A. NO: 611/ICB OF 1.997-98, DECIDED ON 15TH MARCH, 1999. VS A. NO: 611/ICB OF 1.997-98, DECIDED ON 15TH MARCH, 1999.
1999 P T D (Trio.) 3229
[Income-tax Appellate Tribunal Pakistan]
Before Muhammad Mujibullah Siddiqui, Chairman
A. No: 611/ICB of 1.997-98, decided on 15/03/1999.
(a) Income Tax Ordnance (XXXI of 1979)---
---S.66-A--Powers of Inspecting Additional Commissioner to revise Deputy Commissioner's order---Concept of finality of assessment---Quality of assessment--Vested right ---Revisional jurisdiction---Mere poor quality of assessment order shall not ,provide sufficient justification for exercising revisional jurisdiction under S.66-A of the Income Tax Ordinance, 1979-- With the completion of .assessment a vested right was created in favour of assessee and .the concept of finality of assessment came into operation-- Assessee was not to be lightly deprived of his vested rights under the law until and unless the conditions prescribed by law in that behalf were strictly fulfilled.
(b) Income Tax Ordinance (XXXI of 1979)---
----S.66-A---Powers of Inspecting Additional Commissioner to revise Deputy Commissioner's order---Possibilities and probabilities---Findings, objective in nature and findings, subjective in nature---Exercise of jurisdiction-- Justification---.Mere possibilities and probabilities of .coming to some other conclusion, had the desired enquiries been held would not provide sufficient justification for exercise of jurisdiction under S.66-A of the Income Tax Ordinance, 1979---Findings .required to be given under S.66-A have to be. objective in nature--Findings subjective in nature were not allowed to be reached in proceedings tinder S.66-A of the Income Tax Ordinance, 1979 and such proceedings were bound to become wanton in nature which could never be the intention of Legislature while conferring jurisdiction under 8.66-A of the Income Tax Ordinance, 1979.
(c) Income Tax Ordinance (XXXI of 1979)---
----S.66-A--Powers of Inspecting Additional Commissioner to revise Deputy Commissioner's order---Findings of the Additional .Commissioner of Income-tar were not specific as to how the-assessment order was erroneous-- Findings were merely charge-sheet of the Assessing Officer showing his in competency and inefficiency with the direction to finalize the assessment afresh---Validity---Additional Commissioner of Income-tax in circumstances, had failed to make out case for exercise of jurisdiction under S.66-A of the Income Tax Ordinance, 1979---Order of Additional Commissioner was cancelled by Tribunal.
Udha Ram Rajput for Appellant.
Abdul Aziz Memon, D.R. for Respondent
Date of hearing: 13th March, 1999.
ORDER
This appeal is directed against the order, dated 4-5-1998 by the learned ACIT, Sukkur Range, Sukkur under section 66-A of the Income Tax Ordinance, 1979.
2. Heard Mr. Udha Ram Rajput, Advocate for the appellant and Mr. Abdul Aziz Memon, learned representative for the department. The learned counsel for the appellant has submitted that in the show-cause notice issued under section 66-A and the impugned order under section 66-A the learned ACIT has failed to give any specific finding as to how the assessment order was erroneous and prejudicial to the interest of revenue. He has submitted that the learned ACIT can exercise jurisdiction under section 66-A of the Income Tax Ordinance, 1979 if after examination of record he considers that any order passed therein by the Deputy Commissioner is erroneous in so far, as it is prejudicial to the interest, of revenue. He has further submitted that the learned ACIT is empowered to make an order under section 66-A after making or causing to be made such enquiry as he deemed necessary. However, neither on examination of record the learned ACIT has given any finding that the assessment order was erroneous nor he has made any enquiry leading to such conclusion. He has submitted that the learned ACIT has proceeded on surmises and conjecture and the assumption and presumption not warranted in law. He. has proceeded on to argue that in the show-cause notice, dated 12-2-1998 the learned ALIT has stated that the assessee failed to prove the investment of Rs.60,37,250 with reference to the advance claim in the names of Zamindars on different .dates which ultimately was remitted by M/s. A.G. Mart (Pvt.) Limited.
Mr. Udha Rata has submitted that the Assessing Officer held a detailed enquiry in this behalf and issued a notice, dated 25-3-1997. The enquiry was prompted on the basis of information received from DCIT, Circle A-II, Cos. III, Karachi informing that M/s. A.G. Mart has stated to have received a sum of Rs.60,37,250 from Royal Agro Traders. In the notice, dated 25-3-1997 issued by the Assessing Officer the assessee was called upon to prove source of meeting-the advance money paid to A.G. Mart alongwith details of mode with date. It was further stated in the notice that if source was not proved it will attract to addition under section 13 of the Income-tax Ordinance. It'-was explained to the assessing officer vide letter, dated 25-4-1997 that the amount stated to have been received from Zamindars at Rs.60,37,250 was not correct. The amount received from Zamindars was at Rs.51,01,250. It was received through 26 drafts. It was further stated that the assessee had apicultural income- at Rs.80,000 per annum and certificate of Mukhtiarkar -was produced in this behalf. It was further stated that the list of growers and Zamindars from whom the advance was received shall be submitted very soon. The assessing officer' after examination of details and explanations observed that the scrutiny has revealed and established that the amount of advance is Rs.51,01,250 as against Rs.60,37,250 communicated from Karachi Authorities. The list of growers and Zamindars who paid the advance to the appellant was submitted to whom summons were issued by the Assessing Officer. 27 , Zamindars appeared before the Assessing Officer and stated on oath that they have made advances to the appellant. The Assessing Officer further observed that the persons who appeared before him belong to noble families and either hold agricultural land or cultivate such land: The Assessing Officer after detailed discussion, observed that no adverse inference which could result attracting section 13 of the Income Tax Ordinance, 1979 can be drawn. Mr. Udha Ram has submitted that after such detailed enquiry and discussion in the assessment order, the first reason assigned by .the leaned ACTT for invoking jurisdiction under section 66-A was uncalled for.
3. The second reason assigned in the show-cause notice, "that the order passed by the Special Officer, seems to have been framed under haste, leaving behind the main question of investment unresolved". This observation is without substance as the detailed enquiry was made by the Assessing Officer.
4. Mr. Udha Ram has further submitted that two other points were raised in the show-cause notice which read as follows:--- .
"You have emerged as a prospective trader for the first time during assessment year 1995-96, declaring loss followed by marginal income for assessment year 1996-97. What were the past activities?
All of sudden, you have brought the names of landlords and growers, 'having reflected the quantum of money declared for purchases of products from M/s. A.C. Mart (Pvt.) Ltd. What kind of crop compelled them to buy the items only for one season. Such transaction has never been reported prior to the proceedings under discussion."
5. Mr. Udha Ram has submitted that perusal of the above points shows that the learned ACIT has travelled beyond the scope of authority vested in him under section 66-A and has travelled beyond the scope of enquiry envisaged under section 66-A which has to be confined to the period relevant to the year under consideration.
6. Mr. Udha Ram has submitted that even in the order under section 66-A there is no specific finding as to how the assessment order is erroneous which is a condition precedent for exercising jurisdiction under section 66-A. In order to appreciate the contention of Mr. Udha Ram it would be appropriate to re-produce the order under section 66-A, which reads as follows:---
Order under section 66-A of Income Tax Ordinance, 1979.
"The case record was called for and examined. The assessee was afforded an opportunity of being heard, vide this office Letter No, 1408 of 1997-98,dated 12-2-1998: The reply thereof received and considered.'' -The order passed by the officer has been found erroneous and prejudicial to, the interest of Government Revenue, due to following reasons:
That the Assessing Officer has failed to make proper probe and investigation: with regard to the source of investment of assessee who was nether required toe file Wealth statement nor made to explain his business capital. Had the probe been" conducted, the source of investment would' have become clear, with regardto application of section 13.
That the Assessing Officer has failed to utilise the information received from DCIT A-2, Cos-III, Karachi. He has failed .to apply his mind-which resulted in failure to draw any adverse inference on account of investment of assessee in the shape, of advances.
The Assessing Officer has although summoned different Zamindars/Growers who paid advances to the assessee but had failed to prove the worth/potential of each person alongwith made of payment viz-a-viz quantity; nature and quality of pesticides, supplied.
The procedure for examination of growers was full of defects in as much as the affidavit have not been obtained. Though the signatures on blank order-sheets have been obtained but without writing/confronting the persons summoned for, resulting in framing an erroneous/defective order. Hence, paras Nos.6 to 8 of the assessing order reflected the element of wastage of precious time, consecutively for four days w.e.f. 19,5-1997 to 22-5-1997 in respect of all 27-persons.
The assessee has been declaring and assessed on commission receipts earned as Distributor of M/s. Cyana-mid Pak Ltd., who lifted 61722-litres of different; products from the company, during the year. The rate of commission as allowed by the company was Rs.5 per litre, but assessed at higher rate of Rs.5.5 per litre without cogent reasons. It appears that the officer wanted to enhance the quantum of commission receipts for a meagre addition of Rs.30,861 only. He should have established such receipts by adopting alternate increase in over all turnover.
In the circumstances, the assessment order, framed by the officer, has been found erroneous and prejudicial to the interest of Revenue, which is accordingly cancelled under section 66-A of Income Tax Ordinance, 1979.
The Assessing Officer is directed to finalize the assessment, afresh after having removed the defects/shortcomings as pointed out here in-above under intimation to the Office of undersigned. "
7. I have asked the learned D.R. to show from the above findings of learned ACIT if he has made out a specific case by giving instances of findings which are erroneous or the learned ACIT has merely charge sheeted, the Assessing Officer showing his incompetence and inefficiency. The learned DR has though supported the impugned finding of learned ACIT but he is not able to show that the learned ACIT has given any clear cut finding that the assessment order was erroneous and prejudicial to the interest of revenue. It has been held time and again that mere poor quality of assessment order shall not provide sufficient justification for exercising revisional jurisdiction under section 66-A. The reason being that with the completion of assessment a vested right is created in favour of assessee and the concept of finality of assessment comes into operation. An assessee is not to be lightly deprived of his vested right under the law until and unless the conditions prescribed by the law in this behalf are strictly fulfilled. In order to exercise jurisdiction under section 66-A the precondition is that after examination of record if any proceedings or after making or causing to be made such enquiry as deemed necessary the Assessing Officer comes to a definite conclusion based on the material and reasons that the, order sought to be revised is erroneous as well as prejudicial to the interest of revenue. Mere possibilities and probabilities of coming to some other conclusions had the desired enquiries being held would not provide sufficient justification for exercise of jurisdiction under section 66-A. The reason being that the findings required to be given under section 66-A have to be objective in nature and if the findings such as given by the learned ACIT in this case that," had the probe been conducted, the source of investment would have become clear, with regard to application of section- 13, or enquiries as intended in the show cause notice such as, "what were the past activities?," and, "what kind of crop compelled them to buy the items only from one season", are allowed to be raised in the proceedings under section 66-A, it shall become subjective in nature and such proceedings are bound to become wanton in nature which could never be the intention of legislature while conferring jurisdiction under section 66-A.
8. For the foregoing reasons it is held that the learned ACIT has failed miserably to make out a case for exercise of jurisdiction under section 66-A and, therefore, the impugned order under section 66-A is hereby cancelled. The assessment order stands restored. The appeal is allowed accordingly.
C.M.A./69/Tax(Trib.) Appeal partly, allowed.