Income Tax Ordinance (XXXI of 1979)---

----Ss.65, 13(i)(aa) & 59(1)---Additional assessment--Addition---Change of opinion---Assessment was finalized under Self-Assessment Scheme-- Assessing Officer re-opened the case subsequently on the basis of information gathered from the accounts/computation chart attached with the return and made additions---Validity--When 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 Self Assessment Scheme and for that purpose material. on record had been examined---Re-examination of same material should 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.

1990 PTD (Trib.) 539 rel.

A.S. Jafry for Appellant.

Zaki Ahmad, D.R. for Respondent.

Date of hearing: 30th October, 1999

ORDER

MUHAMMAD MUJIBULLAH SIDDIQUI (CHAIRMAN).---This appeal at the instance of assessee is directed , against the order dated 2-8-1999 by the learned CIT(A), Hyderabad in I.T.A. No.687 relating to the assessment year 1994-95.

2. The appellant has raised objection in the upholding or reopening of assessment under section 65, maintaining of addition under section 13(1)(aa) at Rs.3,18,875 confirming of G.P. rate applied and maintaining the estimated sales-

3. Heard Mr. A. S. Wry, learned counsel or the appellant and Mr. 7aki Ahmad, learned representative for the department. The learned counsel for the appellant has vehemently assailed the reopening of assessment. He has submitted that reopening is the result of change of opinion and is not based on any information envisaged under section 65. In. support of his contention the learned counsel for the appellant has taken us through the assessment order, according to. which the return was filed under the Self-Assessment Scheme. The assessment was completed under the Self Assessment Scheme. The assessment was reopened on the basis of re- examination of record according to which the appellant's payment towards power bills were shown at Rs.1,48,362 and according to the Assessing Officer gross receipts were declared at Rs.1.00,000. A perusal of assessment order further shows that the statement that the declared receipts were at Rs.1,00,000 is not correct. In fact G. P. was declared at Rs.1,00,000 and the N.P. was declared at Rs.35,000. The learned counsel has further argued that according to the provisions. contained to Self-Assessment Scheme the requirements were that profit and loss accounts as well as estimate of sales and gross profit were to be furnished alongwith the return of income. The Assessing Officer was required to examine if the requirements were fulfilled. It was further provided to the scheme that returns wherein in evidence is available regarding concealment of income or furnishing inaccurate particular of income shall not qualify for acceptance under the Self-Assessment Scheme. Thus when the return, was accepted under the Self-Assessment Scheme there would be a presumption in law that the Assessing Officer had examined the material produced with the return of income and had arrived at the conclusion that there was no concealment on the part of assessee and then only the -return was accepted under the Self-Assessment Scheme. He has submitted that subsequently on examination of same record and same' material if the Assessing Officer derives some other conclusion it would be a case of change of opinion rendering the reopening of assessment beyond mandate of section 63.

4. On the other hand the learned D.R. has though not denied that in the very first para. of the assessment order the Assessing officer has observed that the information forming basis of reopening was gatherer: on examination of record, but has contended it would not amount to change of opinion. He has submitted that the original assessment was finalised under sale assessment scheme in a mechanical manner without conscious application of mind and, therefore, the reopening of assessment was justified.

5. We have carefully considered the contentions raised by the learned representatives for the parties. We are persuaded to agree with the submissions made by the learned counsel for the appellant. The point in issue already stands decided against the department by a Division Bench of this Tribunal reported as 1990 PTD (Trib.) 539 It has been held in the cited judgement as follows:--

"As a matter of fact no assessment whether under the Self Assessment Scheme or under section 62 of the Ordinance or on agreement basis can be made without examining the annual financial statements of accounts comprising of trading and profit and loss account and a balance-sheet. These statements firm the foundation of any exercise which is undertaken to compute taxable income of an assessee. Even under the Self-Assessment Scheme an Income-tax Officer is not. required to accept returned income blindly without looking at the statements of accounts. He is empowered by section 59(3) to add back inadmissible expenses and other unreasonable expenses claimed by an assessee. He can do so provided he examines the statement filed otherwise the return. This aspect of processing of a return filed under Self-Assessment Scheme has been examined in detail in this Tribunal's order reported as 1986 PTD 380. The point worth noting here is that even an order under section 59(1) is passed after ensuring that the return of income qualifies for acceptance under the Self-Assessment Scheme "

6. Respectfully following the principle laid down above it is held that' there would be a presumption in law that before accepting the return under Self-Assessment Scheme the Assessing Officer had ensured that it qualifies for being processed under Sell-Assessment Scheme and for that purpose a material on record must have been examined with the result that the assessment cannot be reopened on the basis of re-examination of same material as it would amount to change of opinion

7. For the foregoing reasons, it is held that the reopening of assessment was not justified. As we have held that 'the reopening of assessment was not justified, therefore, all subsequent proceedings in pursuance thereof would be held to be without jurisdiction and, therefore, we need not examine the issues relating to the additions made on reopening hereby quashed and the original assessment order stands restored. The appeal is allowed accordingly.

C.M.A./107/Tax(Trib.)Appeal allowed