I.T.As. Nos. 1856/LB to 1858/LB of 2001, .decided VS I.T. A. No. 2025/LB of 2001, decided on 28th February, 2002.
2002 P T D (Trib.) 1957
[Income‑tax Appellate Tribunal Pakistan]
Before Muhammad Sharif Chaudhry, Accountant Member and Zafar Ali Thaheem, Judicial Member
I.T. A. No. 2025/LB of 2001, decided on 28/02/2002.
(a) Income Tax Ordinance (XXXI of 1979)‑‑‑
--‑S.59‑‑‑C.B.R. Circular No.9 of 1998, dated 21‑7‑1998, para. 5(b)‑‑‑ Self‑assessment‑‑‑Salary income 50% or more of the total income‑‑‑No exemption from, selection for special audit‑‑‑Persons whose income from salary was at least 5096 of their total income were not required to pay tax for the year 1998‑99 equal to or more than tax payable for the assessment year 1997‑98‑‑‑However, no concession or exemption or immunity had been given to such persons for selection of cases of such persons‑for special audit in individual capacity or as a class.
(b) Income Tax Ordinance (XXXI of 1979)‑‑
‑‑‑Ss. 59 & 62‑‑‑C.B.R. Circular No.9 of 1998, dated 21‑7‑1998, Para. 5(b)‑‑‑Self Assessment‑‑‑Doctor‑‑‑Salary income was more than 50% of total income ‑‑‑Selection of case for total audit‑‑‑Assessment under S.62 of Income Tax Ordinance, 1979‑‑‑First Appellate Authority directed the Assessing officer to accept the case under Self‑Assessment Scheme as selection of case was not justified as salary income was more than 50% of his total income‑‑‑Validity‑‑‑Central Board of Revenue was within, its jurisdiction when it had selected cases of doctors as a class‑‑ Doctors may have their income 10086 from medical profession or they may have 50% income from salary and 50% income from medical practice or they may have 90% income from salary and 10% income from medical practice, that did not make any difference ‑‑‑Assessee's case had been rightly assessed under S.62 of the Income Tax Ordinance, 1979 as he was a member of a class of persons who had been selected for special audit.
I. T. A. No. 1176/LB of 2000 fol.
1997 PTD (Trib.) 183 ref.
Ahmed Kamal, D. R. for Appellant
Nemo for Respondent.
Date of hearing: 21st February, 2002
ORDER
MUHAMMAD SHARIF CHAUDHRY (ACCOUNTANT MEMBER).‑‑‑The present appeal in the titled case has been filed at the instance of revenue to challenge appellate order, dated 21‑2‑2001 passed by Commissioner of Income Tax (Appeals‑Zone‑1), Faisalabad under section 132 of the Income Tax Ordinance for the year 1998‑99 wherein the Income Tax Ordinance has been directed to adept assessee's case under S.A. S.
2. Appellant s DR is present who has been heard and available records have been perused. None appeared for the assessee-respondent who is, therefore, proceeded against ex parte on merits under Rule 20(2). of the ITAT Rules of 1981.
3. It has been Contended by the appellant that the learned CIT had m justification to issue directions for acceptance of the case of the assessee as salaried person under Self‑Assessment Scheme. According to the learned DR, the learned First Appellate Authority had not appreciated the fact that the doctors were selected for special audit as a class in the light of pats. 5(b) of C.B.R's Circular No.9 of 1998 and, therefore, the case of the assessee was rightly subjected to audit and by the ACTT under section 62 of the Income Tax Ordinance vide his assessment order, dated 29‑6‑1999 for the year under consideration i.e. assessment year 1998‑99. It has also been submitted by the learned DR that the reliance of the Commissioner (Appeals) on a judgment of the ITAT in ITA No.1176/LB/2000, dated 8‑11‑2000 is unjustified as there is no bar against selection of case for audit in case of a doctor whose salary income is more than 50% of his total income.
4. We have considered the contentions of revenue and the arguments of the learned DR, in the light of 'the facts of the case as well as in the light of the law regarding Self‑Assessment Scheme for the year 1998‑99. Appeal of Revenue is decided as follows.
5. Section 59 of the Income Tax Ordinance, 1979 deals with Self- Assessment Scheme. Its subsection (1) authorizes Central ,Board of Revenue to make a Self‑Assessment Scheme for every year while its subsection (IA) authorizes C.B.R. to select out of returns filed under Self‑Assessment Scheme any cases or classes of cases or persons .or classes of persons for assessment under section 62. These two subsections, for better comprehension of law on the subject, are reproduced as under:‑‑‑
"(1) Where the return of total income for any income year furnished by the assessee (not being a company engaged in the business of banking, leasing and Modaraba,) under section 55 qualifies for acceptance in accordance with the provisions of a scheme of Self‑Assessment made by the Central Board of Revenue for that year or under any instructions or orders issued thereunder, the (Deputy Commissioner) 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."
"(1A) Notwithstanding anything contained in subsection (1), the Central Board of Revenue or any authority subordinate to it, if so authorised by the Central Board of Revenue in this behalf, may, in accordance with a scheme referred to in subsection (1), select out of returns referred to in that subsection any cases or classes of cases or persons or classes of persons, howsoever determined, for assessment under section 62, and the (Deputy Commissioner) shall proceed to make the assessment under that section or, if the circumstances so warrant, under section 63, accordingly."
From subsection (1) and subsection (IA) of section 59, which have been reproduced verbatim supra, it is crystal clear that Central Board of Revenue has been given authority to frame a Self‑Assessment Scheme for every. assessment year and it has been also authorized to select out of the returns filed under SAS any cases or classes of cases or persons or classes of persons for audit or total audit or detailed scrutiny, whatever the name may be given to a normal law assessment under section 62 or section 63, if warranted by the circumstances. The C.B.R., in exercise of this authority issues a comprehensive circular every year wherein detailed rules and regulations are laid down regarding eligibility of returns under SAS, documents required, tax to be paid, selection of cases for audit, any other matter relating to SAS, etc.
The sanctity of the scheme framed by the C.B.R. under section 59 is asmuch as is the sanctity of any provision of income‑tax contained in the Income Tax Ordinance of 1979. Rather the Income Tax Appellate ‑Tribunal in its judgment cited as 1997 PTD (Trib.) 183 has held that Self‑Assessment Scheme framed by the C.B.R. vide a circular, being special law, overrides provisions of any other section of the Income Tax Ordinance, 1979.
8. For the assessment year 1998‑99, the year which is now under our active consideration, the C.B.R. has made Self‑Assessment Scheme vide its Circular No.9 of 1998, dated July 21, 1998 under the head: Simplified Self‑Assessment Scheme of Income‑tax for assessment year 1998‑99. Para. (1) of this circular includes within the scope of the scheme all returns of income, other than those filed by a company as defined under the Income Tax Ordinance, 1979. Para (2) of this circular prescribes qualifications which have to be fulfilled by a return for its acceptance under the scheme. It reads as follows:
"(2) Returns filed for the assessment year 1989‑99 shall qualify for acceptance, under the scheme, provided that the following conditions are fulfilled.
(a) Return is filed voluntarily by the due date; and
(b) The tax paid by an existing assessee on the basis of income declared for the assessment year 1998‑99 is not less than the tax payable for the assessment year 1997‑98 on the basis of assessment or returned income whichever is higher provided that this condition shall not apply to the following returns:
(iv) where income chargeable under the head "salary" is at least 50% of the income declared for the year;
(v) ................
(vi) ................
9. Para, (5) of the above‑mentioned circular deals with selection of cases for special audit and it read as follows:‑‑‑
"(5) (a) From amongst those qualifying for the Self‑Assessment Scheme, up to 10% returns may be selected for Special Audit through computer ballot.
(b) Notwithstanding anything contained in sub‑para. (a) above, the C.B.R. may also specify classes/categories of cases for Special Audit through a separate circular."
From a plain reading of para. (2) it comes to light that condition laid down vide its clause (b) regarding payment of tax for the year 1998‑99 being not less than tax payable for the assessment year 1997‑98 is not applicable to the returns where income chargeable under the head salary is at least 50% of the total income declared for the year in question. Thus the persons whose income from salary is at least 50% of their total income are not required to pay tax for the year 1998‑99 equal to or more than tax payable for the assessment year 1997‑98. However, no concession or exemption or immunity has been given to them for selection of cases of such persons for special audit in individual capacity or as a class.
So it is our considered view, without any shadow of doubt, that C.B.R. is perfectly within its jurisdiction when it has selected cases of doctors as a class. The doctors may have their income 100% from medical profession or they may have 50% income from salary and 50% income from medical practice or they may have 90% income from salary and 10% income from medical practice, it does not make any difference. They can be selected for special audit by C.B.R. under para. (5) of its abovementioned circular and have rightly been so selected for the year under consideration. On this provision of law we believe, we are clear and our mind does not entertain any doubt, hence there is no benefit of doubt which can be given to the doctors selected for special audit under the scheme of the instant year.
8. The contention of the assessee that he is a salaried doctor as his income comprises more than 50% of the salary and, therefore, his case cannot be selected for 'special audit, in our humble opinion, is incorrect. At least, this contention is not supported by the Self‑Assessment Scheme as frame by C.B.R. for the assessment year under consideration which has been Outlined and discussed above.
9. The learned First Appellate Authority has given relief to the assessee in the instant case relying on a judgment of the ITAT (Lahore Bench) in ITA No.1176/LB/2000, dated 8‑11‑2000. The relevant portion of the judgment of the learned Bench reads as follows:‑‑‑
"It includes the doctors as a class at Sr. No. 10 but it has not distinguished doctors who have filed their returns keeping in view of the salary being more than 50%. The doubt of benefit also goes in favour of (the doctor) the assessee which is a salaried person whose declared income in the return is more than 75% as salary and less than 206 as professional, income, qualifies under S.A.S. It is ordered accordingly. The return filed by the assessee under SAS be accepted.
The abovementioned judgment of the ITAT gives benefit of doubt to a doctor and such judgment, in our humble view, does not form a precedent to be applied in other cases. Only that judgment of the ITAT, according to our opinion, can be applied and followed by the other Benches which enunciates some rule of law. Hence the judgment in question is not followed.
10. In view of the foregoing discussion, we feel no hesitation in, holding that the relief given to the assessee by the First Appellate Authority is absolutely unjustified. Assessee is a doctor and his case has been rightly assessed by the ITO under section 62 as he is a member of a class of persons who have been selected for special audit. It would, therefore, meet the ends of justice if appeal of revenue is accepted; the impugned appellate order of the First Appellate Authority is vacated and, the assessment order of the ITO is restored.
C. M. A. /M. A. K./271/Tax (Trib.) Appeal accepted.