I.T.A. No.5870/LBof 1995, decided on 18th January, 2002. VS I.T.A. No.5870/LBof 1995, decided on 18th January, 2002., 2002 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 2539 (2002)

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

‑‑‑‑S.65‑‑‑Additional assessment‑‑‑Initiation of proceedings on the basis of information/material already available on record at the time of original assessment‑‑‑Validity‑‑‑Whatever material was produced before the Assessing Officer who made the original assessment, was the only information available with the department on the basis of which proceedings under S.65 of the Income Tax Ordinance, 1979 were initiated which was also confirmed from the fact that the additions made in the order related to the assets declared in the Wealth Statement as on 30‑6‑1990, already on records and the reconciliation of Wealth Statement, both of which were already considered by the Assessing Officer while making original assessment‑‑‑If in making of an assessment an inference was drawn by the Assessing Officer from material available before him, howsoever, incorrect that might be the same material could not be made basis of reopening the assessment by the Assessing Officer‑ Action taken by the department under S.65 of the Income Tax Ordinance, 1979 in any case was illegal and could not be upheld‑‑‑ Assessing Officer had illegally proceeded to issue notice under S.65 of the Income Tax Ordinance, 1979 on the basis of the material which was already on his .records and duly considered by his predecessor‑‑ Action of the First Appellate Authority in annulling the order under Ss.62/65 of the Income Tax Ordinance, 1979 was confirmed by the Tribunal and departmental appeal being devoid of merits was dismissed.

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

‑‑‑‑Ss.65 & 154(6)‑‑‑Additional assessment‑‑‑Submission of return‑‑ Jurisdiction‑‑‑Filing of return under protest in compliance to notice under S.65 of the Income Tax Ordinance, 1979 did not debar the assessee to challenge jurisdiction notwithstanding the provisions of S.154(6) of the Income Tax Ordinance, 1979. because even consent of the assessee would not give jurisdiction to an authority if it did not legally lie with the said authority.

PLD 1967 SC 314; PLD 1985 Kar. 411; PLD 1973 SC 236 2000 PTD 2214; 1975 (Supplementary) India SCR and PLD 1960 SC 237 rel.

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

‑‑‑‑S.65‑‑‑Constitution of Pakistan (1973), Art. 4‑‑‑Additional assessment‑‑‑Submission of return on the basis of illegal notice‑‑ Jurisdiction ‑‑‑Unchallenged‑‑‑Discrimination‑‑‑If it was considered that on the basis of submission of return, the proceedings under the S.65of the Income Tax Ordinance, 1979 could not be challenged, even if the notice under S.65. was illegal, then this would amount to discrimination against the person who submitted the return vis‑a‑vis a person who did not submit a return in compliance with a notice under S.65 which otherwise was illegal‑‑‑No such discrimination could be made under the law because all the assessees were to be treated equally as provided under Art.4 of the Constitution of Pakistan, 1973.

PLD 1987 SC 447 PLD 1958 SC 104 and PTD 1999 Kar. 4037 rel.

Misri Landhani, D.R. for Appellant.

M.H. Bokhari for Respondent.

Date of hearing; 18th January, 2002.

ORDER

The appellant is aggrieved against the assessment made by the Assessing Officer under sections 62/65 of the Income Tax Ordinance, 1979. Both the representatives have been heard and orders of the authorities below perused.

2. It is submitted by the learned A.R. that regular assessment in the case of the appellant was made on 6‑6‑1991 when the income was determined after detailed scrutiny under total audit at Rs.102,397 against the declared income of Rs.85,000. Whatever documents were required by the Assessing Officer, these were produced before him and it was only after proper scrutiny of all the documents including wealth statement as on 30‑6‑1990 and its reconciliation with the previously available wealth statement as on 30‑6‑1984 was considered by the Assessing Officer. This assessment made by the Assessing Officer was subjected to further scrutiny by the CIT(A) when he rejected the assessee's appeal filed before him. It is argued by the learned A.R. that in these circumstances the successor Assessing Officer was not justified to proceed under section 65 of the Income Tax Ordinance, 1979.

3. The learned D.R. in reply to the arguments of the learned A.R. has submitted that the cash flow reconciliation as submitted by the assessee to the Assessing Officer was not properly appreciated by the said officer inasmuch as the investment in the shop was not probed and the factum of payment of installments against House Building Loan was not looked into by the said Assessing Officer and in these circumstances the successor Assessing Officer was justified in proceedings under section 65 of the Income Tax Ordinance, 1979.

4. We specifically asked the learned D.R. as to whether the successor Assessing Officer had received any information after his predecessor had assisted the assessment. The learned D.R. candidly replied in the negative. There is, therefore, no dispute that whatever the material was produced before the Assessing Officer who made the original assessment, was the only information available with the department on the basis of which proceedings under section 65 were initiated. This is further confirmed from the fact that the additions now made in the order impugned before us relates to the asset as declared in the wealth Statement as on 30‑6‑1990. already on records and the reconciliation of the Wealth Statement, both of which were already considered by the Assessing Officer while making original assessment. There is plenthora of case‑law on the issue that if in making an assessment an inference is drawn by the Assessing Officer from a material available before him, however, incorrect that inference may be the same material cannot be made basis of reopening the assessment by the Assessing Officer. In these circumstances action taken by the department under section 65 in any case was illegal and, therefore, it could not be upheld.

5. Before parting with the case, it is pertinent to mention that in compliance to notice under section 65, the appellant had under protest submitted return declaring income at Rs.85,000 as before. However, submission of this return does not debar the appellant to challenge jurisdiction notwithstanding the provisions of section 154(6) of the Ordinance because even consent of the assessee does not give jurisdiction to an authority if it does not legally lie with the said authority. In this connection we are fortified by the following decision of the Hon'ble Higher Courts:‑‑

(1) PLD 1967 Supreme Court 314.

(2) PLD 1985 Kar. 411.

(3) PLD 1973 Supreme Court of Pakistan 236.

(4) PTD 2000 2214.

(5) 1975 (Supplementary) India SCR and

(6) PLD 1960 Supreme Court of Pakistan 237.

6. It is also right of the appellant to be treated in accordance with law without any discrimination. For argument's sake if it is considered that on the basis of submission of his return, the proceedings under section 65 cannot be challenged, even if the notice under section 65 is illegal, then this would amount to discrimination against the person who submits the return vis‑a‑vis a person who does not submit a return in compliance to a notice under section 65 which otherwise is illegal. No such discrimination can be made under the law because all the assessee are to be treated equally. This has been so provided under Article 4 of the Constitution of Islamic Republic of Pakistan, 1973 and has been so implemented by the superior Courts as decided in the following cases:‑‑

PLD 1987 447, (Supreme Court of Pakistan)

PLD 1958 104 (Supreme Court of Pakistan) and

PLD 1999 4037 (Karachi High Court).

7. In view of the discussion made above, we have no doubt in our mind that the Assessing Officer had illegally proceeded to issue notice under section 65 of the Income Tax Ordinance. 1979 on the basis of the material which was already on his records and duly considered by his predecessor. In this view of the matter, the action of the learned CIT(A) in annulling the order under sections 62/65 is confirmed and the departmental appeal being devoid of merits is dismissed.

C.M.A./M.A.K./383/Tax(Trib.)

Appeal dismissed.