Law: Income Tax Ordinance, 1979

Section: 13(1)(d)

THIS ORDER PASSED BY: INAM ELLAHI SHEIKH, CHAIRMAN:-------------- This departmental appeal is directed against an order, dated 16-1-1995 recorded by the learned CIT(A), Zone-V, Lahore on the following ground: "The CIT Appeals is not justified to reduce the addition made under section 13(1)(d) from Rs.4,15,400 to Rs.80,000 by accepting the disclosed cost of property." 2. The relevant facts in brief are that the original assessment of the assessee was made at net income of Rs.85,000. Such assessment was reopened as the assessee was found to be the owner of 1/4th share in a plot at Lawrance Road, Lahore as gifted by the assessee's mother. Such property was declared in the wealth statement as on 30-6-1991 whereas the rental income was shown in the assessment year, 1989-90 as well. The assessee had declared the value of his share in a plot at Rs.3,55,000 which was accepted. The cost of construction was declared at Rs.1,50,000 which was assessed to be understated and the assessee's share was determined at Rs.5,65,000 by adopting the construction rate at Rs.200 per sq. Ft. In the meantime, the Assessing officer also got the enquiry conducted and the Inspector reported in January, 1994 that the property had been constructed about four years back. After estimating the value of the construction cost, the Assessing officer made the addition at Rs.4,15,000 under section 13(1)(d) of the Income Tax Ordinance, 1979 which was reduced by the learned First Appellate Authority in the following manner:- "The Excise and Taxation Authority in the PT-I Form for 199192 had shown that the property consists of offices and show room and there are three storeys to the said building. The Inspector's report, dated 5-1-1994 shows that property consists of four storeys. It is clear that the construction was made over a period of time. The said Inspector in his report had not shown. His sources of information regarding completion of building and his report contradicts the finding of Excise and Taxation Authority. The ITO's insistence regarding completion of construction in assessment year, 1989-90 is simply not acceptable. The appellant's contention that the building was constructed over a…

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