Income Tax Ordinance (XXXI of 1979)---

----Ss. 65 & 59(1)---Additional assessment---Assessment Year 1996-97-- Assessment was finalized under Self-Assessment Scheme---Assessment was reopened on the ground that opening stock for the assessment year 1996-97 was on the higher side (different) than the closing stock for the assessment year 1995-96 while this fact was available on record at the time of assessment---Validity---Assessing Officer did not have any new material let alone a "definite information" at the time of reopening of assessment under S.65 of the Income Tax Ordinance, 1979---Reopening of assessment on the same facts was by all means change of opinion, which was not permitted under law---Original assessment was restored by the Appellate Tribunal in circumstances.

1995 PTD (Trib.) 580; 2000 PTD (Trib.) 329; 1997 PTD 1485; 1994 PTD (Trib.) 1360 and 1990 PTD 155 ref.

Muhammad Ajmal Khan for Appellant.

Mrs. Talat Altaf, D.R. for Respondent.

Date of hearing: 12th February, 2000.

ORDER

Present appeal for the assessment year 1996-97 has been directed against the impugned order, dated 30-4-1999 passed by the learned AAC, Appeal Range, Lahore. The assessee/appellant challenged that the learned AAC was not justified in -setting aside the assessment made under section 62/65 of the Income Tax Ordinance, 1979.

2. The assessee, an individual, derives income from grinding of chilly and salt at Akbari Mandi, Lahore. Original assessment in the instant case was finalised under section 59(1) of the Income Tax Ordinance, 1979 at an income of Rs.50,000. Later on it transpired that the assessee has furnished inaccurate particulars regarding declared closing stock at Rs.40,000 for assessment year 1995-96 whereas the opening stock for 1996-97 shown at Rs.6,10,000. A show cause notice was issued to the assessee and after seeking approval of the learned IAC the case was reopened. Statutory notices under sections 65 and 58(1) were issued and duly complied with, and assessee filed return of income as before i.e. Rs.50,000. The Assessing Officer was not convinced with the declared results of the assessee so he proceeded to estimate the same at .9,00,000 adopting G.P. rate at 250. The assessee preferred an appeal before the learned AAC who vide order, dated 30-4-1999 set aside the case for re-assessment for the reason that the service of notice under section 65 of the Income Tax Ordinance, 1979 was not in accordance with law; hence the present appeal.

3. Heard Mr. Muhammad Ajmal Khan, Advocate, learned authorised representative for the appellant/assessee and Mrs. Talat Altaf, learned representative for the Department.

4. The learned A.R. vehemently contended that the action of the Assessing Officer in reopening the case under section 65 was ab initio, null and void as there was no definite information available to the Assessing Officer at the time of reopening the case. He also contended that re assessment proceedings were invalid because the service of notice under section 65 is not in accordance with law. In alternative he challenged the estimation of sales at Rs.9,00,000 against the declared Rs.4,00,000. He urged at the bar that the original assessment after having been finalised under section 59(1) of the Income Tax Ordinance, 1979, the Assessing Officer could not reopen it on the same facts. He stated that in this case the review of the original assessment amounted to change of opinion which has been disapproved by the appellate authorities at all forums. In support of his contention he relied upon various judgments of the august Supreme Court as well as the judgment cited at the bar by the learned counsel of the assessee was a case reported as 1995 PTD (Trib.) 580 wherein it has been declared that:

"Assessment cannot be reopened on reappraisal of same facts and as a result of change of opinion---where the assessment was reopened on the report of Income-tax Inspector which he had submitted on the scrutiny of record which was already available at the time of original assessment and no new information had been received by the Assessing Officer justifying the re-opening of the assessment, it was a clear case of change of opinion and reopening of assessment was not warranted by law".

Another recent judgment of the Tribunal reported as 2000 PTD (Trib.) 329 was also cited. In the cited (Supra) case the assessment was finalised under SAS, the Assessing Officer re-opened the case finalised under SAS, the Assessing Officer re-opened the case subsequently on the basis of information gathered from accounts/computation chart attached with the return made additions. It was held when the return was accepted under Self Assessment Scheme there would be a presumption in law that Assessing Officer had ensured that same qualified for being processed under SAS and for that purpose material on record had been examined. Re-examination of same material would amount to change of opinion. Assessment order was held to be without jurisdiction. Proceedings of re-opening of assessment were quashed and original assessment order was restored' by the Appellate Tribunal. The learned A.R of the assessee sought strength from judgment of august Supreme Court of Pakistan reported as 1997 PTD 1485 wherein their Lordships dilated upon the concept of definition of definite information and reopening of assessment on the basis of that information. It would be useful to reproduce a paragraph from the judgment, which is as under:

"Where an assessment had been framed consciously by applying mind and there being no concealment of facts by the assessee, discovery of the fact that a provision of law had been ignored or not applied, or the agreement made by the assessee was void, could not be called a definite information".

Similarly another judgment of the Tribunal reported as 1994 PTD (Trib.) 1360 was also relied upon which provided that:---

"When all the facts are placed before the department/Revenue nothing is concealed and nothing does actually come into the knowledge or possession of the department to belie the facts already placed before it, reopening of the assessment is not legal".

5. Mr. Muhammad Ajmal Khan, learned counsel for the appellant also brought to our notice *the famous judgment of the Supreme Court of Pakistan Edu1ji Dinshaw Limited v. ITO reported as 1990 PTD 155 which also considered the issue in question and gage authoritative findings that:---

"Once all the facts have been fully disclosed by the assessee and considered by the Income Tax Authorities and the assessments have been consciously completed, and no new fact has been discovered, there can be no scope for interference with these concluded transactions under the provisions of S.65 on the ground that the income chargeable to tax under the Ordinance has escaped assessment or has been under-assessed, etc. in the meaning of S.65 (1)(a)(b) of the Ordinance".

Elaborating his arguments the learned A.R contended that the computation chart mentioning the closing stock at Rs.40,000 for assessment year 1995-96 and opening stock at Rs.6,10,000 for assessment year 1996-97 was already on the record when the original assessment under section 59(1) was completed by the Assessing Officer. Though it was typographical mistake but still it was on the record and the assessing authority could have easily excluded the assessee's case from the ambit of section 59(1) of the Income Tax Ordinance 1979. However, the assessment was framed after giving due consideration to the facts and circumstances of the case and the figures available on record. He further contended that now reopening of the case on the same facts would be obviously in flagrant violation of the principles laid down by the Supreme Court of the country on this issue.

6.The learned D.R was also heard who supported the impugned order.

7. Arguments heard and relevant orders perused. I feel myself pursued by the arguments of the learned A.R keeping in view the facts and circumstances of the case as well as the judgments cited at the bar. I have no hesitation in holding that the Assessing Officer did not have any new material let alone a definite information with him at the time of reopening of the case under section 65 of the Income Tax Ordinance, 1979. Reopening of the case on the same facts was by all means change of opinion, which is not permitted under the law. Even otherwise the learned first appellate authority erred in law while setting aside the case for the reason that notice under section 65 has not been issued in accordance with law because if this is considered to be true then any subsequent proceedings which were conducted in pursuance of a notice which is not valid in the eye of law could not be sustained legally. For the foregoing reasons the impugned order passed by the learned AAC is hereby vacated and assessment originally framed under section 59(1) is restored. Appeal succeeds accordingly.

C.M.A./M.A.K./36/Tax (Trib.)Appeal allowed.