I.T.A. NO.685/HQB OF 1987-88, DECIDED ON 21ST OCTOBER, 1997. VS I.T.A. NO.685/HQB OF 1987-88, DECIDED ON 21ST OCTOBER, 1997., 1998 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 878 (1997)

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

----Ss. 59 & 62---C.B.R. Circular No.5 of 1984, dated 26-6-1984, paras. 4 & 9---Self-Assessment Scheme 1984-85, paras. 4 & 9---Return filed under Self-Assessment Scheme---Existence of evidence of concealment---Effect---If positive evidence of concealment exists or comes into possession of the department during the pendency of assessment, then irrespective of quantum of income declared, the return shall fall outside the purview of Self- Assessment Scheme---Expression "concealment" used in para. 9, Self- Assessment Scheme, 1984-85---Connotation---Act of claiming adjustment of returned losses, not available to assessee and conversion of income into losses was an act of camouflage and cover up, amounting to an act of disguising the true facts and make the things obscure by concealment of material fact, in deceitful manner and attempt to avoiding the tax.

Legal Thesaurus by William C. Burton, 1980 Edn. ref.

(b) Words and phrases---

----Words "conceal", "concealment"---Meanings elaborated.

Legal Thesaurus by William C. Burton, 1980 Edn. ref.

Misri Ladhani, D.R. for Appellant. Muhammad Saleem, C.A. for Respondent.

Date of hearing: 15th October, 1997.

ORDER

MUHAMMAD MUJIBULLAH SIDDIQI (CHAIRMAN). ---The above appeal at the instance of department is directed against the order dated 23-2-1988 by the learned AAC of Income-tax, Hyderabad Range, Camp at Sukkur in I.T.R. No.327/Sukkur relating to the assessment year 1984-85.

2. The grievance of the department is to the direction of learned AAC for accepting the return under the Self-Assessment Scheme.

3. Heard Mr. Misri Ladhani, learned representative for the department and Mr. Muhammad Saleem, CA learned representative for the respondent. Briefly stated the relevant facts are that the respondent a private limited company deriving income from Cotton Ginning etc. filed return of income under the Self-Assessment Scheme showing loss of Rs.7,71,389. The assessing officer found that the assessee declared income for the year under consideration at Rs.1,43,957 but claimed adjustment of alleged unobserved assessed losses which were in fact not available assessed losses already stood adjusted up to the assessment year 1983-84. The brought forward losses adjusted by the assessee were actually returned losses for the assessment year 1981-82 to 1983-84 which could not be adjusted because under the Self- Assessment Scheme for the year 1984-85 the assessee could claim adjustment for assessed losses only. The assessing officer, therefore, excluded the return from the purview of Self-Assessment Scheme and on scrutiny further found that the assessee declared income from Cotton Ginning and Pressing Factory, Ali Wahan as well as from controlling procurement, transport and rental income but did not declare any income from M/s. Gabol Cotton Ginning and Pressing Factory, Khanpur and Habib Cotton Ginning and Pressing Factory, Pano Akil. The assessing officer, therefore, processed the assessment under section 62 and assessed the total income at Rs.5,45,744.

4. Being aggrieved with the exclusion of return from the purview of Self-Assessment Scheme and assessment of total income at Rs.5,45,744, the assessee preferred first appeal. It was contended before the learned A.A.C. that the return did qualify for being processed under Self-Assessment Scheme because income for the year was declared at Rs.1,43,957 before set off of previous years losses. The return was not picked up for detailed scrutiny and, therefore, assessment ought to have been completed under section 59(1). It was further contended that all previous losses claimed by the assessee already stood adjusted up to assessment year 1983-84 which further strengthened the assessee's claim that the income returned at Rs.1,43,957 was to be considered for the purpose of Self-Assessment. It was further urged before the learned A.A.C. that under para. 4(a) of the Self-Assessment Scheme for the year 1984-85 income of the year was to be taken before set off of previous loss. The learned A.A.C. accepted the contention and held that since the appellant's return showed an income of Rs.1,43,757 before set off of previous loss and the case was not picked up for detailed scrutiny, therefore, the case qualified for assessment under section 59(1). The learned A.A.C. directed to re-compute the assessment under section 59(1) on the basis of return filed. In view of this finding he did not deem fit to decide other issues on merits. Being aggrieved with the above direction the department has preferred this second appeal before us. During the course of arguments before us Mr. Muhammad Saleem, C.A. learned representative for the respondent has submitted that under para. 4(a) of Circular No.5, dated 26-6-1984 containing Self-Assessment Scheme for the assessment year 1984-85 a case was not qualified for processing under Self-Assessment Scheme where the declared income, before any adjustment for brought forward assessed loss, does not exceed Rs.18,000. He has further contended that the assessee declared income for the assessment year 1984-85 at Rs.1,43,957, the assessee made adjustment of returned losses of Rs.9,15,346 and thereby returned losses of Rs.7,71,389. He has conceded that the assessing officer rightly observed that assessed losses which could be adjusted against the income for the assessment year 1984-85 were not available to the assessee having being adjusted up to the assessment year 1983-84, consequence whereof is that the assessee had not assessed losses for adjustment. Thus the declared income for the assessment year 1984-85 was to be charged for tax which is more than Rs.18,000 and thus the return did qualify for being process under the Self-Assessment Scheme. Mr. Muhammad Saleem has supported the impugned direction of learned A.A.C. On the other hand the learned D.R. has submitted that the assessment has not been excluded from the purview of Self-Assessment Scheme with reference to para. 4(a) of the Self-Assessment Scheme on which the learned counsel for the assessee has placed reliance but for the reason that the assessee concealed the income which' even according to the assessee was required to suffer the incidence of tax. The learned D.R. has argued that the act of concealment is admitted on record and has not been denied before any forum. He has submitted that the Assessing Officer has nowhere stated in the assessment order that the return was being excluded from the purview of Self -Assessment Scheme because it did not qualify with reference to the provision contained in para. 4(a) of the Self-Assessment Scheme for the assessment year 1984-85. He has contended that in the para. 1 of the assessment order the Assessing Officer narrated the admitted facts to show that no assessed losses were available to the assessee but he claimed returned losses in the garb of assessed losses and thereby worked out losses of Rs.7,71,389 which was not warranted in law. He has further submitted that this act is positive evidence of concealment which existed on record at all times and which was never denied and, therefore, the assessing officer rightly excluded the return from the purview of Self-Assessment Scheme. The learned D.R. has proceeded on to urge that the learned A.A.C. failed to consider the relevant factor and relegated himself to the point which was not relevant at all. He has submitted that if the assessee would not have resorted to the act of concealment the return would have qualified for being processed under the Self-Assessment Scheme. According to the learned D.R. the assessee instead of coming with clean hands and returning the declared income for the assessment year 1984-85 resorted to distortion of facts arid law and thereby returned losses of Rs.7,71,389 with the clear intention of avoiding the tax payable and thereby indulging in act of concealment and thus deprived himself of the benefit of Self-Assessment Scheme.

5. We have carefully considered the contentions raised on behalf of the learned representatives for the parties and material available on record. So far the facts are concerned they are admitted and, therefore, we need not to dilate on it. The sole point for consideration before us is whether, after declaring income for the assessment year 1984-85, exceeding Rs.18,000 before adjustment of brought forward losses, the return could be excluded from the purview of Self-Assessment Scheme or not. As already observed the Assessing Officer has not excluded return from the purview of Self-Assessment Scheme for the reason that it suffers from any disqualification contained in clause A, B and E of para. 4 of the Self-Assessment Scheme or for non-fulfilment of the requirements of the return. The Assessing Officer has though not stated that the return was being excluded from the purview of Self-Assessment Scheme for the reason of concealment but a perusal of the assessment order shows that in substance the precise reason for exclusion from the purview of Self-Assessment Scheme is the concealment. Thus the return has been excluded from the purview of Self-Assessment Scheme under para.4, clause (c) read with para. 9 of the Self-Assessment Scheme for the assessment year 1984-85. It is provided in para. 4(c) that the case shall not qualify for processing under Self-Assessment Scheme where evidence for concealment is available as specified in para. 9. Para 9 reads as follows:---

"9. Concealment cases.---Notwithstanding anything contained in the preceding paragraphs the cases where positive evidence of concealment exists or comes into possession of the Department during the pendency of the assessment, such cases shall fall outside the purview of Self-Assessment Scheme as well as from immunity, irrespective of the quantum of income declared. "

6. A perusal of the above para. 9 shows that it contains non obstante clause meaning thereby that it will override all other provisions contained in Self-Assessment Scheme. It has specifically provided that if positive evidence of concealment exists or comes into possession of the department during the pendency of assessment then irrespective of quantum of income declared, the return shall fall outside the purview of Self-Assessment Scheme. Thus, if positive evidence of concealment exists in any case then the quantum of income declared, shall not come to the aid of assessee. A perusal of para. 9 reproduced above further shows that it does not speak of the concealment of income but merely speaks of the concealment, meaning thereby, that the expression used is more comprehensive and shall comprehend and cover every act of concealment whether of income or the incidence of tax due under the law. The expression "concealment" has not been defined in the Self-Assessment Scheme but the word "concealment" as defined in Legal Thesaurus by William C. Burton (1980 Edition) fully brings the admitted facts on record within the purview of concealment. The expressions ' concealed' and 'concealment' have been defined as follows:---

"CONCEAL, verb: camouflage, cloak, confine, cover up, curtain, disguise, eclipse, enshroud, entomb, envelop, harbor, hide, keep clandestine, keep from, keep out of sight, keep secret, keep to oneself, keep underground, make inconspicuous, make indiscernible, make unapparent, make un-perceptible, mask, not reveal, obscure, occulere, protect, render invisible, screen, seclude, secrete, shade, shadow, shield, shroud, store, suppress, throw a veil over, veil, withdraw from observation, withhold, withhold information.

ASSOCIATED CONCEPTS: conceal assets, conceal information, conceal material facts.

FOREIGN PHRASES: Fraus est celare fraudem. It is fraud to conceal a fraud.

CONCEALMENT, noun: camouflage, confinement, cover, deceitfulness, disappearance, disguise, disguisement, duplicity, evasion, furtiveness, hiding, incognito, inconspicuousness, invisibility, non-appearance, obfuscation, obscurity, obsuration, privacy, seclusion, secrecy, secretion, secretiveness silence, stealthiness, subterfuge, suppression, suppression of the truth.

ASSOCIATED CONCEPTS: concealment of assets, concealment of incormation, concealment of material fact, concealment voiding an insurance policy, concealment with intent to defraud creditors, evasive contempt.

FOREIGN PHRASES: Aliud est celare, aliud tacere: To conceal is one thing; to be silent is another. Suppressio veri, suggestio falst: The suppression of truth is equivalent to the suggestion of what is false."

7. It is admitted position in the present case that the assessee had no assessed losses and the learned counsel for the assessee has frankly conceded that the adjustment for returned losses was not available in law. The only consequence which follows is that the act of claiming adjustment of returned losses, not available to assessee and thus converting the income into losses was an act of camouflage and cover up. It amounts to an act of disguising the true facts and make the things obscure by concealment of material fact, in deceitful manner and if the assessing office would have been misled by the apparent facts the assessee would have succeeded in his attempt of evading the tax. Thus, we are of the considered opinion that the admitted facts on record amount to concealment and the positive evidence whereof is not only existing but is glaring as well. Thus, notwithstanding anything else contained in the Self-Assessment Scheme and irrespective of the quantum of income declared by the assessee, the return shall fall outside the purview of Self -Assessment Scheme. It is, therefore, held that the Assessing Officer rightly excluded the return from the purview of Self-Assessment Scheme. It is further held that the learned A.A.C. could not reach the crux of the matter and directed to process the return under Self-Assessment Scheme by considering the irrelevant facts and points. The impugned direction of learned A.A.C. is, therefore, hereby vacated and the order of Assessing Officer, excluding the return from the purview of Self-Assessment Scheme is hereby restored.

8. As already observed in the earlier part of this order the learned A.A.C. has not given any finding on merits after coming to the conclusion that the return should be processed under Self-Assessment Scheme. Since the impugned direction of learned A.A.C. has been vacated and it has been held that the return was rightly excluded from the purview of Self-Assessment Scheme, the appeal is remanded back to the C.I.T.A.A.C. having jurisdiction to decide the appeal on the other points raised in first appeal, after giving opportunity of being heard to the assessee as well as department. The appeal at the instance of department is allowed as above.

M.B.A./462/Trib.Order accordingly.