Income Tax Ordinance (XXXI of 1979)-----

----S.59---C.B.R. Circular No.16 of 1992, dated 1-7-1992---C.B.R. Circular No.9 of 1994, dated 11-7-1994---Constitution of Pakistan (1973), Art. 199---Constitutional petition ---Self-assessment---Assessee, vide C.B.R. Circular No-16 of 1992 dated 1-7-1992, was assured that "the case of assessee once selected through computer ballot will not be earmarked for such ballot in the next two years", assessee, therefore, had contended that a vested right had accrued in its favour and its case could not be selected for total audit in the next two years and that the Department had illegally resiled from its promise which could not be allowed by any law---Validity---When a person represented and made an offer to a person and on the representation/offer of that person, the latter changed his position, then the former remained bound to honour that representation and could not resile from that representation afterwards-- Representation made to the assessee in the year 1992-1993, that the case once selected through computer ballot will not be earmarked for such ballot in the next two years, was a representation made to the assessee and acting upon said representation, he had subjected himself to the total audit and the Department after having found the amounts due against the assessee, the assessee had paid the same in the year 1992-1993---Said total audit and the payment of the income tax in the year 1992 had created a vested right in favour of the assessee, therefore, he could not be subjected to the total audit in the next two years-- Principles.

Millat Bottle Store Faisalabad v. Additional Commissioner of Income Tax 1998 PTD 2555 ref.

Mirza Muhammad Waheed Baig for Petitioner.

Ch. Abdul Sattar for Respondent.

Date of hearing: 16^th October, 2003.

JUDGMENT

Succinctly the facts of the case are that the petitioner had filed income tax return under the Self-Assessment Scheme for the year 1992-93 with Assistant Commissioner Income Tax. Rahimyar Khan. The case was selected for total audit through computer ballot. The assessment was made and the petitioner paid the additional amount of tax as the assessment made was higher than the tax return filed by the petitioner. In the next assessment year of 1993-94, again the case of the petitioner was selected for total audit, to which the petitioner objected through an application, dated 8-5-1994. The grievance of the petitioner was that while filing of return in Self-Assessment Income-tax Scheme in the year 1992-93, a promise was made by the Income Tax Department through Income-tax Circular No. 16 of 1992, dated 1st of July, 1992 that "The case once selected through computer ballot will not be earmarked for such ballot in the next two years." The objection was upheld by the Assistant Commissioner Income Tax, Rahimyar Khan and the petitioner was exempted from the total audit for that assessment year. But unluckily in the year 1994-95, when the petitioner filed Self-Assessment income tax return for the assessment year 1994-95, again his case was designated and selected for total audit. The same set of objections was pleaded and raised by the petitioner. But upon this occasion, the objection was turned down by the Department which caused the feeling of grief to the petitioner. Aggrieved by the impugned order passed on 11-6-1995 by the Assistant Commissioner Rahimyar Khan, the petitioner has invoked the extraordinary jurisdiction of this Court.

2. According to the learned counsel appearing on behalf of the petitioner, a vested right had accrued in favour of the petitioner when he was offered through Circular No. 16 of 1992, dated 1-7-1992, that his case shall not be selected in the next two years, for total audit, but after having earmarked the case of the petitioner for the purpose, the Department has illegally resiled from its promise which cannot be allowed to it by, any law. He has referred to 1998 PTD 2555 Millat Bottle Store Faisalabad v. Additional Commissioner of Income Tax, and the other cases from the appellate jurisdiction of Additional Commissioner, Income Tax.

3. The learned counsel appearing on behalf of the respondent has opposed vehemently the arguments of the learned counsel for the petitioner. According to the learned counsel for the respondents, if the petitioner had fulfilled the qualifications for entering into the Self Assessment of Income-Tax Scheme, then the immunity could be claimed by the petitioner. According to the learned counsel under para. 5 of Circular 9 of 1994, dated 11-7-1994, which was issued under section 54 of the Income Tax Ordinance, 1979, he was bound to increase the income tax by 20 per cent as compared to the last three years highest assessment, then to claim the immunity.

4. Replying to the interpretation of the respondent, the learned counsel appearing on behalf of the petitioner has referred para. 1 clause (e) of the aforesaid Circular No.9 of 1994, dated 11-7-1994. The learned counsel submits that to qualify for the Self-Assessment Scheme of income-tax, for the assessment year of 1994-95, the petitioner had to increase the tax higher by only 10 per cent for more than the amount of income-tax last paid, which the petitioner had fulfilled. This fact has not been disputed by the learned counsel for the respondents.

5. I have considered the arguments of the learned counsel appear ing on behalf of the parties and perused the record and the relevant law on the subject with the assistance of the both the learned counsel.

6. It is settled law that when a person represents and makes an offer to a person and on the representation/offer of that person, the latter changes his position, then former remains bound to honour that representation. He cannot resile from that representation afterwards. The representation made to petitioner in the year 1992-93 that "The case once selected through computer ballot will not be earmarked for such ballot in the next two years" was a representation made to the petitioner. Acting upon this representation, he had subjected himself to the total audit and the Department after having found the amount due against the petitioner, the petitioner had paid that sum in the year 1992-93. This total audit and the payment of the income tax in that year had created a vested right in favour of the petitioner. Therefore, he could not be subjected for total audit in the next two years. This interpretation itself was accepted by the Income Tax Department in the year 1993-94. This action of the Department strengthens further the case of the petitioner: In the year 1994-95, the reversal course adopted by the Income Tax Department cannot be given approval from this Court because promissory estoppel was created in the way of the respondents. The interpretation of para. 1 clause (e) of Circular 9 of 1994, dated 11-7-1994 is self explanatory on this point, which has laid down that the return of existing assessee which is higher by 10 per cent or more as compared to the tax paid on the basis of income last declared or assessed, whichever is the higher, shall qualify for acceptance under the Self-Assessments Scheme. Para. 4 of the above-noted circular clarifies it more when we examine it in the perspective that those self-assessed income-tax returns can be selected for audit when those qualify for self-assessment. In other words, initially the case has to qualify then it would be selected for audit. If a case does not enter into the qualifying arena, the case cannot be selected for audit. The plea taken by respondents that the case was not qualifying for the Self-Assessment Scheme under section 59 of the Income Tax ordinance, 1979, falls to the ground because it becomes self-contradictory plea when the Department assert that they have earmarked this self-assessment income tax return for the total audit. The selection of the case itself speaks that the concerned Authority has accepted the case of the petitioner to have entered into the class/category of qualifying Self Assessment Scheme, otherwise according to para. 4, supra if the case was not qualifying, the selection for audit could not have been made. Accordingly, the interpretation of the Department is fallacious and illusionary. The vested right created in favour of the petitioner could not be snatched away, through the impugned order, dated 11-6-1995, to which promissory estoppel impedes the way of its implementation. Therefore, the impugned order, dated 11-6-1995 passed by Assistant Commissioner of Income Tax, Circle 16, Rahimyar Khan for compelling the petitioner to get his self-assessment return of 1994-95 assessed for total audit is declared to be illegal, and without lawful authority, without any order as to costs.

C.M.A./S-780/LPetition accepted.