I. T. AS. NOS. 61/KB TO 64/KB OF 1996-97, DECIDED ON 4TH APRIL, 1998. VS I. T. AS. NOS. 61/KB TO 64/KB OF 1996-97, DECIDED ON 4TH APRIL, 1998., 1998 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 3718 (1998)

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

----S.59(1) & (3)---Self-assessment---Acceptance of income as declared-= Addition add-back---Assessment could either be made by accepting the declared income only where no adjustment was required under S.59(3) of the Income' Tax Ordinance, 1979 or otherwise---Where adjustment was so required, the assessment could be finalized by including the figure of adjustment to the declared income---Both such orders continued to be an order under S.59(1) of the Income Tax Ordinance, 1979.

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

----S.59(1)---Self-assessment---Assumption---Where no adjustment and no legal add-back had been made in the assessment order and returned income had to be accepted, the order assumed the nature of a mechanical calculation of tax liability to determine whether the tax due had been correctly calculated by the taxpayer and so paid with the return or there was some balance still payable because of short payment of tax or wrong calculation.

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

----S.59(3)---Self-assessment---Assumption---Where adjustment or addition was made, the amount of adjustment and addition had to be verified, determined and reason for the same had to be given---Order under S.59(3), Income Tax Ordinance, 1979 was not merely a mechanical verification of tax computation but it assumed the nature of a reasoned order though confined to the limits of adjustments and legal add-backs only.

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

----S.2(7)---"Assessment"---Meaning and connotations---Word "assessment" is used as meaning sometimes the computation of income, sometimes the determination of the amount of tax payable and sometimes the whole procedure laid down in the Income Tax Ordinance for imposing liability upon the taxpayer.

(1938) 6 ITR 414 ref.

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

----S.59---Self-assessment---Declared income accepted---Effect---Where assessment was to denote only the acceptance of income as declared it could not be ascribed any meaning apart from an arithmetical verification of total income declared and tax paid thereon and for this purpose the entries made in the various columns of computerised IT 30 sheets served all the purposes of "an order in writing" and nothing further was required for any meaningful purpose of completing the assessment process.

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

----S.59(1) & (3)---Self-assessment---No assessment order in writing was passed by the Assessing Officer---IT 30 Form duly signed by the Assessing Officer was issued---Requirements of an assessment in writing ---Necessity-- Where return was filed under Self-Assessment Scheme which qualified for processing under such Scheme without requiring any adjustment under S.59(3) of the Income Tax Ordinance, 1979 or otherwise so that the returned income was accepted in toto as the assessed income and the requirement of an assessment in writing were sufficiently fulfilled by preparation of a tax computation sheet in the matter described in the prescribed IT 30 Form duly signed by the Assessing Officer such an order under S.59(1), Income Tax Ordinance, 1979, held, was properly made by the Assessing Officer.

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

----Ss.66-A & 59(1)---Power of Inspecting Additional Commissioner to revise Deputy Commissioner's order---Assessments were completed under Self-Assessment Scheme---Only IT 30 Form and no separate order in writing was passed---Revision---Validity---Contention of the assessee that S.66-A of Income Tax Ordinance, 1979 could not be invoked as there was no order in writing was rejected by the Appellate Tribunal.

1987 PTD 249 and 1987 PTD (Trib.) 129 distinguished.

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

----S.19---Income from property ---Assessee let out godown of the building-- Receipts were declared as business income on the ground that said receipts were not from simple letting out of properties rather facilities for storage of materials were provided in the shape of letting out godown---Assessment was made under Self-Assessment Scheme---Orders were cancelled under S.66-A of the Income Tax Ordinance, 1979 by the Inspecting Additional Commissioner with the direction to the Assessing Officer to assess the receipts under S.19 of the Income Tax Ordinance, 1979 after allowing the expenses allowable under S.20 of the Ordinance which was upheld by the Appellate Tribunal. [p. 3730] H

(1965) 58 ITR 592 and (1967) 66 ITR 596 ref.

Athar Saeed for Appellant.

Inayatullah Kashani, D.R. for Respondent.

Date of hearing: 24th December, 1996.

ORDER

MUHAMMAD MAHBOOB ALAM (ACCOUNTANT MEMBER).---The four appeals for the assessment years 1991-92, 1992-93, 1993-94 and 1994-95 have been filed against the order dated 30-5-1996 passed under section 66-A by the learned Inspecting Additional Commissioner of Income-Tax, Range-II, Zone-B, Karachi. The appellant has challenged the order both on legal and factual grounds and prayed that the order may be cancelled. The learned A.R. and D.R. have been heard.

2. The facts of the case are that the appellant had been assessed to tax under section 59(1) under the Self-Assessment Scheme on income, which was declared to be arising from business. The nature of business was statedly "Warehousing receipts". The Warehouse was situated at Shershah, Karachi. The assessee had been claiming expenses like commission, general expenses and depreciation against the said receipts. Moreover, the assessee had introduced an Agency Agreement in 1974 under which it was paying 40 % of the entire receipts to another registered firm namely M/s Haji Jamaluddin & Sons, Boulton Market, Karachi NTN 10-12-2077542. Against the said Commission, M/s. Jamaluddin & Sons had been claiming further expenses of salaries, telephone expenses, general expenses and depreciation. On perusal of records of the case the learned I.A.C. found---

"(a)that the income being earned by the assessee is rental income. This fact is proved by Conditions 3 and 5 of the Agency Agreement filed by the assessee, which states:--

'That the Agent shall let out the said Godown to tenants and recover rent from them and pass receipt therefrom. They will be entitled to eject tenants. (Clause (3) of the Agency Agreement).

That in consideration of the services of the Agent, the principal shall pay to the Agent Commission at 40% of the total recoveries of rent.'

(Clause (5) of the Agency Agreement.)"

When confronted with the above findings the assessee replied as under:--

"(a)Vide Partnership Deed dated 1-7-1974, the nature of business shall be Godown keeping and Storing and such other business as the partners may mutually decide."

(b)The Agency Agreement in force since 1-7-1974 was examined and scrutinised since 1974-75 onwards.

(c)The commission paid to registered firm M/s. Jamaluddin & Sons is duly assessed. Hence the charge of erroneous and prejudicial assessment is not applicable. "

The explanation was rejected by the learned I.A.C. with the following observations:--

"The assessee's explanation has been considered. No explanation/specific conditions of agency agreement or on claiming already covered by the Agency Agreement, has been given. Thus the assessee's explanation is unsatisfactory and, therefore, rejected.

In the light of facts stated above, it is clear that rental income has been earned by the assesses:, It has been camouflaged as warehouse storage receipts and wrongly offered under section 22 of the Income Tax Ordinance, 1979. Thus not only expenses inadmissible under section 19 of Income Tax Ordinance, 1979 have been claimed and allowed but the commission paid to M/s. Jamaluddin & Sons has been further subjected to claim of expenses against it. Seemingly the whole exercise is to minimise the incidence of tax liability under the grab of warehousing receipts and payment of 40 % commission out of total receipts.

Thus the assessment order passed for the assessment years 1991-92, 1992-93, 1993-94 and 1994-95 are erroneous and prejudicial to Government revenue. The orders are, therefore, cancelled under section 66-A with directions to the assessing officer to assess the following receipts under section 19 of the Income Tax Ordinance, 1979 after allowing the expenses allowable under section 20. "

3. The above findings of the learned I.A.C. have been contested before us on the following main grounds:--

(1)There was nothing erroneous and prejudicial to the interest of revenue in the orders passed under section 59(1) which called for action under section 66-A for all the years.

(2)That for the assessment years 1991-92, 1992-93 and 1994-95 there being no order in writing under section 59(1), the subsequent action under section 66-A was not justified.

(3)That for the last twenty years the receipts from the godown and warehouse were being treated as business receipts and not income chargeable as property Income under section 19 of the Income Tax Ordinance. The I.A.C. was, therefore, not right in holding that any prejudice and loss of revenue has been caused to the department on this account.

4.The matter has been considered -by us. As regards the first ground, this is merely of theoretical nature. The appellant has submitted that the assessment finalised under section 59(1) could be erroneous only if the case was assessed under that section without fulfilling the required conditions. This in our view is only one aspect of an order passed under section 59(1; being erroneous to attract the provision of section 66-A. If it could be proved that the order passed under section 59(1) was erroneous and prejudicial to the revenue on its own merit the provisions of section 66-A are clearly attracted even though the original order under section 59(1) may have been framed technically correctly on fulfilment of the requirement of Self-Assessment Scheme. That there is such prejudicial loss of revenue has however to be established independently. This issue, therefore, merges with ground No.3 enlisted above where the issue of such loss of revenue has been challenged by the appellant. We are, therefore, left with grounds Nos. (2) and (3) which are required to be considered in evaluating the propriety of the impugned order passed under section 66-A.

5. We first take up the ground relating to the invoking of the provisions of section 66-A, when according to the appellant there was no assessment to writing, which could be the basis of any action by the Additional Commissioner. It has been contended that action under section 66-A allowing the I.A.C. to interfere with the order of the subordinate assessing officer presupposes the existence of an "assessment order" which is held to be erroneous and prejudicial to revenue. In the case of the appellant it has been contended that no order has been passed by the assessing officer so that there is no basis for the I.A.C. to interfere with the action of the assessing officer. The appellant had filed return for all the years under section 59(1). The Department accepted the return under section 59(1) for the years 1991-92, 1992-93 and 1994-95, but no formal order in writing was made by the assessing officer. The assessee was issued only the computerized tax computation sheets technically called IT 30-B and the Demand Notices under section 85 of the Income Tax Ordinance, 1979. For 1993-94. However an order in writing under section 59(1) was also issued alongwith IT 30 Form and the Demand Notice. Relying upon the cases referred as 1992 PTD 347 (Supreme Court of Pakistan) and 1987 PTD 249 (Karachi High Court) and (1987 PTD (Trib.) 129 it has been submitted that the action of issuing only tax computation sheets IT 30 and the Demand Notice cannot be equated with the passing of the assessment order in writing as envisaged under the provisions of section 59(1), and no order, therefore. could be said to exist for these years. Under these circumstances, the action of the Additional Commissioner invoking the provision of section 66-A was not warranted as the said section could not be invoked to cancel a non existent order.

6. The learned A.R. and D.R. have been heard. The matter has to be considered first in terms of the provision of section 59(1). It has then to be evaluated in comparison with the ratio of decision in the cases cited above. The matter also calls for distinguishing the two situations of the assessment under Self-Assessment Scheme, and assessment under the normal law. The provision of section 59(1) are reproduced below:--

" Where the return of total income of any income year furnished by the assessee under section 55 qualified for acceptance in accordance with the provision of a Scheme of Self-Assessment made by the C.B.R. for that year or under any instructions or order issued thereunder, the I.T.O. shall assess, by an order in writing, the total income of the assessee on the basis of such return and determine the tax payable on the basis of such assessment."

The assessment as envisaged under section 59(1) quoted above can either be made by accepting the returned income as declared or after making such adjustment as allowed under section 59(3) which is reproduced below:--

"59(3) ...In assessing the total income and determining the tax payable under subsection (1) the Income Tax Officer may make such adjustment as may be necessary including any adjustment under sections 34, 35, 36, 37, 38, 50, 53 and 54, the rules made under section 165, the First Schedule and the Third Schedule."

Again under para. 6 (c)(iii) of Self-Assessment Scheme of 1991-92, 1992-93 and para. 7(e)(ii) of Self-Assessment Scheme of 1993-94 and 1994-95 following items were to be included in total income:--

"(i)Agricultural income of any sum deemed to be income under the provision of the Income Tax Ordinance, 1979.

(ii)The share of profit from an A.O.P. and R.F.

(iii)Any expenditure, deduction or allowance, which is not admissible under the Income Tax Ordinance, 1979. "

Thus, the assessment under section 59(1) could either be made by accepting the declared income only where no adjustment is required under section 59(3) and no addition required under the paras. 6(c) (iii) and 7(e)(ii) of the Self-Assessment Scheme operative for the various years or alternatively whereas is so required the assessment may be finalised by including the figure of these adjustments to the declared income. The order continues to be an order under section 59(1). This practice has already been endorsed by the various judicial forums including the Tribunal vide case reported 1986 PTD 380 and 1987 PTD (Trib.) 28. From the very nature of two categories of assessment envisaged under the Self-Assessment Scheme there have to be two types of order. In the first case when there is no adjustment and no legal add-back as discussed above and the returned income has to be accepted, the order assumes the nature of a mechanical calculation of tax liability to determine whether the tax due has been correctly calculated by the taxpayer and so paid with the return or there is some balance still payable because of short payment of tax or wrong calculation otherwise the second category of cases there has to be more than this verification of tax liability in the sense that the amount of adjustment or addition has to be verified, determined, and reason for the same is to be given. The order in this case does not remain merely a mechanical verification of tax computation. It assumes the nature of a reasoned order though confined to the limits of adjustments and legal add-backs only as mentioned above.

7. Reverting to the factual position in the four years under appeal it is seen that the assessments for 1991-92, 1992-93 and 1994-95 was finalised on the basis of returned income only with no adjustment or add-back made by the assessing officer. The income as declared was accepted and tax liability calculated thereon. For assessment years 1991-92 and 1992-93, the tax calculation as made by the assessee was found correct and no demand was raised against the appellant. For assessment year 1994-95 a refund was created amounting to Rs.8,435. In all these three years no formal order in writing was passed. The assessee was only issued the tax calculation sheets technically called by the Department as IT 30-B and a notice under section 85 of the Income Tax Ordinance, 1979 was also issued for these years as mentioned above conveying the nil demand for 1991-92 and 1992-93 and refund of 1994-95. For assessment year 1993-94, the assessee was conveyed a formal order in writing also accepting the return under section 59(1), tax computation sheet and notice of demand under section 85 conveying nil demand was also issued to the appellant.

8. It will be interesting at this point to discuss the format of the IT 30-B or the Tax Computation Form. This form as it was in use during the year covered by appeal consisted of four parts. Part "A" showed the identification of the taxpayer, his name, address, status, assessment year and the section under which the assessment was being finalized and its date. Part 'B' was titled "Computation of Income" and had columns for showing the declared income/loss, the assessed income or loss/exempt income claimed and the division of income under different heads of Business, Interest, House Property etc. Part ' C' had columns for Rebates and Tax Credits as allowable under the Ordinance and Part ' D' showed the computation of Tax, with columns for total tax as computed by the Department, tax claimed to have been paid by the assesses: as per return under different heads and the balance due from or payable to the assessee according to the short fall or excess paid by him alongwith the return. This computation was to be signed by the assessing officer.

9. As pointed out above in the case of the appellant the IT 30 Form of 51-92, 92-93 showed nil balance of tax payable by the appellant and the IT 30 Form for 1994-95 showed a refund due at Rs.8,435 only. For 1993-94 the IT 30 again showed nil amount payable. The issue before us is whether in be circumstances as illustrated above the IT 30 computation sheets can be taken to he sufficiently fulfilling the requirement of the assessment order in writing as envisaged under section 59(1). From a perusal of the above 1T 30 Sheet we find that no adjustments were made for any of these years, no add backs were made on account of legally inadmissible expenditure or on any other ground. The computation of tax was made in a mechanical and routine manner without investigating into the declaration made by the assessee. The question then is, what remains for passing a separate order in writing apart from the detailed computation of tax as per IT 30 described above for all these three years. The IT 30 Form has already conveyed the acceptance of the declared income and determined the final balance of tax payable or refundable after allowing credit for tax paid. The assessment order if any Would not have conveyed more than what has been conveyed by this IT 30 Form as is evident from the order of the assessment year 1993-94 where apart from giving a narration of the return being accepted under Self- Assessment Scheme at the declared income nothing further has been stated. In other words when the assessment has to be a merely mechanical and routine calculation for checking the payment of tax due on the basis of income as declared by an assessee, the IT 30 tax computation sheet as described above conveyed the same information as an assessment order and in this view of the matter reference to the Tribunal's order reported as 1987 PTD (Trib.) 129 is found to be out of context. In that order it was held that a person could not be made liable to tax under the provision of section 59 of the Ordinance without making an order in writing as provided therein. The order reported had not discussed whether the assessment required was to be a routine and mechanical in nature accepting the declared income or required any elaboration regarding the adjustment under section 59(3) or addition of any expenditure claimed being not legally admissible. To appreciate this point further we have to examine the meaning of the word "assessment" as has been ascribed to it by the various judicial forums, over the years under the old Act and the Ordinance. In the Ordinance itself under section 2(7) "assessment" has been defined to include "re-assessment and additional assessment and the cognate expression shall be construed accordingly". Judicially various observations have been made about its meaning and it has been observed that the expression "assessment" is used in Income Tax Statutes with different connotations and the classic observation in this regard is that of the Judicial Committee of the Privy Counsel in the case reported as (1938) 6 ITR 414, 416 where it was stated:--

----The word 'assessment' is used as meaning sometimes the computation of income, sometimes the determination of the amount of tax payable and sometimes the whole procedure laid down in the' Act of imposing liability upon the taxpayer."

The question that has now to be answered is what actually is the meaning of "assessment" in the context of section 59(1) and whether it is identical with the meaning that can be ascribed to it under the other provisions of assessments namely section 59(1)/62/63 ' If the meaning is taken to be identical, the procedure for their completion has also to be identical and in that case the reason for their simultaneous existence on the statute book has to be rationalized. The contents of section 62 which narrate the normal provision for regular assessment under the Ordinance are reproduced as under:---

"62. Assessment on production of accounts, evidence etc.---(1) The Deputy Commissioner after considering the evidence on record (including evidence if any, produced under 61) and such other evidence as the Deputy Commissioner of Income Tax may require on specific points shall by an order in writing assess the total income of the assessee and determined the tax payable by him on the basis of such assessment."

10. As can be seen, the title of the two sections is different. The title of section 59 is self-assessment while the title of section 62 is "Assessment on production of accounts, evidence etc". Under section 59 the scheme of assessment begins with the qualification of a return of total income for acceptance in accordance s with the provisions of a Scheme of Self- Assessment made by the C.B.R. for that year or any instructions or order issued thereunder. Once a return is found to qualify for such acceptance, the assessing officer has to assess, by an order in writing the total income of the assessee on the basis of such return and determine the tax payable on the basis of such assessment. Obviously where the return of income is being accepted as declared, with not a penny being added to it the process of assessment shrinks down to merely an arithmetical verification of the total income computed and tax calculated as per the prescribed schedule. Such verification does not require any detailed narration of facts and figures or description of deficiencies or discussion of inappropriateness of any claim made by the assessee. However, where some adjustments have to be made under section 59(3) or any legal add-backs are required, a narrative order giving reasons for the additions becomes an obvious necessity for establishing the legal basis of such additions. Similarly, while framing an assessment under section 62 narration of facts and figures in respect of the evidence being accepted or rejected and the income figure consequently being determined becomes a sine qua non for establishing the legality of the resultant tax liability created by the assessing officer. When, however, assessment is to denote only the acceptance of income as declared" it cannot be ascribed any meaning apart from an arithmetical verification of total income declared and tax paid thereon and for this purpose the entries made in the various columns of computerised IT 30 sheets as described above serve all the purposes of "an order in writing" and nothing further is required for any meaningful purpose of completing the assessment process. In this view of the matter, the concept of an order in writing in the present circumstances distinguishes itself from the concept of "order in writing" as emphasized in the judgment of the High Court reported as 1987 PTD 249 (Karachi) and the Supreme Court judgment reported as 1992 PTD 347. Incidentally, both the judgments centered round the requirement of an order in writing for the levy of penal interest under subsections (6) and (8) of section 18-A of the Repealed Income Tax Act of 1922. The relevant extract of the High Courts order reported in 1987 PTD 249 is reproduced as under:---

"It is obvious, therefore, that there has to be an order by the Income Tax Officer holding that advance tax in terms of section 18-A was not paid by the assessee, and calculation of interest on the advance tax not paid in the manner laid down in subsection (6) of section 18-A which is to be added to the tax as determined on the basis of regular assessment. Admittedly, no such order was made in the present case and the Income Tax Officer proceeded to issue demand notice for the same under section 29 of the Income Tax Act which reads as follows:---

'29.When any tax, penalty or interest is due in consequence of any order passed under or in pursuances of this Act, the Income-tax Officer shall serve upon the assessee or other person liable to pay such tax, penalty or interest a notice of demand in the prescribed form specifying the sum so payable.'

Under the above section a notice of demand can only be served provided tax, penalty or interest is due in consequence of an order passed under the Act. Therefore, the condition precedent to the validity of the notice of demand under section 29 must be an order passed under the Act and the notice is merely consequential upon that order. Therefore, if there is no order under the Act, no notice can be served under section 29. In our view, in the absence of such an order there is no liability of an assessee to comply with a notice under section 29. "

11.In the case before the Supreme Court, reported as 1992 PTD 347 their Lordships were required to consider the Hon'ble High Court of Sindh's answer to the following question in the context of penal interest levied under section 18-A of the Repealed Act:

"Whether on the facts and circumstances of the case, the Tribunal justified in holding that an order was a prerequisite for the levy and demand of penal interest under section 18-A(8) of the Act?"

12The answer to the above question from the Honourable High Court which was placed for consideration before their Lordships of the Supreme Court was as follows:-

"An order implies the application of mind by the officer passing the order. In the absence of any mention in the assessment order for penal interest, it cannot be said that the I.T.O. had applied his mind to the levy of penal interest for failing to pay the advance tax in accordance with the provisions of section 18-A. It has not been shown that the respondent had admitted his liability to pay penal interest. Mere mention of it in I.T.30, which is merely an assessment form, is not a substitute for an order under sub section (8) of section 18-A of the Act. A Division Bench of this High Court in I.T.C. 78/79 comprising one of us (Z.A. Channa, J.) also took the same view that, as the assessment order was silent as regards any liability of the assessee for his failure to pay advance tax, the assessment Form IT 30, in which the penal interest was included, was not an order under subsection (8) of section 18-A of the Act. "

13. After considering the matter, it was observed by their Lordships of the Supreme Court that "in section 29 (of the Repealed Act) the expression 'under or in pursuance of this Act' exhausts the totality of the activity permissible or possible conformably to or in accordance with the provisions of the Act. The Act being a fiscal statute takes care and makes special provision for not only application of mind but also of making a determinative order before a liability is created". After discussing various existing decisions on the issue it was finally confirmed by their Lordships that "the sum and substance of their decisions and the express language of section 29 is that there must be an application of mind followed by an order on the basis of which notice of demand can be issued. Mere incorporation of demand in the notice is not sufficient to satisfy the requirement of law. The impugned decision of the High Court correctly interprets the law and is upheld".

14. With due respect to the above-cited judgment it is observed that the issue before their Lordships was levy of penal interest for failing to pay advance tax in accordance with the provisions of section 18-A. It was not the case that the assessee had admitted his liability to pay penal interest and the only thing required was arithmetical verification of the amount admittedly payable. It was, therefore, held that mere mention of it in the I.T.30 was not a substitute for an order subsection (8) of section 18-A of the Act. A basis had to be given for the levy of such liability and for that reason an assessment order had to be passed. The circumstances of the present case of processing a return filed under Self-Assessment Scheme which so qualified under that Scheme are, however, different. Once, on scrutiny by the assessing officer, a return is found to qualify under the Self-Assessment Scheme for which of course the law does not lay down any requirement for there to be an order in writing, the only option left for the Department is to accept the declared income subject only to such adjustment as provided under section 59(3) or as provided under the scheme as discussed in earlier paras. Where no such adjustment or add-backs are made the income declared automatically becomes the income "assessed" or in other words liability to tax is restricted to the amount admitted by the taxpayer. The assessee cannot be arraigned with any extra liability for which any basis is required to be rendered by the assessing officer. Only the arithmetical accuracy of income returned and tax payable thereon has to be checked by the assessing officer and this purpose as has been demonstrated above is properly served by the assessment Form called I.T.30. The position under these circumstances in the case under consideration, therefore, is quite different from the position obtaining before their Lordships of the High Court and Supreme Court in respect of the question set-out in the cases before them as mentioned above and for this reason the ratio of decision emerging from those judgments cannot be applied to the case presently under our consideration.

15. To sum up, having considered the provision of section 59(1) and comparing the same to the provisions of normal assessment under section 62 and having considered the meaning of the word "assessment" in the context of the Self-Assessment Scheme under section 59(1), and having distinguished the decided cases in respect of requirement of law for an order in writing as a prerequisite for levy of tax demand, we are of the considered opinion that in a case where return was filed under Self-Assessment Scheme and which qualified for processing under such Scheme without requiring any adjustment under section 59(3) or otherwise so that the returned income is accepted in toto as the assessed income, the requirement of an assessment in writing are sufficiently fulfilled by preparation of a tax computation sheet in the manner described in the prescribed IT 30 Form duly signed by the assessing officer and such an order under section 59(1) can be held to have been properly made by the assessing officer for the relevant year. The contention of the appellant, therefore, that section 66-A could not be invoked as there was no this order in writing for the years under appeal is, therefore, rejected on this ground.

16. Coming to the merits of the case as to whether the income declared constitutes receipts from business or was to be' taken as income from property, the facts as narrated in the order under section 66-A are that the assessee was the owner of certain buildings which were let out as godown to various tenants. Rent was being collected from these tenants allegedly through an agent with whom an agreement was reported to have been made the genuineness of which was held to be doubtful by the I.A.C. According to the learned I.A.C. it was pure and simple letting out of property and was not incidental to any business being carried on by the assessee. The structures in question were being used for commercial purposes rather than residential purposes but that did not change their charter as rental income. No other services were being rendered by the owner assessee to the tenants. The learned counsel of the appellant while disputing the findings of the learned I.A.C. has referred cases reported as (1965) 58 ITR 592 and (1967) 66 ITR 596 asserting that it is not a simple case of let out of properties rather facility for storage of materials were provided in the shape of let out godowns. He has also drawn our attention to the fact that throughout its history the income has been treated as income from business.

17. The matter has been considered by us. Reverting to the cases cited by the appellant it is found that the principle emerging from discussion to both the cases with reference to assessment of income under the head "Income from House Property" is that "where income is derived from house property by the exercise of property rights properly so called, the income falls under the head income from property. It is the nature of operations and not the capacity of the owner that must determine whether the income is from property or from trade. Where the operation involved in the activity of earning income from house property are not different from those of an ordinary house owner, the income derived is income from property irrespective of whether the operations are carried on by a company one of whose objects or even the sole object is to indulge in the activity of earning income from house property. Thus, where house property is given on lease or licence basis for earning income therefrom the true character of the income derived is income from property. The said character is not changed and the income does not become income from trade or business if the hiring is inclusive of certain additional services such as heating, cleansing, lighting and sanitation which are relatively insignificant and only incidental to the use and occupation of the tenants". (1965) 58 ITR pages 595-596.

18. As for the plea of the appellant that the income from leasing of the godown was actually income from business it has been observed in the cases referred to above that such income could be categorised as income from operations of a trading nature only "if the subject hired out was a complex one and the income obtained was not so much because of bare letting out of the tenement but because of facilities and services rendered, the operation involved in such letting out of property may be of the nature of business of trading operations and the income derived may be income not from exercise of property rights properly so called but income from operations of a trading nature". (1965) 158 ITR page 596.

19. As the facts are, the appellant is deriving income from renting of premises which are being used as godown by the tenants. No other service or facility is being provided to these, tenants. In other words the receipts declared are from 'bare letting out of tenements and income is being derived from exercise of property rights only. On the basis of principles enumerated in the above-cited cases such income cannot be held to be arising from operations of a trading nature and income has correctly been treated by the; Additional Commissioner as income arising from house property assessable under section 19 of the Income Tax Ordinance after allowing the expenses admissible under section 20.

20. The orders under section 66-A for all the years are upheld and the appeal fails for all the four years.

C. M. A./562/Trib. Appeal dismissed.