I.TA. NO. 9064/LB OF 1992-93, DECIDED ON 23RD OCTOBER, 1994. VS I.TA. NO. 9064/LB OF 1992-93, DECIDED ON 23RD OCTOBER, 1994., 1995 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 1174 (1994)

Income Tax Ordinance (XXXI of 1979)---

----S. 59(1)---Self-Assessment Scheme (1991-92), para. 4(ii)---C.B.R. Circular No.22 of 1991, dated 21-7-1991---Selection 6f case for total audit on the ground of assessee's declaration of low income---Assessing Officer had not said a word qua availability of any material evidence on the basis of which he suspected gross understatement of income---Validity---Held, lowness of declared income qua turnover would not justify selection of a case for total audit---Denying an assessee the benefit of Self-Assessment Scheme ought to be in very rare circumstances and for valid reasons observing strictly the mode and method prescribed by the Self-Assessment Scheme for the relevant year---Selection of case of assessee for total audit being not in accordance with the Scheme, return filed by assessee was ordered by the Income Tax Appellate Tribunal to be accepted under Self-Assessment Scheme.

M/s. Specico International v. RCIT, Karachi 1993 PTD 1007; Pakistan Educational Society, Karachi v. Government of Pakistan through Chairman, CBR/Secretary Revenue 1993 PTD 804;,1988 PTD 612 and 1988 PTD 987 ref..

Kaisar Mansoor for Appellant.

Ghulam Mujtaba Bhatti, D.R. for Respondent.

Date of hearing: l0th October, 1994.

ORDER

NASIM SIKANDAR (JUDICIAL MEMBER): --This further appeal by an individual deriving income from export of surgical instruments assails an order recorded by C.I.T.(A), Sialkot Zone, Sialkot on 9-1-1993. In the grounds of appeal objections are directed against the orders of -the authorities below on the ground of their being against natural justice.

2. The assessee declared an income of Rs.165,786 for the year 1991-92. Export sales including rebate were declared at Rs.3,840,698 and a rate of 34.94%. As per assessment order the case of the assessee was selected for total audit under para. 4(ii) with the approval of the Northern Regional Commissioner, Islamabad and after rejection of the declared version and conversion of sales into F.O.B. assessment was framed at total income at Rs316,644. Before the first appellate authority it was forcefully contended that no assessment order was actually passed or served upon the assessee. The objection was repelled by the appellate authority alongwith the one taken against selection of case for total audit. In this manner the treatment meted out to the assessee was confirmed.

3. Learned counsel for the assessee repeats his arguments that he raised before the appellate authority. After hearing the parties and going through the record we find that selection of the case for total audit under para. 4(ii) of the Scheme announced through Circular No.22 of 1991, dated 21-7-1991 was not in accordance with law. According to this Circular the returns from amongst those qualifying for Self-Assessment Scheme could be selected for total audit with the approval of R.C.I.T. where gross understatement of income was suspected on the basis of "definite information" based on material evidence. The assessing officer has not said a single word qua availability of any material evidence on the basis of which he suspected gross understatement of income. Learned appellate authority confirmed the selection of case for total audit on the ground that income declared was low when seen in the context of quantum of exports. The other reason that weighed with the appellate authority to confirm the order being declaration of net income only at a rate of 5.9% of the turnover while in similar other cases it was allegedly being declared at 8% to 10% of the exports. The observations of the appellate authority in this regard appear to have been kind of improvement in the assessment order as no such reason was ever stated by the assessing officer. The superior Courts in the country as also this Tribunal in a number of cases have dilated upon the issue and found the kind of basis taken by the appellate authority to be inadequate to disallow benefit of Self-Assessment Scheme. Reference in this regard can be made to a number of judgments including those cited as 1993 PTD 1007 re: M/s. Specico International v. RCIT, Karachi and 1993 PTD 804 re: Pakistan Educational Society, Karachi v. Government of Pakistan through Chairman, CBR/Secretary Revenue.

4. Judging the selection of case for total audit on the touchstone of the findings of the Courts in the aforecited cases we entertain no doubt in our mind that the assessing officer was not justified in picking up the case for process under normal law. It is by now well-settled that denying an assessee the benefit of Self-Assessment Scheme ought to be in very rare circumstances and for valid reasons observing strictly the mode and method prescribed for the Self-Assessment Scheme for the relevant year. If an authority is required, they may refer to the findings of their Lordships in 1988 PTD 612 and 987.

As to the contention of the learned counsel that no assessment order was passed in this case till a regular application for a copy of the same was put in we will restrain from making any observation in this regard. The allegations made in this connection refer to the personal conduct of the Assessing Officer and, therefore, the proper forum for the assessee is to take up there and with, those placed in the hierarchy of the Department..

5. In view of what has been said in the penultimate para. we will allow this appeal by holding that selection of the case of the assessee for total audit being not in accordance with the law and the scheme of the aforesaid Circular, the return filed by the assessee for the year under review shall be accepted under Self-Assessment Scheme.

6. It is so ordered.

M.B.A./117/T ???????????????????????????????????????????????????????????????????????????????????? Appeal allowed.