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I.T.As. Nos.2749(LB), 2750(LB), 2751(LB) of 1984-85, decided on 22nd March, 1987.

---Ss.132 & 13(2)--Setting aside of original assessment--Re-assessment- Words "set aside"--Definition and meaning--On setting aside, assessment is reduced to nothing, in other words for all purposes an assessment on setting aside stands cancelled--Other actions which go in the making of an assessment also stand abrogated or cancelled--Approval given to a certain addition by Inspecting Assistant Commissioner also stands abrogated or cancelled on setting aside of an assessment--Approval of Inspecting Assistant Commissioner, in re-assessment proceedings was, therefore, mandatory and has to be obtained afresh with the purpose of making a valid assessment--Non-obtaining of fresh approval of I.A.C. for making additions on account of unexplained expenditure by I.-T.O, would render additions illegal ab initio in the eyes of law.

Javed Athar DR for Appellant.

Miss Surriya Azim for Respondent.

Date of hearing: 22nd March, 1987.

--These three appeals on behalf of the department are directed against the impugned order of learned A.A. C. in consequence of which he deleted additions on account of unexplained expenditure under section 13(1)(e) of the Income-tax Ordinance, 1979 (hereinafter called the Ordinance), for the charge years 1974-75, 1975-76 and 1977-78.

2. Brief facts giving rise to these, appeals are that the assessee who is an individual derives income from processing of Wax and rent of property, in this case assessments were initially framed on net incomes of Rs.76,880, Rs.83,860 and Rs.66,220 in respect of the charge years 1974-75, 1975-76 and 1977-78 respectively. Incomes so assessed having been set aside by learned A.A.C., re-assessments were made on the following incomes:-

3. Incomes assessed as above were contested in appeal before learned A.A.C., who by virtue of Appeal No. 889/13 dated 3-1-1985 deleted the following additions on account of unexplained expenditure

Rs.56,000 for the Charge Year 1974-75,

Rs.62,000 for the Charge Year 1975-76 and

Rs.32,400 for the charge year 1977-78.

4 The department having taken exception to the deletion of unexplained expenditure filed second appeals before the Tribunal for the redress of its grievance. In this connection the only objection of the department relates to the fact that since approval for making additions on account of unexplained expenditure was obtained from the Inspecting Assistant Commissioner of Income-tax while making the original assessments, there was no legal compulsion to obtain approval at the time of making reassessments for the charge years 1974-75, 1975-76 and 1977-78. It was accordingly prayed that the order of learned A.A.G. may be vacated by the Tribunal.

5. On the basis of evidence that has been led before us there is no controversy with regard to the fact that at the time of making re-assessments the I.T.O. did not obtain approval from tae concerned I.A.C. in accordance with the provisions of subsection (2) of section 13 of the Ordinance. Therefore, the only point for consideration before us is whether approval having been obtained at the time of making original assessment held good in respect of the assessments finalized under section 62 read with section 132 of the Ordinance or not This issue is examined below.

6. In accordance with the provisions of section 132 of the Ordinance, "the Appellate Assistant Commissioner may in disposing of an appeal, in the case of an order of assessment set aside the assessment and direct assessment to be made afresh after making such further inquiry as the A.A.C. may direct or as the I.T.O, thinks fit". At this stage it is relevant to put on record that the word set aside has not been defined in the said section of the Ordinance. However, according to Lexicon Webster Dictionary (Vol-II) page 882 set aside means "to put it aside; dismiss from the mind; to annul or quash. The word annul according to Volume 1 page 42 of the said dictionary means to reduce to nothing or annihilate, to make void, to nullify; to abrogate; to abolish, cancel as laws decrees, compacts, while the word quash in the same dictionary in Volume (II) page 782 has been defined as under:----

To subdue, put down, or quell; to put an end to; as, to quash a rebellion.

7. From the definition of the word set aside which also means annulment or quashment of proceedings. We have reached the inevitable conclusion that, on setting aside an assessment it is reduced to nothing. In other words for all purposes an assessment on setting aside stands cancelled. Therefore, other actions, which go in the making of an assessment also stand abrogated or cancelled. This is equally true in respect of an approval given to a certain addition by the Inspecting Commissioner of Income-tax. In this view of the matter in re-assessment proceedings where approval from the Inspecting Assistant Commissioner of Income-tax in mandatory, it has to be obtained afresh with the purposes of making a valid assessment. In the present case the I.T.O. did not obtain approval from the Inspecting Assistant Commissioner of Income-tax for making additions on account of unexplained expenditure in accordance with the provisions of subsection (2) of section 13 of the Ordinance. This fact is not in dispute between both the parties. Hence this omission on the part of the I.T.O. has rendered the additions on account of unexplained expenditure illegal ab initio in the eyes of law. In arriving at this conclusion we have not drawn any support from the cited cases on which reliance was placed by learned A.A.C. as in those cases question involved related to approval in respect of the original assessments. On the other hand in respect of the appeals before us question relates to approval of re-assessments for which no case law has been furnished by either side for or against the issue. However, we have given a finding based on the definition of the word 'set aside' and the result flowing therefrom in accordance with the dictionary meaning. From this analysis we have reached the inescapable conclusion that while making re-assessments approval from the JAC is also required for making any addition on account of unexplained expenditure. On account of this omission learned A.A.C., had rightly deleted additions representing unexplained expenditure for the charge years 1974-75. 1975-76 and 1977-78. Therefore, departmental appeals being devoid of any merit are hereby dismissed.

M.B.A./382/T Appeal dismissed.

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