[emphasis supplied].

6. It has not been shown to us that above findings are perverse contrary to record or
suffer from any other legal infirmity or impropriety warranting interference in reference
jurisdiction. This Court has to decide Reference Application in the exercise of its advisory
jurisdiction, on facts and circumstances founded by the Appeal findings of facts the last
fact finding forum. High Court cannot call regard can be arrived at by the Appellate
Tribunal. Reliance Commissioner placed upon Messrs F.M. Y. Industries Income Tax (2014
SCMR 907).

7. Since the decision by learned Appellate Tribunal is based on findings of facts, therefore
we decline to exercise advisory jurisdiction.

This Reference Application is decided against applicant department.

8. Office shall send a copy of this order under seal of the Court to learned Appellate
Tribunal as per Section 133(5) of the Income lax Ordinance, 2001.

SD/-
MUHAMMAD SAJID MEHMOOD SETHI
JUSTICE

SD/-
MUZAMIL AKHTAR SHABIR
JUSTICE