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

‑‑‑‑Ss. 59(1) & 80D‑‑‑Self‑Assessment‑‑‑Assessment year 1999‑2000‑‑ Income‑‑‑Total income‑‑‑Loss was declared by carrying forward of losses of previous years‑‑‑Return was claimed to be qualified under Universal Self‑Assessment Scheme on the ground that assessee had paid minimum tax under S. 80D of the income Tax Ordinance, 1979 more than 30% of the last tax paid‑‑‑Para.2(b) of the Self‑Assessment Scheme for the year 1999‑2000 required the declaration of income and not total income which the assessee did‑‑‑Validity‑‑‑After adjusting the income for the year from the business loss, being brought forward from the preceding year, the resultant income declared worked out to be a loss‑‑ Bar of scheme that cases where loss had been shown were not entitled to be processed under Self‑Assessment Scheme was applicable and the assessee's claim of his case for being processed under Universal Self- Assessment Scheme was not tenable.

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

‑‑‑‑Ss. 55 & 59(1)‑‑‑Return of total income‑‑‑Self‑Assessment Scheme‑‑ Total income‑‑‑Income of a year‑‑‑Chapter‑VII of the Income Tax Ordinance, 1979 regulates the assessment required under S.55 to file a return of the total income which implied the computation of income in accordance with the different provisions of the Income Tax Ordinance, 1979‑‑‑Section 55 of the Income Tax Ordinance, 1979 provided that the return was to be filed of total income and not that of income of a year.

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

‑‑‑‑S. 59(1)‑‑‑Self‑assessment‑‑‑Universal Self‑Assessment Scheme for the assessment year 1999‑2000‑‑‑Held, Scheme as framed by Central Board of Revenue in exercise of powers under S.59(1) of the Income Tax Ordinance, 1979 could not be deemed that by using the word income it had overridden the provisions of the Income Tax Ordinance, 1979 where filing of return of total income was the requirement and not that of income of that year regardless of the necessary deductions of expenses and adjustment of losses.

Noushad Ali Khan, D.R. for Appellant.

Abdul Basit, F.C.A. for Respondent.

Date of hearing: 11th December, 2003.

ORDER

MUHAMMAD JAHANDAR (JUDICIAL MEMBER).‑‑‑The assessee being a private limited company deriving income from sale and extraction of coal filed return for the years under consideration and claimed that as per Self‑Assessment Scheme relevant for the assessment year 1999-2000 as he had paid tax by thirty per cent more than the preceding year his case qualified for being accepted under the Scheme. The Assessing Officer found that the assessee had shown loss in the return thus his case could not be processed under Self‑Assessment Scheme. In respect of assessment year 2000‑2001 the facts being similar the same treatment was accorded. The assessee went in appeal and the learned CIT(A) by two separate orders cancelled the assessments for both the years and directed to accept the returns under Self‑Assessment Scheme. The department has challenged the orders of learned CIT(A) before this Tribunal.

2. Learned DR maintained that one of the requirements of the Schemes relevant, for the years under consideration for processing cases thereunder, was that the assessee should have shown income but as the assessee in these years declared loss his cases did not quality for SAS. As against this, learned AR contended that as per returns the assessee declared income for these years and mere fact of purportedly carrying forward of losses of previous years. It cannot be inferred that the returns showed losses. He mentioned that in these years, the assessee paid minimum tax under section 80D of the Ordinance and tax paid for the year 1999‑2000 was more than 30 % of the last tax paid. He referred to para. 2(b) of the Scheme for the year 1999‑2000 to argue that it merely required the declaration of income and not total income which the assessee did.

3. Having heard the arguments it appears that in the assessment year 1999‑2000 the assessee filed return under the Self‑Assessment Scheme. In the immediately preceding year net loss was assessed and only minimum tax under section 80D of the Ordinance at Rs.36,101 was paid. For the year 1999‑2000, as per return after adjustment of brought forward assessed losses, the assessee had shown that the tax payable for the year was minimum tax under section 80D of the Ordinance amounting to Rs.101,444 which was more than 30% as against the preceding year. The assessee on this basis claimed that his return qualified under the Self‑Assessment Scheme. However, the Assessing Officer found that after adjustment of brought forward losses the income declared resultantly worked out to be a loss. The contention of the learned AR is that in the assessment year 1999‑2000 the assessee had shown income at Rs.5,65,751 and the loss shown by him at Rs.12,71,618 was in fact brought forward from the assessment year 1998‑99 which could not be taken into account for the purposes of processing the case under Self‑Assessment Scheme. He provided a copy of the return for the assessments year 1999‑2000 which showed in the column of the "Summary of Return" Total income which was added by words "after brought forward losses" at Rs.5,65,751. On the second page under heading "Description of Income" the income shown is at Rs.5,70,803 and under the same heading in the column business loss a sum of Rs.12,71,618 has been mentioned. Further in the heading Computation of Tax, the total income declared is Rs. 5,67,751 and the tax under section 80D of the Ordinance is shown to have been paid at Rs.1,01,444 being 0.5 percent.

4. Before proceeding further, we find it adviseable to reproduce herein relevant clauses of Self‑Assessment Scheme for the year 1999‑2000.

2(a) The Scheme is optional for existing as well as new taxpayers. Those do not opt for this Scheme may file their returns in the standard form for assessment under the normal law. However, their cases may not be dealt with by the same Circle holding original jurisdiction.

(b) All returns of income filed for assessment year 1999‑2000 are entitled to the benefits of this Scheme except the following.

(i) --------------------------

(ii) --------------------------

(iii) --------------------------

(iv) --------------------------

(v) --------------------------

(vi) Cases where income declared is below taxable limit or loss is declared: and

3. Returns voluntarily filed under this Scheme will be readily accepted and assessment order issued if the taxpayer ensures that:

(a) --------------------------

(b) the income declared for assessment year 1999‑2000 is not less than the income last declared or assessed: whichever is higher.

(c) --------------------------

(d) --------------------------

5. A bare reading of the above shows that case where loss has been shown those did not qualify for being processed under the said scheme. In order to appreciate the operation of the Scheme, it is necessary to shed some light on the mechanism developed by the Ordinance. It seems that income tax is charged on the total income from various heads and the losses like expenses are deductible for computation of income. Further the toss is allowed to be set off in certain circumstances either within one source or within one head or loss under one head against income from another head or carry forward of losses to the succeeding year and set off against the income of that year. In this regard it is mentionable that for allowing set off and carrying forward the relevant provisions viz. section 34 or 35 of the Ordinance are directory in nature for the word shall has been used therein. It manifests that while filing return of total income, the assessee is obliged to work out the total income after deducting the expenses and losses which are admissible and this exercise has not been left to be done by the Assessing Officer who during assessment proceedings in just to make adjustments in case he disagrees with the computation furnished by the assessee. This is further evident by the operation of some other provisions of the Ordinance which are sections 50,53,54 and 85. Under section 50 of the Ordinance it is necessary for certain persons to deduct or recover the amount of tax at specific stages and deposit the same with the tax authorities. Alongwith this, in certain cases the assessee is enjoined under section 53 of the Ordinance to pay advance tax which all companies and registered firms are liable to pay provided they were assessed to tax in the previous years and in certain circumstances by other assessees. This again has to be done by the assessee on his own working. Yet another provision makes the scheme of Ordinance more crystal clear. That is payment of tax with return under section 54 of the Ordinance. It provides that all those persons who are required to file the return of total income are bound at the time of filing of the return to pay tax payable on the basis of the return subject to adjustment of tax deducted at source or paid in advance. It is a residual amount which is to be paid under section 54 ibid. Thereafter the stage of assessment comes, and when the assessment in respect of an assessee is completed, one possibility is that the tax already paid by him under the above three modes of payments is not sufficient to meet the demands of the Revenue and there is a possibility that some more tax is still payable and in that case the Assessing Officer shall serve upon the assessee a notice under section 85 of the Ordinance by specifying the sum payable. It thus appears that the assessee has to work out the total income himself and pay tax thereon and not to wait the assessment to be made by the department. In case the working is not in accordance with law, the Assessing Officer can interfere and proceed accordingly section 88 of the Ordinance deals with additional tax in case of non‑payment of tax due under section 54 or short payment thereof. In this regard it will not be out of place to mention that Chapter VII which regulates the assessment requires under section 55 to be filed a return of the total income which implies the computation of income in accordance with the different provisions of the Ordinance. In this section the return is to be filed of total income and not that of income of a year. In these circumstances the argument of the AR that the Self‑Assessment Scheme only required the filing of return of the income of that year is not acceptable. Indisputably, the scheme which has been framed by C.B.R. in exercise of powers under section 59(1) of the Ordinance cannot be deemed by using the word income to have overridden the provisions of the Ordinance where filing of return of total income is the requirement and not that of income of that year regardless of the necessary deduction of expenses and adjustment of losses.

6. Given this situation the contention of the assessee that he did declare income for the assessment year 1999‑2000 does not appear to be correct on the basis of the overall mechanism of the Ordinance as highlighted above while computing the income chargeable to tax. It seems that in this year after adjusting the income for the year 1999‑2000 from the business loss, being brought forward from the preceding year the resultant income declared works out to be a loss. The assessee as per his return has applied the aforesaid working and shown total income at Rs.565,571 which in fact was a loss. In these circumstances the bar of the scheme that cases where loss has been shown are not entitled to be processed under SAS is applicable and the assessee's claim of his case for being processed under USAS is thus not tenable. The arguments developed by learned CIT(A) to cancel the assessments are not only out of context but also preposterous. These have nothing to do within the controversy. The facts of the case for the assessment year 2000‑2001 were found to be identical by learned CIT(A) with those of the year 1999‑2000 who proceeded to cancel the assessment case for this year too. We also do not find any dissimilar feature and in view of our findings for the years 1999‑2000 we hold that the assessee's case for both the years were rightly rejected by the Assessing Officer to be processed under the relevant Self‑Assessment Scheme for these years.

7. Learned AR at the time of arguments also agitated that appeal for the year 1999‑2000 is time‑barred by one day. This objection is without any substance as the last day on which appeal could be filed was holiday being Sunday and the same was filed on the following date which thus is within time. The impugned orders passed by the learned CIT(A) are thus vacated and that of the assessments orders restored. Resultantly both the appeals are accepted.

C.M.A./51/Tax(Trib.)Appeals accepted.