Income Tax Ordinance (XXXI of 1979)--

----S. 59(1)----Constitution of Pakistan (1973), Art. 199---Self-Assessment Scheme (1993-94)---C.B.R. Circular No.9 of 1993---Constitutional petition- Provision in Self-Assessment Scheme not to select the cases for total audit in subsequent two years if case of assessee was picked up for total audit for the assessment year 1993-94 and was duly scrutinized---Same case was again selected through computer ballot for total audit for the assessment year 1994-95---Validity---Selection of the case of assessee for total audit and issuance of notice was without lawful authority and of no legal effect in circumstances.

Messrs Army Welfare Sugar Mills Ltd. and others v. Federation of Pakistan and others 1992 SCMR 1652; AI-Samrez Enterprises v. The Federation of Pakistan 1986 SCMR 1917 and Mian Aziz A. Sheikh v. Commissioner of Income Tax PLD 1989 SC 613 = 1989 PTD 894 ref.

Siraj-ud-Din Khalid for Petitioner.

Muhammad Ilyas Khan and Shahbaz Butt for Respondent.

JUDGMENT

1. The circumstances leading ip the filing of these petitions briefly stated are that the petitioners, who are individuals deriving income from bottles, essences/colours, were being assessed to income tax in Circle 23 Faisalabad. Pursuant to section 59(1) of the Income Tax Ordinance, 1979, Central Board of Revenue issued Circular No.9 of 1993 promulgating the self-assessment scheme of income tax for the year 1993-94 which inter alia provided that 5 % of the returns received under the scheme shall be picked up for total audit through computer ballot and cases once selected through ballot shall not be earmarked for any further balloting in the next two years.

2. It is common ground between the parties that the petitioner had submitted his returns for the year 1993-94 under self-assessment scheme which was picked up for total audit and was duly scrutinized. Subsequently, when he filed the returns for the next assessment year 1994-95, it was once again selected through computer ballot of total audit, though according to the petitioner it could not have been done as the self-assessment scheme for the year 1993-94 had granted immunity from scrutiny for a period of two years while the returns filed under the scheme had been subjected to total audit.

3. In support of this petition, learned counsel for the petitioner has contended that as in the self-assessment scheme announced vide Circular No.9 of 1993, a categorical promise had been made by the Central Board of Revenue that if once a person's returns under the self-assessment scheme has been subjected to total audit his returns for the subsequent two years would be exempt from the scrutiny, this immunity could not be taken away by the respondents who are estopped from earmarking the petitioner's case for the assessment year 1994-95 for total audit.

4. Learned counsel for the respondents has, on the other hand, argued that the returns filed by the petitioner for the assessment year 1994-95 did' not qualify for exemption as the conditions laid down in the scheme for the assessment year 1994-95 did not stand fulfilled.

5. The contention raised by the learned counsel for the respondent ignores the fact that the petitioner, having acted upon the terms and conditions of Circular No.9 of 1993 by filing returns under the self- assessment scheme for the year 1993-94, had earned a vested right of being exempt from total audit for a period of two years as provided in the scheme itself any subsequent change in the policy could not destroy that right nor can the petitioner be deprived of the benefit of the earlier scheme. The theory of vested right as well as promissory estoppel has been applied by the Courts of this country since long. It is unnecessary to burden this judgment by mention of all cases as reference to Messrs Army Welfare Sugar Mills Ltd. etc . v. Federation of Pakistan and others 1992 SCMR 1652 and Al-Samrez Enterprises v. The Federation of Pakistan 1986 SCMR 1917 would suffice.

6. Another aspect of the matter which is to be noted is that under Islamic dispensation of justice the parties including State should be bound down to the terms of the contract arrived at between them and they must be made to adhere to their promises. In view of Article 2-A of the Constitution and promulgation of Shariat (Application) Ordinance, 1990, Islamic principles of interpretation of statutes are to be kept in view by the Courts. It follows, therefore, that the respondents cannot be allowed to wriggle out of the clear promises which they made while promulgating self-assessment scheme for the year 1993-94. A useful discussion in this respect can be found to the case of Mian Aziz A. Sheikh v. Commissioner Income Tax PLD 1989 SC 613 = 1989 PTD 894.

This also disposes of Writ Petitions Nos. 7808 of 1995 and 717 of 1996 in which the same controversy is involved.

As a consequence, this petition is allowed; impugned action of the respondents in selecting the case of the petitioner for total audit and the notice issued in this behalf are declared to be without lawful authority and of no legal effect.

There shall be no order as to costs.

M.B.A./R-682/L Petition allowed.