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

----Ss.59(1) & 59A---Self-assessment--Assessment on the basis of Return---, Distinction---Assessee becomes entitled for finalization of assessment under S.59(1), Income Tax Ordinance, 1979 if the Return of income is filed by the assessee in accordance with the provisions of Self-Assessment Scheme issued by the Central Board of Revenue for the relevant year which qualifies for acceptance under the Scheme--Provision of S.59A of the Ordinance confers the power upon the Assessing Officer to assess the total income of the assessee without requiring the presence of the assessee or the production of any evidence if he was satisfied that .the return furnished under S.55 was correct and complete---Assessing Officer was to look into the facts and circumstances of each and every case and to decide that whether the assessment of a particular case could be finalized under S.59A of the Income Tax Ordinance, 1979 or not.

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

--S.8---Central Board of Revenue---Letter C. No. 7(27) S.Asstt/96, dated 2-6-1997---Instructions in the letter were of administrative nature and did not in any way create any right in favour-of the assessee.

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

----S.59(1)---Broad Based Self-Assessment Scheme, 1996-97--New assessee- Return filed by new assessee also qualified for acceptance under "Broad Based Self-Assessment Scheme" for the assessment year 1996-97 and there was no mention in the Scheme of any liability for the new taxpayers:

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

----S. 59A---Assessment on the basis of Return---Broad Based Self -Assessment Scheme, 1996-97---C.B.R. Circular No. 16 of 1996, dated 4-5-1996---C.B.R Letter C. No.7(27) S.Asstt/96, dated 2-6-1997---New assessee---Assessment year 1996-97---First Appellate Authority directed the Assessing. Officer to accept the Return of the assessee under S.59A.of the Income Tax Ordinance, 1979 as no concealment was pointed out by, the Assessing Officer---Validity---Order of the First Appellate Authority was modified and assessment was set aside by the Appellate Tribunal with the direction that Return filed by the assessee for the year 1996-97 be accepted under Broad Based Assessment Scheme subject to the condition that same fulfilled other requirements of the scheme.

Malik Bros. Cloth Dealers, Lahore (NTN 6-12-000874) v. SOIT Circle 12, Zone-B, Lahore, I.T.A. No.618/LB of 1998 rel.

Noor ul Amin Hotyana, D.R. for Appellant.

Ch. Muhammad Akram Gondal, A.R. for Respondent.

Date of hearing: 23rd October, 1999.

ORDER

This departmental appeal pertaining to, the assessment year 1996-97 has been filed to impugn the Order No. 1202.of 1998, dated 30-11-1998 passed by the learned A.A.C of Income Tax/Wealth Tax, Appeal Range, Lahore on the following ground:--

"That the learned A.A.C. was not justified to accept the case under section 59A. "

2. Relevant facts of the case under consideration are that the respondent-assessee is an AOP deriving income from herbal processing and agitated in first appeal that the instant case was in fact liable to be accepted under the provisions of section 59A of the Income Tax Ordinance, 1979 due to the reason that there was no concealment pointed out by the Assessing Officer. Before the learned A.A.C., learned A.R. of the assessee furnished copy of C.B.R.'s Letter C.No. 7 (27) S. Asstt/96, dated 2-6-1997 with the contention that the return of the assessee was liable to be accepted under the provisions of section 59A of the Ordinance due to the reason that there was no concealment pointed out by the Assessing Officer. Accordingly, learned A. A. C. disposed of the first appeal with the following directions:----

The contention of the appellant's A.R. carries weightage, hence the Assessing Officer is directed to accept the return under section 59A in the light of Board's above-referred letter."

3. Learned A.R. of the respondent-assessee defended the impugned first appellate order and stated that the return for, the assessment year 1996-97 was filed under Broad Based Self-Assessment Scheme on 29-9-1996. Learned A.R. contended that the case of the assessee qualified to be accepted under Self-Assessment Scheme. According to the learned A.R. -all returns filed for the assessment year 1996-97 including those by new taxpayers qualified for acceptance under the Broad Based Scheme of Self- Assessment Scheme. In support of his contention, learned A.R. produced a copy :of the ITAT, Lahore Bench order, dated 18-6-1998 passed on I.T.A. No.618/LB of 1998 for the assessment year 1996-9.7 in the case of M/s. Malik Bros. Cloth Dealers, Lahore (NTN 6-12-000874) v. SOIT Circle-12, Zone-B, Lahore wherein it was held that new taxpayers were not debarred from filing the returns under self-assessment scheme for the assessment year 1996-97.

4. On the other side, learned D.R. in his arguments contended that new taxpayers did not qualify for acceptance. of their returns under Self -Assessment Scheme in view of the clarification issued by the C.B.R. through Circular No. 16 of 1996, dated 4-9-1996.

5. Learned A.R. of the assessee, however, submitted that the assessees could not be deprived of the opportunity of availing the benefit of SAS originally provided to them through issuance of subsequent clarifications having the effect or bringing of. substantive nature of amendments in the scheme. According to the learned A.R. even the clarification issued through Circular No.16 of 1996 did not in any way debar the new taxpayers for acceptance of their returns under Self-Assessment Scheme. In support of this contention, learned A.R. again relied on the above-quoted order of the I.T.A.T., dated 18-6-1998.

6. Arguments of the learned representatives of both the parties have been heard and the relevant order as well as the documents as submitted by the learned A.R. have been perused. The Assessing Officer proceeded under formal law because according to him this was a case of gross under statement. Learned A.A.C. directed to accept the return under section 59(A) of the Ordinance in the light of the C.B.R.'s Letter C. No.7(27) S. Asstt/96, dated 2-6-1997 wherein the instructions were issued by the C.B.R., that the returns filed by new taxpayers may be accepted under section 59(A) where considered fit and where there was no concealment. It is pertinent to point out here that provisions of section 59(A) are altogether different from those of section 59(1) of the Ordinance. Under the provisions of section 59(1) of the Ordinance, the return of income filed by an assessee in accordance with the provisions of S.A.S. issued by the C.B.R. for that year which qualifies for acceptance under the Scheme in that case the assessee becomes entitled for finalization of assessment under section 59(1) of the Ordinance. On the other hand, the provisions of section 59(A) confer the power upon the Assessing Officer to assess the total income of the assessee without requiring the presence of the assessee or the production of any evidence if he is satisfied that the return furnished under section 55 is correct and complete. Thus, in the latter case, it is the Assessing Officer who is to look into the facts and circumstances of each and every case and to decide that whether the assessment of a particular case can be finalized under section 59(A) or not? The abovementioned Circular issued by the C.B.R. on 2-6-1997 contained instructions of administrative nature and did not in any way create any right in favour of the .assessee. Accordingly, the findings of the learned first appellate authority to accept the return under section 59(A) in the light of the Board's instructions through its letter, dated 2-6-1997 are not maintained. However, the contention of the learned A.R. supported with the decision of the I.T.A.T., dated 18-6-1998 in I.T.A. No.618/LB of 1998 pertaining to the assessment year 1996-97 that, the return filed by the new assessee also qualified for acceptance under Broad Based Self-Assessment Scheme for the assessment, year 1996-97 has much force. The I.T.A.T. in its abovementioned order, dated 18-6-1998 upheld the viewpoint that S.A.S. for the assessment year 1996-97 did not make mention of any liability for the new taxpayers. Learned D.R. failed to substantiate his contention that the returns filed by new taxpayers were not eligible for acceptance under Broad Based Self-Assessment Scheme for the year 1996-97 by putting forth any plausible arguments. Under the circumstances the order of the first Appellate Authority is modified and the assessment is set aside with the direction that the return filed by the assessee for the year under consideration be accepted under Broad Based Self-Assessment Scheme for the assessment year 1996-97 subjected to the condition that it fulfilled other requirements of the scheme.

7. The appeal of the revenue is disposed of in the manner as indicated above.

C.M.A./Mq1.K./38/Tax (Trib.) Order accordingly.