I.T.As. Nos.3934/LB, 4208/LB of 2002, 717/LB and 1167/LB of 2004, decided on 7th April, 2005. VS I.T.As. Nos.3934/LB, 4208/LB of 2002, 717/LB and 1167/LB of 2004, decided on 7th April, 2005.
2005 P T D (Trib.) 2032
[Income-tax Appellate Tribunal Pakistan]
Before Jawad Masood Tahir Bhatti, Judicial Member and Mukhtar Ahmad Gondal, Accountant Member
I.T.As. Nos.3934/LB, 4208/LB of 2002, 717/LB and 1167/LB of 2004, decided on /01/.
th
April, 2005. Income Tax Ordinance (XXXI of 1979)---
----Ss. 59-A, 62, 63, 64 & 134---Appeal to Appellate Tribunal---Assessment---Limitation---Assessment for the year 1998-99 was made by Assessing Officer on or before 30-6-2001 and was served on assessee on 3-8-2001---Said assessment was invalid and ineffective under S.64 of Income Tax Ordinance, 1979 according to which it had been mentioned unambiguously that no assessment under Ss.59-A, 62 & 63 of the Ordinance would be made after expiration of two years from the end of assessment year in which total income was first assessable---Assessment order passed under S.62 of Income Tax Ordinance, 1979 being barred by time, was held to be null and void---Books of accounts produced by assessee were duly examined by Assessing Officer and Assessing Officer despite admitting that vouchers and other documents had been furnished, by assessee, on the basis of stock phrases without confronting assessee and pinpointing any specific defects in the books of accounts, rejected declared version of assessee and framed assessment on the basis of history without considering that facts for the year under review were different from previous assessment years---As assessee was maintaining books of accounts and Assessing Officer without pinpointing any specific defects in the account books had made estimation without any justification, appeal filed by assessee was allowed and declared version of assessee was directed to be accepted.
(2005) 91 Tax 322 (Trib.) and 1996 PTD 1104 ref.
Haroon Ahmad, A.C.A. for Appellant (in I.T.As. Nos.3934/LB of 2002 and 717/LB of 2004).
Imran Raza Kazmi, D.R. for Respondent (in I.T.As. Nos.3934/LB of 2002 and 717/LB of 2004).
Imran Raza Kazmi, D.R. for Appellant (in I.T.As. Nos.4208/LB of 2002 and 1167/LB of 2004).
Haroon Ahmad, ACA for Respondent (in I.T.As. Nos.4208/LB of 2002 and 1167/LB of 2004).
Date of hearing: 7th April, 2005.
ORDER
Through these four cross appeals, two separate orders passed by the learned CIT(A), dated 19-6-2002 for the assessment year 1998-99 and order, dated 1-12-2003 for the assessment year 2000-2001 have been objected.
The assessee for both the years under review has objected to the treatment meted out in respect of estimated sales. While the Department is also aggrieved regarding action of the learned CIT(A) reducing estimated sales of Rs. 20,00,000 to Rs.16,00,000 for the assessment year 1998-99. For the assessment year 2000-2001, the Department has objected the setting aside the issue of chargeability of Workers' Welfare Fund.
We have heard the learned representatives of both the sides and have also perused both the impugned orders of the learned CIT(A) and the assessment order.
Regarding assessment year 1998-99, the learned counsel for the assessee Mr. Haroon Ahmad, ACA has contended that the order under section 62 of the Repealed Ordinance, 1979 passed by the Assessing Officer is illegal and void, as it has been served after the limitation period prescribed under section 64 of the Repealed Ordinance, 1979. He has, in this respect, drawn our attention to the provisions of section 64 which according to the learned counsel has remained on the statute from 29-6-1996 up to 30-6-2002. According to which it has been mentioned unambiguously that no assessment under section 59-A section 62 or section 63 shall be made after the expiration of two years from the end of the assessment year in which total income was first assessable. The learned counsel has contended that this Tribunal in a decision reported as (2005) 91 Tax 322 (Trib.) has held that "under the law, the making of an order under statutory provision means that the order must be communicated to the party affected by such an order. Unless the order is communicated to the effective party on or before the date prescribed under section 64, the order shall be invalid and ineffective". In this case, the assessment order made/served upon the assessee on or before 30-6-2001 but admittedly the order has been served on the assessee on 3-8-2001 and is therefore, invalid and ineffective in view of the decision of this Tribunal referred supra.
After considering the above said submissions made by the B learned counsel for the assessee, we are of the view that the assessment order passed under section 62 of the Repealed Ordinance, 1979 was barred by time limitation which is, therefore, held to be null and void. As a result, the appeal filed by the assessee for the assessment year 1998-99 succeeds, while the appeal field by the department being not maintainable, is dismissed.
Regarding the appeal filed by the assessee for the assessment year 2000-2001 we have found that the declared sales of Rs.13,75,146 have been estimated by the Assessing Officer at Rs. 20,00,000 which have been reduced to Rs. 17,00,000 by the learned CIT(A) while the applied GP rate at 36% has been upheld by the learned CIT(A).
The learned counsel for the assessee has contended that the Assessing Officer in the assessment order, has accepted that books of accounts were produced and examined by the Assessing Officer and the Assessing Officer in the assessment order has admitted that vouchers and other documents have been furnished and has observed that the reply c filed by the assessee carries weight, but on the basis of stock phrases without confronting the assessee and pinpointing any specific defects in the books of accounts, the declared version has been rejected and the assessment has been framed on the basis of history without considering, the fact that facts for the year under review are different from the previous assessment year. The learned counsel, in this regard has also placed before us the comparative chart of the previous assessment year and other details which are already on record of the assessment proceedings. The learned counsel for the assessee placing reliance on the decision of the Tribunal reported as 1996 PTD 1104 has contended that history of the case is certainly something which does provide guidelines, but it does not always make a basis for clear cut rejection of accounts. In this decision, it has been held by this Tribunal that assessing authority for rejecting the accounts must establish a foolproof case quoting full facts and figures of an unproved, unverifiable and inaccurate version in the declared trading accounts.
After considering the above facts of the case, we are of the view that as the assessee is maintaining books of accounts and the Assessing Officer without pinpointing any specific defects in the accounts has made the estimation without any justification and therefore, the appeal filed by the assessee is allowed and the declared version is directed to be accepted. Consequently, the appeal filed by the department for the assessment year 2000-2001 on the issue of chargeability of Workers' Welfare Fund is also dismissed. Even otherwise, the learned CIT(A) has directed to levy Workers' Welfare Fund if so warranted by the fact after brought forwarding all determined losses in accordance with the decision of Hon'ble Karachi High Court which requires no further interference.
The two appeals filed by the assessee for the assessment years 1998-99 and 2000-2001 are allowed while the cross appeals for the same assessment years filed by the Department are, dismissed for the reasons as discussed supra.
H.B.T./458/Tax (Trib.)Order accordingly.