Income Tax Ordinance (XXXI of 1979)‑‑‑

‑‑‑‑Ss. 65, 13(1)(aa). 13(1)(d) & 59(1)‑‑‑Additional assessment‑‑‑Change of opinion‑‑‑Assessment completed under S.59(1) of the Income Tax Ordinance, 1979 was reopened on the basis that assets declared in wealth statement were not commensurate with the income declared‑‑‑Validity‑‑ Return was accepted under Self‑Assessment Scheme and there would be a presumption in law that Assessing Officer had examined the material produced with the return of income to arrive at the conclusion that there was no concealment on the part of assessee and only then return was accepted under Self‑Assessment Scheme‑‑‑If the Assessing Officer arrived at some other conclusion subsequently, on examination of the same record and same material, it would be a case of `change of opinion' rendering the reopening of assessment as illegal‑‑‑First Appellate Authority had rightly annulled the assessment made tinder S.65 of the Income Tax Ordinance, 1979.

1991 PTD (Trib.) 294 and 2000 PTD (Trib.) 329 rel.

Ahmed Kamal D.R. for Appellant.

Mian Ashiq Hussain for Respondent.

Date of hearing: 11th March, 2003.

ORDER

JAVED THAIR BUTT (ACCOUNTANT MEMBER). ‑‑‑This appeal has been filed by the Revenue assailing the order of the AAC on the following grounds:‑‑

(1) The learned A.A.C., Sahiwal has annulled the assessment with the observations that action under section 65 is illegal. That the Department has definite information in the i.e. Bank A/C No.669, HBL, near Thana Saddar, Pakpattan. The Bank account has not been declared by the assessee in the wealth statement for the year ending on 30‑6‑1991.

(2) The assessee as understated the value of property and has not submitted the true particulars of his income and the concealment was established.

(3) The then learned AAC has set aside the order with the directions on the issue of peak deposits and the same should be treated as assessee's income during that year as unexplained credit entry. This treatment was meted out in the order under appeal i.e. 62/65 and notice under section 62 was rightly issued but on the other hand the learned AAC, Sahiwal has annulled the assessment against the facts and circumstances' of the case.

2. Brief facts of the case are that the return of income was filed under SAS declaring income of Rs.68,754. The assessment was completed under section 62 of the Income Tax Ordinance, 1979 on 31‑3 1994 at an income of Rs.611,654 which was appealed against and the A.A.C., Sahiwal set aside the impugned assessment order for de novo proceedings. During the re‑assessment proceedings it was pointed out that assessment in this case had also been made under section 59(1) on 30‑3‑1992 and this being a case of double assessment, the reassessment proceedings were dropped. However, proceedings were initiated by reopening the assessment under section 65 on the ground that the assessee had acquired substantial assets in the form of properties and bank balances which do not commensurate with the declared income, The assessee challenged the reopening of assessment under section 65 of the Income Tax Ordinance, 1979 but assessment was completed by rejecting the declared version in the absence of pr scribed books of accounts to be maintained by the medical practitioner. On the basis of inquiries conducted, professional receipts were estimated at Rs 600,000 on which G.P. rate was applied and P&L expenses were also allowed. Further additions on account of unexplained investments in properties and peak accredit in bank account were made by resorting to various provisions of section 13 of the Income Tax Ordinance, 1979. The agricultural income shown by the assessee at Rs.2000 was also estimated at Rs.12300 and included in the income for rate purpose. The salary income declared at Rs.35354 was accepted as declared. Total income was computed at. Rs.10,56,986.

3. Against the order made under section 62/65 appeal before the AAC was filed and reopening of assessment under section 65 was challenged being illegal and unjustified. It was argued that higher Courts have held that the proceedings once initiated and proved illegal subsequently and withdrawn, no proceedings could be initiated under similar ground/material/evidence as no new evidence/material has been brought on record to authorize initiation of proceedings once again and such action is illegal being based on presumption and amounts to rectification of the previous illegal proceedings and that the Assessing Officer has adopted recourse on the similar reasons and grounds for withdrawn proceedings initiated earlier. The assessee cited the case decided by the ITAT in I.T.A. No.4/LB/1990/91 reported as 1991 PTD (Trib.) 294 wherein it was held that case cannot be reopened after filing the re‑assessment proceedings initiated previously by reopening of the Self‑Assessment Case and that no second notice can be issued nor any second assessment order can be passed once the Assessing Officer has filed the assessment proceedings under section 65 of the Income Tax Ordinance. It was also argued that the business/professional income has beets assessed without going through the relevant facts. The inquiry of the Inspector is also not relevant to the assessment year 1991‑92 and the basis of assessment of business income is also hypothetical and not based on the facts and that the appellant is not a Specialist but a simple M.B.B.S. Doctor and receipts have been estimated at Rs.2000 per day whereas the Assessing Officer is very Well aware that no doctor has been assessed at such high income and that the additions made under section 13(1)(d) and 13(1)(aa) are illegal and unjustified. The learned counsel contended that there is no definite information available with the Assessing Officer because wealth statement alongwith reconciliation for the year was filed with the return for assessment year 1991‑92 and accepted by the department. Fresh material/evidence has not been brought on record to justify the reopening of the case. The counsel of the assessee cited plethora of cases in support of its arguments and the AAC after considering the facts of the case and the case‑law cited in support of the argument, observed that no new information has been received by the Assessing Officer justifying the reopening of the assessment and it was clear case of change of opinion and the reopening of the assessment was not warranted by law. The assessment framed under section 65 was held to be illegal and annulled.

4. We have heard both sides and relevant available record has been perused. This is a peculiar case where an assessment completed under section 59(1) was not reopened under section 65 but still the assessment was framed ignorantly by the Assessing Officer under section 62 of the Income Tax Ordinance, 1979. The assessment completed under section 62 of the Income Tax Ordinance was also a subject-matter of appeal which was set aside by the AAC. It was during the re‑assessment proceedings under section 62/132 that the Department realized mistake of double assessment and the assessment subsequently completed under section 62 of the Income Tax Ordinance, 1979 was considered as double assessment and proceedings were dropped: The dropping of proceedings in consequence of an order by the AAC under section 132 of the Income Tax Ordinance, 1979 amounts to re‑assessment. Now the assessment completed under section 59(1) was reopened under section 65 of the Income Tax, Ordinance, 1979 on the basis that the assets though declared in the wealth statement as on 30‑6‑1991 do not commensurate with the income declared by the assessee over the years. However, proceedings under section 65 were found by the AAC to be unwarranted under, the law as all the facts had been fully considered at the time of finalizing the assessment under section 59(1) and the Department was not in possession of any definite information which could attract the action under section 65 of the Income Tax Ordinance, 1979 and annulment of the assessment made under section 65 was ordered.

5. It was contended by the AR of assessee that no assessment order was served on the assessee except IT‑30 and in view of judgment of ITAT in its decision ITA No.5883‑5885/LB/1995 proceedings under section 65 and resultant re‑assessment is unjustified and illegal.

6. As the return filed by the assessee was accepted under self -Assessment Scheme and there would be a presumption in law that the Assessing Officer had examined the material produced with the return of income to arrive at the conclusion that there was no concealment on the part of the assessee and only then return was accepted under Self Assessment Scheme. Subsequently, on examination of the same record and same material if the Assessing Officer arrives at some other conclusion, it would be case of change of opinion rendering the reopening of assessment as illegal. Reliance has also been placed on the order of the ITAT reported as '2000 PTD (Trib.) 329. In view of the cited judgment of the ITAT and decision of Superior Courts, the AAC has rightly annulled the assessment made under section 65. The order of AAC is upheld.

7. The departmental appeal fails.

C. M. A./12/Tax (Trib.)Appeal dismissed.