COMMISSIONER OF INCOME TAX/ WEALTH TAX, MULTAN ZONE, MULTAN VS Messrs BABU MUHAMMAD HUSSAIN ANSARI, MULTAN, 2005 PTD-LAHORE-HIGH-COURT-LAHORE 2368 (2005)

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

----S. 62---Assessment on production of accounts, evidence, etc.---Deputy Commissioner of Income Tax is mandatorily required to serve a notice upon the assessee under S.62(1) of the Ordinance only where the assessee produces books of account in support of his return and the Deputy Commissioner intends to disagree with such accounts; in fact notice is to be given in respect of the defects to be found by the Deputy Commissioner in the accounts so as to enable the assessee to explain the same---When admittedly the books of account were not produced by the assessee in evidence and there was no question of the Deputy Commissioner proceeding to consider and disagree with the same, there was no occasion for the said officer to serve notice on the assessee under S.62 of the Income Tax Ordinance, 1979.

Ch. Saghir Ahmad, Standing Counsel for Pakistan.

Respondent ex parte.

Date of hearing: 5th April, 2005.

JUDMGENT

MAULVI ANWARUL HAQ, J.---The respondent is an individual assessee. He filed his return for the assessment year 2001-2002. The case was selected for total audit through computer ballet and he was informed. Statutory notices under sections 58(1) and 61 of the Income Tax Ordinance, 1979, were served. The respondent put in appearance.

However, books of accounts were not produced on the ground that the same were not maintained. The Special Officer of Income Tax Circle/ Wealth Tax Circle 15, Multan, completed the assessment on 13-5-2002 and assessed the income at Rs.2,02,041. Feeling aggrieved the respondent field an appeal which was heard by a Commissioner of Income Tax (Appeals), Multan. It was partly allowed inasmuch as the estimate of sales was reduced from Rs.10,00,000 to Rs.800,000. Still feeling aggrieved the respondent filed an appeal which was heard by a learned Judicial Member of the Income Tax Appellate Tribunal, Lahore, Bench, Lahore. Vide order, dated 20-8-2003, the appeal was allowed and the return filed by the respondent determining his income at Rs.1,21,500 was restored.

2. The present Tax Reference has been filed for consideration of the following questions by this Court;--

(i)Whether under the facts and in the circumstances of the case, the learned Tribunal was justified to hold the assessment void ab intio on the reason that notice under section 62 was not issued in no account case.

(ii)Whether it is mandatory upon the Assessing Officer to issue notice under section 62 even in cases where the books of account are produced by the assessee, before completion of assessment proceeding under section 62 of the Income Tax Ordinance, 1979 (Repealed).

3. Learned Standing counsel contends that the impugned order is against the law inasmuch as no circumstance exist in the present case necessitating issuance of a notice under section 62 of the Income Tax Ordinance, 1979. Respondent has been proceeded against ex parte.

4. We have examined the copies of the records. Now we find that the learned Appellate Tribunal proceeded to allow the appeal holding that the assessment was increased without serving a notice upon the respondent under section 62 of the said Ordinance. Now we have already noted above and it is. so noted in the impugned order of the learned Appellate Tribunal that the respondent had not produced the accounts on the grounds that the same were not being maintained. Now we find that section 62(1) of the said Ordinance authorizes the Deputy Commissioner to assess the total income of the assessee and to determine the tax payable by him on the basis of such assessment. This exercise is to be undertaken after considering the evidence on record including evidence produced under section 61 and such other evidence as the Deputy Commissioner may require on specific points.

5. Now the notice referred to by the learned Appellate Tribunal is required to be served under the proviso to section 62(1) of the said Ordinance. We find that the Deputy Commissioner is mandatorily required to serve a notice upon the assessee only where the assessee produces books of account in support of his return and the Deputy Commissioner intends to disagree with such accounts. In fact, the notice is to be given in respects of the defects to be found by the Deputy Commissioner in the accounts so as to enable the assessee to explain the same.

6. To our mind, there was no occasion for the said officer to serve a notice on the respondent for the simple reason that, admittedly, no books of account were produced by him in evidence and there was no question of the said officer proceeding to consider the same and disagree with the same.

7. We, therefore, do find that the learned Income Tax Appellate Tribunal, Lahore Bench, Lahore, has committed a serious error of law while passing the impugned order and proceeding to set aside the assessment made under section 62(1) of the Income Tax Ordinance, 1979, on the grounds stated in the impugned order.

8. For the reasons stated above, we consequently answer both the questions in the negative.

9. A copy of this judgment be immediately remitted to the learned Income Tax Appellate Tribunal, Lahore Bench, Lahore, in terms of section 133(12) of the Income Tax Ordinance, 2001. No orders as to costs.

M.B.A./C-90/LReference answered in the negative.