I.T.A. NO. 1213(LB) OF 2001 VS I.T.A. NO. 1213(LB) OF 2001
2001 P T D (Trib.) 2872
[Income-tax Appellate Tribunal Pakistan]
Before Inam Ellahi Sheikh, Chairman andZafar Ali Thaheem, Judicial Member
I. T. A. No. 1213(LB) of 2001, decided on 07/06/2001.
Income Tax Ordinance (XXXI of 1979)---
--Ss.65, 13(1)(aa) & 59-A---Additional assessment---Assessment was completed under S.59-A of the Income Tax Ordinance, 1979 having the information on record with regard to purchase of car and subsequently the case was reopened on the basis of same information---Validity---Action under S.65 of the Income Tax Ordinance, 1979 could-only be initiated if the department came into possession of a definite information after the, original assessment had been made or it was established that the original assessment was made without the application of mind---,Original assessment under S.59A of the Income Tax Ordinance, 1979 could only be made after applying the mind to the facts of the case and coming to the conclusion that the presence of the assessee was not required---Return having not been accepted under any deeming provision of law, Assessing Officer was not justified to reopen the assessment framed under S.59-A of the Income Tax Ordinance-1979 ---Order passed under S.65 of the Income Tax Ordinance, 1979 was annulled by the Appellate Tribunal.
1990 PTD 155 and 1997 PTD 1485 ref.
Muhammad Ajmal Khan, A. R. for Appellant.
Muhammad Aslam Bhatti, D.R. for Respondent.
Date of hearing: 6th June, 2001.
ORDER
This is the appeal of individual assessee, deriving income from retail business of paints and arises out of an order, dated 14-3-2001 recorded by the learned C.I.T.(A), Zone-5, Lahore.
2. The assessee has agitated the action under section 65 of the Income Tax Ordinance (hereinafter called the Ordinance) and also the addition made under section 13(1)(aa) of the Ordinance and the quantum of sales estimate as well as business income estimated by the departmental officials.
3. The relevant facts in brief are that the Assessing Officer passed an order under section 59(A) of the Ordinance on 25-3-1998 determining the income of the assessee at Rs.58,000. On 28-3-1998, the same Assessing Officer issued show-cause notice proposing to reopen the assessment under section 65 of the Ordinance on the ground that the assessee had purchased a car for Rs.4,00,000 as appearing in the wealth statement for which the asses see did not have adequate resources. The assessee's contention was rejected and the case was reopened under section 65 of the Ordinance by issuing notice on 2-9-1998 after obtaining approval of the I.A.C. on 31-8-1998. The income was assessed at Rs.10,59,800 by estimating sales at Rs.50,00,000, applying G.P. rate at 15% and thereafter making addition of Rs.4,00,000 under section 13(1)(aa) of the Ordinance. The learned C.I.T.(A) upheld the reopening of assessment and reduced the sales estimate to Rs.3,50,000. The Assessing Officer was also directed to allow the credit equal to the trading addition for a period of three months, i.e. up to the date of purchase of the car.
The learned counsel of the assessee has strongly agitated that there was no justification to reopen the case as the Assessing Officer has not come into possession of any definite information after the completion of the assessment under section 59A of the Ordinance. It -was elaborated by the learned counsel that the assessee had obtained an exemption in the Form "A" for the purchase of car on 19-9-1994. Thus according to the learned counsel the information regarding the purchase of car was already available with the Assessing Officer at the time of framing of the assessment. The learned counsel of the assessee also submitted that the Assessing Officer had made the original assessment under section 59A of the Ordinance without requiring the presence of the assessee in the presence of the information w uh regard to the purchase of the car. Thus according to the learned counsel the Assessing Officer had no jurisdiction to proceed under section 65 of the Ordinance:. The learned counsel of the assessee has relied on two decisions of the apex Court, one reported as 1990 PTD 155 and the other reported as 1997 PTD 1485. The learned D.R. on his turn when not displaced the arguments of the learned counsel that the Assessing Officer already had such information on the record while making the assessment under section 59-A of the Ordinance. However, the plea of the learned D.R. is that the Assessing Officer was bound to accept the return under the Self-Assessment Scheme. The learned D.R, has relied on decision of the Tribunal reported as 2000 PTD 329:
5. The submissions of both the parties have been considered. It is an established law that the action under section 65 of the Ordinance could only be initiated if the Department comes into possession of a definite information after the original assessment had been made or it is established that the original assessment was made without the application of mind. In the present case the original assessment was made under section 59-A of the Ordinance which the Assessing Officer can only make after applying his mind to the facts of the case and coming to the conclusion that the presence of the assessee is not required. The plea of the learned D.R. that the Assessing Officer was bound to accept the return under the Self-Assessment Scheme is of no avail as the return has not been accepted under section 59(1) of the Ordinance. Also the return has not been accepted under any deeming provision of the law. In these circumstances, we are of the considered view that the Assessing Officer was not justified to reopen the assessment already framed under section 59-A of the Ordinance. Hence, the appeal of the assessee is accepted and the order passed under sections 65/62 of the I Ordinance is annulled. The appeal succeeds.
C.M.A./M.A.K./108/Tax(Trib.) Appeal accepted.