COMMISSIONER OF INCOME-TAX, COMPANIES-II, KARACHI VS Syed KHALID JAMAL, 2003 PTD-KARACHI-HIGH-COURT-SINDH 1093 (2002)

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

‑‑‑‑Ss. 59(1) & 65‑‑‑Self‑assessment‑‑‑Return of total income accompanying with Wealth Tax Return finalised under Self‑Assessment Scheme was reopened on account of under‑valuation of plot shown in Wealth Tax Return‑‑‑Appellate Authority set aside such order, which judgment was upheld by Tribunal‑‑‑Validity‑‑‑Filing of ‑ Wealth Tax Return alongwith Income Tax Return was a condition precedent‑‑ Assessing Officer was obliged to scrutinize Wealth Tax Return and after detecting any concealment to exclude return of income from purview of Self‑Assessment Scheme‑‑‑Since return had not been excluded from purview of Self‑Assessment Scheme, inference would be that Assessing Officer, after examining Wealth Tax Return already available on record, had not found initially any case of concealment of income‑‑‑Tribunal had rightly decided issue and rejected the reference application‑‑‑High Court dismissed direct reference application in limine.

(b) Income-Tax---

‑‑‑‑Change of opinion‑‑‑Test‑‑‑Where on examination of same material earlier examined by the Assessing Officer, if he comes to a conclusion different from the one arrived at the earlier examine, on of information, then same would be a case of change of opinion.

Messrs National Beverages (Pvt.) Ltd. v. Federation of Pakistan 2001 PTD 633 rel.

Aqeel Ahmed Abbasi for Appellant.

Nemo for Respondent.

Date of hearing: 19th November, 2002.

JUDGMENT

MUHAMMAD MUJEEBULLAH SIDDIQUI, J.‑‑‑The brief facts giving rise to this direct reference application under section 136(2) of the Income Tax Ordinance, 1979 are that, the respondent filed Return of total income for the assessment year 1994‑95 under Self‑Assessment Scheme which was finalised under section 59(1) of the Income Tax Ordinance, 1979. Subsequently, the Assessing Officer reopened the assessment for the reason that the examination of Wealth Tax Return revealed that, the assessee has purchased a plot, value whereof was understated. The assessment was thereafter finalised under normal provision of law and addition under section 13(1)(d) was made on account of under valuation of the plot. The respondent preferred first appeal, assailing the reopening of the assessment as well as the addition under section 13(1)(d) of the Income Tax Ordinance, 1979. The learned CIT(A) accepted the appeal for the reason that, it was condition precedent for acceptance of Return in the Self‑Assessment Scheme for the assessment year 1994‑95, that it shall be accompanied by the Wealth Tax Return and consequently, information forming basis for reopening of assessment was already available with the Assessing Officer and thus, it was a case of change of opinion.

Being aggrieved with the order of learned CIT(A), the department preferred second appeal before the Tribunal contending that the Wealth Tax Return was available with the Assessing Officer at the time of finalizing the Return under the Self‑Assessment Scheme, but conscious application of mind was not made to the Wealth Tax Return and consequently, the principle of change of opinion was not attracted. The learned ITAT, did not accept the contention and held that, since it was specifically proved in the Self‑Assessment Scheme for the assessment year 1994‑95 that the Wealth Tax Return shall be filed alongwith the Income Tax Return, therefore, the presumption would be that the Assessing Officer examined the Wealth Tax Return and accepted the Income Tax Return after conscious application of mind to the information contained in the Wealth Tax Return. It was further held that, the Assessing Officer would have excluded the Return from the purview of the Self‑Assessment Scheme, if it would have been a case of concealment. The appeal was dismissed accordingly.

Being still aggrieved with the dismissal of appeal the department submitted reference application under section 136(1) of the Income Tax Ordinance, 1979, proposing the, following questions of law for reference to this Court.

"Whether on facts and the circumstances of the case the learned Income‑tax Appellate Tribunal was justified/right in holding that reopening of case already finalized under section 59(1) on the basis of definite information available on record tantamount to change of opinion'?"

"Whether on facts and the circumstances of the case the 'learned Income Tax Appellate Tribunal omitted to appreciate that finalized under section 59(1) are considered as deemed to have been finalized without conscious application of mind by the Assessing Officer who assumed the jurisdiction of section 65(1)(c)?"

The ITAT rejected the reference application and held that, no substantial question of law was involved and it was a simple case of change of opinion, which is evident from the material available on record.

Being still dissatisfied the department has submitted this direct reference application under section 136(2) of the Income Tax Ordinance, 1979.

Mr. Aqeel Ahmed Abbasi, learned counsel for the Department has contended that, the CIT(A) and the ITAT have merely presumed that, the Wealth Tax Return was filed alongwith the Income Tax Return, although there is nothing on record to establish this fact. However, when confronted with the question as to how the Assessing Officer accepted the Return in the Self‑Assessment Scheme if the condition precedent for acceptance thereof was not fulfilled, the learned counsel for the Department was not able to furnish any explanation.

His second contention is that, even if it is assumed that, the Wealth Tax Return was filed alongwith the Income Tax Return and the information forming basis for reopening of assessment was already available with the Assessing Officer, still the, principle of change of opinion is not attracted because there was no conscious application of mind to the fact. In this regard, he has placed reliance on a, Division Bench judgment of this Court, in the case of Messrs National Beverages (Pvt.) Ltd. v. Federation of Pakistan 2001 PTD 633.

We have perused the cited judgment with the assistance of Mgr. Aqeel Ahmed Abbasi. It has been held that, the principle of change of opinion shall not be attracted even in the case of normal assessment under section 62 of the Income Tax Ordinance, 1979, if conscious application of mind is not shown by the Assessing Officer at the time of first assessment.

We respectfully agree with the law as propounded in the cited judgment, but it is of no help to Mr. Aqeel Ahmed Abbasi, for the simple reason that in the cited case, the conscious application of mind to the material available on record was not condition precedent for the finalisation of assessment. While in the present case, the filing of Wealth Tax Return alongwith the Income Tax Return was a condition precedent and therefore, the Assessing Officer was obliged to scrutinize the Wealth Tax Return and on scrutiny of the said document, if any concealment was detected to exclude the Return of income from the purview of Self- Assessment Scheme. Since the Return was not excluded from the purview of Self‑Assessment Scheme, therefore, it can be inferred that the Wealth Tax Return, which was available on record was examined and initially the Assessing Officer did not find any case of concealment of income.

It is established principle of change of opinion that if on examination of the same material, which was earlier examined by an Assessing Officer, he comes to a conclusion different from the one arrived at the earlier examination of the information, then it is a case of change of opinion.

In the above circumstances, we are satisfied that, the Income Tax. Appellate Tribunal has rightly considered all the aspects of the law and fact and has rightly decided the issue and has correctly rejected the reference application to which no interference is required. This direct reference application under section 136(2) of the Income Tax Ordinance stands dismissed in limine.

S.A.K./C‑60/KReference dismissed.