Law: Income Tax Ordinance, 1979

Section: 65,13

Income Tax Ordinance (XXXI of 1979)---Ss.65 & 13---Re-opening of assessment---Addition---Purchase of property by assessee---"Finalized proceedings" and "pending proceedings"--¬Distinction---Condition precedent for re-opening of finalized proceedings---Definite information---Suspicion or doubt of Assessing Officer does not constitute "definite information" ---Not legal to assume that if any one buys an asset -cheaper than its fair price market value he had necessarily bought the same at the market value but was disclosing its lesser value to suppress his real income. There is no rule of law to ensure that if anyone buys an asset cheaper than its fair market value he had necessarily bought it at the market value but was disclosing its lesser value to suppress his real income. Finalized proceedings can be reopened under section 65 of the Ordinance only if a definite information has come to the possession of the assessing officer that the assessee's income has escaped assessment. There is a clear distinction between the cases where the assessment proceedings are pending with the assessing officer and the cases where the proceedings have concluded and are required to be reopened. In matters of pending proceedings if an assessing officer can show that an asset acquired by the assessee was acquired at the price lower than its fair market value the burden of proof to show that the assessee did not expend the money equal to the fair market value of the asset will lie on the assessee and if the assessee fails to discharge the burden that he acquired the asset at its full market value or had the reason to acquire it for a lesser price the assessing officer will be quite justified to hold that the assessee had expended more money to acquire the asset than shown in his books of accounts to suppress his real income. However, where the proceedings have been finalized whether after scrutiny or by fiction of law under any scheme before they are reopened the assessing officer has to show that he had definite information that the assessee had concealed his income and in the context of acquiring asset by the assessee the assessing officer will have to show that the assessee…

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