R.A. No.526/LB of 2004, decided on 9th February, 2005. VS R.A. No.526/LB of 2004, decided on 9th February, 2005., 2005 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 2029 (2005)

Income Tax Ordinance (XXXI of 1979)---

----Ss. 62, 66-A, 80-C, 143-B & 136---Reference to High Court---Statement for relevant assessment year declaring supplies and deduction---Validity---Question of law involved in the case was "whether or not filing of statement under S.143-B of Income Tax Ordinance, 1979 duly signed by Tax payer should be construed as legally valid option exercised for presumptive tax regime"---Because of the fact that assessee filed statement under 5.143-B of Income Tax Ordinance, 1979 and income was not chargeable under S.80-C of the said Ordinance, it could not be considered that assessee.had opted for presumptive tax regime in respect of supplies which was a requirement under clause (9) of Part-IV of Second Schedule to Income Tax Ordinance, 1979, because it was an established proposition that unless assessee would opt for presumptive tax regime specifically by mentioning that fact in the return, mere filing of statement under 5.143-B of Income Tax Ordinance, 1979 would be of no importance and it could not be considered to be erroneous, in circumstances---Authority was not justified to invoke provisions of S.66-A of Income Tax Ordinance, 1979---Application filed by Department for reference of proposed question to High Court, had no force in the eye of law; same was dismissed being devoid of any merit and substance.

2003 PTD (Trib.) 1158; 2003 PTD (Trib.) ref.

Akram Tahir, D.R. for Appellant.

Mudassar Shuja for Respondent.

Date of hearing: 9th February, 2005.

JUDGMENT

MAZHAR FAROOQ SHIRAZI (ACCOUNTANT MEMBER).--The captioned application has been filed by the Department to seek the reference of the following question of the law, to the Honourable Lahore High Court, said to have arisen out of the Tribunal's order, dated 29-7-2004 passed in I.T.A.No.748/LB of 2002 (Assessment year 1997-98):

Question of law:

"Whether or not filing of statement under section 143B duly signed by the taxpayer should be construed as legally valid option exercised for presumptive tax regime?"

The brief facts giving rise to this reference application are that the assessee-respondent, an individual, filed statement under section 143-B of the Income Tax Ordinance, 1979 for the assessment year 1997-98 declaring supplies and deductions made thereon. The assessment has to be finalized under the provisions of section 80C and the tax deducted thereon at the prescribed rates was final discharge of tax liability. Subsequently, the assessee filed return of income for the said year and the assessment was framed under section 62 of the Income Tax Ordinance, 1979. The Additional Commissioner cancelled the assessment under section 66A of the Income Tax Ordinance, considering it erroneous as far as prejudicial to the interest of Revenue. The assessee being aggrieved with the above treatment, preferred an appeal before the ITAT whereby the learned ITAT considering the arguments put forth by the AR of the assessee and relying upon the reported judgment of learned ITAT cited as 2003 PTD (Trio:) 1158, observed that the learned Additional Commissioner of Income Tax was not justified to invoke the provisions under section 66A of the Income Tax Ordinance, 1979 and the order of the IAC was cancelled. Now, the department has filed the above said reference application posing the above stated question to be referred to the Honourable Lahore High Court for the opinion of their Lordships.

After hearing the arguments of both the sides and going through the orders passed by the authorities below and especially the ITAT order passed on 29-7-2004 vide I.T.A. No.748/LB of 2002 whereby the issue under consideration was decided inter alia in the light of a reported judgment in re: 2003 PTD (Trib.) (sic) as under:--

"On the issue of filing of statement under section 143B, assessee's stance also stands supported by the judgment relied upon by the learned AR. It has been held time and again that provisions of law are to be interpreted in substance and not in form, the fact that the assessee filed statement under section 143B of the Ordinance and income is not chargeable under section 80C of the Ordinance, it cannot be considered that the assessee has opted for presumptive tax regime in respect of supplies which is a requirement under clause (9) of A Part-IV of Second Schedule to the Ordinance because it is an established proposition that unless that assessee opts for presumptive tax regime specifically by mentioning that fact in the return, mere filing of statement under section 143B would be of no importance hence it could not be considered to be erroneous."

Therefore, considering the reported case-law cited supra, we are of the considered view that the submissions taken by the learned DR at the time of hearing before us does not have any force in the presence of the reported judgment on the basis of which the learned IAC was not at all justified to invoke the provisions of section 66A of the Income Tax Ordinance, 1979. Under these circumstances, the reference application filed by the department for reference of the proposed question to the B Hon'ble High Court, Lahore has no scope in the eye of law and the same is hereby dismissed being devoid of any merit and substance.

H.B.T./436/Tax (Trib.)Application dismissed.