I T A. NO. 1280 OF 1992-93, VS I T A. NO. 1280 OF 1992-93,
1997 P T D (Trib.) 2286
[Income-tax Appellate Tribunal, Dhaka]
Before Abu Bakr Miyanjee, Judicial Member and Muhammad Zahurul Alam, Accountant Member
LT.A. No. 1280 of 1992-93, decided on 11/08/1994.
(a) Bangladesh Income Tax Ordinance (XXXVI of 1984)---
---S.158(4)---Appeal to Appellate Tribunal---Time-barred appeal-- Condonation of delay---Sufficient cause---Appellant preferred time-barred appeal explaining delay as due to his ignorance about order of revised asessment and after having knowledge he, at once, applied for certified copy of the same---(fin receiving copy he came to file appeal but Appellate Authority refused to accept memorandum of appeal for want of jurisdiction- Appellant filed appeal through registered post---Record testified his version---Held, appellant had taken all possible steps on his part as soon as he came to learn of revised assessment, appeal was treated as having been filed within time in circumstances.
(b) Bangladesh Income Tax Ordinance (XXXVI of 1984)--
----S.120---Reassessment---Precondition---Principles---Assessee filed return under Self-Assessment Scheme fulfilling all requirements--.Case was processed in due course ---Assessment completed---Inspecting Assistant Commissioner served notice for re-assessment relying upon enquiry report of Departmental Inspector ---Assessee objected that .I.A.C. had arrogated to himself jurisdiction for which no facts were available to him---Held, law did not provide unlimited powers, it provided power in maters of supervisory jurisdiction---Erroneous order prejudicial to revenue, thus, was pre condition.
(c) Bangladesh Income-Tax Rules, 1984---
---R.38---Self-Assessment return---Essentials---Self-assessment return was held not ordinarily open to question---What, of course, were open to question were formalities---Assessing Officer could ask to fulfil requirements---When fulfilled, it was obligatory to complete assessment under assessment rules.
Suit. Daijet Kaur v. Commissioner of Income-tax TR Vol. 184. page 149 and Russell Properties (Pvt.) Ltd. v. VA Chowdhury; Additional CIT (1977) 109 ITR 229 ref.
Syed Ahmed and Mohiuddin Ahmed for Appellant.
Syed Wahid Hossain, D.R. for Respondent.
ORDER
This appeal has arisen out of the order passed under section 120 of the Income Tax Ordinance by the learned IJCT Range-2, (E) Zone, Dhaka dated 30-3-1991. The appeal is disposed of as under:
Records show that the appeal in this case was filed with the Tribunal on 1-12-1992 whereas the order revising the assessment under section 120 of the Income Tax Ordinance was passed on 30-3-1991. The appeal, apparently, is out of time. Being confronted with this, the learned A.R. of the appellant states before us that the assessee did not receive any IET 88, IET 30 and IT 15 of the revised assessment and that on hearing of the revised asessment the assessee filed an application on 27-10-1991 for certified copy of the assessment order. The appellant was supplied with certified copy of the order of the learned IJCT of 28-9-1992. The learned AR states that the assessee on receipt of the revised assessment order came to Dhaka for filing of the appeal, but the concerned appellate authorities refused to accept the appeal memorandum for want of jurisdiction and ultimately he filed the present appeal with the Taxes Appellate Tribunal by registered post on 24-11-1992, the appeal memorandum was received by this Tribunal on 1-12-1992.
2. The learned A.R. of the appellant assessee informs us that the assessee had to waste a lot of time in moving the appellate authorities for acceptance of the appeal memorandum, but he failed to persuade them to accept his appeal. The learned A.R., however, urges before us that since neither the appellant nor any of his relations or representatives was served with the revised assessment order, IT 30 and ITR 15 relating to the revised assessment, the question of limitation under section 158(4) of the Income Tax Ordinance will not arise. We have considered the records of the case, have taken into account the facts stated above and the submission of the learned A.R. in regard to the question of limitation. We find that, as stated by the learned A.R. no order of revised assessment nor any IT 30 connected with the revision was ever served on the assessee appellant. Here we are inclined to agree with learned A.R.' s submission and are of the opinion that the question of Limitation is not a material issue in this case, as the relevant order of the assessment, IT 30 and IT 15 were not at all served on the assessee, as a matter of fact, the assessee to this case had unlimited time for filing an appeal with the Tribunal. The assessee has, of course, taken all steps possible on his part to file the appeal as soon as he came to learn of the revised assessment which gave rise to his grievance. In this view of the matter, the appeal is treated as having been filed within time.
The appellant has taken a number of grounds in this appeal. Precisely two substantial objections have emerged out of these grounds. One of them relates to the illegality of the revised assessment under section 20 of the Income Tax Ordinance made by the learned IJCT and the other to the excessiveness of the quantum of revised assessment.
3. We first take up the dispute regarding the alleged illegality of the revised assessment made under section 120 of Income Tax Ordinance. The facts of the case are stated briefly in the following paragraph.
4. The appellant, being an assessee of Mymensingh Circle-1. Mymensingh, filed a return under Self-assessment procedure for the assessment year 1988-89 alongwith statements of accounts including balance sheet showing total income at Taka 72,896. The appellant paid on the basis of his return tax including surcharge at Taka 9,988, The appellant's self assessment return was processed in due course and the assessment was completed under section 82/A on 20-9-1989. Subsequently on 11-1-1991 the learned IJCT Range-2, East Zone, Dhaka served a notice on the assessee to show cause why his assessments completed under self-assessment procedure for the years 1985-86 to 1988-89 should not be undertaken for fresh assessment. The grounds which formed the basis of his action were given as below:
(i) that the DCT had accepted assessee's Self-assessment returns in spite of his not fulfilling the requirements of Self-assessment procedure.
(ii)that the DCT had not confronted the assessee with an explanation of the initial capital introduced in assessee's brick manufacturing business.
(iii)That the DCT had not computed income from the Rest House run by assessee correctly, and
(iv) that the DCT had not confronted the assessee with an explanation a for the capital invested in the construction of a Market and had not computed any rental income from the Market.
On receipt of the show cause notice the assessee appellant submitted his reply in two instalments. By these the assessee gave the learned IJCT to know that his Self-assessment returns were filed complying fully with all the requirements of self-assessment procedure, that no separate capital was invested in brick manufacturing business apart from the capital shown as per balance sheet, that the income from the Rest House was disclosed correctly, that the Market was under construction and the investment in the market since 1987-88 to 1989-90 had duly been reflected in the concerned balance sheets and that no rental income arose during the period under question. The learned IJCT ignored this reply of the assessee and went about revising the assessment under section 120 of the Income Tax Ordinance. He, however, could not pass any order under section 120 for the years 1985-86, 1986-87 and 1987-88 as these cases were barred by limitation. Consequently the assessment for the year 1988-89 only was revised under section 120. For this year the learned IJCT computed net income from assessee's brick business at 1,07,500 net income from Rest House Taka 3,81,060, net income from Taka 6,322 and net rental income at Taka 20,000, and from all these sources was computed including income from Self-occupied HP at Taka 5,34.882, assessee fell aggrieved at this order of the learned IJCT and hence this appeal before the Tribunal.
5. At the outset, the learned A.R. of the appellant assessee has come out with a protest against the interference by the learned IJCT under section 120 of the Income `fax Ordinance. He said that the action of the learned IJCT was unlawful, unjustified and unwarranted since the appellant had submitted a return of income under Self-assessment scheme for the year under consideration and the same was found in order by the relevant assessing officer. 'He states that the learned IJCT was not justified in rejecting the assessee's reply in response to the show-cause notice without assigning any reasons. The learned A.R. urges before us that the learned IJCT was also not justified in relying upon report dated 10-3-1991 by the departmental Inspector on an enquiry conducted much beyond the period falling under the relevant income year.
6. With the above charges the learned A.R. goes on to say that the learned IJCT had arrogated to himself the jurisdiction under section 120 of the Income Tax Ordinance with no facts available to him. The learned A.R. explains before us that for availing the jurisdiction under section 120 two pre-conditions must be fulfilled. Firstly, the order passed by the DCT must be erroneous and secondly, the error must be such as to have prejudiced the interest of revenue. The learned A.R. argues that in the instant case the assessee filed a return under self-assessment procedure which fulfilled all the conditions of Rule 38 of the Income Tax Rules and the assessing officer was obliged under the law to accept it and that, as a matter of fact, in doing so the assessing officer committed no error. The learned A.R. argues that since no error was committed by the assessing officer the learned IJCT had no warrant under the law to assume jurisdiction under section 120 of the Income Tax Ordinance. The learned A.R. elaborates this saying that for conferring jurisdiction under section 120 the error and the prejudicial act done to revenue must be co-extensive so that a certain loss of revenue must have resulted from the error committed by the assessing officer. The learned A.R. says that here the question of loss of revenue does not arise since no error at all was committed He says that the assessing officer acted completely within the bounds of law in accepting the self-assessment return filed by the assessee. The learned A.R., thus, concludes his arguments contending that in this case the learned IJCT acted beyond the provisions of law in assuming jurisdiction under section 1 2 of the Income Tax Ordinance. In support of his submission the learned A.R. has cited before us two legal decisions. One of them is the decision of the High Court of Gauhati in the case of Sint. Daijet Kaur v. Commissioner of Income-tax TR Vol-184 page 149 and the other is the decision of the Calcutta High Court in Russel Properties (Pvt.) Ltd. v. VA Chowdhury, Addl. CIT (1977) 109. ITR 229.
7. In reply to arguments put forward by the learned A.R. the learned D.R. submits before us that the assessment made under self-assessment procedure in this case was defective as the assessee failed to disclose the correct extent of his income and that, as such, the learned IJCT was justified to invoke the provision's of section 120 for revising the assessment. The learned D.R. presses for confirmation of the order passed under section 120.
8. We have given due consideration to the facts of the case as well as to the arguments put forward by the learned A.R. and D.R. We find that the issue before us is quite simple. We have to decide whether in an assessment completed as per law under self-assessment procedure there is any scope at all for invoking the provisions of section 120. It is to be kept in mind that section 120 of Income Tax Ordinance does not provide unlimited power of revision to the IJCT. The power of revision under section 120 is in the nature of supervisory jurisdiction and the same can be exercised only if the circumstances specified therein exist. Two circumstances must exist to enable the IJCT to exercise the power of revision under this section: (1) the order is erroneous, (ii) and because of the erroneous order prejudice has been caused to the interests of revenue. Otherwise, the IJCT cannot exercise his powers under this section. It is pertinent to note here that a vague suspicion that prejudice has been caused to the interests of revenue is not a sufficient ground to exercise power under section 120 of the Income Tax Ordinance. It is also to be made clear here that an order cannot be termed as erroneous unless it is proved to have been made not in accordance with law. If the assessing officer, acting in accordance with law, makes certain assessment and determines the total income of an assessee at a certain figure, the same cannot be branded as erroneous by the learned IJCT simply because, according to him, the total income should have been determined at a higher figure. In the instant case a return was filed under self-assessment procedure fulfilling all the requirements of Rule 38 of the Income Tax Rules. Here under the Rules the assessing officer had little scope to scrutinise the return to see whether the income returned by the assessee was correct or not. The existing Self-assessment Rule, that is Rule 38, makes it almost obligatory on the part of the assessing officer to accept the return filed under the self assessment scheme. A self-assessment return, as such, is not ordinarily open to question. What, of course, is open to question are the formalities. If the formal requirements are not fulfilled the assessing officer can ask the assessee to make good the lack. When the lickings are made good, he is obliged to complete the assessment under self-assessment new rule. In the present case the assessing officer did not come across any lack in the return filed by the assessee. On examination of the assessee's return he found it to be in order and acceptable and accordingly, the assessment was completed under section 82/SA. The learned IJCT undertook a scrutiny of assessee's self assessment return after a lapse of about one and half years and came across certain inadequacies in the assessment completed by the assessing officer, but failed to pin-point any error justifying an interference with the assessment completed under Rule 38 of the Income Tax Rules.
9. In view of the discussion in the foregoing paragraphs, we are constrained to opine that the learned IJCT misapplied the law in revising the assessment completed under self-assessment procedure. We are of the view that an assessment completed under section 120 of the Ordinance. It can however be re-opened under section 93 of the Ordinance when there is a case of clear concealment of income. In this view of the matter, we vacate the order of the learned IJCT passed and under section 120 and cancel the concerned revised demand notice. Consequently, the original assessment for the year under consideration made under self-assessment procedure be restored. As the revised assessment under section 120 has already been vacated by us on the point of legality, we do not find it necessary to enter into the assessee's grievances regarding exclusiveness of the quantum of assessment.
In the end, the appeal succeeds in the manner as indicated above.
C.M.S./5/PTDAppeal allowed.