I.T.A. No. 345/KB of 2003, decided on 31st October, 2003. VS I.T.A. No. 345/KB of 2003, decided on 31st October, 2003., 2004 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 1470 (2003)

Income Tax Ordinance (XXXI of 1979)‑‑‑

‑‑‑‑S. 59(1)‑‑‑C.B.R. Circular No.4 of 2001, dated 18‑6‑2001 (Self- Assessment Scheme) Cl. 1.1(e) & 1.2, "Note"‑‑‑Declared total income included salary income more than 50% of total income‑‑‑Return was set apart for normal assessment on the ground that income shown was far below from the last assessed income and it should have been at least 20% more than the last assessed income (tax paid was less than 20 % from the tax paid from the last year)‑‑‑Assessee contended that return was fully qualified to be processed under Self‑Assessment Scheme as salary of the assessee was much more than 50% of the total income declared and condition to pay tax by more than 20% of the tax last assessed would not be applicable in the case of assessee for the purpose of qualifying the Self‑Assessment Scheme‑‑‑Validity‑‑‑Cl. 1.1(e) of the Self‑Assessment Scheme provided that all returns filed by the Tax Payers shall be eligible in case of persons not being companies, where tax payable on income declared was higher by 20% or more of the tax payable on the income last declared or assessed which was higher‑‑‑Situation will be changed due to application of "Note" 'appended to clause 1.1 which clarified the condition regarding percentage increase in tax shall not be applicable if income consisted of or included salary and such income constituted more than 50% of the total income declared for the year‑‑ Assessing Officer failed to appreciate that percentage of salary income constituted more than 50 % of total income and as such condition of tax to be higher by 20% was not applicable in case of assessee by virtue of "Note" appended to Cl. 1.1.(e) and 1.2 of the said Self‑Assessment Scheme‑‑‑Apart from this, clause (7) of the Self Assessment Scheme provided the details of cases where returns would be illegal for the purpose of accepting the claim under Self Assessment Scheme, whereas the assessee's case did not fall within any of the sub‑clause of clause (7), hence not only return was eligible for all the purpose but also fit for acceptance under the Self‑Assessment Scheme‑‑‑Process of return under normal law and order of First Appellate Authority approving the treatment given by the Assessing Officer warranted interference being illegal, unjustified and contrary to law as well as to provisions of Self‑Assessment Scheme for the assessment year 2001‑2002‑‑‑Orders of the two authorities below were annulled by the Appellate Tribunal and directed to accept the claim of assessee under Self‑Assessment Scheme.

Udha Ram Rajput for Appellant.

Dr. Faiz Ellahi Memon, D.R. for Respondent

Date of hearing: 1st October, 2003.

ORDER

HASAN IMAM (JUDICIAL MEMBER).‑‑‑The assessee, being aggrieved and dissatisfied from the impugned order, dated 19‑12‑2002 passed by the learned CIT(A), has preferred present appeal challenging the order confirming the processing of return under normal while rejecting the, claim to accept it under Self‑Assessment Scheme.

2. The facts reveal that the assessee an individual, deriving income from Dall mill, engaged in business activities, in selling the Ghee/cooking oil, besides salary as Director, of Rima Cooking Oil Industry (Pvt.) Ltd. The results shown by the assessee are hereunder:‑‑

3. The assessee also furnished statement under section 143 for the commission earned from running of petrol pump under the name and style of Supna Petroleum Service (which is on lease) and interest income of Rs.41,230. The case was set apart for normal assessment as the income shown was far below from the last assessed income where the condition precedent laid down in the relevant Self‑Assessment Scheme is that it should have been at least 20% more than the last assessed income.

4. In response to notice under section 61 read with section 58(1), the assessee objected processing of return under normal law, as according to him the return qualifies to be processed under Self -Assessment Scheme by virtue of "Note" appended to clauses 1.1 & 1.2 of Self‑Assessment Scheme for the relevant year. The Assessing Officer rejected the explanation being not sustainable and assessed the income as under:

5. The learned CIT(A) confirmed the treatment meted out of the stage of assessment whereby rejected the version of the assessee, observing that the income declared by the assessee in the year under appeal is quite low as compared to the income shown in the immediately preceding year, for the purpose of comparison two sets of income have ` marked difference, and income from salary did not exceed 50% in the immediately preceding year and this year, income from salary shown being more than 50% is just manipulation. He added that the rejection of the claim for acceptance of the return of income under Self- Assessment Scheme on the part of the officer was quite justified whereby assessment so framed under the normal law does not warrant interference, which is confirmed.

6. Heard the learned representatives of the two parties. The learned counsel for the assessee argued that the return is fully qualifying to be processed under the scheme by virtue of "Note" appended to clause 1.1 of Self‑Assessment Scheme vide Circular No.4 of 2001 which reads as under:‑

"The condition regarding percentage increase in tax shall not be applicable if income consists of or includes salary and such income constitutes more than 50 % of the total income declared for the year or where income is derived from house property. "

7. The learned counsel referring above provision of law, stressed that the return is fully qualifying to be processed under Self‑Assessment Scheme as salary of the assessee (Rs.1,68,000) is much more than 50% of the total income of Rs.1,99,000 declared. In the circumstances condition to pay tax by more than 20% of the tax last assessed would not be applicable in case of assessee for the purpose of qualifying in the Self‑Assessment Scheme. The learned counsel added that the learned CIT(A) has mis‑stated that the case has been selected under total audit as there appears no such reference in the assessment order. The learned D.R. representing the department, on the other hand, argued that the case was selected for total audit, therefore, objection raised by the assessee did not arise.

8. Before taking into consideration, the other grounds related to requirement of the scheme to pay tax by more than 20% of the tax last assessed for the purpose of qualifying for the relevant Self‑Assessment Scheme, we would like to record our finding on the plea that the case was sale-deed under total audit or set apart for normal assessment. The assessment order is silent in respect of selection of case under provision of total audit, the learned Assessing Officer has recorded his order in view of the, objection raised by the counsel at the time of assessment with regard to processing of return under normal law and setting apart of the case because of condition of the tax to be higher by 20% and vide para. 3 of the order, he also recorded his version rejecting the assessee's plea observing that assessee was required to nay tax by more than 20% of the tax last assessed to qualify for acceptance of return under the Scheme. On the contrary, there is no discussion in the assessment order in respect of selection of case under total audit as such D.R's version finds no support from the assessment order. Besides there is no other evidence available on record to support the learned D.R. in his version that the case has been selected under total audit, as such bears no merit whereby, rejected being misconceived and presumptive.

9. Returning to the real controversy, we find that the Self- Assessment Scheme for the year 2000‑2001, as contemplated vide Circular No.4 of 2001 initially provides the scope of scheme for the purpose of qualification for acceptance and clause 1.1(e) of the Scheme further provides that all returns filed by the Tax Payers shall be eligible in case of persons not being companies, where tax payable on income declared is higher by 20% or more of the tax payable on the income last declared or assessed which is higher, however, situation will be changed due to application of "Note" appended to clause 1.1 which without any" shadow of doubt clarify and support the version of the assessee that the condition regarding percentage increase to tax shall not be applicable if income consists of or includes salary and such income constitutes more; than 50% of the total income declared for the year. In the circumstances, the learned DCIT mercilessly failed to appreciate that the percentage of salary income at Rs.168,000 constitutes more than 50% of total income such the condition of tax to be higher by 20% is not applicable in case of assessee by virtue of "Note", appended to clause 1.1(e) and 1.2 of the Scheme (Circular No. 4 of 2001). Apart from, this, clause (7) of the Scheme provides the details of cases where returns! would be ineligible for the purpose of accepting the claim under Self Assessment Scheme whereas the assessee's case does not fall within any of the sub‑clause of clause (7), hence not only return is eligible for; all the purpose but also fit for acceptance under the scheme by virtue of "Note" appended to clause 1.1(e)

10. In the circumstances supra, the process of return under normal law and order of the learned CIT(A) approving the treatment given by the learned CIT(A), Hyderabad, warrants interference being illegal, unjustified and contrary to law as well provisions of Self‑Assessment Scheme, for the assessment year 2001‑2002. As a result thereof, two orders below stand annulled.

11. Consequently, the Assessing Officer is directed to accept the claim of the assessee under Self‑Assessment Scheme.

C.M.A./48/Tax (Trib.)Appeal accepted.