Income Tax Ordinance (XXXI of 1979)---

----Ss. 65 & 61---Constitution of Pakistan (1973), Art.199---Constitutional petition---Re-opening of assessment---Notice---Issuance of notice to assessee for re-opening of assessment for the year 1991-1992---Validity---Assessment order framed under scheme of income-tax without asking for further information and documents under relevant scheme stands on different footing than an assessment order made after detailed scrutiny and examination of record under S.61 of the Income Tax Ordinance, 1979, and conscious application of mind to material facts---Assessment can be re-opened in terms of S.65(1)(c), Income Tax Ordinance, 1979; notice under S.65, however, could not be sustained unless it was shown that new information or document was not available before Income Tax Officer when assessment order was framed and/or Income Tax Officer failed to apply his mind consciously to the matters in respect of which notice under S.65 of the Ordinance was issued and/or the assessee was guilty of concealment of material facts or he managed and/or manoeuvred assessment order with the help and/or connivance of the Assessing Authority, which fact was apparent from such assessment order ---Assessee had mainly stressed that assertion regarding under-valuation of property was incorrect and against the facts; if that be so, assessee would have option to lead evidence and demonstrate that fact before Income Tax Officer and to satisfy him that property in question, was not under-valued---No interference was warranted in the order of Income Tax Officer whereby he had issued notice to assessee for re-opening of assessment for the year 1991-92.

Commissioner of Income Tax, Zone D, Karachi and others v. Jennings Private School 1993 SCMR 96 ref.

Mian Ashiq Hussain for Petitioner.

Shahbaz Butt for the Department.

ORDER

This petition under Article 199 of the Constitution calls in question the notice issued by the Assistant Commissioner of Income Tax/Wealth Tax, Circle 16, Zone-A, Lahore' under section 65 of the Income Tax Ordinance, 1979 on 6-4-1995 issued to the petitioner for the re-opening of the assessment for the year 1991-92.

2. Briefly facts of the case are that the petitioner in the status of individual being partner of a registered firm, namely M/s. Decent Canvas Centre, Circular Road, Lahore filed his return of income for the assessment year 1991-92, which was completed under section 59/69 of the Income Tax Ordinance, 1979 without detailed scrutiny. The respondent No.l vide letter, dated 26-3-1995 made certain inquiries from the petitioner pertaining to the purchase of Property No. 13-S-66 R-13, the petitioner in response to the said inquiries filed explanation contending that the acquisition of the property was a result of family settlement and further contended that the assessment could not be re-opened on the basis of change of opinion. Respondent No.l being not satisfied with the reply of the petitioner issued notice under section 65 of the Ordinance dated 6-4-1995 for the said year to which the petitioner-respondent filed his letter, dated 9-4-1995. Therespondent No.l issued another notice under section 13(2) of the Ordinance, dated 14-5-1994 to which the petitioner also replied vide his letter, dated 29-5-1995 and ultimately being not satisfied with the reply of the petitioner, the respondent No.1 issued notice under section 61 of the Ordinance, dated 25-11-1985; the petitioner again agitated and raised the objection regarding jurisdiction; the issue continued till 31-12-1995 when the respondent No. l issued notice under section 13(2) read with sections 13(1)(aa) and 13(1)(d) of the Ordinance; allegedly which was not received by the petitioner as per report of the process-server, dated 2-1-1996; hence this petition.

3. The learned counsel for the petitioner vehemently contended that usingthe same information on the basis of which assessment for the year 1991 was made tantamounts to change of opinion which is not permissible in law; proceedings initiated by the respondents are violative of principle of natural justice and the assumption of jurisdiction under section 65 and approval of the respondent No.2 are being carried out in a mechanical manner; further Contended that at the most notice under section 66-A of the Ordinance may have been issued for assessment being prejudicial to the interest of the revenue as the property in dispute was declared in the wealth statement for the year 1991-92 alongwith return and was on the record at the time of assessment.

4. Learned counsel for the Department at the very outset raised objection that the writ petition is not competent as the petitioner has not exhausted the alternate adequate remedy available to the petitioner. Further contended that the respondent No. l while completing assessment under sections 59/69 under the Ordinance, did not apply his conscious mind to the valuation of the property mentioned in the wealth statement and it was during the assessment year 1994-95 while examining reconciliation statement learnt that the property was under valued and the I.T.O. was justified in proceeding under section 65 of the Ordinance.

5. Admittedly the property in dispute was purchased by the petitioner on 24-9-1990 against a consideration of Rs.2,45,000 belonging to the late grandfather of the petitioner; was declared in the wealth statement by him filed alongwith the return for the year 1991-92 and was sold for Rs.9,35,000 on 16-10-1991 during the assessment year 1992-93; further the assessment for the year 1991-92 was made under section 59/69 of the Ordinance without asking any further information or documents and without issuance of notice under section 61 of the Ordinance. The I.T.O. while completing the assessment for the said year under section 59/69 did not apply his conscious mind to the valuation of the property and in fact learnt that the property purchased during the assessment year 1991-92 being under-valued escaped assessment while examining the wealth statement during the proceedings for the year 1994-95 as the wealth statement for the year 1992-93 covering the period of sale of the said property on 16-10-1991 was not filed by the assessee as the wealth statement filed voluntarily for the year 1991-92. The contention of the learned counsel for the petitioner the expression "information" for the purpose of re-opening of an assessment under section 65 of the Ordinance in the context in which it occurs must mean instructions or knowledge derived from an external source that the income has escaped then the ingredients of section 65 are attracted if the information is deducted from the record then the ingredients of section 66-A are attracted is misconceived as the explanation to subsection (2) of section 65 was inserted by Finance Act, 1987 which clarifies the term "definite information". Further through a retrospective amendment in section 65 of the Ordinance by substituting clause (c) by Finance Act, 1992, the Assessing Officer has been empowered to re-assess the income assessed earlier under the Self-Assessment Scheme and simplified procedure under subsection (1) of section 59 and section 59-A subject to the condition laid down in subsection (2) of section 65 of the Ordinance.

6. The controversy in regard to re-opening under section 65 of the Ordinance has been settled by their Lordships of Supreme Court in case Commissioner of Income Tax, Zone-D, Karachi and others v. Jennings Private School 1993 SCMR 96 that;---

"There cannot be any controversy that an assessment order framed under the scheme without asking for further information and documents under the relevant paras. of the Scheme stands on a different footing than. an assessment order made after detailed scrutiny and examination of the record under section 61 of the Ordinance, and conscious application of mind to the material facts. The principle of change of opinion cannot be made applicable to the former case as in such a case upon discovery of the factum that the income chargeable to tax under the Ordinance has escaped assessment, on the basis of definite and reliable information, assessment can be re-opened by virtue of clause (c) of subsection (1) of section 65 of the Ordinance, but in the latter case, a notice under section 65 of the Ordinance cannot be sustained unless it is shown that the new information or document was not available before the Income Tax Officer when the assessment order was framed and/or the Income Tax Officer failed to apply his mind consciously to the matters in respect of which notice under section 65 of the Ordinance is issued and/or the assessee was guilty of concealment of material facts or he managed and/or manoeuvred the assessment order with the help and/or connivance of the assessing authority, which fact is apparent from such assessment order. "

7. The learned counsel for the petitioner has mainly stressed and argued that the assertion regarding the under-valuation of the property is incorrect and against the facts; if that be so; it is open to the petitioner to lead evidence and demonstrate this fact before the I.T.O. and to satisfy him that the property in question was not under-valued.

8. For the reasons, no interference is, however, called for in the exercise of this Court's jurisdiction; in these circumstances, the petition fails and is dismissed; leaving the parties to bear their own costs.

M.B.A./Q-1/LPetition dismissed.