I.TA. NO. 171(PB) OF 1993-94, DECIDED, ON 21ST NOVEMBER, 1994. VS I.TA. NO. 171(PB) OF 1993-94, DECIDED, ON 21ST NOVEMBER, 1994., 1995 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 1403 (1995)

1995 P T D (Trib.) 1403

[Income-tax Appellate Tribunal Pakistan]

Before Nasim Sikandar, Fazal-ur-Rehman Khan, Judicial Members and Muhammad Iqbal , Accountant Member

I.TA. No. 171(PB) of 1993-94, decided, on 21st November, 1994.

Per Nasim Sikandar, Judicial Member, on difference between Fazal-ur- Rehman Khan, Judicial Member and Muhammad Iqbal Khan, Accountant Member--

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

----S. 59---Self-Assessment Scheme---Framing of assessment under normal law is the rule which changes into exception when a return is filed under Self -Assessment Scheme or under any instruction or orders as notified by the Central Board of Revenue in accordance with the provision of S.59, Income Tax Ordinance, 1979.

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

----S. 59---Self-Assessment Scheme---Object.

Self-Assessment Scheme introduced in the income-tax law of Pakistan has been introduced to encourage the taxpayers to make contribution towards the State effort in running the Government and the other related State machinery more willingly than it used to be under the normal assessment Scheme. One purpose was to save an honest taxpayer from unnecessary suspicion, accusation and torture of being assessed and/or found guilty of deceit and falsehood. This being the main purpose, care was taken to safeguard the interest of the State also against deceit and cheating even in the Self Assessment Scheme. For the better purpose the scheme as well as the provisions in the income Tax Ordinance provided for a very limited reopening of the self-assessment.

1993 P T D 1108 = 1993 SCMR 1108 quoted.

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

----S. 59---Self-Assessment Scheme (1991-92), para. 4(ii)---C.B.R. Circular No.22 of 1991, dated 21-7-1991, para. 4(ii)---Terms "gross understatement" and "definite information" in para. 4(ii) of the Self-Assessment Scheme (1991-92)--Connotation---Balance between the rights of an honest taxpayer and hi, obligations towards revenue has to be kept in mind while judging whether or not an information was "definite" in nature and was based upon material evidence raising legitimate. suspicion of "gross understatement" ofincome.

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

----Ss. 59 & 65---Self-Assessment Scheme (1991-92), para. 4(ii)---Para. "definite information" used in para. 4(ii) of the Self-Assessment Scheme (1991 92) and as used in S.65, Income Tax Ordinance, 1965---Distinction- Expression "definite information" cannot be given a universal meaning but is will have to be construed in the context and the circumstances of each case- Selection of a case for total audit or for proceedings under normal law, Self Assessment Scheme, at best calls upon the assessee to establish the declared version and thus cannot be equated with the hardship or prejudice that i" caused to an assessee when a completed assessment is re-opened under S.65 the Income Tax Ordinance, 1979.

In spite of the fact that the phrase "definite information" used in para.4(ii) of Self-Assessment Scheme (1991-92) also appears in section 5 of the Ordinance in somewhat similar manner the ratio of the case-law developed on reopening of an assessment cannot be applied as a matter of course to matters arising from selection of cases under Self-Assessment Scheme. If these words are taken in the ordinary sense, cross check them with their dictionary meanings to re-conceal their popular meanings, all chances are there that that will make the return filed under SAS to be a shell which even a sledge hammer will not break open. This does not appear to be the intention of the Ordinance nor the purpose of any of the schemes so far notified. The reopening of a case occurs despite the established concept. The finality of assessment order already framed. Therefore, the law and Court watch the action with a keen eye so that the sanctity of a completed assessment is not compromised for discretion or administrative convenience. Selection of a case for total audit or for proceedings under normal law at best calls upon the assessee to establish the declared version. It cannot be equated with the hardship or prejudice that is caused to an assessee when a completed assessment is reopened under section 65 of the Ordinance. It is, therefore, not the meaning of the phrase information" or "definite information" which will possibly undergo a change as these are contained in various dictionaries or as expounded by the Judges of the superior Courts. It is the perspective or the canvas on which the facts are spread which will change. The angle of looking at things generally shapes the end result.

The expression "definite information" cannot be given a universal meaning but it will have to be construed in the context and the circumstances of each case.

The case-law relating to reopening of assessment under section 65 of the Ordinance cannot indiscriminately be made applicable in spite of the use of same or similar words in that section and para. 4(ii) of the Scheme, and no universal meanings being possibly assignable to these terms, each case for selection for audit will have to be seen and judged in the light of its own prevailing facts.

Definite information in case of reopening of an assessment under section 65, Income Tax Ordinance, 1979 is that which leads to a conclusion of escapement of income, assessment at too low a rate or excessive relief or refund. In case of selection of a case under para.4(ii) of the Self-Assessment Scheme (1991-92) definite information for normal assessment will ,suffice which gives rise to a legitimate and genuine suspicion that income had grossly been understated. So the difference in the two situations is exactly the same which lies between a conclusion . and a suspicion. It may, however, be noted here that the word "suspicion" has a specific significance.

1993 PTD 766 = 1993 SCMR 1232; Spiceco Investment, Karachi v. RCIT, Karachi 1993 PTD 1007; Indian and Eastern Newspapers Society v. CTT (1979)119 ITR 996; CIT v. Union Carbide Corporation (1995) 71 Tax 177 and A.N. Lukshman Shenoy v. ITO (1958) 34 ITR 275 ref.

Re: M/s. Spiceco International, Karachi 1993 PTI) 1007; Jittan Ram Nirmal Ram v. CIT 1993 PTD (Trib.) 1681; 1995 PTD (Trib.) 1152; (1958) 34 ITR 476 (Pat.); Mushtaq Ahmad Mir v. Government of AJ&K PLD 1985 Azad J&K 212; Kundun Bibi and others v. Vilayat Hussain Controller of Estate Duty 1971 PTD 43; NTR 1995 (Trib.) 20 and 1993 PTD (Trib.) 1681 distinguished.

(e) Words and phrases---

---- "To advertise "---Connotation.

Oxford Advanced Learners Dictionary of Current English; Black's Law Dictionary, 5th Edn.; Chamber's 20th Century Dictionary, New Edn. and Muhammad Salah v. Chief Settlement Commissioner PLD 1972 SC 326 ref.

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

----S. 59---Self-Assessment Scheme (1991-92), para. 4(ii)---Definite information---Selection of case for total audit---Principles---Advertisement by assessee in a periodical giving therein the kind of its activities and details of his local and foreign offices with telephone numbers and fax number had no nexus with the declared income of the assessee---Selection of case resulted mainly on account of the information that the assessee had purchased a piece of land and had constructed a show-room thereon---Such information being extraneous to the declared income of the assessee, no case was made out for selection of the case for total audit under para. 4(ii) of the Self-Assessment Scheme (1991-92).

An advertisement published simply for attracting customers is not an offer as is understood legally but it is certainly an information or declaration that the advertiser is engaged in the kind of declared business whose services can be utilised for consideration. This information when admittedly provided by the advertiser can safely be taken as definite information against him. In the present case the assessee had through the advertisement in question, declared its line of business and the kinds of special fields a customer could avail of its services. The assessee had also given the details of its local and overseas offices alongwith telephone and telex numbers for facility of contact. The assessee had not denied having provided that information to the printer in the same form Therefore, there was no reason why the information contained in this advertisement as regards the nature and kind of business activity the assessee was engaged in as well as its local and foreign offices including telephone and telex numbers could not be taken as definite information of these facts.

Para. 4(ii) of the Self-Assessment Scheme (1991-92) requires something further to be done before R.C.I.T. can allow selection of case for audit. It is, "where gross understatement of income is suspected on the basis of definite information". It means that information being definite in nature must be such as to give rise to a suspicion that income had grossly been understated. The recommendation of the case of the assessee for selection for total audit, however, did not result on any such connection between the declared income and the facts held out through the said advertisement. From the letter of the Assessing Officer recommending the RCIT to select the case it was evident that the selection resulted on account of personal opinion of the Assessing Officer that "it is a highly potential case and requires normal assessment". In other words in the opinion of the Revenue if the declared income was seen in the light of the advertisement then gross understatement of income could be suspected. It was nowhere stated that the assessee declared engagement only in one or more but not all kinds of business activity it advertised. It was also not the case of the revenue that the business address local or foreign indicated much bigger volume of activity than declared by the assessee. No connection whatsoever between the advertisement and the declared income had been made. At least none appears from the assessment order. The only situation in such case which could form basis for selection out of the scheme would have been the advertisement expenses. A suspicion would have been well placed if, for example, advertisement cost in this case was outrageously disproportionate to the declared capital, expenses and even income. The way Assessing Officer reached the conclusion in this case, if allowed to sustain, very purpose of Self Assessment Scheme will be defeated. All businessmen big and small, do advertise and many of them incur losses at the end of the year. However, they cannot be hauled up only for the reason that they have been advertising through various modes and therefore they must have had a roaring business. This kind of reasoning therefore, was factually incorrect. The Scheme had laid down a standard and a procedure or condition which must be in existence for exercise of official authority. Advertisement was not only an information but also having been made and come from the assessee itself was a definite information. However, the Revenue made no attempt to make out a case at any level of the proceedings that from such definite information "gross understatement" of income could be suspected. The approval of the R.C.I.T. as provided in para.4(ii) of the Scheme is not only a further check on exercise of arbitrary powers by the Assessing Officer but also an assurance that availability of the preconditions will be looked into and considered by the highest Revenue Officials in the field. However, in the present case, the approval sought by the Assessing Officer was granted by R.C.I.T., prima facie, in a mechanical manner. No nexus between the advertisement and the declared income having been there, selection of the case resulted mainly on account of the information that assessee had purchased a piece of land and had constructed a show room thereon. Since this information was extraneous to the declared business income an impatient attempt was made to "make out a case" for process under normal law instead of accepting the income under section 59(1), Income Tax Ordinance, 1979 and then going for proceedings under section 65 of the Ordinance if these were otherwise invocable. No addition, however, was finally made on account of unexplained investment in the alleged purchase of plot and the construction.

The selection of case when seen in the light of the above guiding principle, appeared to be without any fact available on record to justify a legitimate suspicion of understatement of income.

The advertisement in question could be taken as a definite information of the facts contained therein. However, the Revenue having failed to bring about any conceivable connection between the advertisement and the returned income, no fact emerged to raise and justify a genuine suspicion of under statement of income. Therefore, the selection of case under para. 4(ii) of the said Circular No.22 of 1991 could not be approved.

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

----S. 59---Self-Assessment Scheme (1991-92), para. 4(ii)---Word "suspected" Pro used in para. 4(ii) of the Scheme alongwith "gross understatement of income" and "definite information based on material evidence"---Connotation.

The word "suspected" has been used in the paragraph alongwith the words "gross understatement of income" and "definite information based on material evidence". A plain reading of the said paragraph makes it abundantly clear that the Income Tax Officer or the Regional Commissioner of Income Tax can proceed against an assessee or grant approval as the case may be, only on the ground of definite information which must be based on material evidence, Therefore, such action cannot be based on mere suspicion. Suspicion, in contradistinction to definite information, means partial or unconfirmed belief. The use of the word "gross" in the said paragraph further indicates that it is not in case of every understatement in regard to income that empowers the Income Tax Officer to take action against an assessee under the said paragraph, but only when gross understatement appears to have been made by him.

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

---S. 59---Self-Assessment Scheme (1991-92), para. 4(ii)---Selection of case for total audit---No show-cause notice was required to be served upon an assessee before his case could be selected for audit under para. 4(ii) of Self-Assessment Scheme (1991-92)---Non-service of notice before selection of case under para.4(ii) of the Scheme would not result into prejudice to assessee which could colour the selection if it was otherwise legal.

Abdur Rauf Rohaila for Appellant.

Qaisar Ali Khan, D.R. for Respondent.

Date of hearing: 5th October, 1994.

ORDER

This appeal is directed against the order dated 22-12-1995 of the Commissioner of Income-tax (Appeals-1), Peshawar whereby the appeal of the appellant was rejected.

2. The brief facts giving rise to this appeal are that the appellant is a Registered Firm, which earns income from the sale of Engineering, Agricultural and Mechanical implements. The appellant filed a return under Self-Assessment Schemes for the assessment year 1991-92 declaring net income at Rs.64,710. The return was accompanied with trading, profit and loss account and challan of payment. The case was recommended for total audit under para. 4 (ii) of Self-Assessment Scheme. While selecting the case for total audit, the learned I.T.O. recommended that:--

"The assessee derives income from repairs and sales of various kind of machinery/Return for assessment year 1991-92 was filed declaring net income at Rs.64,710. The income declared grossly understated. As the assessee deals in the sales of Engineering equipments, products, machinery including drilling machines, road rollers, crushers, etc. He deals in construction machinery, earth moving machinery, water equipments, heavy machinery, agricultural and Industrial machinery , diesel generators, medical equipments, hardware hydraulic, power tools and as per 490 of yellow pager of Pakistan, the assessee also consultants, geologist and engineers (industrial on turn key basis and irrigation projects and are importers and manufacturers also: According to this advertisement the following is further information:

Head Office.	Plot No.B-2 Industrial Estate, Peshawar.
Factory	Near Radio Transmeter, Shahra-e-Pakistan, Peshawar.
Overseas	17-Steyre House, Steyre Road Acton, Office.London-3 U.K.

Moreover the assessee has purchased a big piece of land on main Saddar Road, Peshawar Cantt. and has constructed a big show-room. It is a highly potential case and require normal assessment and is strongly recommended for total audit".

3.After obtaining approval under para. 4(ii), the assessee was served with notices under sections 61 and 62 of the Income Tax Ordinance, 1979 which were served upon the appellant but the appellant failed to put appearance before the learned ITO or to produce books of accounts. As such, the learned I.T.O. on the basis of materials on record and inquiry report, already on file computed the income of the appellant as follows:---

1.	Total supplies made by the assessee to the Norweigion Project, Cattle Dairy Farm and through I.D.B.P.	Rs. 1,00,11,235
	Tax liability @ 2.5% U/S 80(c)	Rs. 2, 85, 280
	Less tax deducted from the assessee.	Rs. 1,90,673
	Balance tax payable and concealed from the Department	Rs. 59,608
2.	Total balance deposits available in the banks and treated as sales per working above.	Rs. 1,40,66,257
	G.P. applied as per history @ 25%	Rs35,16,564
	Less expenses claimed by the assessee and allowed in view of quantum of the income.	Rs, 1,10,590
	Total income assessed.	Rs34, 05,974
	Less super-tax.	Rs, 11.55.980
		Rs. 22,50,084
	Surcharge @ 10%	Rs. 2,15,689
	Divisible income.	Rs. 21,34,495

4 Feeling aggrieved by the assessment order, the appellant went in appeal but the learned CIT(A I) Peshawar rejected the appeal of the appellant. The appellant has now come in second appeal before this Tribunal.

5. The learned A.R. for the appellant and the learned D.R. for the Department had been heard and record perused.

6.In the memo. of appeal, the following grounds have been agitated:

(1)Decision of the learned CIT(A) is against facts and law of the case.

(2)Learned CIT(A) has erred at law by not accepting the case of the assessee under Self-Assessment Scheme which renders it to be unlawful, arbitrary and throws it on the ground.

(3)Learned CIT(A) failed to notice that selection of case for Audit was not called for as requirement of "definite information based on material evidence was lacking in the case.

(4)Learned CTT(A) failed to apply his mind by writing a speaking judicious order but instead repeated verbatim the order of the learned ITO.

(5)Learned CIT(A) failed to give fair and proper opportunity of hearing to the appellant demanded by the magnitude of the case thus violating principles of natural justice.

(6)Learned CIT(A) erred at law by ignoring that I.T.O. failed to pass best judgment assessment as required by law.

(7)Learned CIT(Appeals) erred at law by not noticing that I.T.O. has failed to obtain the mandatory prior approval of IAC before treating the bank deposits as receipts of business.

(8)Learned C.I.T.(A) was not justified in treating all the bank deposit as sales when many were in reality inter-bank transfers evidence from record.

(9) Learned CIT (Appeals) was not justified in confirming the G.P. @ 25% applied by the I.T.O. keeping in view parallel cases and facts of the case.

7. At the time of arguments the learned A.R. for the appellant laid stress mainly on grounds Nose and 3 as reproduced above, which are almost one and the same in substance and did not press the other grounds. Elaborating the objections, the learned A.R. for the appellant contended that while selecting the case for total audit the learned I.T.O has mainly relied upon the quotation from the Yellow Pages of Pakistan, 1991 who is in the sort of an advertisement and does not in any way to definite information based on material evidence; that even if the same amounts to definite information, the appellant had not been confronted with the same. Consequently, the selection of the case for total audit by the learned I.T.O. was wrong and illegal.

8. Both the arguments are without force. No doubt, while selecting the case for total audit, the I.T.O. has mainly relied upon the quotation from the Yellow Pages of Pakistan, 1991, as reproduced expired, the quotation is in the shape of an advertisement. Such advertisement is always based on the information supplied by the person/ authority for whom the advertisement is published. It is unbelievable that such an advertisement would be published without the consent of the person or authority for whom it is published because it will not only give rise to legal actions but for the publication of the same high charges are made. This advertisement not only appears in the book for 1991 but the same continues to have been published in edition of 1991-92 of the lip book at page 566 as well as of 1994 at page 654. In the edition of 1992, the advertisement begins with the words: "We can solve your problem if you have any kind of industrial or construction project. We are specialized in and in the edition of 1994 with the words, "we are specialized in". The word `we' in both the editions of the book of 1992 and 1994 clearly indicates that the information has been supplied by the appellant. It was, therefore, a definite information supplied by the appellant themselves and now they are bound by the same. The first argument is, therefore without force.

9.So far as the second objection that the appellant has not been confronted with the information, it would be also suffice to reproduce here the letter No.342, dated 5-3-1992 of the learned I.T.O. in toto:

"To

M/s. Engineering Age Corporation,

Saddar Road, Peshawar Cantt.

Sub: Notice u/s 62 for assessment year 1991-92.

As you are aware that your case for assessment year 1991-92 has been selected for Total Audit and statutory notice has thus been statutory upon. You are now directed to produce the following documents and file the relevant details/explanation:---

(1)Bank statement of all the accounts for the period from 1-7-1990 to 20-6-1991 alongwith bank reconciliation statement.

(2)Documentary evidences regarding purchases of raw materials.

(3)Certificate regarding sales tax paid.

(4)As per "YELLOW PAGES OF PAKISTAN 1991" your name appear at page 490 with the following advertisement and facts:

"ENGINEERING AGE CORPORATION Importers and Manufacturers

Head Office Plot No.B-2, Road No.2, Industrial Estate Peshawar Phones 40454-43552 Fax (92-521) 74038.

Factory: Near Radio Transmitters Shahrah-e-Pakistan, Peshawar Phone 62025, Cable "Engine"

Overseas 17-Steyne House, Steny Road, Acton Off London W3 U.K. Phone 992-9363"

From the above facts it is evident that your firm has got several units but in the balance-sheet neither the factory, nor the plot and even the share income from London does not appear, you should, therefore, explain your position on this score and file documentary evidence regarding purchase of Plot No.B-2, Industrial Estate intimate value of factory and machinery, fare bills of all the above phone numbers, introduce that through which bank import is being made, and file the bank statement.

(5)Full particulars of the parties to whom sales were made should be intimated.

(6)Books of accounts should be produced for examination.

(7)Proof regarding direct and indirect expenses against each account may be filed. Compliance must be made on or before 10-3-1992 positively.

(Sd.)

(QAISAR ALI),

Income Tax Officer,

Circle-B, Peshawar."

10. From the contents of the letter, as reproduced above, it is quite clear that the appellant had also been confronted with the information and the second objection of the appellant is also without force.

11. The result of the foregoing discussion is that the appeal fails and is hereby rejected.

(Sd.)

(FAZALUR REHMAN KHAN),

Judicial Member."

With due respect of my learned brother (Member Judicial), I cannot agree to the opinion expressed by him for the following reasons:---

(a) True, advertisement is an information, but it is not `definite information' based on `material fact' on the basis of which the income of the assessee could be suspected to have been concealed or understated. We have to examine as to what constitute `definite information' and `material facts'. The decision of the learned Supreme Court of Pakistan in (1993) PTD 1108 has finally settled as to what constitute definite information and material facts.

(b) Secondly, the nature of this information should be such which can, conclusively and without any further probe and enquiry, lead and ordinary person to believe that income has been concealed as held by the Supreme Court (cited as above).

(c) Thirdly, such information/evidence/material fact must exist prior to the selection of the case under para.4(ii).

(d) A show-cause notice, not a notice under section 61, has to be issued to confront the assessee, before the selection of the case. It is after this that a notice under section 61 can be issued for production of accounts.

I am therefore, of the opinion that the selection of this case under para.4(ii) is not legally correct and my opinion is based on the decision of the learned Sindh High Court, in,

"Pakistan Educational Society v. The Government of Pakistan (1993) 67 Tax 311(H.C. Kar)

This view was further re-affirmed by the Sindh High Court, Karachi in:

"Muhammadi Oil Trading Co. v. Regional Commissioner of Income Tax, Southern Region, Karachi and others 1994 P T D 494.

(Sd.)

(MUHAMMAD IQBAL KHAN),

Accountant Member.

ORDER

In view of our different findings, the learned Chairman may be pleased to refer the case to a third Member of the Tribunal for his opinion on the following questions:---

"Whether, in view of the information contained in the "Jamal's YELLOW PAGES OF PAKISTAN, 1991" and repeated in the subsequent editions and in view of the other materials on record, the learned I.T.O. was justified in law to assess the assessee/appellant for the assessment year 1991-92 instead of accepting its return under the Self-Assessment Scheme vide C.B.R: s Circular No.22 of 1991"?

(Sd.)

(FAZALUR REHMAN KHAN),

Judicial Member,

Income Tax Appellate Tribunal,

Peshawar Bench, Peshawar.

15. NASIM SIKANDAR (JUDICIAL MEMBER).---The above questions have been referred to me under section 133(7) of the Income Tax Ordinance on account of difference of opinion between the learned Division Bench at Peshawar.

16. The facts leading to this appeal have already been detailed with precision by my learned brother the Judicial Member in paras. 2 and 3 of the proposed order. I will however, make a specific, reference to para. 2 of the order wherein a portion of the letter recommending the case for total audit from DCIT to' RCIT has been reproduced. The assessing officer and the learned first appellate authority also reproduce this letter in their orders which needs to be kept in constant focus while looking for the answers to the aforesaid two questions.

17. According to learned Judicial Member (per para. 8 ante) the advertisement in question having been published at the instance, instruction and the information supplied by the assessee itself, it amounted to "definite information" justifying selection of the case for audit as provided in para. 4(ii) of the Self-Assessment Scheme for the year 1991-92. Learned Judicial Member also found that after selection of the case all information gathered by the assessing officer coupled with the one responsible for selection was duly confronted to the assessee through a letter No.342, dated 5-3-1992. Therefore the second objection that proper opportunity was not given before selection of case for audit and thereafter burdening the assessee with an income at,,. Rs.34,05,974 as against the declared at Rs.64,710 was also repelled. It appears, and the learned Judicial Member has recorded in para. 7 (ante) that no other objection or ground of appeal was seriously pressed before the learned Division Bench.

18. Learned Accountant Member in his dissenting note at para. il has found the advertisement in question to be lacking in any attributes of a "definite information" or constituents of a `material evidence' as propounded by their Lordships of the Supreme Court in 1993 PTD 1108 re: ITO and others v. Chappal Builders. Also on the authority of the reported decisions of the Karachi High Court in re: Pakistan Educational Society v. The Government of Pakistan 1993 PTD 804 and 1994 PTD 494 re: Muhammadi Oil Trading Company v. RCIT, Southern Region, Karachi and others, he found the selection of case for audit to be legally incorrect in view of the failure of the assessing officer to serve the assessee with a show-cause notice before selection of case.

19.Framing of assessment under normal law is the rule which changes into exception when a return is filed under Self-Assessment Scheme or under any instruction or orders as notified by the CBR in accordance with the provisions of section 59 of the Income Tax Ordinance. Subsection (1-A) of section 59 added through Finance Act, 1985 after decision in re: M/s. Cannon Products Limited cited as 1985 PTD 549 provided for creation of such exception which in the assessment year 1991-92 is embodied in para.4(ii) of the Scheme notified through C.B.R: s Circular No.22, dated 21-7-1991. The portion of the Circular, so far as applicable in this case is-reproduced as under:---

"Selection for audit

Para 4:

(i) .

(ii) with the approval of RCTT where gross understatement of income is suspected on the basis of definite information based upon material evidence."

20. The objects of Self-Assessment Schemes (for short. Scheme) both from the view point of the Revenue and the assessee were described by Muhammad Afzal Zullah, C.J. (as his Lordship then was) in 1993 PTD 1108 = 1993 SCMR 1108 (re: ITO and another v. Chappal Builders) in these words:---

"The matter has arisen out of the well known Self-Assessment Scheme introduced in the Income-tax Law of Pakistan so as to encourage the taxpayers to make contribution towards the State effort in running the Government and the other related State machinery more willingly than it used to be under the normal assessment Scheme. One purpose was to save an honest tax-payer from unnecessary suspicion, accusation and torture of being accused and/or found guilty of deceit and falsehood. This being the main purpose, care was taken to safeguard the interest of the State also against deceit and cheating even in the Self-Assessment Scheme. For the better purpose the scheme as well as the provisions in the Income Tax Ordinance provided for a very limited reopening of the Self-Assessment"

It is that balance between the, rights of an honest tax payer and his obligation towards Revenue that has to be kept in mind while judging whether or not an information is definite in nature and is based upon material evidence raising legitimate suspicion of gross under statement of income. The tug of war between the rival interests of Revenue and the assessee has given rise to a number of controversies taken to superior Courts. Para. 4(ii) above which is the center of discussion before us manifests the typical clash of interests. The assessee seeks protection of the terms used in the para. "gross understatement" and "definite information based upon material evidence". The Revenue on the other hand, before us as well as in every similar case relies upon the connotation of word "suspected" and the required approval of RCIT alleging it to be the best safeguard against whimsical and arbitrary use of power by assessing officers while selecting a case or recommending one for audit. Since the phrase "definite information" also appears in subsection (2) of section 65 of the Ordinance and therefore has been subject-matter of a number of reported decisions, the ratio settled in such cases and the meanings assigned to this phrase has frequently been made use of by this Tribunal as well as the first appellate authorities to rule upon whether in a given situation definite information was available with the Revenue to select a case for audit. In my humble view, however, in spite of the fact that the phrase "definite information" used in para. 4(ii) above also appears in section 65 of the Ordinance in some what similar manner the ratio of the case-law developed on reopening of an assessment cannot be applied as a matter of course to matters arising from selection of cases under Self-Assessment Scheme. If we take these words in their ordinary sense, cross check them with their dictionary meanings to reconcile their popular meanings, all chances are there that we will make the return filed under SAS to be a shell which even a sledge hammer will not break open. This does not appear be the intention of the Ordinance nor the purpose of any of the schemes so far notified. The reopening of a case occurs despite p the established concept of finality of assessment order already framed. Therefore, the law and Courts watch the action with a keen eye so that the sanctity of a completed assessment is not compromised for discretion or administrative convenience. Selection of a case for total audit or for proceedings under normal law at best calls upon the assessee to establish the declared version. It cannot be equated with the hardship or prejudice that is caused to an assessee when a completed assessment is reopened under section 65 of the Ordinance. It is, therefore, not the meaning of the phrase"information" or "definite information." which will possibly undergo a change as these are contained in various dictionaries or as expounded by the Judges of the Superior Courts. It is the perspective or the canvas on which the facts are spread which will change. The angle of looking at things generally shapes the end result.

22. So much of case-law has developed in recent times with reference to reopening under section 65 of the Ordinance and the meaning of the aforesaid words "information" as well as "definite information" that any further attempt to examine them would be unnecessary: To understand meaning and import of these words and phrases reference can conveniently be made to some recent decisions from local and foreign jurisdiction. The Supreme Court of Pakistan in re: Central Insurance Company and others v. C.B.R. and others cited as 1993 PTD 766 = 1993 SCMR 1232 has thoroughly scanned both of these terms. The Sindh High Court, in re: Spiceco Investment Karachi v. RCIT, Karachi 1993 PTD 1007 and re: Pakistan Educational Society (supra) has also deliberated on them. The Indian Supreme Court in re: Indian and Eastern Newspapers Society v. CIT (1979) 119 ITR 996 has mused the terms with reference to section 147 of the Indian Income Tax Act, 1961. In that case atpage 1001 of the report their Lordships held that , for the purpose of section 147(b) of the Income Tax Act, 1961 an information is definite when "it requires no ,further authority to make it significant. Its quite-essential value lies in its definite vitality". The High Court of Calcutta in re: CIT v. Union Carbide Corporation (1995) 71 Tax 177 has discussed all the available case-law including the said Supreme Court decision on the subject. However, them capable conclusion remains which their Lordships of the Supreme Court of Pakistan reached in re: Central Insurance Company (supra) that "the expression "definite information" cannot be given a universal meaning but it will Save to be construed in the context and the circumstances of the each case". To the same effect are the findings of a Full Bench of the Indian Supreme Court in A.N. Lukshman Shenoy v. ITO (1958) 34 ITR 275 saying that "The phrase `definite information' cannot be construed in a universal sense 'and its meaning must depend on and vary with the circumstances of each case". My humble submission in this context, therefore, is that firstly, the case-law relating to reopening of assessment under section 65 of the Ordinance cannot indiscriminately be made applicable in spite of the use of same or similar words in that section and para. 4(ii) of the Scheme, and secondly no universe meanings being possibly assignable to these terms, each case for selection for audit will have to be-seen and judged in the light of its own prevailing facts. Therefore, for these and other reasons that will follow, with utmost respect I will disagree with dissenting finding of the learned Accountant Number in para. 11(a) ante that the Supreme Court of Pakistan has finally settled as to what constitutes definite information and material facts. Their Lordships only gave broad outline of the significance and reckoning factors of these terms but' that too in the context of re-opening of a case under section 65 of the Ordinance.

23. In the case relied upon by the learned Accountant Member re: Chappal Builders (supra) the assessee was served with a notice for reopening of the assessment framed three years earlier. The only ground stated being lowness of the purchase price declared by the assessee in. respect of a plot situated in Clifton Area, Karachi. In this background the Supreme Court held that in order to establish so-called definite information under section 65 of the Ordinance for making an additional assessment the department had to rely upon further reasoning is order to clothe their information with credibility. It was also found that in order to reach the conclusion the department had to make inquiry in regular trial in which all persons who sold or purchased their plots might have been examined. Therefore the Court upheld the judgment of the High Court on facts agreeing that definite information m the context of the law under discussion (reopening of assessment under section 65 read with section 59 of the Ordinance) could not mean mere difference of opinion or further reasoning or other exercise of logic or even drawing of conclusion. It may be pointed out here that if the sale was not disclosed by the assessee in the year it took place, its mere happening through a registered deed irrespective of the reasonability or otherwise of the consideration passed, it would have been a definite information justifying reopening under section 65 of the Ordinance. Definite information in case of reopening of an assessment is that which leads to a conclusion of escapement of income, assessment at too low a rate or excessive relief or refund. In case of selection of a case under the above para. definite information for normal assessment will suffice which gives rise to a legitimate and genuine suspicion that income had grossly been understated. So the difference in the two situations is exactly the same which lies between a conclusion and a suspicion. It may, however, be noted here that the word "suspicion" has a specific significance as pointed out in the case re: Pakistan Educational Society (supra).

24. Besides the three cases referred to by learned Accountant Mem paras.11 and 12 of the proposed order reliance has further been placed by the assessee upon a number of other decisions to support the view that firstly the advertisement in question is not a definite information nor a material evidence on the basis of which gross under statement of income could be suspected and secondly, that the assessee was entitled to a kind of show-cause notice before selection of case for total audit and therefore the notice issued under section 61 after selection of case did not fulfil the requirement of audi alteram partum. In support of the first contention that there was no definite information available for plucking the case out of Scheme strength is sought from 1993 PTD 1007 (Re: M/s. Spiceco International, Karachi), 1993 FM (Trib.) 1681 (Trib.), NTR 1995 (Trib.) 55, (1958) 34 ITR 476 (Pat.) (re: Jittan Ram Nirmal Ram v. CIT). The second contention qua right to a show-cause notice before selection of case is sought to be supported by PLD 1985 Azad J&K 212 (re: Mushtaq Ahmad Mir v. Government of AJ&K), 1971 PTD 43 (re: Kundun Bibi and others v. Vilayat Hussain, Controller of Estate Duty) and NTR 1995 (Trib.) 20.

25. In 1993 PTD (Trib.) 1681 another case relied upon by the assessee, this Tribunal followed the ratio in the above case re: Chappal Builders to conclude that in the facts and circumstance of that case no definite information was available with the Revenue enabling it to reopen the case of the assessee on the ground that price of some immovable property was understated.

26. The other cases relied upon are also distinguishable and therefore do not support the contentions broached upon at the bar. In NTR 1995 (Trib.) 55 a Division Bench of this Tribunal directed acceptance of the declared income after finding that selection of case under para. 4(ii) of the Scheme in the year 1992-93 was unjustified. In that case the reasons to set apart the case rest on the alleged local enquiry that the assessee was running a factory and that hem had obtained CVT certificate for purchase of some immovable properties. The casecited from Indian jurisdiction re: A.M. Lukshman Shenoy (supra) also lends no support to the view being advanced by the assessee. A Full Bench of the Supreme Court of India in that case wherein reopening of assessment was challenged identified the ethos of the phrase as reproduced earlier in para. 22 ante. This view as a general statement of law in the context of reopening has been accepted by Courts in Pakistan. For example the case in re: Educational Society (supra). The invocation of the ratio to the facts before us, however, is totally misplaced as discussed elsewhere in this order.

27.In 1995 PTD (Trib.) 1149 the plea of the department against the order of CTT was rejected who had earlier held that the case of the assessee did not fall within the purview of para. 9 of SAS for the year 1985-86. According to this para. cases where positive information came into possession of the department during pendency of the assessments were to be taken outside the purview of the SAS irrespective of the quantum of income declared. Evidently the wording of the scheme and the directions of para. 9 of the Scheme were different from para. 4(ii) in question before us. That case as well the rest of them discussed above are, therefore, clearly distinguishable and do not support the assessee with reference to the first proposition.

28.To advertise 'according to Oxford Advanced Learners Dictionary of Current English means "'o make known to public" (by printing notices in newspapers or by other means eg. T.V.). According to Black's Law Dictionary, 5th Edition advertisement means notice given in a manner designed to attract public attention. Also, it means information communicated to the public or to an individual concerned; as by hand bills, newspapers T.V., bill board and Radio. According to the same treatise to advertise means to announce, apprise, command, give notice of, information, make known to public. In Chamber's 20th Century Dictionary, New Edition to advertise means to inform, give notice, to give public information about merits claimed for and advertisement to be any device for obtaining public favour or notoriety.

29. Advertisement in modern times assumes varied forms by mouldinginto the media pattern, printing, announcements, stills celluloid pictures, jingles, Audio, Vedio methods etc. The objects are as diversified as are the persons- intended to be. addressed. While most of them are issued voluntarily some do publicist information under regulatory legislation such as issuing a prospectus or an offer to subscribe for shares. Some advertisements are public others are not. Likewise some advertisements are offers and legally bind the publisher if acceptance is expressed in the required terms. Advertisement inviting offers are rather most common. Some advertisements are made as a matter of record only and therefore th6se are information provided to general public without making fine offer or soliciting investment. Advertisement by official agencies or departments perusing commercial objects are not different from those made by ordinary business houses. However, making of official announcements through press could be held binding in cases where these tend to make an offer or lay down a procedure for some giant. In such cases the citizens addressed through public announcements will be entitled to be considered if they fulfil the published criteria and the procedure. In Muhammad Salah v. Chief Settlement Commissioner, PLD 1972 SC 326 the Supreme Court found a press note real with the relevant Settlement Scheme to be an offer and the person satisfying all the conditions to be entitled to transfer of property even if the instructions contained in the press note were merely directory and not mandatory.

30. An advertisement published simply for attracting customers is not an offer as we understand it legally but it is certainly an information or declaration that the advertiser is engaged in the kind of declared business whose services can be utilised for consideration. This information when admittedly provided by the advertiser can safely be taken as definite information against him: In the case before us the assessee has through the advertisement in question, declared its line of business and the kinds of special fields a customer can avail of its services. The assessee has also given, the details of its local and overseas offices alongwith telephone and telex numbers for facility of contract. The assessee has not denied having provided that information to the printer in the same form. Therefore, I see no reason why the information contained in. this advertisement as regards the nature and kind of business activity the assessee is engaged in as well as its local and foreign offices including telephone and telex numbers cannot be taken as definite information of these facts. To that extent I will agree with the findings recorded by the learned Judicial Member. However,-the matter does not end here because para. 4(ii) of the scheme requires something further to be done before R.C.I.T. can allow selection of case for audit. It is "where gross understatement of income is suspected on the basis of definite information". It means that information being definite in nature must be such as to give rise to a suspicion that income had grossly been understated. The recommendation of the case of the assessee for selection for total audit, however, did not result 'on any such connection between the declared income and the facts held out through the said advertisement. From the letter of the Assessing Officer as reproduced in para. 2 (ante) recommending the RCIT to select the case it is evident that the selection resulted on account of personal opinion of the Assessing Officer that "it is a highly potential case and requires normal assessment". In other words in the opinion of the Revenue if the declared income at Rs.64,710 is seen in the light of the advertisement then gross understatement of income can be suspected. It is nowhere stated that the assessee declared engagement only in one or more but not all kinds of business activity it advertised. It is also not the case-of the revenue that the business address local or foreign indicated much bigger volume of activity than declared by the assessee. No connection whatsoever between the advertisement and the declared income has been made. At least none appears from the assessment order. In my opinion the only situation in such case which could form basis for selection out of the scheme would have been the advertisement expenses. A suspicion, would have been well placed if, for example, advertisement cost in this case was outrageously disproportionate to the declared capital, expenses-are even income. The Way Assessing Officer reached the conclusion in this case, if allowed to sustain, very purpose of Self -Assessment Scheme will be defeated. All businessmen big and small, do advertise and many of them incur losses at the end of the year. However, they cannot be hauled up only for the reason that they have been advertising through various modes and therefore they must have had a roaring business. This kind of reasoning therefore, is factually incorrect. The Scheme had laid down a standard and a procedure or condition which must be in existence for exercise of official authority. As observed earlier I am ready to accept that advertisement is not only an information but also having been made and come :from the assessee itself is a definite information. However, the Revenue made no attempt to make out a case at any level of the proceedings that from such definite information "gross understatement" of income could be -suspected. The approval of the R.C.I.T. as provided in para.4(ii) of the Scheme is not only a further check on exercise of arbitrary powers by the Assessing Officer but also an assurance that availability of the preconditions will be looked into and considered by the highest Revenue Officials in the field. However, in this case, the approval sought by the Assessing Officer was granted by R.C.I.T., prima facie, in a mechanical manner. No nexus between the advertisement and the declared income having been there, my opinion is that selection of the case resulted mainly on account of the information that the assessee had purchased a piece of land and had constructed a show room thereon. Since this information was extraneous to the declared business income and impatient attempt was made to "make out a case" for process under normal law instead of accepting the income under section 59(1), and then going for proceedings under section 65 of the Ordinance if these were otherwise invocable. It is also interesting to note that no addition was finally made on account of unexplained investment in the alleged purchase of plot and the construction. Their Lordships of the Karachi High Court in re: Pakistan Educational Society (supra) observed that no action under para. 4(ii) could be initiated on mere suspicion. The kind and level of suspicion required as a sine qua non under para.4(ii) was laid down in the following words:---

"The word `suspected' has been used in the said paragraph alongwith 1. the words `gross understatement of income' and `definite information based on material evidence'. A plain reading of the said paragraph makes it abundantly clear that, as pointed out earlier, the Income Tax Officer or the Regional Commissioner of Income Tax can proceed against an assessee or grant approval as the case may be, only on the ground of definite information which must be based on material evidence. Therefore, such action cannot be based on mere suspicion. Suspicion, in contradistinction to definite information, means partial or unconfirmed belief. The use of the word `gross' in the said paragraph further indicates that it is not in case of every understatement in regard to income that empowers the Income Tax Officer to take action against an assessee under the said paragraph, but only when gross understatement appears to have been made by him." .

31.The selection of case when seen in the light of the above guiding principle, appears to be without any fact available on record to justify a legitimate suspicion of understatement of income. .

32.The reported decisions from the Karachi High Court cited by learned A.M. in support of the second finding that prior show-cause notice was enquired be served do need some elaboration.. In Both of these cases re: Pakistan Educational Society (sumra) and Muhammadi Oil Trading Company a (Division Bench of Karachi High Court ruled upon sub-para. 4(ii) of SAS now under consideration before us. In both of these as well the third case re: M/s. Spiceco International Limited a number of assessees who filed returns under 5AS for the year 1991-92 were served with notices under section 61 of the Ordinance. Before the learned Division Bench it was argued that none of the conditions given in para.4 (ii) existed and therefore the assessing officer could hot issue impugned notices requiring the assessees to file certain details. The learned Division Bench went through the Dictionary meanings of all the aforesaid three phrases to hold that such information must be substantial this may lead to discovery. Also that such information should not be based upon mere guess, gossip or rumor but it should be based upon material evidence against an assessee. Before their Lordships it was argued that action taken by the department was opposed to principles of natural justice as no opportunity was given to them before selection of their cases for audit. It was therefore claimed that a prior notice was necessary before selection of case for total audit under para. 4(ii). The contention was repelled in para. 11 of the decisions recorded in re: M/s. Spiceco International (supra) and re: Pakistan Educational Society in the following words:---

"It is pertinent to point out that at the inquiry under section 61 of the Ordinance, the assessee would have a right to appear and to produce evidence before the Income Tax officer as the Income Tax Officer in such a case would be required to hold a quasi-judicial inquiry. Any inquiry held prior to the issuance of notice would necessarily result into duplication of the procedure, as was held in the case of Messrs Mahaliram Renjidas and Messrs Burhan Engineering Co. Ltd. Therefore, in the final analysis, neither the Income Tax Officer is required to issue notice to the assessee prior to his taking action under paragraph 4(ii) nor such an enquiry would be feasible under the circumstances enumerated above."

33. The ratio settled in these cases was followed by another Division Bench in re: Muhammadi Oil Trading Company (supra) and similar Constitutional petitions assailing denial of benefit of SAS under para. 4(ii) were accepted. It is very important to note that petitioner assessees in these Constitutional petitions succeeded inter alia, for the reasons that counter affidavits filed by the Revenue, Officers failed to disclose and pin-point any information on the basis of which these cases were selected under para.4(ii) of the Scheme. Their Lordships as observed earlier, also found that the provisions of para. 4(ii) required examination from an angle different from the one which merits consideration in an section under section 65 of the Ordinance. Next, the Court found the assessees to be entitled to disclosure of material on the basis of which their cases were selected for audit. This disclosure was found necessary after the selection of the case and not -before an action under para.4(ii) of the Scheme. In this view of the matter it is not correct to say that a I show-cause notice is required to be served upon an assessee before his case can be selected for audit under para. 4(ii). Therefore, the reasons recorded by learned Accountant Member in para. 11(d) ante also cannot be subscribed. For, mere selection of a case out of Scheme where it 'happens in accordance with letter and spirit of law causes no prejudice. At least none was alleged in this case. In 1971 SCMR 681(re: Collector, Sahiwal v. Muhammad Akhtar) the Supreme Court held that where there was no provision for service of notice or the provision was merely of directory nature then wherever violation of audi alteram partem, the principle of natural justice is alleged, the Court may call upon the party alleging the same to prove prejudice before setting aside the order. No allegation of prejudice has. been made before us nor its nature indicated. The Scheme or para. 4(ii) does not provide for any kind of show cause notice. No authoritative pronouncement requires service of this type of notice either. Therefore, it is not correct to hold that selection of a case under I the said para. is in any way subject to the service of a notice or in its absence the selection is bad in law where all the conditions stated in that para. are fulfilled.

34. The result of the above discussion is that the advertisement in question could be taken as a definite information of the facts contained therein. However, the Revenue having failed to bring about any conceivable connection between the advertisement and the returned income, no fad emerged to raise and justify a genuine suspicion of under statement of income. Therefore, the selection of case under para. 4(ii) of the said Circular No.22 of 1991 cannot be approved. Also for the reasons recorded above, I conclude that no notice before selection of case under such para. is required to be served on the assessee and that absence of such notice does not result into a prejudice which could colour the selection if it was otherwise legal. Both of the above questions, therefore, are answered in the negative.

35. This appeal shall accordingly succeed and the action of the Revenue in selection of the case for normal assessment and the reasultant assessment shall be ineffective.

M.BA./122/T Appeal accepted.