I.T.A. NO.7026/LB OF 1991-92 - VS I.T.A. NO.7026/LB OF 1991-92 -
1997 P T D (Trib.) 2165
[Income-tax Appellate Tribunal Pakistan]
Before Muhammad Mujibullah Siddiqui, Chairman and
Shariq Mahmood, Accountant Member
I.T.A. No.7026/LB of 1991-92, decided on 01/07/1996.
Income Tax Ordinance (XXXI of 1979)---
----Ss. 13(1)(d) & 62---Circular No. 6 of 1988, para. 6---Addition-- Validity---Department, on receipt of verification that assessee purchased house, called for return under S.56, Income Tax Ordinance, 1979---Assessee contended that return under Simplified Assessment Procedure (S.A.P.) had already been filed ---Assessee was required to furnish evidence which he did in form of photo copy of return and postal receipts---Assessing Officer, observing and relying on para. 6 of C.B.R. Circular No.6 of 1988, that return did not fulfil conditions of S.A.P. brought assessee within ambit of S.62 of the Ordinance---Commissioner of Income Tax (A) set aside order with direction that case should be disposed of in accordance with law and case was remitted back---Contention was that there was no justification in setting aside order as same it was contrary to facts of case---Held, Assessing Officer's reliance on para. 6 of C.B.R. Circular No.6 of 1988 was not correctly placed---If return suffered from certain mistakes and deficiencies. Assessing Officer was obliged to communicate to assessee and provide him 15 days period to take up deficiency, which was not done---Assessing Officer in fact made return filed under S.A.P, as basis of assessment-- Commissioner of Income Tax (A) had nowhere dealt with the point nor given his finding---No justification held existed in setting aside the order---Order under S.62 of the Ordinance being without jurisdiction Assessing Officer was directed to accept return under S.A.P.
Dr. Ilyas Zafar for Appellant.
Khalid Aziz Banttah, D.R. for Respondent.
Date of hearing: 27th June, 1996.
ORDER
SHARIQ MAHMOOD (ACCOUNTANT MEMBER).---In the Assessment Year 1988-89 it was observed by the department on receipt of verification note dated 26-12-1990, that the assessee had ,purchased a house 128-B, Model Town, Lahore on land measuring 2 Kanal, 13 Marlas for a registered cost of Rs.9,50,000 on 26-12-1987. It, therefore, issued a notice under section 56 calling for the return of income. The assessee replied that a return under the Simplified Assessment Procedure had already been filed on 20-10-1989 wherein an income of Rs.88,281 had been declared. The said return was not available on record. The assesses was required to furnish necessary, evidence and proof in this respect, which was done in the form of a photo copy of the return and postal receipt. The Assessing Officer observed that the return did no6fulfil the conditions of S.A. P. and keeping in view the provisions of para. 6 of Circular No. 6 of 1988 brought it, within the ambit of section 62. After doing so and observing that the value of house was under-stated made an addition of Rs.12,70,000 under section 13(1)(d) and also added a sum of Rs.50,000 to the declared income. Resultantly, the assessed income stood at Rs. 14,08,281 against the declared Rs.88,281.
2. Appeal was preferred against the assessment order and it was agitated that the case qualified for acceptance under section 59 and as such there was no justification in framing assessment under section 62. The additions made under section 13(1)(d) and to the declared income were also agitated in appeal. The appeal was disposed of by the CIT (A) Zone-III, Lahore vide his order dated 12-12-1991 who set it aside with the directions that the case should be disposed of "in accordance with law as warranted by the facts of the case as the assessee's submissions vide letter dated 20-6-1991 had not been considered. The issues of additions under section 3(1)(d) and to the business income were remitted back to the Assessing Authority. Now in appeal against the order of the first Appellate Authority it has been maintained that there was no justification in the setting aside of the order as it was contrary to law and facts.
3. The learned A.R., arguing on behalf of the assessee, maintains that a specific issue regarding the return fulfilling the condition of simplified Assessment Procedure had been raised before the First Appellate Authority and he was not justified in ignoring his ground. He referred to the declaration of the CIT (A) and maintained that this issue has not been specifically dealt with and there was no finding on it. His alternate plea was that the additions made under section 13(1)(d) and in the business income is without any justification. The A.R. maintained that the return filed under the S.A.P. fulfilled all the conditions. Further, the reliance on para. 6 of Circular No.6 of 1988 was not correctly placed as this Circular had been superseded by Circular No. 10 of 1988 dated 22-8-1988. The provision of para. 6 of Circular No. 10 of 1988 were neither applicable nor relevant in case of the assessee. As such it was pleaded that the I.T.O. had wrongly assumed jurisdiction over the case and any subsequent action which included the framing of assessment order under section 62 was void and without any jurisdiction. Explaining his point of view it was maintained that the return filed did not stiffer from any lacunas as prescribed under para. 2 of the SAP for 1988-89 and the return stood presence/accepted under the conditions laid down in para, 5 of the said Circular (No. 10).
4. The learned D.R., opposed the stand taken on behalf of toe assessee and maintained that the return filed was not acceptable under the provisions of S.A.P. for 1988-89. It was maintained that the income tax return had been filed after the due date and the payment of tax under section 54 alongwith the return of income had not been fulfilled. As such when the return itself did not fulfil the conditions of the S.A.P., therefore, the assessee was not entitled to any benefit of the provisions and as such it did not quality for assessment under section 59(b). Based on these submissions the D.R., was of the view that the return had been rightly taken out of the purview of the S.A.P. and order framed under section 62 was warranted according to the merits and facts of the case.
5. We have considered the points of view of the two representatives. We would first dispose of the issue whether the, return qualifies for acceptance under the S.A.P. or not. The assessment order shows that the explanation filed by the assessee and the photocopies of income tax return alongwith the Postal receipt produced before the I.T.O. have been accepted by him. He does not doubt the same. The reasons as per para. 2, however, the assessee was informed that the return of income for the charge year 1988-89 was not qualified to be accepted under Simplified Procedure of Assessment vide para. (6) of Circular No.6 of 1988 wherein it is provided that "assessment will be final unless the Income Tax Department receives or discovers documentary evidence of concealment" of the assessment order the return has been brought within the purview of the Self-Assessment Procedure. In fact the Circular No.6 of 1988 was subsequently superseded by Circular No. 10 of 22-8-1988 para. 6 of the relevant Circular No. 10 states.
"6(a). Cases involving a change in status from A.O.P., U.R.F. and H.U.F. to a R.F. or from a R.F. to A.O.P., U.R.F. and H.U.F. would be considered existing assessee unless the name, nature and place of business does not remain the same.
(b) The assessment completed under Simplified Procedure for Assessment shall not have any bearing on the earlier assessments pending in appeal."
6. In the light of the above provisions the reliance on para. 6 by the ITO is not correctly placed. Further, if the return filed under S.A.P. suffered from certain mistakes or deficiencies the I.T.O. was obliged under para. 5 of Circular No.10 of 1988 to communicate the assessee the same and provide him a period of 15 days to make up the deficiency. This was nowhere done. In fact the I.T.O. makes the return filed under S.A.P. as the basis of assessment as the income declared Rs.88,281 is considered while computing the total income.
7. The learned D.R., could not controvert the above facts on record i.e., that the return had been incorrectly and illegally taken out of the purview of the S.A.P. for 1988-89, the return filed by the assessee had been accepted and made the basis for the framing of assessment. The CIT (A) in his order mentioned above has nowhere dealt with this specific issue raised I by the assessees nor given his findings. Under the circumstances we find that there was no justification on his part in setting aside the order. The order passed under section 62 is without any jurisdiction and we, therefore, annul it. The Assessing 'Officer is directed to accept the return under S. A. P.
8. The appeal stands disposed of to the manner and extent indicated above.
C.M.S./338/Trib. Order accordingly.