I.T.A. No.479/KB of 1996-97, decided on 23rd August, 2002. VS I.T.A. No.479/KB of 1996-97, decided on 23rd August, 2002., 2003 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 192 (2002)

Income Tax Ordinance (XXXI of 1979)‑‑‑

‑‑‑‑Ss. 66‑A, 59‑A, 80‑C(4)‑‑‑C.B.R. Circular No.12 of 1991, dated 30‑6‑1991‑‑‑Powers of Inspecting Additional Commissioner to revise Deputy Commissioner's order‑‑‑Income from sale of opening stock‑‑Taxability‑‑‑Order passed under' S.59‑A of the Income Tax Ordinance, 1979 was considered as erroneous and prejudicial to the interest of Revenue by the Inspecting Additional Commissioner on the ground that income in respect of sale of opening stock was not subjected to tax after prorating expenses in terms of C.B.R. Circular No.12 of 1991, dated 30‑6‑1991 and directed the Assessing Officer to determine the taxability of income out of sale of opening stock‑‑‑Validity‑‑‑Inspecting Additional Commissioner himself, clearly showed in his order that the provisions of S.80C of the Income Tax Ordinance, 1979 had duly been complied with and the order relevant to said provision of law made by the assessing Officer under S.59‑A of the Income Tax Ordinance, 1979 was in no way erroneous or prejudicial to the interest of Revenue Income from sale of opening stock with due regard to allowing of expenses prorata under the instructions of Central Board of Revenue was not a matter which could form a partof the order under S. 59-A of the Income Tax Ordinance, 1979---Proper course for the department was to call for the return under S. 56 of the Income Tax Ordinance, 1979 and then proceed to determine income from said source and that also under normal provisions of Law Proceedings calling for return of income had not been initiated---Order passed under S.59-A read with S.80-C of the Income Tax Ordinance 1979, was in no way erroneous and prejudicial to the interest of Revenue on the basis of facts determined by the Inspecting Additional Commissioner after hearing the assessee but it was not in his legal jurisdiction to direct the Assessing Officer through order under S.66-A of the Income Tax Ordinance, 1979 to determine the taxability of income out of sales of the opining stock If the legal proceedings for assessing this part of income had not been taken then obviously no order at all was in the field pertaining to this issue which could be adjudged by the interest of Revenue Order passed by the Inspecting Additional Commissioner under S.66-A of the income Tax Ordinance, 1979 was cancelled by the Appellate Tribunal.

Muhammad Anwar, I.T.P. for Appellate.

Javed Iqbal Rana, D. R. for Respondent.

Date of hearing: 23^rd August, 2002.

ORDER

MUHAMMAD, AKHTAR NAZAR MIAN (ACCOUNTANT MEMBER).‑‑In this case the order under section 66‑A of the Income Tax Ordinance, 1979 has been passed by the learned I.A.C. because according to him the order made by the Assessing Officer on 23‑6‑1994 under section 59‑A read with section 80C of the Income Tax Ordinance, 1979 was erroneous insofar as it was prejudicial to the interest of revenue. He had so concluded from the facts that the tax payable under 1st proviso to section 80C(4) had not been paid and income in respect of sale of opening stock for the assessment year 1991‑92 was not subjected to tax after prorating expenses in terms of C.B.R. Circular No.12 of 1991. In respect of payment of tax liable under section 80‑C(4) the final conclusion by the learned I.A.C., after examining assessee's reply to his notice under section 66‑A, re‑examining records consequent thereto and hearing the assessee, was that the said tax payable under‑section 80C(4) had duly been paid. So, the only issue now to be considered is that whether the order under section 59‑A could be considered as erroneous or prejudicial to the interest of Revenue if income from sale of the opening stock had not been worked out after prorating expenses in terms of C. B. R. Circular No. 12 of 1991.

2. The facts given above, as determined by the learned I.A.C. himself, clearly show that the provisions of section 80C had duly been complied with and therefore, the order relevant to this provision of law made by the Assessing Officer under section 59A was in no way erroneous or prejudicial to the interest of Revenue. The other issue of determination of income from sale of opening stock with due regard to allowing of expenses prorata under C.B.R. instructions was not a matter which could form a part of the order under section 59A. If this income was not determined, the proper course for the department was to call for the return under section 56 of the Ordinance and then proceed to determine income from this source and that also under normal provisions of law.

3. We specifically asked the learned D.R. as to whether any proceedings calling for return of income had been initiated, but he could not find anything on record to show that this had ever been done. In the view of the matter, we have no hesitation in holding that the order passed under section 59‑A read with section, 80‑C on 23‑6‑1994 was in no way erroneous and prejudicial to the interest of Revenue on the basis of facts determined by the learned I.A.C. after hearing the assessee but it' was not in his legal jurisdiction to direct the Assessing Officer through this order under section 66‑A to determine the taxability of income out of sales of the opening stock. If the legal proceeding for assessing this part of income had not been taken, then obviously no order at all was in the field pertaining to this issue which could be adjudged by the I.A.C. as erroneous and prejudicial to the interest of Revenue.

4. The appeal, therefore, succeeds and the order passed by the IAC under section 66‑A for the assessment year 1991‑92 on 29‑6‑1996 cancelled.

C. M.A./501/Tax(Trib.) Order accordingly.