I.T.A, NO.4535/LB OF 1999 VS I.T.A, NO.4535/LB OF 1999, 2000 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 1444 (2000)

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

----S. 59(1)---Self-Assessment Scheme---Question of fact and law---Plea that return should be accepted under Broad Based Self-Assessment Scheme can be taken at any stage of appeal because it is a mixed question of law and fact.

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

----S.59(1)---Self-Assessment Scheme---Notice for selling apart case outside the ambit of Self-Assessment Scheme---Limitation---To set apart Return outside the ambit of Self-Assessment Scheme, Assessing Officer has to inform the assessee by 30th June of relevant assessment year.

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

----Ss. 59(1) & 63----C.B. R. Circular No. 16 of 1996, dated 3-9-1996---Self Assessment Scheme---Notice for short documents---Setting apart of Return outside the ambit of Self-Assessment Scheme---Return was filed under Self Assessment Scheme---Short documents notice was issued by the Assessing Officer as the relevant columns of the Return were not filled---Complete details were available from the computation chart annexed with the Return, as were required in the notice---Assessment was finalized ex parte under S.63 of the Income Tax Ordinance, 1979---Validity---Assessing Officer had issued the short documents notice owing to misconception of facts and had erroneously excluded the assessee's Return of income from the ambit of the' Self-Assessment Scheme although same fully qualified to be accepted under S.59(1) of the Income Tax Ordinance, 1979---Assessing Officer was directed to accept the returned income of the assessee under S.59(1) of the Income Tax Ordinance, 1979 by the Appellate tribunal in circumstances.

Muhammad Shahid Abbas for Appellant.

Shahid Bashir, D.R. for Respondent.

Date of hearing: 27th January, 2000

ORDER

This appeal at the behest of assessee-appellant is directed against order dated 15-7-1999 passed by A.A.C. Appeal Range, Lahore in respect of assessment year 1996-97.

Both the learned representatives appearing at the bar have been heard at great length.

The first contention of the learned A.R. of the assessee is that the learned AAC has fallen in grave error in setting aside the assessment to be made afresh. According to the learned A.R. the learned A.C. should have accepted the return of income filed by the assessee under the Self-Assessment Scheme instead of directing to frame re-assessment after affording proper opportunity of being heard. It was also pointed out by the learned A.R. that the return of income filed by the assessee fully qualifies to be accepted under the Broad Based Self-Assessment Scheme and there was no reason with the Assessing Officer to exclude the said return of income out of the ambit of B. B. Self-Assessment Scheme. On the other hand, the learned D.R. strongly objected that the assessee is debarred to take plea at this stage that his return should be accepted under the BBSAS particularly when this plea was not taken before any of the two authorities below. This contention of the learned D.R. is devoid of any force because this is a mixed question of law and fact and can be taken at any stage. Hence this objection of the learned D.R. is overruled.

4. Coming to the assessee's contention that his return of income should be accepted under the BBSAS, facts of the case are that the assessee appellant, an individual, derives income from manufacture and sale of wooden tools. Income Tax Return was filed by him declaring net income of Rs.47,574 under the BBSAS. However, the Assessing Officer excluded the return of income of the assessee out of the ambit of the said scheme. To finalize the assessment, statutory notices were issued by the Assessing Officer and none attended on behalf of the assessee to participate in the assessment proceedings. In the circumstances, the Assessing Officer was constrained to finalize ex parte assessment by resort of section 63 of the Ordinance. Accordingly the net income was computed by the Assessing Officer at Rs.1,43,329 by adopting proper methodology of computing business income. At the first appellate stage, the AAC remanded the case back to the Assessing Officer with the directions to frame re-assessment after affording the assessee proper/fair opportunity of being heard. These findings of the First Appellate Authority compelled the assessee to file further appeal before the Tribunal.

5. After giving anxious thought to the averments advanced by the two parties and also after having perused the BBSAS, I find that the Assessing Officer has not appreciated the facts of the case in its proper perspective. Perusal of the assessment order reveals that the Assessing Officer has written a single sentence while setting apart the assessee's return out side the ambit of the BBSAS. He did not bother to mention on what grounds or basis the said return was hit by mischief of the BBSAS. On the contrary, the learned A.R. has stated that to qualify the return of income under the said scheme the tax on declared income should be higher by 25 % or more as compared with the tax payable on the basis of last declared or last assessed income whichever is higher as is laid down in C. B. R. Circular No. 16 of 1996, dated rd September, 1996. According to the learned A.R., as this condition was duly fulfilled in the present case, the assessee's return of income merited acceptance under the said scheme.

6. I have also examined the assessment record with the assistance of the learned D.R. and it is noted that short documents notice was issued by the Assessing Officer on 1-3-1997 as the relevant columns of the return were not fulfilled. However, it is found that computation chart was duly annexed with the Income Tax return wherein complete details, as were required in the said notice, were available. Besides, this computation chart was duly initiated by the Assessing Officer. It seems that the Assessing Officer has issued the short documents notice dated 1-3-1997 owing to misconception of facts.

7. I also show my immense displeasure that the Assessing Officer has handled this case with most carelessness. Actually the Assessing Officer should inform the assessee by 30th of June, 1997 that his case did not qualify under BBSAS. Assessment record is completely silent with this exercise. Perusal of the order sheet also reveals that first notice under section 61 was issued on 4-11-1997 and this notice is not available in the assessment record. The second notice under section 61, was issued on 6-3-1999 for 20-3-1999; and this notice is very much available therein. It is amazing that this case remained unattended on the part of the Assessing Officer for quite in long time in the absence of any valid reason.

8. For 'foregoing discussion, I am of the considered view that the Assessing Officer has erroneously -excluded the assessee's return of income out of the ambit of the BBSAS as 'it fully qualified to be accepted under section 59(1) of the Ordinance. When compared with the tax paid for the year under appeal vis-a-vis the tax payable on the basis of last declared or assessed income in accordance with the said scheme. Accordingly, the Assessing Officer is directed to accept the returned income of the assessee for the year under appeal under section 59(1) of Ordinance, 1979.

9. In the result, the appeal filed by the assessee stands accepted on the primary issue.

C.M.A./M.A.K./10/Tax(Trib.) Appeal accepted.