COMMISSIONER OF INCOME-TAX/WEALTH TAX, FAISALABAD VS Messrs NATIONAL BRICKS CO., FAISALABAD, 2006 PTD-LAHORE-HIGH-COURT-LAHORE 2329 (2006)

Income Tax Ordinance (XXXI of 1979)---

----S. 62---Central Board of Revenue's Circular No.5 of 1990---Self-Assessment Scheme---Selection of cases for total audit---Regional Commissioner under Circular No.5 of 1990 having authority to select cases for total audit upto 5-4-1990---Selection of assessee's case for total audit on 7-4-1990 (after expiry of original date)---Central Board of Revenue on 8-4-1990 extending date for selection of cases upto 20-4-1990---Effect---During period between 4-4-1990 and 8-4-1990, there was no specific instructions of C.B.R.---With expiry of original date, vested right had accrued in favour of assessee, whose case had not been selected for total audit---Subsequent extension of time by C.B.R. would not sanctify selection of cases prior to 8-4-1990---Selection of assessee's case by Commission was illegal.

1992 PTD (Trib.) 1665 rel.

Muhammad Ilyas Khan for Petitioner.

ORDER

The case of assessee was selected for total audit on 7-4-1991 under plea 4(ii) of C.B.R. Circular No.5 of 1990 with the approval of Regional Commissioner. The income assessed under section 62, was at Rs.3,83,125. The appeal of assessee before CIT (Appeals-II) Faisalabad was partly allowed vide order, dated 30-10-1991, who upheld the decision of case of total audit but reduced the income from Rs.3,38,125 to Rs.3,00,000. The assessee went into second appeal before learned Appellate Tribunal. The appeal was accepted vide order, dated 30-2-1994 whereby it was held that Regional Commissioner was not competent to select the case for total audit, after 5-4-1991. Learned Tribunal refused to refer the case to this Court on the ground that question preferred is regarding finding of fact and no question of law is involved.

2. The petitioner through the instant reference has proposed the following question of law, statedly arising out of the decision of ITAT, dated 5-9-1994:--

"Whether on the facts and in the circumstances of the case the Income Tax Appellate Tribunal was justified in holding that the selection of case under para 4(ii), of C.B.R.'s Circular No. 5 of 1990 (Self-Assessment Scheme 1990-91) was valid only if made on or before a certain date."

3. Heard learned counsel for the petitioner and perused the record.

4. It is an admitted fact that originally the Regional Commissioner was authorized to set apart the cases for total audit only up to 5th of April, 1991; and the case of the respondent/assessee was selected on 7th of April i.e. after the expiry of the original date. After selection of the ease of the respondent/assessee the Board extended the date for selection of eases up to 20th of April; however, there is nothing in the letter of the Board which sanctified/authorized the selection of cases between the 5th and 8th of April. It is also a moot-point whether the Board could extend the date of setting apart of cases for total audit once the original date had expired because with the expiry of the original dates a vested right had accrued in favour of the assessee whose cases had not been set apart for total audit. The learned ITAT, relying on its judgment reported as 1992 PTD (Trib.) 1665, held that the setting apart of the case by the Regional Commissioner was illegal as originally he was authorized to set apart the cases only up to the 5th of April, 1991 whereas the case of the assessee was set part on 7th of April. The subsequently extension of the timeframe for setting apart of the cases up to 20th of April vide Board's letter, dated 8-4-1991 was of no help to the Revenue as it did not sanctify the setting apart of the cases prior to 8th of April.

5. There is no denial of the fact that power of the Revenue to select the case for total audit under sub-para (ii) of para 4 of C.B.R. Circular No.8 of 1990 remained operative till 5-4-1991 and subsequently it was extended from 7-4-1991. The case of the appellant was selected during the period between 4-4-1991 and 8-4-1991 for which there are no explanations and specific instructions by C.B.R., therefore, the Appellate Tribunal has rightly held that the power did not vest with the Commissioner to select the case for total audit for the period for which there is no directive or notification.

6. For the foregoing, the proposed question of law arising out of the order of ITAT is answered in affirmative in favour of the respondent/assessee and against the Revenue.

S.A.K./C-27/LReference answered.