I.T.A. NO.3723 OF 1993-94 VS I.T.A. NO.3723 OF 1993-94
1997 P T D (Trib.) 2277
[Income-tax Appellate Tribunal Dhaka]
Present: Abu Bakr Miyanjee, Judicial Member and Muhammad Zahurul Alam, Accountant Member
I.T.A. No. 3723 of 1993-94, decided on 16/01/1995.
(a) Bangladesh Income Tax Ordinance (XXXVI of 1984)--
----S. 84-A---Presumptive assessment---Non-submission of income-tax return---Power of Assessing Officer ---Assessee neither maintained account nor filed return as required by law---Held, law conferred power on Assessing Officer for presuming assessee's total income as per procedure and law.
(b) Bangladesh Income Tax Ordinance (XXXVI of 1984)--
----S. 43---Presumptive income ---Method--Assessee's income in previous years was assessed at Rs.40,000 Takes but present income was assessed at Takes 1,35,000 about 3 and half times more, than previous income---Held presumptive total income was product of vindictiveness, imagination, surmises and conjectures---Presumptive income ought to be correct, based on honest opinion, material facts and evidence.
(c) Bangladesh Income Tax Ordinance, 1984---
----S. 153(3)---Appeal---Rejection---Basis---Assessee did not file return-- Total income was presumed and assessee was made liable to tax ---Assessee went into appeal which was rejected in his absence---Held, no provision existed in law to reject appeal to Appellate Court by defaulter ipso facto-- Assessee was made liable to tax without having filed return---Rejection of appeal was illegal in circumstances.
M.A. Raza and Mr. Yakub, I.T.P. for Appellant.
Syed Wahid Hossain, D.R. for Respondent.
ORDER
ABU BAKR MIYANJEE (JUDICIAL MEMBER).---This is an appeal at the instance of the assessee against the order dated 25-1-1994 passed in I.T.A. No.32/Taxes Circles-91/92-93, passed by Mr. Muhammad Hafizur Rehman, AJCT, Appellate Range-5, Taxes Appellate Zone-2 Dhaka, on the following grounds.
2. Grounds of appeal (abridged):
(1) That the order of the learned AJCT is not justifiable.
(2) That the learned AJCT was not testified in confirming the order of assessment by the Act.
(3) That the learned AJCT was not justified in passing the order rejecting the appeal without giving the assessee a chance of hearing by serving notice.
(4) That income computed is excessive.
(5) Other grounds, if any, will be taken at the time of hearing of the appeal.
3. Facts leading to this case are that assessee, a doctor, did not file any Income-tax return for the assessment year 1992-93. He did not maintain any account. He was served with a notice under section 84/A(1) as to why his income shall not be computed at Taka 1,35,000 also served on him IT 57 slip dated 9-3-1993 (Preserved).; The assessee did not appear in response to the notice. So, with prior approval of the learned AJCT assessment was made under section 84-A(2), computing total income at Taka 1,35,000. On appeal to the learned AJCT, the assessee got no relief. His appeal was rejected under section 153(3)(b) for non-payment of required tax. Hence the appeal.
4. Heard the learned representatives, considered the facts and circumstances of the case and law involved. Perused the impugned order and assessment order.
5. We take up all the grounds together for discussion for convenience as they are closely related to each other. Section 84-A(1) of the I.T.O. Ordinance, 1984 lays down:
"84-A Presumptive-(1) Notwithstanding anything contained in this Ordinance, where an assessee, not being a company deriving income from business or profession does not maintain any account in accordance with the provision of this Ordinance, the Deputy Commissioner of Taxes may, whether such assessee filed a return or not, presume his total income for the income year at such an amount as he deems correct and shall send a notice accordingly to the ,as asking him to establish that the total income presumed is not correct:
Provided that the Deputy Commissioner of Taxes shall not presume the total income of an assessee unless he has material facts and evidence in support of his presumption:
Provided further that the Deputy Commissioner of Taxes shall not presume the total income of the assessee without previous approval of the Inspecting Joint Commissioner of Taxes "
6. Section 84-A(1) quoted above lays down provision of the presumptive evidence. The language of the section is clear, self-explanatory and unambiguous.
7. In the instant case the assessee does not maintain any account and did not file any return. So, the section conferred power on the Deputy Commissioner which (includes Assistant Commissioner as well) may presume assessee's total income as per procedure laid down subject to the provision that follow.
8. But the assessing officer has to presume total income for the income year at such an amount as he deems correct. It means that his presumptive total income- shall not be the product of vindictiveness, imagination, surmise or conjecture. At least in his honest opinion the presumptive income need be correct. This is one protection for the assessee. In the instant case it appears that assessee's income for the preceding year i.e., the first year of his practice was assessed at Taka 40,000 while the presumptive income computed for the instant year is Taka 1,35,000 i.e., about 3 times and a half of the income under the same head. This is not correct and cannot be deemed as correct. Had he consulted the previous record he would not adopt this jumping method of computation upward without any proportion. It is true that notice was issued under section 84-A to the assessee. But he personally appears before us alongwith his lawyer representatives to personally and frankly submit that the notice reached him at a time when the date of hearing was over. He went home and came back from there to find that he could not come back from home within the date of hearing. The learned D.R. could not show from record that the notice was personally served on the assessee. The assessee further submits that the moment he got the notice, he ran to the office of the assessing officer, who told him that he has already passed the order and he has then nothing to do.
9. There is no denying the fact that in section quoted above, the word used about notice is sent and not served. But from the perusal of subsection 2 it appears that the question of compliance of the notice by the assessee is very much there before making an assessment on the total income presumed and determination of the sum payable by him on the basis of such assessment. If the notice does not reach him in time how he can comply? Thus, it appears that the notice must reach him before the question of compliance arises. In the instant case if the assessee be believed, the notice reached him after the assessment by the assessing officer was complete. So, the question bf his failure to comply does not arise in the context of subsection (2) of section 84-A enabling and entitling the assessing officer to make assessment on the total income presumed, and to determine the sum payable by him on the basis of such assessment. If it was 'possible' for the assessee to -comply, the question of success or failure to comply would arise, otherwise not. We have no sufficient reason to disbelieve the assessee or to believe that compliance was possible for him. As such, we find that the assessment was illegal. Our decision might have been otherwise if there was no question of compliance and simply sending the notice was sufficient. Moreover, in the first proviso to section 1 of section 84-A, it is provided that the D.C.T. shall not presume the total income of an assessee unless he has material facts and evidence in support of his presumption. Here also presumption relates to a total income. The total income is a figure in Taka it the instant case and it is Taka 1,35,000. Thus it appears that the assessing officer must have material facts and evidence in support of his presumption, But this material facts and evidence are conspicuous by their absence in the assessment order and, as such, it was illegal.
10. Now, we turn back to the impugned order. The learned AJCT observed in the impugned order that none was present at the time of hearing of the appeal. Still he disposed of the appeal on the basis of particulars obtained from the file. He further observed that the case was decided under presumptive assessment method and that tax has not been paid as per provision of section 153(3)(B). So, the appeal cannot be accepted and, as such, he rejected the appeal. We find no such section anywhere in the Income Tax Ordinance, 1984. Nobody pointed out any such section. Of course there is section 153(3) which lays down that no appeal under this section against any order of assessment shall lie unless the tax payable under section 74 has been paid. We quote the section below.
"74. Payment of tax on the basis of return.---(1) Every person who is required to file a return under section 75 shall on or before the date on which he files the return pay the amount of the tax payable by him on the basis of such return as reduced by the amount of any tax deducted from his income or paid by him in accordance with the provision of this chapter (chapter vii).
(2) Any amount paid under subsection (1) shall be deemed to have been paid towards the sum as may be determined to be payable by him after regular assessment.
(3) A person -who without reasonable cause, fails to pay the tax as required by subsection (1) shall be deemed to be an assessee in default.
11. Thus, it appears that tax to be paid under section 74 is payable by the assessee on the basis of the return. But in the instant case admittedly no return was submitted. So, there is no basis for payment of tax under section 74. Moreover, an assessee who failed to pay tax under section 74, shall be deemed to be a defaulter simply. There is no provision anywhere to reject the appeal to the learned AJCT by a defaulter ipso facto. In the instant case no tax was payable by the assessee who did not file any return. So, rejection of his appeal was illegal. Moreover, as no tax was payable by the assessee under section 74 of the Income Tax Ordinance, 1984, no tax is also payable by him under section 158(2)(a) for bringing the instant appeal.
In spite of it we win from the record that the assessee deposited in Bangladesh Bank 50% of the tax payable on presumptive assessment, in the meantime. So, we are of opinion that the assessee deserves a hearing of the appeal by the learned AJCT and, as such, the impugned order need be set aside. The tax paid by the assessee amounting to Taka 10,080 shall be refunded or adjusted as per law and rules on merit. This case need be sent back to him for its disposal on merit in the light of our discussion above. The learned AJCT did not decide the appeal before him on merit.
In the result, the appeal succeeds. The impugned order is set aside. The learned AJCT is directed to hear the appeal before him now sent on remand in the light of our discussion made above and to dispose of the appeal as per rules.
C.M.S./3/DhakaAppeal allowed.