ITA NO. 6217/LB OF 1985-86, DECIDED ON 26TH SEPTEMLRER,1992. VS ITA NO. 6217/LB OF 1985-86, DECIDED ON 26TH SEPTEMLRER,1992., 1993 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 960 (1992)

(a) Income Tax Appellate Tribunal Rules, 1981---

---R.13---Where no affidavit as required by R.13 was filed, Tribunal did not allow the appellant to contend a thing which was against the facts appearing from the impugned order.

(b) Income Tax Ordinance (XXXI of 1979)---

----S.59, 55 & 62---Where a person expressly admits a liability towards revenue by declaring certain income the question of annulment of the assessment oar any ground whatsoever is clearly not warranted.

(c) Income Tax Appellate Tribunal Rules, 1981---

----R.12---Failure of appellant-Department to despatch by registered post and before filing an appeal, a copy of memorandum of grounds of appeal to the respondent (assessee)---Effect---Tribunal, in view of circumstances of the case, exercised its discretion to entertain the appeal.

CIT v. Mian Javed A. Sheikh 1989 PTD 525; CIT v, Gulzar Muhammad 1989 PTD 11108; CIT v. Kohinoor Trading Company 1989 PTD 1047 and 1990 PTD (Trib.) 1042 ref.

1990 PTD (Trib.) 1042 fol.

F.D. Qaiser, D.R. for Appellant. Hamid Chaudhry, C.A. for Respondent.

Date of hearing: 24th September, 1992.

ORDER

NASIM SIKANDAR (JUDICIAL MEMBER).--This departmental appeal impugnes a consolidated order of CIT(A) Zone 1, Lahore, dated 27-2-1986 rendered in respect of assessment years 1984-85 and 1985-86. This appeal, however, pertains only to the assessment year 1985-86.

2. Respondent is an individual and derives income from salary etc. On his failure to file returns for the periods relevant to the assessment years 1984-85 and 1985-86, notices under section 56 of the Ordinance were issued which remained un-complied with. Thereafter, a notice under section 61 of the Ordinance was issued for 3-12-1985 but again no compliance was made. Therefore, the assessing officer proceeded to finalise the assessments for both of these years under section 63 of the Ordinance. And, on the basis of certain information that the assessee-respondent was maintaining accounts with various bank branches at Lahore wherein substantial transactions of money took place during the assessment years under question, proceeded to treat the peak balance in these accounts as income of the assessee. In this way the appellant was assessed at a total income of Rs.861,172 for the assessment year 1985-86. On appeal the learned CIT(A) annulled the assessment on the ground that no notices under sections 56 and 61 of the Ordinance were served upon the respondent. This annulment of assessment for the year 1985-86 has aggrieved the department and hence this appeal.

3. It is apparent from the impugned order that a show-cause notice was issued on 3-11-1985 and served upon the respondent on 12-11-198` in which compliance was required by 14-11-1985. It is not denied that the assessee appeared before tire assessing officer and asked for an adjournment to file details as required in the notices. However, no return was received and the assessing officer proceeded to issue notices under sections 56 and 61 of the Ordinance on 31-11-1985 for compliance on 3-12-1985. On this day the assessee was duly represented by his A.R. who requested further time on account of his personal engagement abroad. It appears that the assessing officer did not wait further and a consolidated assessment order for the years 1984-85 and 1985-86 was completed and later served upon the respondent on 8-12-1985. During the appeal proceedings the learned Appellate authority found that the supposed combined notices under sections 56 and 61 of the Ordinance served upon the respondent pertained only to the assessment year 1984-85 and not to the assessment year 1985-86. It was further observed that figures of assessment year "1985-86" were subsequently inserted in the notices available in case file which did not appear on the notices served upon the respondent. The learned appellate authority; after observing that the department failed to serve the respondent with a notice for the assessment year 1985-86 and that the impugned assessment order was made with undue haste and without caring a bit for dispensation of justice, proceeded to annul the assessment for the year 1985-86 while assessment for the year 1984-85 was only set aside for de novo proceedings.

4. We have heard the parties. The learned D.R. objected to the observations made by the appellate authority as regards subsequent insertion of the assessment year 1985-86 on the notices available in the file of the assessee. However, he was neither possessed of the record nor could otherwise satisfy us as to how the observations of the appellate authority in this regard were incorrect. Even an affidavit as required under rule 13 of the Income Tax Appellate Tribunal Rules was not filed. Therefore, we did not allow him to contend a thing which was against the facts appearing from the unpugned order. At this stage the learned D.R. submitted that even if the observations of the appellate authority were correct, mere non-mentioning of a year of assessment in the combined notice was merely a technical flaw and a bona fide mistake. Therefore, the revenue could not be punished in the manner that it was debarred from considering even the income declared by the assessee? respondent himself.

5. Nevertheless, the only question that boils down for our decision remains that whether in the given circumstances the appellate authority was justified in annulling the assessment for the year 1985-86. After hearing the parties we entertain no doubt that even if each and every contention of the present respondent is accepted and the observations of the learned appellate authority are not rebutted by the department, the position remains the same that annulment of assessment for the year 1985-86 was not warranted by law for the simple reason that the respondent had declared a salary income of Rs.46,500 each for the years 1984-85 and 1985-86. These returns are stated to have been filed on 1-8-1984 (for the assessment year 1984-85) and on 7-10-1985 (for the assessment year 1985-86). This fact was duly noted by the appellate authority in the last para. of the impugned order. Where a person expressly admits a liability towards revenue by declaring certain income the question of annulment of the assessment on any ground whatsoever is clearly not warranted under the scheme of the Ordinance. A number of things in this case have surprised us. The observations of the appellate authority regarding the service of notices and inadequacy of time allowed to the respondent do bear some weight when seen as a general preposition. However, he failed to take into account that when the assessee-respondent appeared before the assessing officer for the first time on 14-11-1985 he ought to have declared the fact that had already. filed returns for the relevant assessment years with ITO "Contractor Circle-3, Zone A, Lahore. Instead he never turned up again and when his A.R. did on 3-12-1985 again an adjournment was sought. In normal circumstances a time gap of three days in the case of first notice and that of days for compliance to second notice could have been described as insufficient. However, in this case, we have our reservations to the observations o: the appellate authority made with regard to inadequacy of the time allowed by the ITO. For a person who had already filed his returns, the time starting from service of first notice on 12-11-1985 till 3-12-1985 he appeared before the assessing officer lastly, was not at all insufficient It hardly required any efforts from the assessee respondent to inform the ITC that returns for two years had already been riled on certain dates in a certain circle. Be that what it may, the appellate authority was clearly mistaken when it annulled the assessment for the year 1985-86 even after accepting the fact that the assessee-respondent appeared before the assessing officer twice and sought time for providing the details. If the assessee-respondent was not aware of the assessment years for which he had been summoned then what was it for which he required two adjournments with an intervening period of about 20 days. The learned A.R. for the respondent has also not been able to reconcile this aspec4of the impugned order nor the appearance of the present respondent before the assessing officer for seeking adjournment one after the other when the information regarding riling of returns could be provided on the very first opportunity.

6. Before parting we would like to discuss a. preliminary objection of the present respondent. An application was moved on 14-9-1992 to raise an objection against the maintainability of present appeal in view of its alleged violation of Rule 12 of the Income Tax Appellate Tribunal Rules, 1981. In this application it has been submitted that the appellant department was under legal obligation to despatch by registered post and before filing of the appeal, a copy of memorandum of grounds of appeal to the respondent which he failed to do. In this connection reliance has been placed upon three reported cases; re: CIT v. Mian Javed A. Sheikh cited as 1989 PTD 525; CIT v. Gulzar Muhammad cited as (1989) PTD 1008 and CIT v. Kohinoor Trading Company cited as (1989) PTD 1047. The respondent being conscious of the fact that all the aforecited cases were discussed and distinguished by this Tribunal in a case reported as 1990 PTD (Trib.) 1042, tried to make out a case that the facts and circumstances of the present case do not warrant exercise of discretion on the basis of which this Tribunal accepted the appeal for adjudication in the aforecited judgment. However, the respondent has not been able to point out a single distinguishing feature which could render the aforesaid judgment of this Tribunal inapplicable or otherwise to bring his case within the four corners of the principles settled in the earlier cited cases. Therefore, we will not take long to say that we will follow the decision of this Tribunal in the case reported as 1990 PTD (Trib.) 1042 and exercise our discretion to entertain the appeal. The three cases relied upon by the present respondent having already been discussed in detail in the aforesaid reported case of this Tribunal, the preliminary objection against maintainability of the departmental appeal is rejected.

7. For the reasons stated above we will set aside the order of annulment of the assessment for the assessment year 1985-86 and remand the case to the assessing officer for completion of assessment in accordance with law.

8. It is so ordered.

M.B.A./2287/T ?????????????????????????????????????????????????????????????????????????????????? Order accordingly.