I.T. AS.OS.2822/LB-AND 2823 OF 1998 VS I.T. AS.OS.2822/LB-AND 2823 OF 1998, 2000 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 3773 (2000)

Income Tax Ordinance (XXXI of 1979)---

-----Ss. 66A & 65---Powers of Inspecting Additional Commissioner.-to revise Deputy Commissioner's order---Assessment years 1993-94 & 1994-95-- Assessments were finalized under S.63 of the Income Tax Ordinance, 1979 and under Self-Assessment Scheme respectively---Assessments were cancelled by the Inspecting Additional Commissioner after obtaining information from supplier in respect of supplies to the assessee on subsequent date that is 30-4-1998---Assessee contended that Inspecting Additional Commissioner proceeded to invoke jurisdiction under S.66A of the Income Tax Ordinance, 1979 on the basis of information received from supplier which was not available with the Assessing Officer at the time of .framing original assessments and information subsequently received was not permissible under the provision of S.66A of the Income Tax Ordinance, 1979 to cancel the assessments---Validity---Inspecting Additional Commissioner could not invoke the jurisdiction on the basis of information received subsequently which could have been used for invoking the jurisdiction under S.65 of the Income Tax Ordinance, 1979 by the Assessing Officer---Order of the Inspecting Additional Commissioner was cancelled by the Appellate Tribunal.

(1979) 118 ITR 447 ref.

Muhammad Ajmal Khan for Appellant.

Muhammad Asif, D.R. for Respondent.

Date of hearing: 18th May, 2000.

ORDER

INAM ELLAHI SHEIKH (ACCOUNTANT MEMBER).---These two appeals have been filed on behalf of an individual assessee against two orders of the Inspecting Additional Commissioner of Income/Wealth Tax, Jhang, both, dated 26-6-1998 recorded under section 66A of the Income Tax Ordinance (hereinafter called the Ordinance) whereby the assessments originally framed were cancelled.

2. The relevant facts in brief are that the original assessment for the assessment year 1993-94 was made at an income of Rs.75,000 on ex pane basis as against the declared income of Rs.45,000, the assessee having filed the return under self-assessment and the return having been selected for total audit.

3. In the assessment year 1994-95, the assessment was made at Rs.88,000 under Self-Assessment Scheme. On examination of the assessment record, the IAC found that the assessee had not filed trading, profit and, loss account as was done in other parallel cases and she had only declared gross commission in respect of the sales. The IAC also found that subsequent information received by the department showed that the assessee had made purchases amounting to Rs.21,109,460 from Dawood Yamaha Ltd. The IAC also found that the income was determined by applying a G.P. rate of 2.48% in two other parallel cases. He, therefore, concluded that the assessment for the year 1993-94 was erroneous in so far as prejudicial to the interest of the revenue and he cancelled the same.

4. In the assessment year 1994-95 again the main reason for the cancellation of the original assessment given is the information received subsequently from Dawood Yamaha Ltd., which indicated purchases made amounting to Rs.7,416,785. Again it was found that the assessee had not filed proper trading accounts. It was also found that the declared income of the assessee could not have sufficient capital to undertake the transaction and indicated by the supplier of motor-cycles: Hence the assessment for the year 1994-95 was also held to be erroneous in so far as prejudicial to the interest of the revenue and cancelled.

5. The parties have been heard and relevant orders perused. The main thrust of the argument of the learned counsel of the assessee is that the department had been making enquiries from the supplier of motor-cycles subsequent to the assessment order date. It was submitted by the learned counsel that assessment for the year 1993-94 had been completed on ex parte basis on 30-6-1994 and assessment for the assessment year. 1994-95 on 26-06-1995 under self-assessment scheme. It was further submitted by the learned counsel of the assessee that the Assessing Officer issued notice to M/s. Dawood Yamaha Ltd. Corporation on 30-5-1997. 13-9-1997 and 1-1-1998 under section -144 of the Ordinance to get the .information with regard to the supplies made to the assessee. It was further explained that M/s. Dawood Yamaha Corpn, supplied the relevant information on 30-4-1998. Thus the contention of the learned counsel of the assessee is that the IAC has proceeded on the information subsequent received which is not permissible under the provision of section 66A of the Ordinance. The learned counsel of the assessee has relied on a decision of Calcutta High Court reported as (1979) 118 ITR 447 to support this contention. The learned DR on the other hand raised -a preliminary objection that the assessee who had signed the grounds of appeal as well as the name of appeal appears to be an illiterate person as she had fixed signatures in Urdu and that no affidavit of the assessee has been filed to depose that she had understood the contents of the memo. as well as grounds of appeal. However, the learned DR could not substantiate this objection with arty evidence, namely the fact that she has signed the memo. of appeal as well as the ground in Urdu does not mean that she is illiterate and does not know English. The learned AR of the assessee also opposed this objection of the learned DR with the submission that she had signed the additional ground, which was the main issue now. The additional ground has been filed by the learned AR of the assessee to challenge that the Assessing Officer had proceeded on the basis of material, which was not available with the Assessing Officer at the time of framing the original assessment in both the years.

6. The main thrust of the argument of the learned counsel of the assessee is that the IAC has proceeded to invoke the jurisdiction under section 66A of the Ordinance on the basis of the information received from Dawood Yamaha Corpn. which was not available with the Assessing Officer at the time of framing the original assessments in both the years. This, contention of the learned AR of the assessee is found to be forceful. The IAC could not invoke the jurisdiction on the basis of information received subsequently which could have been used for invoking the jurisdiction under section 65 of the Ordinance by the Assessing Officer. Hence we accept these two appeals of the assessee and we cancel the impugned orders of. the Inspecting Additional Commissioner, Jhang Range, Jhang. Both the appeals succeed accordingly.

C.M.A./M.A.K../45/Tax(Trib) Appeals accepted.