High Court Division :
(Special Original Jurisdiction)
AFM Abdur Rahman J
FRM Nazmul Ahasan J
Judgment November 15th, 2012
Commissioner of Taxes Dhaka …………
Income Tax Ordinance (XXXVI of 1984)
Sections 35(4) and 83(2)
The DCT can resort to the provisions of Section 35(4) of the ordinance even for a professional, but in order to deal with the assessee, who is an Advocate of the Bangladesh Supreme Court, the exact way to estimate the income lies in the consultation of his professional diary he maintains and if he fails to furnish the diary, upon notice under the provisions of Section 83(2) of the Ordinance, then only the estimation on the basis of other documents can be resorted to but on whim and caprice of the DCT concerned. . ..... (12)
Mosharaf Hossain, Advocate-For the Assessee-Applicant.
Abu Amzad, DAG with Mahfuza Begum, AAG-For IT Department.
AFM Abdur Rahman J : In this IT Reference application, under Section 160 of the Income Tax Ordinance, 1984, the following questions have been formulated by the Assessee-applicant seeking an opinion of this court;
(1) In the circumstance and on the facts whether the Taxes Appellate Tribunal, Division Bench-3 Dhaka was justified estimating professional income of the applicant without having any definite information or basis and ignoring the past record?
(2) In the circumstances and on the facts whether the Taxes Appellate Tribunal Division Bench-3, Dhaka, was justified estimating the family expenses in reducing form ?
Facts of the Case
2. It has been asserted in the application that the Assessee-Applicant Mr Ashraful Kamal is a professional person practicing as an Advocate in the Supreme Court of Bangladesh and an income tax payer, having tax identification No. (TIN) 249-200-5421/Circle-87 Taxes Zone-8. The Assessee-Applicant derives income from the profession of Advocacy who submitted his tax return for the assessment year 2008-2009 showing a total income of Taka 10,50,334. Subsequently, the Assessee Applicant produced relevant documents supporting the income and expenses, in support of the return, pursuant to the notice as has been served by the Deputy Commissioner of Taxes, Circle-87, Taxes Zone-8, Dhaka, who after hearing the representative of the Assessee Applicant most arbitrarily ignored the shown income in the return and estimated the total income of the Assessee-Applicant at Taka 23,33,333 upon estimating exaggerated professional income of the Assessee-Applicant along with enhancing the family expenses and adding the same with total income determining the total income of the Assessee-Applicant arbitrarily.
3. Being aggrieved with and highly dissatisfied by the said assessment, the Assessee-Applicant preferred two unsuccessful appeal before the Appellate Joint Commissioner of Taxes, Appellate Range-4, Taxes Appeal Zone-2, Dhaka and also the Taxes Appellate Tribunal Division Bench-3, Dhaka.
4. Being aggrieved with and highly dissatisfied with the said order passed by the taxes Appellate Tribunal in appeal, the Assessee Applicant upon formulating aforementioned the questions filed the instant IT Reference for an opinion from this court.
5.Upon service of the notice, the learned Deputy Attorney-General Mr Abu Amzad along with Assistant Attorney-General Ms Mahfuza Begum appeared on behalf of the income tax department, while the learned Advocate Mr Mosharaf Hossain represented the Assessee-Applicant before this court at the time of hearing.
6. We have heard the learned Advocate Mr Mosharaf Hossain and the learned Deputy Attorney-General Mr Abu Amzad and perused the materials on record.
Argument of the parties.
7. It has been argued by the learned Advocate Mr Mosharaf Hossain that the concerned DCT is not empowered to ignore the statement of income of the Assessee-Applicant without any definite knowledge or without considering any further evidence specially the professional Diary maintained by each and every Advocate that the Assessee-Applicant has earned much higher income then the claim in the concerned return, since no method of accounting although has been employed by Assessee-Applicant, yet as he has disclosed his all income through filing the bank statement and also the relevant papers and documents, the concerned DCT cannot rely upon the provision of Section 35(4) of the income tax ordinance 1984 and apply his unfettered discretion on the so called ground that the actual income is not deducible from the account as has been submitted by the Assessee-Applicant.
8. These arguments have been refuted by the learned Deputy Attorney-General Mr Abu Amzad, appearing on behalf of the IT Department through the assertion that the provision of Section 35(4) of the income tax ordinance 1984 has empowered the DCT to ignore any account of a professional, as sub-section (1) of the said section provided that the professional, which includes· Advocate of Bangladesh Supreme Court, who does not employ regular method of accounting for which the actual income is not deducible then the DCT may recourse to the estimation process as has been provided in sub-section (4) of Section 35 of the Income Tax Ordinance 1984 upon exercising his discretion and since in the instant case the Assessee-Applicant admittedly has not employed any regular method of accounting, the concerned DCT had lawfully resorted to the Provisions of Section 35(4) of the Income Tax Ordinance 1984.
Deliberation of the Court
9. It appears that the Assessee-Applicant filed his return for the Assessment year 2008-2009 showing an income of Taka 10,50,334. But the concerned DCT discarded the statement of income of the Assessee-Applicant and made an estimation of the income of the Assessee-Applicant upon expressing his view in the following language;
করদাতা সুপ্রীম কোর্টের একজন আইনজীবী হিসাবে পেশাগত আয় প্রাপ্ত হন। করদাতা আয় প্রাপ্তির সমর্থনে বিধি-৮ অনুযায়ী হিসাবের খাত সংরক্ষণ করেন না। হিসাবের খাতাপত্রের অবর্তমানে প্রদর্শিত আয় যাচাই করা গেল না। করদাতার দাখিলকৃত ৩টি ব্যাংক বিবরণী পরীক্ষায় দেখা যায় যে, (১) প্রাইম ব্যাংক লিঃ, সঞ্চয়ী হিসাব নং-২১০৪৭০৬৮ তে মোট টাঃ ২,৮০,০০০ (২) প্রাইম ব্যাংক লিঃ সঞ্চয়ী হিসাব নং-৭৫০০১৮০১ তে মোট ২,৮২,৮০০ (৩) সোনালী ব্যাংক, সুপ্রীমকোর্ট শাখা, সঞ্চয়ী হিসাব নং-৩৪০৪৪৬৮ তে জমা টাঃ ১৯,৫৯,৮১১ (৪) ন্যাশনাল ব্যাংক বিটিএমসি ভবন, কাওরান বাজার শাখা সঞ্চয়ী হিসাব নং-০০৩-৪০৪৭-৩৩২ তে জমা মোট ১,০০,০০০। চারটি ব্যাংকে মোট জমা টাঃ ২৬,২২,৬১১। করদাতা একজন আইনজীবী হিসাবে ব্যাংকের মাধ্যমে লেনদেনের পাশাপাশি নগদ প্রাপ্তি থাকা স্বাভাবিক বিধায় আয় সম্পূর্ণরূপে ব্যাংক বিবরণী দ্বারা সম্ভব নহে। তাহা ছাড়া করদাতার সুনাম, অভিজ্ঞতা, খ্যাতি/ইত্যাদি সার্বিক বিচেনায় প্রদর্শিত আয় কম বলিয়া প্রতীয়মান হয়। এমতাবস্থায় প্রদর্শিত প্রাপ্তি নাকচ করিয়া উপর্যুক্ত আলোচনার ভিত্তিতে নিম্নরূপে আয় প্রাক্কলন করা হইল।
10. The reason for resorting to the Provisions of Section 35(4) of the income tax ordinance 1984 is that the four bank accounts, of whose statement submitted by the Assessee-Applicant before the concerned DCT, does not tally as to the income shown by the Assessee-Applicant. But it further appears that the concerned DCT while considered the Ki`vZvi mybvg, AwfÁZv, L¨vwZ BZ¨vw`, did not consider whether the Assessee-Applicant is a very senior lawyer of the Supreme Court of Bangladesh or he has a long standing in the profession deriving high income from the immense client which can be easily ascertained by the concerned DCT asking the evidence to be produced by producing the professional diary etc. It appears from the member's list of Supreme Court Bar Association that the Assessee-applicant was a junior lawyer at the time of filing of the return for the assessment year 2008-2009. Therefore, the finding that he had huge income in the income year 2008-2009 without being supported by any of the document or by the Diary of the Assessee-Applicant, the same appears to be a exaggerated exercise of the discretion rendered to the DCT through the provision of Section 35(4) of the Income Tax Ordinance 1984 and, as such, not only without any basis also arbitrary. Any finding made upon exercising of discretion under the provision of Section 35(4) of the Income Tax Ordinance 1984, which will affect the Assessee-Applicant adversely, the same is required to be supported by definite evidence before the DCT.
11. Herein the instance case the concerned DCT may call for farther document under the provision of Section 83(2) of the Income Tax Ordinance 1984, specially the professional diary of the Assessee-Applicant and the Supreme Court Bar Association list in order to satisfy himself as to the real standing of him, the quantity of clients and the income of such a junior Advocate of the Bangladesh Supreme Court and without having considering such evidence the DCT most arbitrarily resorted to the Provisions of Section 35(4) of the Income Tax Ordinance 1984 and estimated the income of the Assessee-Applicant. Therefore, this court finds the question as has been formulated by the Assessee-Applicant is required to be answered in negative and in favour of the Assessee- Applicant.
12. Although this court is in agreement with the learned Deputy Attorney-General Mr Abu Amzad that the DCT can resort to the Provisions of Section 35(4) of the Income Tax Ordinance 1984 even for a professional, but in order to deal with the instant Assessee-Applicant, who is an Advocate of the Bangladesh Supreme Court, the exact way to estimate the income lies in the consultation of his professional diary he maintains and if he fails to furnish the said diary, upon notice under the Provisions of Section 83(2) of the Income Tax Ordinance 1984, then only the estimation on the basis of other documents can be resorted to but on whim and caprice of the DCT concerned. That being not done in the instant proceeding by the DCT and the same not being considered by two lower appellate authority we are inclined to allow the instant reference application answering the questions in negative and in favour of the Assessee- Applicant.
13. Accordingly the IT Reference succeeds.
14. The questions as has been formulated by the Assessee-Applicant are answered in negative and in favour of the Assessee-Applicant.
However, there shall be no order as to costs.