Messrs HAJI TRADERS, Proprietor Tanveer Anjum VS COMMISSIONER OF INCOME TAX, WEALTH TAX, ZONE-B, LAHORE
2005 P T D 2413
[Lahore High Court]
Before Nasim Sikandar and Jawwad S. Khawja, JJ
Messrs HAJI TRADERS, Proprietor Tanveer Anjum
Versus
COMMISSIONER OF INCOME TAX, WEALTH TAX, ZONE-B, LAHORE
P.T.R. 165 of 2001 and C.T.R. No. 10 of 2002, decided on /01/.
nd
March, 2005. Income Tax Ordinance (XXXI of 1979)---
----Ss. 62 & 136---Re-opening of assessment---Formula for computation of production achieved by assessee during relevant period---Such formula earlier confronted to assessee by predecessor Assessing Officer was changed by successor Assessing Officer by issuing fresh notice under S.62 of Income Tax Ordinance, 1979---Appellate Authority and Tribunal dismissed appeals filed by assessee---Validity---Nothing was available in law to prohibit Assessing Officer from confronting assessee with a formula proposing adoption of less electricity units to reach production as against the one proposed by his predecessor---Successor Assessing Officer had assigned a valid reason while changing earlier formula---Opinion of Tribunal that production achieved by assessee during relevant period was somewhat lesser than the one estimated by Assessing Officer would not give rise to a question of law to be considered by High Court---Answer to referred questions was refused in circumstances.
Shahbaz Butt for Petitioner.
Muhammad Ilyas Khan for Revenue.
ORDER
By this order we intend to dispose of PTR No. 165 of 2001 and CTR No. 10 of 2002.
2. The petitioner assessee is an individual and during the period relevant to the assessment year in question viz. 1997-98 derived income from manufacturing of ingots and sarya by operating a steel mill taken on lease. As against declared net profit of Rs.3,25,000 the Assessing Officer completed the assessment at a total income of, Rs.98,75,362. Earlier the case of the petitioner was out sourced for special audit in terms of section 4(A) of the late Income Tax Ordinance, 1979. On receipt of the audit report the Assessing Officer by way of a notice under section 62 the late Ordinance expressed his intention to adopt production of ingots at 6772 M.T. by taking consumption of 1795 electric units per ton and to adopt production of re-rolling of sarya at 6169 M.T. by taking consumption of 225 electric units per ton. The basis so confronted were taken from the audit report. It appears that after issuance of that notice the Assessing Officer was transferred. His successor issued a fresh notice under section 62 of the late Ordinance in which he changed the basis suggested in the audit report and instead proceeded to compute the production by adopting 1313 units against per ton of production of ingots and 200 electricity units against per ton of production of sarya to reach the income as aforesaid.
3. The assessee failed before the Commissioner (Appeals) who vide order, dated 2-4-2001 confirmed the formula adopted by the Assessing Officer though some relief was allowed in profit and loss account, expenses. On further appeal a Division Bench of the Tribunal on 19-6-2001 rejected the plea that the successor Assessing Officer could not deviate from the formula earlier confronted to the assessee which was otherwise based upon the report of the auditors. However, some relief was allowed to the assessee with regard to computation of production by adopting a little higher consumption of electricity per tone of production.
4. The assessee thereafter proposed following questions of law under section 136(1) of the late Income Tax Ordinance and submitted them to the Tribunal for their reference to this Court.
(a) Whether on the facts and in the circumstances of the case the learned Tribunal was right in holding that the issue of change of opinion is only relevant in proceedings under section 65 of the Ordinance?
(b) Whether on the facts and in the circumstances of the case, the learned Tribunal was right in holding that a succeeding authority can differ with the opinion of his predecessor during the course of assessment proceedings and such matter does not fall within the scope of difference of opinion?
(c) Whether on the facts and in the circumstances of the case when the predecessor Assessing Officer has admittedly approved the auditors report the successor Assessing Officer can discard the same without recording reasoning?
(d) 'Whether on the facts and in the circumstances of the case the auditors report can be discarded without any plausible justification?
(e) Whether on the facts and in the circumstances of the case when predecessor Assessing Authority had approved the formula of production submitted by auditors and the appellant had been confronted on the said basis, the succeeding Assessing Officer, without placing any material to the contrary can differ with the original stand taken by the Department?
(f) Whether in the given circumstances of the case the auditors report had no binding force and the same can be discarded without placing any contrary material on record?
5. The Tribunal however, remodeled these questions and referred them to this Court through CTR No. 10 of 2002 in the following words:--
(i) Whether on the facts and in the circumstances of the case the auditor's report was binding on the Income Tax Officer or he could reject it on the basis of the declared version of the lessor of the mill and production formula notified by C.B.R.?
(ii) Whether on the facts and in the circumstances of the case when predecessor ITO had approved the formula of production submitted by auditors and the appellant had been confronted on the said basis, the succeeding Assessing Officer could differ with it and adopt a different formula for working out assessee's production?
(iii) Whether on the facts and in the circumstances of the case the learned Tribunal was right in holding that a succeeding ITO can differ with the opinion of his predecessor ITO during the course of proceedings pertaining to assessment under section 62?
(iv) Whether on the facts and in the circumstances of the case the learned Tribunal was right in holding that change of opinion is only relevant in proceedings under section 65 as this section debars action on the basis of change of opinion, while the issue of change of opinion was not relevant to assessment proceedings under section 62?
6. The assessee feeling dissatisfied with the framing and remodeling of questions earlier submitted before the Tribunal has approached this Court by way of PTR No. 165 of 2001 requesting consideration and answer of the questions which were earlier submitted before the Tribunal.
7. We have heard the learned counsel for the parties. In our considered view no question of law arises out of the impugned order of the Tribunal. The only issue before the Revenue as well as the Tribunal remained as to the computation of production achieved by the assessee during the relevant period. There was nothing in the late Income Tax Ordinance, 1979 which prohibited the Assessing Officer from confronting the assessee with a formula proposing adoption of less electricity units to reach the production as against the one proposed by his predecessor. All the moreso when he had assigned a valid reason that A the lessor of the mills operated by the assessee in the immediate preceding and succeeding years namely 1996-97 and 1998-99 declared production on the basis of consumption of 1500 and 1330 electric units per ton respectively in case of ingots and 200 units per ton in case of sarya. Learned Tribunal, therefore, was not incorrect while observing that the truth laid somewhere between the two extremes i.e. the declared results and the one estimated by the Assessing Officer. The opinion of the learned members that the production achieved by the assessee during the relevant period was somewhat lesser than the one estimated by the Assessing Officer does not give rise to a question of law to be considered by this Court.
8. Thus we will refuse to answer the questions referred to this Court in CTR No.10 of 2002 while PTR No.165 of 2001 shall be rejected.
S.A.K./H-83/LAnswer refused.