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

‑‑‑‑S. 134(4)‑‑Appeal to Appellate Tribunal‑‑‑Limitation‑‑‑Condonation of delay‑‑‑Principles‑‑‑Provision of limitation should only be invoked if the decision of the First Appellate Authority is found to be based on fair and reasonable grounds‑‑‑Technicalities of limitation clause should not be invoked in the aid of any damage to the cause of Revenue.  

2000 PTD 344 and PLD 1992 SC 369 rel.

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

‑‑‑‑Ss. 59(1) & 13(1)(aa)‑‑‑C.B.R. Circular No. 9 of 1998, dated 21‑7‑1998 (Self‑Assessment Scheme 1998‑99), Para. 2(h)‑‑‑Exclusion of return from the purview of Self‑Assessment Scheme on the ground of excess stock determined during the raid to what was declared‑‑ Assessment was cancelled by the First Appellate Authority on the ground that determination of excess stock on the basis of raid conducted by the department did not constitute a positive and definite evidence for taking the case out of purview of Self‑Assessment Scheme and no show‑cause notice was issued to give an opportunity to the assessee to rebut the allegation and accordingly assessment officer was directed to accept the return of income under S.59(1) of the Income Tax Ordinance, 1979‑‑ Validity‑‑‑Raiding party found stock on the basis of physical inventory of goods available at the business premises made within a short period of few hours only‑‑‑Difference between the stock discovered by the Department and the capital declared was from unexplained sources liable to be added under S.13(1)(aa) of the Income Tax Ordinance, 1979 to the total income of the assessee‑‑‑Allowance was given for availing the tax Amnesty Scheme in determining the final taxable income as such it was not clear as to why such under‑statement of stock should not be taken as positive evidence for concealment‑‑‑First Appellate Authority had not dilated on this issue and had summarily expressed the opinion that the determination of stock by the raiding party was a simple information and not an evidence for concealment‑‑‑Finding in respect of show‑cause notice was not found correct as the proper show‑cause notice regarding processing of case under normal law had been conveyed‑‑ Order was cancelled on the ground of incorrect appreciation of law and facts relating to acceptability of return filed under Self‑Assessment Scheme and no finding were given on merit of the assessment made by the Assessing Officer‑‑‑Exclusion of case from the purview of Self‑Assessment Scheme was upheld by the Appellate Tribunal and case was remanded to First Appellate Authority for order on merit.

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

‑‑‑‑Ss. 134(3) & 59(1)‑‑‑Appeal to Appellate Tribunal‑‑‑Limitation‑‑ Order by First Appellate Authority causing great injustice to Revenue‑‑ Appeal barred by limitation‑‑‑Canons of limitation could not be put in aid of injustice‑‑‑Condonation of delay‑‑‑Requirement of law and facts relating to determination of concealment of income by the assessee and exclusion of case from the purview of Self‑Assessment Scheme were found to have been overlooked by the First Appellate Authority in cancelling the order of Assessing Officer causing great justice, to the department and the canons of limitation could not be put to aid of such injustice‑‑‑Appellate Tribunal allowed miscellaneous application for condonation of delay and departmental appeal was taken up for regular hearing on merits.

PLD 1987 SC 436 = 1988 PTD 394; 2000 PTD 344; PLD 1992 SC 369 Muhammad Saleem v. Superintendent of Police Sialkot and 2002 PTD 1035 ref.

2000 SCJ 586; 2000 SCMR 706 and 1999 CLC 45 distinguished.

2000 PTD 344 and PLD 1992 SC 369 rel.

Ahmed Saeed Siddiqui, I.A.C. for Appellant.

Agha Faqir Mohammad for Respondent.

Date of hearing: 10th August, 2002.

ORDER

MUHAMMAD MAHBOOB ALAM (ACCOUNTANT MEMBER).‑‑‑The departmental appeal arises out of CIT(A)'s Order No.623/VI, dated 2‑8‑2001. As per noting by the office the appeal was filed on 10‑1‑2002 while the date of communication of the order in the appeal memo has been given 22‑10‑2001. The filing of appeal was, therefore, delayed by 20 days. Accordingly, a miscellaneous application was filed alongwith the appeal memo for condonation of delay. The said application is reproduced as under:‑‑

"BEFORE THE INCOME-TAX APPELLATE TRIBUNAL, KARACHI

COMMISSIONER OF INCOME‑TAX, ZONE‑C, KARACHI.

V/S MA(Cond) 22/KB/2002.

MRS. FARHANA SALEEM PROPRIETORS OF M/S PORTIA BOUTIQUE

SUBJECT':REQUEST FOR CONDONATION OF DELAY IN FILING OF 2nd APPEAL IN THE CASE OF MRS. FARHANA SALEEM PROP. MESSRS PORTIA BOUTIQUE -ASSESSMENT YEAR 1998‑99

In the instant case appeal was due to be filed by 21‑12‑2001 against the order of the learned CIT(A) Zone‑VI, Karachi which could not be filed in time due to Eid Vacations, transfer of officer, oversight and misunderstanding of the official dealing with the matter of appeal. The period of delay works out to Sixteen days.

This office is of the opinion that the order of the CIT(A) is full of infirmities. She has misdirected herself in deciding the legal issues involved which need to be examined at the higher appellate forum. Further, substantial Revenue amounting to Rs.1,11,00,000 is involved in this case. In view of the foregoing facts this office requests for condonation of the delay for filing of appeal which is within the powers (under section 134(4)) of the Income Tax Ordinance, 1979 of the Honourable Income Tax Appellate Tribunal.

(Sd.)

(CH. NAZIR AHMAD)

COMMISSIONER OF INCOME‑TAX

ZONE‑C, KARACHI."

2. The above application was taken up for disposal before the regular hearing of the case. As the delay was not properly explained in the above application the D.R. was asked to submit a detailed explanation regarding the circumstances for delay in filing of appeal. In compliance to these directions an explanation was submitted by the learned Commissioner of Income Tax Zone‑C, Karachi alongwith the request that the delay may be condoned on the basis of circumstances narrated in the said application. The said application, dated 26‑4‑2002 giving the detailed explanation is reproduced as under:‑‑

"BEFORE THE INCOME TAX APPELLATE TRIBUNAL, KARACHI

COMMISSIONER OF INCOME TAX ZONE‑C, KARACHI

MRS. FARHANA SALEEM PROPRIETORS OF MESSRS PORTIA BOUTIQUE

SUBJECT:REQUEST FOR CONDONATION OF DELAY IN FILING OF 2nd APPEAL IN THE CASE OF Mrs. FARHANA SALEEM PROP: MESSRS PORTIA BOUTIQUE‑‑ ASSESSMENT YEAR 1998‑99

In the instant case appeal was due to be filed by 21‑12‑2001 against the order of the learned CIT(A) Zone‑VI, Karachi, which could not be filed in time due to Eid Vacations; transfer of officer oversight and misunderstanding of the official dealing with the matter of appeal. The period of delay works out to Sixteen days The reasons for the delay are explained as under:‑‑

1. The main reason for delay in the CIT office was due to Eid vacations and oversight and misunderstanding of the official dealing with the matter of appeals. There were two appeals i.e. for the assessment year 1998‑99 and 2000‑2001. The case papers were called for ascertainment of the facts and record for the assessment year 2000‑2001 only was put up and no appeal was ordered to be filed. The person concerned dealing with the matter misunderstood that no appeal is to be filed for the assessment year 1998‑99 also. The fact of the matter was that case records were requisitioned for assessment year 1998‑99 which due to misunderstanding, could not be put up and matter got delayed. The Eid vacations w.e.f. 17‑12‑2001 to 19‑12‑2001 were also the reasons for delay. These farces are proved from the. relevant note sheet entries original copies of which were, earlier, produced before the Honourable Court. The copies are once again marked as Annexure 1.

2. The Honourable Court after hearing the departmental plea desired to mention detailed reason for delay w.e.f. 21‑12‑2001 till 10‑1‑2001. These are summarized below:‑‑

(1) Permission letter of CIT Zone‑C, Karachi, dated 21‑12‑2001 was received on 22‑12‑2001. The Assessing Officer marked it to I.T.O. preparation of appeal papers. The official who was responsible for dak absconded from duty and reported back on 1‑1‑2002. He reported that he developed liver infection. He further stated that letter of CIT has also been misplaced. The officer concerned on query had informed that he too was suffering from Malaria and attended the office for only one or two hours these days, besides, he had additional charge of another circle as well. These are the reasons for delay for the period 22‑12‑2001 till 1: 1‑2002. The medical certificate of the official confirming liver infection I enclosed as annexure‑II. The copies of relevant positing orders of A.C.I.T. Circle C‑20 confirming ,his additional charge are marked as Annexure‑III. The affidavit of the officer who filed appeal is marked as Annexure‑IV.

(2) The copy of first grounds of appeal of the assessee was not available on record. The staff was deputed on 2‑1‑2002 to visit Messrs Gul and Company A.R. who advised him to visit the next day. On 3‑1‑2002 when the official visited A.R.'s office, he was informed that file was with other A.R. Mr. Aga Faqir Muhammad who was conducting the appeal. The official visited the office of the A.R. and was again advised to visit the next day. On 3‑1‑2002 the official visited and waited for quite some time. He was informed that Mr. Aga was busy in some important matter and was in a meeting. The official was sent to CIT(A)'s office on 3‑1‑2002 for obtaining a copy of the grounds of appeal. He was advised to visit on 4‑1‑2002. On 4‑1‑2002 the staff of CIT(A) informed that they were trying to trace out the file and informed and the official to visit the next day. On 5‑1‑2002, after a lot of search the papers containing the grounds of appeal were traced out.

(3) The matter being of an important nature the Assessing Officer discussed the same with his IAC on 7‑1‑2002 (6‑1‑2002 being Sunday).

(4) The IAC instructed the Assessing Officer to discuss the matter finally with the undersigned also. On 8‑1‑2002 the matter was discussed with the officer and the IAC by the undersigned.

(5) On 9‑1‑2002 the grounds of appeal were given the final shape and typing was done and papers were finally arranged.

(6) On 10‑1‑2002 appeal was filed before the Honourable Income Tax Appellate Tribunal.

This office is of the opinion that the order of the CIT(A) is full of infirmities. She has misdirected herself in deciding the legal issues involved which need to be examined at the higher appellate forum. Further, substantial Revenue amounting to Rs.1,11,00,000 is involved in this case. In view of the foregoing facts this office requests for condonation of the delay for filing of appeal which is within the powers (under, section 134(4) of the Income Tax Ordinance, 1979 of the Honourable Income Tax Appellate Tribunal.

Following case‑laws have already been submitted in support of the request for condonation of the delay.

(i) PLD 1987 SC 436 = 1988 PTD 394; (ii) 2000 PTD 344; (iii) PLD 1992 SC 369 Muhammad Saleem v. Superintendent of Police Sialkot and (iv) 2002 PTD 1035.

(Sd.)

(CH. NAZIR AHMAD),

Commissioner of Income‑tax Zone‑C, Karachi"

3. The admissibility of this application and the request of condonation of delay was however, opposed by the learned counsel for the appellant who submitted that the date of communication of CIT(A)'s order was 22‑10‑2001 and the appeal having been filed on 10‑1‑2002, the actual delay was therefore, 20 days and not 16 days as mentioned in the application filed by the department. The calculation was given as under:‑‑

4. It was analyzed by the learned counsel that the cause of delay given in the application was:

5. According to the learned counsel there was no sufficient cause beyond the control of department justifying the late filing of appeal and that the plea taken by the department that departmental formalities take longer period was also no ground and in this regard he referred to the case reported as 2000 S.C.J. 586. It was further pointed out that the ground taken by the department that several officers were involved in the filing of appeal was also not a valid ground in law as held in the case reported as 2000 SCMR 706. Further according to the learned counsel that the Government cannot be treated differently than an ordinary litigant for condonation of delay which in the present case was solely on account of negligence which is no cause of condonation of delay. Reliance for this purpose was placed on the case reported as 1999 CLC 45. The learned counsel therefore, pleaded that the condonation having not been properly explained as per the reasons mentioned in the application filed by the Commissioner of Income‑tax reproduced above, the appeal was not maintainable on the face of it and should be dismissed in‑limine.

6. The learned D.R. and the learned Inspecting Additional Commissioner who appeared on behalf of the department however, contended that there was no deliberate delay in filing of appeal and there were genuine circumstances which called for consideration for condoning the delay in filing of the appeal by the department. The D.R. placed before this Bench copy of the approval order issued by the office of the Commissioner of Income Tax, Zone‑C, Karachi whereby the directions were given to the Deputy Commissioner of Income Tax, Circle C‑20, Zone‑C Karachi to file the appeal in the present case. This letter is dated 21‑12‑2001 and the learned DCIT was cautioned that the appellate order having been received in the office of the Commissioner of Income Tax on 22‑10‑2001 was to get barred by limitation on 22‑12‑2001 and the second appeal should be filed before the expiry of this date. Thus, according to the learned D.R. the sanction of the Commissioner of Income Tax was duly conveyed to the concerned DCIT before the expiry of limitation period. However, when this sanction letter reached the office of the concerned DCIT it was as narrated in the condonation application filed by the department marked to the Inspector for preparation of appeal papers. The official who was responsible for Dak absconded from duty and reported back on 1‑1‑2002 and reported that he had developed during these days Liver Infection. It has been further stated that letter of Commissioner of Income Tax was misplaced. The concerned DCIT also on inquiry by the Commissioner informed that he too was suffering from Malaria and attended the office only for one or two hours in those days and further he was preoccupied with additional duties of another Circle. Formulation of the grounds of appeal and its approval was therefore, delayed and finally it was filed on 10‑1‑2002. According to the learned D.R. it was for these reasons that the filing of appeal was delayed. The learned counsel for the appellant has vehemently opposed the admission of the condonation of plea on the basis enumerated by the D.R. and has referred to various case‑laws already referred to above.

7. The matter has been considered by us. As it appears from record although the sanction letter by the Commissioner of Income‑tax, Zone‑C, Karachi was issued quite late in time but it was still one day before, the expiry of the limitation period and if sufficient precautions had been taken the appeal papers could have been prepared the same day and filed before the Tribunal within due time before the limitation which was to expire on 22‑12‑2001. Instead the matter was taken up very casually by the officials of the concerned Circle responsible for filing of appeal. The matter was in the first place marked by the concerned official to the Inspector. It appears that in this process the papers reached the clerk responsible for the Dak who did not turn up till 1‑1‑2002 on the plea of Liver Infection. During this entire period no body bothered to check up the fact whether the appeal papers had been duly prepared and filed before the Tribunal. As the case involved a sufficiently big amount of tax revenue such default on the part of concerned officials is not simply a negligence but a criminal negligence whereby they have committed a serious lapse in discharge of their primary duty which is to safeguard the interest of Revenue. The entire act of the official appears to frustrate directions of the learned CIT to file the appeal within the time intimated by him. The question whether such an irresponsible act on the pert of subordinate officials should be allowed to frustrate the directions of theCIT to file the appeal within time and whether in such circumstances the appeal should summarily be dismissed as being barred by limitation. The learned counsel for the appellant/assessee says yes to such action, however, in our view the provision of such limitation should only be invoked if the decision of the learned CIT(A) is found to be based on fair and reasonable grounds. Otherwise the technicalities of the limitation clause should not be invoked in the aid of any damage to the cause of revenue. In so interpreting the provision of limitation we are supported by the judgment of the Hon'ble High Court of Sindh, Karachi reported as 2000 PTD 344 which is in turn based on an earlier judgment of Supreme Court of Pakistan reported as PLD 1992 SC 369. The relevant portion from the said order of the Honourable High Court is reproduced as under:‑‑

" .Mr. Khalifa Salahuddin, appearing on behalf of the respondent/assessee submitted that if Rule 34 was adhered to very strictly and was followed in letter and spirit then undue advantage would be made available to the applicant/department for filing appeals even after passage of long period of time and appeals which would on the face appear to be time‑barred, as in the present case, would be considered to have been filed within the period of limitation because the order of the Tribunal was communicated to the concerned Commissioner after one year or two years or even more. He further submitted that it could never be the intention of the Legislature that undue advantage or benefit be given to a party for computing the period of limitation for filing the appeals. The arguments advanced by Mr. Khalifa Salahuddin do not merit consideration in view of our observations made hereinabove after taking not consideration Rule 34 of the Income Tax Appellate Tribunal Rules and the case‑law referred to us by Mr. Shaikh Haider, learned counsel for the applicant/department. We may refer here to the case of Muhammad Saleem v. Superintendent of Police, Sialkot reported in PLD 1992 SC 396. In this case the Hon'ble Supreme Court expressed the view that for providing substantive justice the Court should not be influenced by the technicalities of law and they should not be allowed to be impediments in the cause of justice. It would be appropriate to reproduce the relevant portion from the judgment as under:‑‑

"This Court in similar circumstances has, however, held that whether an appeal was likely to succeed on the question of limitation but the case was otherwise unjust and did not merit interference in such situation was not proper and, accordingly, dismissed the appeal on the ground that the equitable writ jurisdiction could not be exercised in aid of injustice."

In the present case, we find that the applicant/department has a strong case of merits as in allowing the benefit to the respondent/assessee, the Appellate Tribunal has misinterpreted the circular of the C.B.R., which according to it provided the relief given by it to the respondent/assessee. In the circumstances, dismissal of the appeal of the applicant/department as time‑barred would result in acting in aid of in‑justice by not strictly following the technicalities of Rule 34 of the Income Tax Appellate Tribunal Rules, 1948."

8. Keeping the above principles in view it appears proper to examine the order of the concerned CIT(A)'s against which the present appeal has been filed by the department and for this purpose we reproduce the grounds as under:‑‑

"(1) That the order of learned CIT(A) Karachi is bad in law and on facts.

(2) That the CIT(A) was not justified to hold that return for the assessment year under consideration qualified under SAS. The case did not qualify under SAS because an information about concealment/under declaration of stock by the assessee was available on record at the time of filing of return. The assessee had three sale outlets one located in Liberty Market Gulberg, Lahore, and the other two at Clifton and Bahadurabad, Karachi. A raid was conducted by Directorate General of Intelligence and Investigation Income Tax in the shop located in Liberty Market Lahore, The raiding was duly authorized by the competent authority. As a result huge under declaration of stacks was discovered.

(3) That the value of understated stock was discovered to the tune of Rs.24,84,48,550 as against the declared capital of Rs.66,04,350 for all the three branches. This information constituted definite instance of concealment of income.

(4) That on the basis of definite information about the concealment of income/under statement of stock the case was kept out the purview of Self‑Assessment Scheme under Para. 2(h) of C.B.R. Circular No.9 for the assessment year 1998‑99, dated 21‑7‑1998, after service of show‑cause notice, dated 10‑5‑1999.

(5) That the CIT(A) was not justified to observe that the inquiries made in the following years cannot be made the basis of assessment for the preceding year as the raid conducted on 22‑4‑1998 was well within the accounting year relevant to the assessment year under consideration.

(6) That the decision of the learned CIT(A) is not in consonancewith the findings of the Honourable High Court of Sindh. The assessee had filed writ petition before the said Court on following grounds:‑‑

(i) The IAC was not empowered to conduct raid under section 146 of Income Tax Ordinance, 1979.

(ii) On the basis of raid conducted the case cannot be set apart from the purview of Self‑Assessment.

(iii) That as per body of assessment order all specific points issues of law raised were duly considered before passing the assessment order.

(iv) That the assessee is in fact one of the largest business concern of trade in which she deal do sell expensive bridal dresses as submitted by the report submitted by the raiding squad who conducted raid only at Liberty Market, Lahore Branch whereas the two branches i.e. at Clifton and Bahadurabad, Karachi remained intact from the raid as no such raid was conducted at Karachi branches/outlets and further there is no parallel case available which matches the huge and expensive business of the assessee. The Honourable High Court of Sindh dismissed the assessee's petition by observing as under:‑‑

"(1) Thus we do not find any substance in the first contention that the respondent No.2 was not empowered under the law to enter the business premises of the petitioner and conduct, inspect or make any inventory of the articles found in the business premises of the petitioner.

(2) The second grievance is that the IAC, the respondent No.2, did not prepare any inventory and he merely estimated the stock available in the business, premises of the petitioner and that a mere assessment by the respondent No.2 does not amount to the evidence material constitution concealment resulting in the exclusion of the return from the purview of Self‑Assessment Scheme.

The second contention raised by Mr. Agha Faqir Muhammad is a question of fact. The assessment proceeding is, still pending as conceded by him."

(7) In the light of raid conducted by the raiding party it was established that the assessee is engaged in selling fancy ladies fabrics and fancy dressed for the Bridal and further committed understatement of stock and was found a big Tax evader of the country having three outlets/branches one at Posh locality of Liberty Market Lahore and two outlets/branches of posh locality at Clifton and Bahadurabad, Karachi, respectively.

(8) That the CIT(A) has erred in holding that the stock inventory taken by the raiding party constituted on information and not a positive evidence of concealment. In this case understatement of stock discovered by " the department on the basis of physical checking constituted definite concealment of income.

(9) The appellant craves permission to add, modify, alter, amend etc. ground of appeal at the time of hearing."

9. Perusal of the relevant impugned order of the CIT(A) shows that the assessment order was cancelled by her with the following observations:

".............I have considered the contention raised on behalf on the appellant as well as the Assessing Officer and materials available on record. The legal point for consideration before me is whether the case of the appellant be excluded from the purview of Self‑Assessment Scheme for the reason that the income‑tax officer at Lahore has taken the inventory of fifty per cent of the stock at the shop of the appellant at Liberty Market, Lahore, amounts to concealment under Clause (h) of para. 2 of Self‑Assessment Scheme for assessment year 1998‑99. The expression concealment has been discussed at length in the case reported at 1998‑99 PTD 882. To establish concealment the Assessing Officer must have in his possession positive and definite evidence. Taking of inventory may be information but cannot be a positive evidence of concealment. It is a requirement of law that before taking the case out of the purview of Self‑Assessment Scheme, a show‑cause notice is to be served on the assessee to give him an opportunity to rebut the allegation made in the show‑cause notice.

From the foregoing facts I conclude that exclusion of assessee's case from the purview of Self‑Assessment Scheme (immunity) was not justified. I reply on the following decisions of Superior Courts.

The impugned order is cancelled to be accepted under section 59(1). The officer may however', proceed under section 65 after meeting full requirements of law and on the basis of definite information of concealment if available. Since the order is cancelled on point of law. The other issues are not discussed in this order."

10. In order to appreciate the findings of the learned CIT(A) we have to go through the assessment order according to which the assessee had filed the returns under the Self‑Assessment Scheme originally on 23‑9‑1998 declaring an income of Rs.15,80,970 which was subsequently on 12‑10‑1998 declaring an income of Rs.1,82,0280 after making a lump sum addition to the income originally declared, The assessee was an individual deriving income from sale of expensive Fabric and Bridal Dresses from its three outlets, out of which two were situated in Clifton and Bahadurabad, Karachi and one at Liberty Market Lahore. The case of the assessee was taken out of purview of Self‑Assessment Scheme for the assessment year 1998‑99 under clause (h) of para. 2 of C.B.R. Circular No.9 of 1998, dated 21‑7‑1998 on the basis of report received from office of the Directorate General of Investigation and Intelligence Islamabad. This information comprised of following reports:

"(1) A written report issued under the seal and signature of Mr. Abdul Rauf, Inspecting Additional Commissioner of Income Tax, Eastern Region, Lahore. In his report the worthy IAC submitted that on directions of by Director General of Intelligence and Investigation a raid was conducted on the joint premises of Messrs Saleem Fabrics and Messrs Portia Boutique situated in Liberty Market Lahore on 22‑4‑1998. According to this report two teams led by Mr. Shahbaz Khan DCIT and Mr. Muhammad Ilyas (ITO took the inventory of first floor and second floor, respectively, occupied by Messrs Portia Boutique. As per this report the stock amounting to Rs.2,48,48,550 was discovered.

(2) Detailed reports submitted by Mr. Shahbaz Khan DCIT and Mr. Muhammad Ilyas ITO, in which description of the inventory has been furnished in detail such as number of thans, suits per than, number of dresses, shawls etc. alongwith their prices.

From perusal of the wealth tax record of, the assessee, it transpired that the assessee has declared the opening capital of the shop at Liberty Market as on 30‑6‑1997 at Rs.66,04,350. In view of the meager capital declared in, respect of the aforementioned business premises in comparison to stock discovered by the raiding party (i.e. Rs.24,848,550) reveals enormous difference of investment towards accumulation of stock vis‑a‑vis the capital available."

11. In view of the above discrepancy pointing out the concealment of income on the part of the assessee an intimation was issued on 10‑5‑1999 by the office of Assistant Commissioner of Income Tax, Circle C‑20, Zone‑C, Karachi, regarding the processing of the case under normal law for the assessment year 1998‑99 and the same is reproduced as under:‑‑

"OFFICE OF THE

ASSISTANT COMMISSIONER OF INCOME‑TAX

CIRCLE C‑20, ZONE `C', KARACHI.

No. ACIT/Cir‑C‑20/ZC/98/99Dated: 10‑5‑1999

To,

Mrs. Farhana Saleem,

Prop. Portia Boutiqe,

Portia 94, Karachi.

SUB:PROCEEDINGS UNDER NORMAL LAW FOR ASSTT. YEAR 1998‑99 INTIMATION REGARDING.

You have filed your income‑tax return for the above subjected year under S.S.A.S. claiming the same as immune from "Total Audit". Perusal of Wealth Tax Return and Break up of Capital reveals that you have declared capital and closing stock as under:‑‑

The department is in possession of information (already communicated to you, during Wealth Tax proceeding), that you were in possession of stock in trade amounting to Rs.2,48,48,550, whereas in your wealth tax return for the Asstt. Year 1998‑99, you have declared the total capital including stock in trade at Rs.78,23,000.

The capital as on 30‑6‑1998 has been grossly understated as such there is ample evidence of concealment of Income furnishing of inaccurate particulars.

Your case therefore, does not qualify for acceptance under S.S.A.S under the provisions of Para. II (H) of C.B.R. Circular No.9 of 1998‑99, dated 21‑7‑1998.

You are therefore, requested to attend my office on 17‑5‑1999 and submit the following details `documents':‑‑

(1) Statement of Accounts.

(2) Trading and Profit and Loss a/c.

(3) Balance Sheet.

(4) Bank Statement.

Notice under section 61 is enclosed for compliance on 17‑5‑1999.

(Sd.)

(ABDUL JABBAR MEMON)

ASSISTANT COMMISSIONER OF INCOME‑TAX

CIRCLE‑20, ZONE‑C, KARACHI"

12. Subsequently the proceedings were continued with the issue of notices under sections 61/62 and finally the assessment was made by addition of an amount of Rs.1,98,78,850 by way of value of stock at cost price determined during the raid against which allowance was given for capital declared at Liberty Branch amounting to Rs.18,50,000 and stock declared in Tax Amnesty Scheme 2000 at Rs.1,68,00,000 making a net addition of Rs.12,28,850 Sales were also estimated on the basis of value of stock so determined and the assessment was finally made at an income of Rs.52,659,142. When the matter reached the learned CIT(A) it was cancelled by her primarily on the ground that determination of excess stock on the basis of raid conducted by the department on 22‑4‑1998 which was prior to the filing of return of income by the assessee did not constitute a positive and definite evidence for taking the case out of purview of Self‑Assessment Scheme as required under clause (h) Para. 2 Circular No.9 of 1998 referred to above. Further according to the learned CIT(A) no show‑cause notice was to give an opportunity to the assessee to rebut the allegations made by the department. Accordingly it was directed by her to accept the return of income filed by the assessee under section 59(1) with the further observation that "since the order is cancelled on point of law, the other issues are not discussed in this order."

13. In our view this interpretation of the fact and law by the learned CIT(A) is not proper. The raid was conducted on the Liberty Market premises of the assessee on 22‑4‑1998 whereby the raiding party found stock worth Rs.24,848,550 on the basis of physical inventory of goods available at the business premises made within a short period of few hours only. Whereas from perusal of the wealth tax record it transpired that capital as on 30‑6‑1997 had been declared at Rs.66,04,350 meaning thereby that the amount of Rs.18,244,200 i.e. difference between the stock discovered by the Income Tax Department Lahore and the capital declared at, Rs.66,04,350 was from unexplained sources liable to be added under section 13(1)(aa) to the total income of the assessee. Subsequently the assessee had availed the Tax Amnesty Scheme, 2000 and declared stock of Rs.1,68,00,000 under this scheme. Allowance was given for the same in determining the final taxable income of the: appellant discussed above. It is not clear as to why such understatement of stock should not be taken as a positive evidence for concealment. The learned CIT(A) has not dilated on this issue and has summarily expressed the opinion that the determination of stock by the raiding party was a simple information and not an evidence for concealment. The learned CIT(A) has also held that no show‑cause notice was served on the assessee to rebut the allegations made regarding concealment. This finding of the learned CIT(A) is not found to be correct as a proper show‑cause notice regarding processing of the case under the normal law had already been conveyed vide letter, dated 10‑5‑1999 reproduced' above which fact has also been noted at Page 2 of her order. The requirement of both law and facts relating to the determination of concealment of income by the assessee and exclusion of the case from the purview of Self‑Assessment Scheme are found to have been overlooked by the learned CIT(A) in canceling the order of the Assessing Officer causing great injustice to the department and the canons of limitations cannot be put in aid of such injustice as already upheld by the Supreme Court in the case mentioned above. In this view of the matter, therefore, we are inclined to allow the Miscellaneous Application for condonation of delay and simultaneously the department appeal is taken up for regular hearing on merits.

14. Having perused the order of the learned CIT(A) we find that the same has been cancelled by her on incorrect appreciation of law and facts relating to acceptability of return filed by the assessee under the Self‑Assessment Scheme and no findings were given by her on merit of the assessment made by the Assessing Office. We are not convinced with the propriety of the order passed by the learned CIT(A) and the cancellation ordered by her and uphold the exclusion of the case from the purview of Self‑Assessment Scheme for the reasons discussed above and remand the case back to CIT(A) for order on merit.

15. While parting with the matter we would like to express our grave concern about the state of affairs obtaining in the department. We have noted that even petty officials can frustrate the direction of the Senior Officer and there appears to be no cheek and balance to arraign such delinquent officials who can cause damage to the interest of Revenue on account of their carelessness deliberate or otherwise. We would direct the Commissioner of Income Tax to take appropriate action against the concerned official so that such instances of late filing of appeal are not repeated.

16. The departmental appeal is allowed.

C.M.A./47/Tax (Trib.) Appeal allowed.