Income Tax Ordinance (XXXI of 1979)‑‑‑

‑‑‑‑‑S. 59(1)‑‑‑C.B.R. Circular No. 7 of 2002, dated 18‑6‑2002, para. 9(a)(ii)‑‑‑Self‑Assessment Scheme, 2002‑2003‑‑‑Establishment of Office of Federal Tax Ombudsman, Ordinance (XXXV of 2000), S.2(3)‑ Self‑assessment, setting apart of‑‑‑Assessment year 2002‑2003‑‑‑Setting apart of case for total audit on the basis of electricity, telephone bills and seating capacity of the shop‑‑‑Validity‑‑‑Selection was not supported by any evidence or information and was found quite invalid‑‑‑federal Tax Ombudsman recommended that the complainant/assessee's return be excluded from the cases selected for total audit under para. 9(a)(ii) of the Self‑Assessment Scheme, 2002‑2003 and the declared income be accepted.

Shafie Jan, for the Complainant.

Arbab Muhammad Tariq, ACIT for Respondent.

FINDINGS/DECISION

This is a complaint relating to the selection of the complainant's income tax return for the assessment year 2002‑2003 for total audit under para. 9(a)(ii) of the Self‑Assessment Scheme for the year 2002‑2003.

2. The facts are that the complainant is an individual carrying on business as a jeweller. No regular accounts are statedly maintained. Income Tax return for the year 2002‑2003 was filed to show income of Rs.183,200. Vide his letter, dated 18‑2‑2003 the RCIT expressed the intention to select the case for total audit on the following grounds:‑‑

"(i)Declared income of Rs.183,200 shows disparity as against the claim of electricity and telephone at Rs.86,800.

(ii)Reportedly you are carrying out the business in a big shop having seating capacity of 40 customers. The declared sales of Rs.1,800,000 are as such, on the lower side as these represent daily sales at Rs.6,000.

2.In the complainant's reply to the RCIT's notice it was pointed out that the reasons for the proposed selection were not valid and there was no evidence or information on which these were based. The case was, however, selected for audit which is the basis for the present complaint.

3. In the respondent's reply the selection has been defended but with regard to the so‑called electricity and telephone expenses of. Rs.86,800 it was seen that in fact the figure represented the total expenses claimed by the complainant and not only electricity and telephone expenses. The other reasons for selection were 'also not supported by any evidence or information. The section of the case for/ audit has thus been found to be quite invalid. The complainant has also contended that the selection was also invalid because it was made after the date of 10‑1‑2003 indicated in the C.B.R. guidelines, dated 17‑12‑2002. Since, however, the selection has been found to be otherwise invalid there is no need to go into this issue here.

4. In the light of the above it is recommended that‑

(i)The complainant's return be excluded from the cases selected for total audit under para. 9(a)(ii) of the Self‑Assessment Scheme, 2002‑2003 and the declared income be accepted.

(ii)Compliance be reported within 30 days

C.M.A./847/FTOOrder accordingly