I.T.As. Nos.321/IB and 368/IB of 2003, decided on 6th March, 2004. VS I.T.As. Nos.321/IB and 368/IB of 2003, decided on 6th March, 2004.
2004 P T D (Trib.) 1812
[Income‑tax Appellate Tribunal Pakistan]
Before Inam Ellahi Sheikh, Chairman and Muhammad Jahandar, Judicial Member
I.T.As. Nos.321/IB and 368/IB of 2003, decided on /01/.
th
March, 2004. (a) Income Tax Ordinance (XXXI of 1979)‑‑‑‑
‑‑‑‑S. 134‑‑‑Income Tax Ordinance (XLIX of 2001), S. 239‑‑‑Appeal to Appellate Tribunal‑‑‑Maintainability‑‑‑Assessment year 2001‑2002‑‑ Assessee contended that since the appeal had been filed by the Commissioner of Income‑tax/Wealth Tax and proceedings for this year were to be continued under the provisions of Income Tax Ordinance, 1979 under which the Assessing Officer was required to be a party to the appeal‑‑‑Validity‑‑‑Appellate Tribunal was not convinced with the arguments of the assessee and observed that a number of departmental appeals had been rejected by the Appellate Tribunal on the score that such appeals had not been filed by the Deputy Commissioner who had raised assessments instead of the Commissioner of Income Tax who was properly authorized to file appeals after the commencement of the Income Tax Ordinance, 2001.
(b) Income Tax Ordinance (XLIX of 2001)‑‑‑--
‑‑‑‑S. 239(1)‑‑‑Removal of difficulties‑‑‑Computation of total income and tax payable‑‑‑Provisions of S.239(1) of the Income Tax Ordinance, 2001 clearly showed that the provision of Income Tax Ordinance, 1979 were to apply only to the computation of total income and tax payable thereon.
(c) Income Tax Ordinance (XXXI of 1979)‑‑‑--
‑‑‑‑S. 59(1)‑‑‑C.B.R. Circular No. 4 of 2001, dated 18‑6‑2001 (Self Assessment Scheme 2001‑2002), Para.9‑‑‑Self‑Assessment‑‑‑Paragraph 9 of the Self‑Assessment Scheme for the year 2001‑2002 provided a procedure to select the cases for total audit and there was no contradiction in the provisions.
PLD 1956 SC 331 distinguished.
(d) Income Tax Ordinance (XXXI of 1979)‑‑‑--
‑‑‑‑S. 59(1)‑‑‑C.B.R Circular No.4 'of 2001, dated 18‑6‑2001 (Self Assessment Scheme 2001‑2002), Para. 9 & 7(ii)‑‑‑Self‑Assessment Scheme‑‑‑Paragraph 9 of the Self‑Assessment Scheme for the assessment year 2001‑2002 simply provides for a pr3cedure for selection of cases which were to be excluded from the purview of eligibility for acceptance under clause (vii) of paragraph 7 which in turn was dependent upon paragraph 1.1 of the Self‑Assessment Scheme.
(e) Income Tax Ordinance (XXXI of 1979)‑‑‑--
‑‑‑‑S. 59(1‑A)‑‑‑C.B.R. Circular No.4 of 2001, dated 18‑6‑2001 (Self Assessment Scheme 2001‑2002), para. 9‑‑‑Self‑Assessment‑‑‑Contention of the assessee was that unless there was a selection made under subsection (1‑A) of S.59 of the Income Tax Ordinance, 1979, no return could be selected for total audit out of the returns filed under Self Assessment Scheme‑‑‑Validity‑‑‑Provision of subsection (1‑A) of S.59 of the Income Tax Ordinance, 1979 was sufficiently clear that the assessment under S.59 of the Income Tax Ordinance, 1979 could be made if the return filed by the assessee qualified for acceptance in accordance with the provisions of the Self‑Assessment Scheme for that year‑‑‑Contention of the assessee was repelled by the Appellate Tribunal.
(f) Income Tax Ordinance (XXXI of 1979)‑‑‑--
‑‑‑‑S. 64‑‑‑Assessment‑‑‑Limitation‑‑‑Limitation of two years from the end of assessment year under S.64 of the Income Tax Ordinance, 1979 did not debar the. Assessing Officer, from completing the assessment before the expiry of assessment year.
(g) Income Tax Ordinance (XXXI of 1979)‑‑‑--
‑‑‑‑S. 59(1)‑‑‑C.B.R. Circular No.4 of 2001, dated 18‑6‑2001 (Self Assessment Scheme 2001‑2002), para. 9‑‑‑Self‑Assessment‑‑‑Status of assessee was `Association of Persons" ‑‑‑Name of, the member of "Association of Persons" was inserted in computer ballot list ‑‑‑Assessee contended that return of Association of Persons was not selected for total audit‑‑‑Validity‑‑‑Selection of case was mainly made on the basis of National Tax Number and name of the assessee was there merely to facilitate the matching up/identification‑‑‑Name of the member of the Association of Persons had been given by the assessee alongwith the business name of the Association of Persons on the form of return and it appeared that the name of the member was fed into the computer instead of the name of the Association of Persons‑‑‑Such a lapse would not be fatal to the selection of the case as long as the National Tax Number was not disputed or claimed to be not belonging to the assessee‑‑ Members of Association of Persons had also filed their statements of assets and liabilities indicating the same National Tax Number as in the case of Association of Persons‑‑‑If any member had filed a separate return, there would had been a separate National Tax Number in that case‑‑‑Selection of the case for total audit was not interfered by the Appellate Tribunal.
Muhammad Iqbal Ahmed, D.R. for Appellant (in I.T.A. No.321/IB of 2003).
Mir Ahmed Ali for Respondent (in I.T.A. No. 321/IB of 2003)
Mir Ahmed Ali for Appellant (in T.A No. 368/IB of 2003)
Muhammad Iqbal Ahmed, D.R for Respondent (in I.T.A No.368/IB of 2003)
Date of hearing: 4th March, 2004.
ORDER
INAM ELLAHI SHEIKH (CHAIRMAN).‑‑‑By this consolidated order. we propose to decide two cross‑appeals, in the, case of an assessee deriving income from running a maternity home, arising out of an order, dated 20‑2‑2003 recorded by the learned CIT(A)‑II, Islamabad camp at Jhelum.
2. The relevant facts in brief are that the assessee has been assessed as an AOP. In the impugned assessment order, the NTN of the assessee has been given as 18‑22‑2369793 and the name of the assessee has been stated as Mr. Asad Ali Bokhari, Syed Riaz Hussain Shah with the address given as Al‑Qasim Hospital and Maternity Home, Civil Lines, Jhelum. The assessee declared the income at Rs.178,000 and the assessee's case was selected for total audit through ballot. After detailed proceedings, the assessment was made on 29‑6‑2002 under section 62 of the repealed Income Tax Ordinance, 1979 (hereinafter called the repealed Ordinance) at an income of Rs.705,164 after estimating the receipts under different ,heads such as surgical operation, maternity home, DNC, OPD etc. and making additions in the P&L expenses. The learned CIT(A) passed the impugned order on 20‑2‑2003 describing the name and address of the appellant as Mr. Asad Ali Bokhari, Proprietor: Al‑Qasim Hospital and Maternity Home, Civil Lines, Jhelum, and the same NTN has been given as on the assessment order. Some relief was allowed to the assessee by way of reduction in the estimates of receipts and in the add backs in the rent addition in the P&L expenses. The department has agitated the relief allowed to the assessee in the estimation of receipts and in the rent account whereas the assessee has challenged the selection of the case for total audit. The assessee has taken a number of other grounds but none of them was pressed at the time of hearing of the appeals.
3. Firstly, we will take up the appeal of the department. The department has agitated the reduction in the estimation of clinical receipts and in the addition on account of rent. The assessee declared receipts from surgical operations at Rs.645,000 which were estimated by the Assessing Officer at Rs.750,000. Similarly, receipts from maternity home were declared at Rs.335,000 and estimated at Rs.400,000. Similarly, the receipts were estimated under three other different heads and as a result, total receipts were estimated at Rs.1,760,000 as against the declared receipts of Rs.1,395,000. The learned CIT(A) reduced the receipts from surgical operations to Rs.670,000 and maternity home to Rs.350,000. Similarly, some relief was allowed in the estimate of receipts in DNC, OPD and laboratory receipts. The learned D.R. was invited to point out the basis of estimates of the Assessing Officer which he failed to point out. The learned AR of the assessee however argued that the departmental appeal was not maintainable since the appeal has been files by the ,Commissioner of Income/Wealth Tax, Islamabad Zone although the assessment had been made by a Special Officer of Income/Wealth Tax, Circle 22, Jhelum. The learned AR has referred to the provisions of section 239 of the Income Tax Ordinance, 2001 to point out that the proceedings for this year were to be continued under the provisions of the repealed Ordinance under which the Assessing Officer was required to be a party to the appeal. We are not convinced by this argument of the learned AR of the assessee. A number of departmental appeals have been rejected by the Tribunal on this very score that such appeals had been filed by the Deputy Commissioner who had raised assessments instead of the Commissioner of Income Tax who was properly authorized to file the appeals after the commencement of the new Ordinance. A reading of subsection (1) of section 239 of the new Ordinance clearly shows that the provisions of the repealed Ordinance are to apply only to the computation of total income and tax payable thereon. Hence the objection of the learned AR of the assessee is rejected. The department appeal is however dismissed as, this is the case, of one estimate against the other requiring no interference.
4. This brings us to the appeal filed by the assessee on the question of selection of the return for total audit under section para. 9(a)(i) of Circular No.9 of 2001. As per the facts of the case, the return for the assessment year 1999‑2000 was the first return filed by this assessee as an AOP and no NTN was stated in that return The next return was filed for the assessment year 2000‑2001 again in the same status and in the same fashion. The return for tie assessment year 2001‑2002, the year under consideration, was also filed in a similar fashion. In the assessment year 2002‑2003, a return was filed in the status of an individual with NTN given as Z .639793 as mentioned in the assessment order for the assessment year under consideration. In the assessment year 2003‑2004, again the return is said to have been filed in the status of an APP with the same NTN as already mentioned above. The learned AR of. the assessee has filed a copy of a list showing the cases selected for total audit in random ballot and the assessee's case appears at No.21 with NTN 18‑22‑Z 639793 and the name of the as sessee is given as Asad Ali Bokhari. The claim of the learned AR of the assessee is that the computer has not selected the case of the present assessee/appellant which is an AOP for total audit and that the computer had selected the case of the individual assessee who is an AOP. The learned AR has submitted that Mr. Asad Bokhari has filed a separate return but he did not have a copy of the same nor could be provided any further details. According to the learned AR, if there was a selection made, it was selection of this individual member of the AOP and not the return of the AOP.
5. The learned AR of the assessee further submitted that this was a case of maladministration and submitted that the Hon'ble Federal Tax Ombudsman (FTO) had passed an order, dated 27‑1‑2000 holding that the selection of cases in such situations was illegal. The learned AR has filed a copy of the order of the FTO recorded in the cases of Star PVC Pipe Factory, Rahim Yar Khan and Javed Hussain, Nazar Hussain Bardana Merchant, Bahawalpur. By such order, as recorded in para. 11 thereof, the Hon'able FTO gave a finding that there was no mala fide in this case but the selection of return for total audit in complainant's case fell under the definition of maladministration. The Hon'ble FTO has recommended the C.B.R. to accept the returns in those cases under Self Assessment Scheme and report the compliance within 30 days. For these reasons, the learned AR has sought the Tribunal to issue similar directions to the Revenue authorities to accept the return under the Self Assessment Scheme.
6. The learned A. R. has further argued that there were some contradictions, between the paragraphs 1.1,7 and 9 of the Self Assessment Scheme for that particular year. For case of reference, we reproduce below the relevant paragraphs as mentioned by the learned A.R. of the assessee:‑‑
"(1.1) All returns filed by taxpayers, other than cases that are in eligible under para.7 of this Scheme, shall qualify for acceptance if they fulfill the following conditions, namely:‑
(a)tax has been fully paid under section 54 of the Ordinance and proof of such payment is attached with the return;
(b)return of income for the assessment year 2001‑2002 has been filed under section 55 of the Ordinance, within due date as defined in this Scheme;
(c)cases of public companies quoted on stock exchange, were tax payable on the income declared is equal to or more than the tax payable on the income last declared or assessed, whichever is higher; and
(d)cases of other companies, where tax payable on the income declared is higher by ten per cent (10%) or more compared to the tax payable on the income last declared or assessed, whichever is higher; and
(e)cases of persons not being companies, where tax payable on income declared is higher by twenty per cent (20%) or more compared to the tax payable on the income last declared or assessed, whichever is higher;"
"(7)RETURNS NOT ELIGIBLE
Following returns shall not be eligible for acceptance and shall automatically be subjected to total audit:‑‑‑ .
(i)All cases where loss has been declared
(ii)All cases where income has been arrived at by making a lump sum addition.
(iii)All cases of non‑residents
(iv)All cases of Modarabas and companies engaged in the banking and leasing business.
(v)All cases, where a legal issue is pending in any appeal in respect of a previous assessment and the same issue exists in the current year, unless the appeal/reference is withdrawn either by the taxpayer or the Department as, the case may be, before the filing of return under the Scheme.
(vi)All returns.
(vii) All returns selected for total audit."
"(9)SELECTION OF CASE FOR AUDIT
(a)From amongst the returns filed under the Self‑Assessment Scheme (excluding salary and only property income cases), twenty per cent (20%) returns may be selected for total audit in the following manner:‑‑
(i)Through computer ballot which may be random or parametric, as deemed fit by C.B.R.
(ii)By Regional Commissioner of Income Tax on the recommendations of Commissioners concerned in the light of, guidelines issued by the Central Board of Revenue in this behalf.
(b)Returns qualifying for self‑assessment, shall be expeditiously processed either manually, or through, computer, after the selection of cases for total audit. The Assessing Officer shall make necessary adjustments under section 59(3) of the Ordinance, if so required, after giving a notice in writing to the assessee and considering his explanation, if any. These adjustments may include add‑backs on account:‑‑
(i)expenses claimed which are legally inadmissible
(ii)any sum(s) deemed to be income under the Ordinance; and
(iii)adding agricultural income to chargeable income for rate purposes in terms' of Proviso to Clause (1) of Part‑I of the Second Schedule to the Ordinance."
The learned AR has emphasized that as per paragraph 1.1, all the returns qualified for acceptance except those which were ineligible under paragraph 7. The learned AR then drew our attention to item (vii) of paragraph 7 which stipulates that the returns selected for total audit would not be eligible for acceptance. Thereafter, the learned AR referred to paragraph 9 to say that there was a provision for selecting the cases for total audit which could not be done if such cases were already excluded from the scope of the Self‑Assessment Scheme. We are unable to comprehend such arguments of the learned AR. Para. 1.1, simply says that all the returns filed by the taxpayers would qualify for acceptance, subject to certain conditions mentioned in the same paragraph, but the cases which were held to be ineligible under para. 7 were not to qualify for acceptance. Paragraph‑7 elaborates the cases which were not eligible for acceptance and the item (vii) thereof specifies that the returns which were selected for total audit would not be eligible for acceptance. Thereafter in paragraph 9 simply a procedure has been laid down to, select the case for total audit and we do not find any contradiction in these provisions of the Self‑Assessment Scheme. The learned AR has, relied on a decision of the apex Court reported as PLD 1956 SC 331 and he has simply provided as with some extracts of head notes on page 336 of the report which as follows:‑‑
"Where provision has been made in clear terms for the general case and in a following provision, worded in the affirmative, a provision is made for a particular class of cases, the rule of exclusion alterius has no application whatsoever. The latter affirmative provision must be limited in its application by its own terms, and so indirect inference may be drawn therefrom to affect the principle laid down in the earlier provision."
However, we feel that the arguments of the learned AR of the assessee are not supported by such extract of the judgment of the apex Court, as in our view, paragraph 9 simply provides for a procedure for selection oil cases which are to be excluded from the purview of eligibility for acceptance under clause (vii) of paragraph 7 which in turn is dependent upon the paragraph 1.1 of the Scheme. Hence we do not find any force in such contention of the learned AR of the assessee.
7. Another argument of the learned AR of the assessee is that under paragraph 1.1 of the Scheme, all the returns filed under section 55 of the repealed Ordinance were liable to be assessed under section 59(4) of the repealed Ordinance and not under section 62 or 63 of the repealed Ordinance. The learned AR of the assessee has referred to the use of the word `such' in subsection (4) of section 59 of the repealed Ordinance to suggest that all the returns filed under the Self‑Assessment Scheme had to be processed under such Scheme and not under section 62 of the repealed Ordinance. The learned AR further fortified such arguments by reference to the period of limitation as given in section 64 of the repealed Ordinance which is regarding the assessments to be made under sections 62 and 63 of the repealed Ordinance whereas the limitation for assessment under Self‑Assessment Scheme is given in subsection (4) of section 59 of the repealed Ordinance. According to the learned AR of the assessee, the limitation for assessment under Self‑Assessment Scheme is to expire by the 30th of June of the assessment year to which such assessment pertains as laid down in subsection (4) of section 59 of the repealed Ordinance and according to the learned AR of the assessee, since the Assessing Officer has made the assessment in this case on 29‑6‑2002, he has complied with the limitation prescribed for Self Assessment Scheme and not the limitation of two years from the end of the assessment year as described in section 64 of the repealed Ordinance. Thus according to the learned AR, there was a contradiction in the assessment made. The learned AR has also referred to the provisions of subsection (1A) of section 59 of the repealed Ordinance which provides for the selection of cases for assessment under section 62 of the repealed Ordinance or section 63 thereof notwithstanding the provisions of the $elf‑Assessment Scheme. It appears that the learned AR of the assessee is trying to make out a case that unless there was a selection made under subsection (1A) of section 59 of the repealed Ordinance, no return could be selected for total audit out of the returns filed under the Self‑Assessment Scheme. Again, we are not inclined to accept such argument of the learned AR of the assessee as the provision of subsection (1) of section 59 of the repealed Ordinance is sufficiently clear that the assessment under section 59 could be made if the return filed by the assessee qualified for acceptance in accordance with the provisions of the Scheme made by the Central Board of Revenue for that year. Limitation of two years from the end of assessment year in F section 64 of the repealed Ordinance does not debar the Assessing Officer from completing the assessment before the expiry of assessment year. We are afraid that such technical objections raised by the learned AR are of general nature and are of not specific to the facts of the case. The learned AR has also referred to the decision of the Hon'ble FTO as mentioned in paragraph 5 of this order. Such decision is specific to the facts of that case and the assessee should have gone to the Hon'ble FTO for similar instructions.
8. Now we take up the more substantive argument of the learned AR of the assessee, i.e., the claim that the assessee's case was not selected for total audit but it was the case of the member of the AOP which was selected. The learned AR has not provided any evidence to support the claim that the member of the assessee had in fact filed a return. No such claim was made before the lower authorities. We have also examined the copies of the returns and the return for the assessment year under considerations shows the name of the proprietor, managing partner/member as Mr. Asad Ali Bokhari and the business name is given as Al‑Qasim Hospital and Maternity Home. The assessee has not filled the NTN portion and noted therein that none had been allotted so far. However on the return, the NTN as mentioned above, has been written in red ink which presumably has been done by the Revenue staff. The list of cases selected provided by the learned AR has also been perused and it is found that it contains several National Tax Numbers containing the letter `Z' as part of such NTN as in the case of the present assessee. The name of the assessee has been given as Mr. Asad Ali Bokhari and, on this strength, the learned AR claims that the case of the assessee/AOP has riot been selected for total audit and perhaps it was the case of the member of the AOP which has been selected for total audit. The learned AR has not produced any evidence to support the claim that the member of the AOP whose name is appearing on the list of the cases selected has filed a return nor such plea has been taken before the lower authorities. Hence we refuse to entertain such claim at this stage. Now question arises as to whether the insertion of the name of a member instead of the name of the AOP would render the selection of the case invalid. We have considered this aspect of the case and we are of the opinion that the selection of the case in made mainly on the basis of National Tax Number and the name of the assessee is there merely to facilitate the matching up/identification. As already said above, the name of the member of the AOP has been given by the assessee along with the business name of the ABP on the form of return and it appears that the name of the member was fed into the computer instead of the name of the AOP. In our considered view, such a lapse would not be G fatal to the selection of the case as long as the NTN is not disputed or claimed to be not belonging to the assessee. A perusal of the assessment record also shows that the members of the AOP have also filed their statements of assets and liabilities as on 30‑6‑2001 indicating the same NTN as in the case of the AOP, if any member had filed a separate return, there would have been a separate NTN in that case. Hence we feel that no interference is required in the orders of the departmental officials on the issue of the selection of the case for total audit.
9. Although the assessee has taken a number of other grounds on the quantum of income or non‑deduction of tax etc. none of these grounds has been pressed by the learned AR at the time of hearing of the appeals which shows that the assessee has no objection to the income fixed by the First Appellate Authority.
10. As a result of above discussion, both the cross‑appeals are dismissed.
C.M.A./62/Tax (Trib.)Cross‑appeals dismissed