I.T.As. Nos.2250/LB and 2251/LB of 2002, decided on 19th May, 2005. VS I.T.As. Nos.2250/LB and 2251/LB of 2002, decided on 19th May, 2005., 2005 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 2039 (2005)

Income Tax Ordinance (XXXI of 1979)---

----Ss. 59, 59-A, 66-A & 134---Appeal to Appellate Tribunal---Cancellation of assessments---For assessment year 1997-98 proceedings were initiated against assessment under S.59-A of Income Tax Ordinance, 1979, by order under S.66-A of said Ordinance, assessment was cancelled---In assessment year 2000-2001 proceedings under S.66-A of Income Tax Ordinance, 1979 were initiated against a completed assessment under S.59(1) of the Ordinance and assessment was cancelled---Validity---Section 59-A of Income Tax Ordinance, 1979 had been enacted to cope with returns not qualifying to be processed under Self-Assessment Scheme, but Assessing Officer found same fit to be accepted as it was---Assessing Officer in violation of S.59(4) of Income Tax Ordinance, 1979 had illegally proceeded to pass order under S.59-A of the Ordinance---Order for assessment year 1997-98, was suffering from incurable legal defects so it was cancelled and acceptance of return filed under Self-Assessment Scheme was restored as per provisions of S.59 of Income Tax Ordinance, 1979---For the assessment year 2000-2001, order was simply filling in blanks without application of mind---Such order had no legal existence and anything which was legally not in existence, no action could be contemplated under it---Impugned order for assessment year 2000-2001 was also cancelled and acceptance of Income Tax return as per provisions of S. 59 of Income Tax Ordinance, 1979, was maintained.

Muhammad Shahid Abbas for Appellant.

Ahmad Kamal, D.R. for Respondent.

Date of hearing: 7^th April, 2005.

ORDER

The titled both the appeals are directed against the two separate orders under section 66A even, dated i.e. 30-3-2002. Both these appeals are being taken up together for disposing of by the single combined order (Section referred to in this order are of the repealed Income Tax Ordinance, 1979).

Facts in brief are that for the assessment year, 1997-98 proceedings under section 66A were initiated against assessment under section 59A, dated 1-5.-1999 but by the order under section 66A the assessment under section 59A has been cancelled. In assessment year 2000-2001, proceedings under section 66A were initiated against a completed assessment under section 59(1) vide DCR No. 442, dated 29-2-2001 and ultimately the assessment order under section 59(1), dated 29-3-2001 was cancelled. Common facts which are cause of action under section 66A are that in both the years it was found by the revising authority that after deduction of declared GP from the declared husking receipts the balance left is not sufficient even to cover the electricity/power bills paid by the assessee. But this an analogy was drawn that expenses on account of salaries of "Mistri", wages of labour and other husking expenses has also been suppressed. By a show-cause notice the same was confronted to the assessee but the reply was not found convincing so it was rejected, ultimately proceedings under section 66A were corpleted which has brought the assessee in appeal in this Tribunal.

We have heard the arguments .and have perused the available record. In both the assessment years undisputedly returns were filed under Self-Assessment Scheme. For the assessment year 1997-98 the proceedings under section 66A have been initiated against the assessment on 1-5-1999 at a net income of Rs.66,000. Whereas returns which are filed under Self-Assessment Scheme then for passing the order the specific section is 59(1) and its limitation is given in section 59(4). Section 59(4). has made it obligatory that no order under section 59(1) shall be made in any case after the 30th day of June of the Financial year next following the income year in respect of which return of total income has been furnished. Here in the assessment year 1997-98 the order was to be passed till 30-6-1998. As per proviso to 59(4) when order has been passed then it shall be deemed to have been passed. The revising authority has stated that assessment was made under section 59A on 1-5-1999. Section 59A is again making obligatory that order shall be in writing but here in this impugned order there is no mention that there is any written order except that assessment was made under section 59. Such language of the impugned order clearly speaks that there is no order in writing. This fact is further strengthened and by finding that only IT-30 Form is provided to us so when there is no order in writing which is illegal. Such illegality cannot get coverage for proceedings under section 66A or any other words further proceedings on a illegal steps are also illegal. The provisions have been initiated under section 66A against the order under section 59A whereas ultimately the order which has been cancelled is 59(1) which too is not in existence because no order could be passed keeping in view the provisions of section. 59(4). The Assessing Officer after violating the provisions as envisaged in section 59(4), has illegally proceeded to pass the order under section 59(A). The section 59A has been enacted to cope with the returns not qualifying to be processed under SAS, but otherwise the Assessing Officer finds it fit to accept as it is. The order for the assessment year 1997-98 is suffering from incurable legal defects so it is devoid of any legal sanctity behind it which is cancelled and acceptance of return filed under SAS is restored as per provisions of section 59.

For the assessment year 2000-2001, the order produced is simply filling in blanks where there is no application of mind. Such order as per pronouncement of the Honourable Superior Judiciary has no legal existence and anything which is legally not existed no action could C be contemplated against it. Therefore, the impugned order for assessment year 2000-2001 is also cancelled and the acceptance of Income Tax return as per provisions of 59 is to be maintained.

On merits the Assessing Officer could have ascertained through spot inquiries about the truthfulness of the assessee's claim that the entire amount of electricity bills does not relate to husking business, which has not been done. The husking of rice is almost agro industry and small units when located in Agriculture field, the element of electricity consumption for other than husking cannot be ruled out. So even on merit the action of the revising authority cannot be approved.

The appeals of the assessee succeed in the manner and to the extent as discussed supra.

H.B.T./447/Tax (Trib.)Appeals accepted.