(a) Income Tax Ordinance (XXXI of 1979)‑‑‑

‑‑‑‑Ss.54, 66‑A, 59(1) & 134‑‑‑C.B.R. Circular No.18 of 1999, dated 11‑9‑1999, para. 12(a)‑‑‑Powers of Inspecting Additional Commissioner to revise Deputy Commissioner's order‑‑‑Universal Self‑Assessment Scheme‑‑‑Assessment year 1999‑2000‑‑‑Short payment of tax‑‑‑Loss of Revenue‑‑‑Inspecting Additional Commissioner cancelled the assessment order passed under S.59(1) of the Income Tax Ordinance, 1979 on the ground that tax paid under S.54 of the Income Tax Ordinance, 1979 was short as compared to the total tax payable on declared income and directed the Assessing Officer to proceed the case under normal law‑‑ Validity‑‑Admittedly tax due was not paid alongwith the return and a part thereof was paid even after the order passed under S.66A of the Income Tax Ordinance, 1979‑‑‑Since tax paid was short and the Assessing Officer did not take cognizance of the matter, his order under S.59(1) of the Income Tax Ordinance, 1979 was prejudicial to the interest of Revenue‑‑‑Appellate Tribunal upheld the order of the Inspecting Additional Commissioner passed under S.66A of the Income Tax Ordinance, 1979 in circumstances.

I.T.A. No.372/KB of 1997‑98 and 1991 PTD 968 distinguished.

(b) Income‑tax‑‑‑

‑‑‑‑Condonation of delay‑‑‑ Short payment of tax‑‑‑Loss of Revenue‑‑ Short payment of tax was definitely and admittedly loss of Revenue and should not be condoned particularly in exercise of discretion of the Assessing Officer.

1991 PTD 968 distinguished.

Muhammad Fareed for Applicant.

Inayatullah Kashani, D.R. for Respondent

Date of hearing: 29th September, 2001.

ORDER

Through this appeal, the assessee has assailed the order of the IAC Range‑III, Zone‑E under section 66A, dated 31‑12‑1999 with the main ground that the assessee had filed return of income under universal Self‑Assessment Scheme and the assessment was neither erroneous nor prejudicial to the interest of Revenue because there has been no actual assessment order.

2. While Mr. Muhammad Farid, Advocate was present for the appellant, Mr. Kashani defended the impugned order of the IAC.

3. The facts of the case are as under:‑‑‑

(i) Return was filed under section 55 under Universal Self Assessment Scheme declaring income of Rs.2,47,500 for assessment year 1999‑2000. The assessee calculated payable tax at Rs.30,750 on the said income and after adjustment of tax deducted at Rs.7,680 under section. 50 and advance tax of Rs.15,180 paid under section 53, he paid the balance of Rs.7,980 under section 54 on 30‑9‑1999 alongwith the return.

(ii) The IAC Range‑III, Zone‑E observed that tax paid under section 54 was short by Rs.1,125 as total tax payable on declared income was Rs.31,875 instead of Rs.30,750 computed by the assessee. Thus the IAC issued a show‑cause notice under section 66A on 23‑12‑1999.

(iii) Since the assessee neither submitted explanation to the show‑cause notice nor filed any application for adjournment, the IAC passed under section 66A on 31‑12‑1999 cancelling the assessment order of the. DCIT passed under section 59(1) directing the Assessing Officer to proceed the case under normal law.

(iv) Meanwhile the assessee paid the difference amount of Rs.1,125 alongwith additional tax of Rs.270 vide challan, dated 4‑3‑2000. However, it was paid only after the date of order passed under section 66A which is 31‑12‑1999.

4. At the very outset, the AR challenged the jurisdiction of IAC under section 66A in this case, as according to him no assessment order was passed. Besides, he argued that since there was no assessment order in the field, there was no question of its being erroneous. So far as the interest of Revenue was concerned, he argued, it was duly covered as the assessee paid the difference of amount of tax and that he had not concealed any income or any particulars relevant to this business activities. Besides, he argued, the short payment was nominal and being human error it should have been condoned.

5. Arguing on the ground that there was no order passed under section 59(1) which was erroneous and cancelled under section 66A, the learned counsel cited decision of the Tribunal vide ITA No.372/KB of 1997‑98 for assessment year 1995‑96. Through this order the learned Tribunal has held that, "not a single condition for applying action under section 66A has been fulfilled as there is no order passed by the Assessing Officer and the same is not erroneous and prejudicial to the interest of Revenue". However, the learned counsel lost sight of the fact that the Tribunal passed its judgment in the case for the assessment year 1995‑96, whereas the appeal before us is filed in a case in which Universal Self‑Assessment Scheme for 1999‑2000 is relevant. The C.B.R. makes Self‑Assessment Scheme under section 59(1) for every year and while some conditions are common, there are other conditions or procedure which is specific for a particular year.

6. Section 59(1) provides that where the return of total income for any income year furnished by the assessee under section 55 qualifies for acceptance under the provisions of Scheme of Self‑Assessment made by the C.B.R. for that year or under any instructions/orders issued thereunder, the DCIT shall assess by an, order in writing, the total income of the assessee on the basis of such return and determine the tax payable on the basis of such assessment.

7. From the above it follows that:‑‑‑

(i) The C.B.R. makes Self‑Assessment Scheme for every year,' in pursuance to the provisions of section 59(1).

(ii) The DCIT shall assess, by an order in writing total income of the assessee on the basis of such return.

8. Firstly, about the scheme for assessment year 1999‑2000, which was known as Universal Self‑Assessment Scheme; para. 12(a) of C.B.R. Circular No.18 of 1999, dated 11‑9‑1999 lays down the procedure for processing of the returns filed under the Scheme as under:

12(a). One copy of the return of income for non‑corporate tax payers qualifying for acceptance under the Scheme shall be retained by the Bank, the other by the Department and the third copy shall be signed and stamped by designated Income‑tax Authority at the time of filing of return, which shall constitute the assessment order under section 59(1) of the Income Tax Ordinance, 1979."

Thus the unique feature for the Universal Self‑Assessment Scheme for assessment year 1999‑2000, which distinguished this Scheme from earlier schemes was that the receipted copy of return of income would constitute the assessment order under section 59(1). It was not a "deemed assessment', but in fact it was‑ a formal assessment. Section 59(1) envisages that there should be an order in writing for acceptance of return filed under sections 55. However, no format of the order is prescribed. Such an order can be handwritten; it can be typed order or a printed one. With advancement of technology it can be generated through computer. However, it should be signed and tamped by the concerned officer and, of course, a copy of the same be served on the assessee. In the instant case the order, although very brief and occupying very little space on the copy of the return of income, is a rubber stamped order duly signed by the DCIT with clear words as under:

OFFICE OF THE

DEPUTY COMMISSIONER OF INCOME TAX/WEALTH TAX

Circle E‑08, Zone‑E, Karachi

Assessment year: 1999‑2000

This return of income declared and tax paid is deemed to be an order of assessment under section 59(1) of the Income Tax Ordinance, 1979.

Date---------------------------- Signature------------------------------

If the scheme so required that the return would be accepted as declared no more words were necessitated than recorded by the DCIT on the receipt copy.

(i) It is also signed by the concerned officer, as such, in our view it qualifies all the requirements of law and it does constitute an assessment order as provided under para. 12(a), C.B.R. Circular No. 18 of 1999. Since the scheme has been made in pursuance to section 59(1) and para. 12(a) clearly envisaged that the copy duly signed and stamped by the designated income‑tax authority shall constitute the assessment order under section 59(1), there can be no second opinion to hold that an assessment order, as required under Universal Self‑Assessment Scheme for assessment year 1999‑2000, was made which was the subject -matter section 66A. We hold that the order passed under section 59(1) on the receipted copy of the return qualifies all requirements of law and it does constitute an assessment order as provided under para. 12(a) of C.B.R.'s Circular 18 of 1999. The case‑law, the decision of the learned Tribunal in ITA No.372/KB of 1997‑98 for assessment year 1995‑96, thus is not found relevant to this case.

9. As regards the finding of the IAC that the assessment order under section 59(1) was erroneous insofar as it was prejudicial to the interest of revenue, it is noted that the finding of the IAC is based on two facts:

(i) The DCIT accepted the return of income under section 59(1) although it did not qualify for Universal Assessment Scheme under section 59(1) vide para. 3 (c) of Circular 18 of 1999 A which makes it obligatory that, among other conditions, tax due is paid alongwith the return. This is the admitted fact in this case that the tax due was not paid alongwith the return i.e. under section 54 and a part thereof was paid even after the impugned order under section 66A was passed.

(ii) Since the tax paid was short and the DICT did not take cognizance of the matter, his order under section 59(1). was also prejudicial to the interest of Revenue.

10. The learned AR cited a case decided by the Supreme Court of Pakistan reported as 1991 PTD 968 in this case their lordships have observed that, "one cannot conceive of the framers of the scheme to have laid down that once there is failure on the part of the assessee to submit documents within prescribed period of one month, even if he was prevented by circumstances beyond his control, to be totally deprived of the benefits of the Scheme. The Income‑tax Officer had the powers to condone the delay and even if he did not do so, he had the discretion not to exclude the case of the assessee from the benefit of the Scheme, it was otherwise entitled thereto under the other provisions of the Scheme."

The case‑law cited by the learned counsel is distinguished from the case under appeal. It may be noted that allowing time to fie certain documents as a requirement of the Self‑Assessment Scheme is different from condonation of short payment under section 54. Late filing of documents does not immediately and necessarily cause loss of revenue, but short payment is definitely and admittedly loss of revenue and should not be condoned particularly in exercise of discretion of the Assessing Officer. The learned counsel also argued that the Assessing Officer should have condoned the short payment under section 54. However, we should not forget that if the Assessing Officers are allowed to condone the short payment or delayed payments under section 54 for the purpose of acceptance of returns of income under Self‑Assessment Scheme, it would give unlimited discretionary powers to them and will negate the efforts of the concerned authorities to minimize the discretionary powers of the Revenue Officers. It will not be out of context to refer to the provisions of sections 86, 87, 88 and 89 under which charge of additional tax is mandatory for non‑deduction/non‑payment/later payment of tax and no tax authority has the discretion to condone the default.

11. The authority enacting the law and promulgating the Universal Self‑assessment Scheme was very much conscious and in fact very much concerned about the increasing contact between the taxpayer and the tax officer, and the misuse of the discretionary powers of the latter. It was also to minimize such discretion that it has been provided under para. 12(a) of C.B.R. Circular No.18 of 1999 that the duplicate copy of the return shall constitute the assessment order under section 59(1). In fact it was for the benefit of the general taxpayers and not to his disadvantage, as appears from the arguments of the learned counsel who contends that no order was passed under section 59(1).

12. In view of the above discussion we are of the considered opinion that the IAC has the jurisdiction under section 66A in the instant case and has lawfully applied the same. Accordingly, we uphold the impugned order of the IAC and dismiss the appeal.

C.M.A./M.A:K./215/Tax (Trib.) Appeal dismissed.