I.T.A. No.868/IB of 2005, decided on 14th June, 2006. VS I.T.A. No.868/IB of 2005, decided on 14th June, 2006.
2007 P T D (Trib.) 745
[Income-tax Appellate Tribunal of Pakistan]
Before Khawaja Farooq Saeed, Chairperson
I.T.A. No.868/IB of 2005, decided on 14/06/2006.
(a) Income Tax Ordinance (XXXI of 1979)---
----S. 59-C.B.R. Circular No.4 of 2001, dated 18-6-2001, Para. 1.2, Note---Self-assessment---Assessment year 2001-2002---Income from house property---Condition regarding percentage increase in tax was not applicable if the income was derived only from house property.
(b) Income Tax Ordinance (XXXI of 1979)---
----S. 59---C.B.R. Circular No.4 of 2001, dated 18-6-2001, Para. 1.2, Note---Self-assessment---Assessment year 2001-2002---If income from property was less than the previous years or tax was not higher than the previous year, it was no disqualification---Makers of the Scheme had clearly and unambiguously directed to accept the income from property without any exception as declared.
2004 PTD (Trib.) 1470 rel.
(c) Income Tax Ordinance (XXXI of 1979)---
---S. 59---C.B.R. Circular No.4 of 2001, dated 18-6-2001, Para. 1.2, Note---Self-assessment---Assessment year 2001-2002---Income from house property---Increase in income to remain covered within the scheme of self-assessment---Validity---All taxpayers who had only one source of income that was from house property, need not increase this income to remain covered within the scheme of Self-Assessment---Assesse's income was entirely from property the condition precedent was to accept the return and then proceed under law and rules---Appellate Tribunal directed to accept the return under Self-Assessment Scheme.
(d) Income Tax Ordinance (XXXI of 1979)---
----S. 59(3)---C.B.R. Circular No.4 of 2001, dated 18-6-2001, Para. 1.2, Note---Self-assessment---Assessment year 2001-2002---Income from house property---Filing of return and acceptance of the case under Self-Assessment Scheme did not debar the department to look into inadmissible claims against property income---Department could always add back by invoking S.59(3) of the Income Tax Ordinance, 1979, legally inadmissible claim etc.
Hafiz Muhammad Idrees and Aurangzeb LT.P., for Appellant.
Muhammad Ali Shah D.R. for Respondent.
ORDER
KHAWAJA FAROOQ SAEED (CHAIRPERSON).---The petitioner in this case is the assessee and the grounds being relevant to the issue are mentioned as follows:
That the return of appellant qualify under SAS as such the exclusive from SAS is illegal, consequently assessment under section 62 is illegal.
*The Taxation Officer was not justified in holding that the return was not in time and was filed late because the return was filed on 1-10-2001 i.e. within the due date of filing of return, as announced by the C.B.R., Islamabad.
*The Taxation Officer was not justified to carry out a comparison of declared income and tax for the year under appeal with
* assessed/declared income tax for the last assessment years as appellant's case having only income from house property, was immune for the purpose of comparison of income tax as provided in "Note" to Para 1.2 of Circular No.4 of 2001.
*The appellant's return having, a fall legal coverage under the said "Notice" irrespective of the income tax declared, whether showing increase or decrease is a case of acceptance under Self-Assessment Scheme.
*That said CIT(A) was not justified in setting aside the order instead of deciding the same on the basis of material available specification when the issue was very much clear on point of fact and law as such the order is illegal.
2. Supporting above grounds the learned AR said that the Self-Assessment Scheme is very clear. The income from business profession or vocation qualifies for acceptance under Self-Assessment Scheme if the tax calculated in consequence to the declared income is higher than the previous year by 10%. Said condition was made inapplicable on the cases where the income declared for the year was derived only from house property. This proviso grants exemption to salary with little reservation but to the house property without any condition. Further supporting his claim he produced a judgment of ITAT reported 2004 PTD (Trib.) 1470, wherein said issue has been thrashed out in details. Coming to the other objection, which is in relation to late filing of return, he said that the return was filed on first of October as 30th of September was Sunday. In support of his contention he has produced before me a diary of 2001, which proves his contention. Coming back to the main issue since it is obvious that the return was not late, I restrict the argument of the DR to the extent of qualification of the case under SAS.
3. 3. I do not agree with the learned D.R. that the note referred by the learned AR does not cover the proposition, which A.R. has argued. However, for the purposes of correct appreciation of the provision it will be worth reproducing the Scheme of Self-Assessment. Circular No.4 of 2001 of Self-Assessment Scheme, 2001-2002 described the scope of the scheme in the following manner:--
SCOPE OF THE SCHEME
1.1 All return filed by tax-payers, other than cases that are in-eligible under para-7 of this Scheme, shall quality for acceptance if they fulfil the following conditions, namely:---
(a) tax has been fully paid under section 54 of the Ordinance and proof of such payment is attached with the return;
(b) return of income for the assessment year 2001-2002 has been filed under section 55 of the Ordinance within due date as defined in this scheme;
(c) cases of public companies quoted on stock exchange, where tax payable on the income declared is equal to or more than the tax payable on the income last declared or assessed, whether is higher.
(d) cases of other companies, where tax payable on the income declared is higher by ten per cent (10%) or more compared to the tax payable on the income last declared or assessed, whichever is higher and
(e) cases of persons not being companies where tax payable on income declared is higher by twenty per cent (20%) or more compared to the tax payable on the income last declared or assessed, whichever is higher.
4. The exception has been provided after clause 1.2 and the same speaks as follows:--
Note:
"The condition regarding percentage increase in tax shall not be applicable if income consists of or includes salary and such income constitutes more than 50% of the total income declared for the year or where income is derived from house property
5. Above note read with the scope of the scheme and with special reference to Para. 1.1(d) mentioned as above is very clear in its application. The condition regarding percentage increase in tax is not applicable if the income consists of income, which is derived only from house property. I have not mentioned the part relevant to the salary income for the purpose of clarity and outcome, therefore, is obvious. The scheme says that all the returns filed by the taxpayers other than those which are ineligible under para. 7, are to be accepted as declared if they fulfil the requirements mentioned from A to C as above. Obviously, if income from property is less than the previous year or tax is not higher than the previous year, it is no disqualification. The makers of the scheme have clearly and unambiguously directed to accept the income from property without any exception as declared. In this regard the judgment referred by the learned A.R. also is quite relevant. The same is reproduced hereunder:--
"(9) Returning to the real controversy we find that the Self-Assessment Scheme for the year, 2000-2001 as contemplated vide Circular No. 4 of 2001, initially provide the scope of scheme for the purpose of qualification for acceptance, and clause 1.1.(e) of the Scheme further provides that all returns filed by the taxpayers shall be eligible in case of persons not being companies, where tax payable on income declared is higher by 20% or more of the tax payable on the income last declared or assessed which is higher, however, situation will be changed due to application of "note" appended to clause 1.1 which without any shadow of doubt clarify and support the version of the assessee that the condition regarding percentage increase in tax shall not be applicable if income consists of or includes salary and such income constitutes more than 50% of the total income declared for the year. In the .circumstances the learned DCIT miserably failed to appreciate that the percentage of salary income at Rs.168,000 constitutes more than 50% of total income at Rs.1,99,000 condition of tax be higher by 20%, is not applicable in case of assessee by virtue of "note", appended to clause 1.1(e) and 1.2 of the Scheme (Circular No.4 of 2001). Apart from this, clause (7) of the Scheme provides the details of cases where returns would be illegible for the purpose or accepting the claim under Self-Assessment Scheme, whereas the assessee's case does not fall within any of the sub-clause of clause (7), hence not only return is legible for all the purpose but also fit for acceptance under the scheme by virtue of "Note" appended to clause 1.1(e)."
6. Above discussion also supports my view. The discussion is with reference to salary income and the condition therein is more liberal. If the assessee's income includes more than 50% from salary the condition of 10% increase or higher income does not apply. The situation becomes more obvious in the case of property. However, here it applies where the income is entirely from property. The upshot, therefore, is obvious. All taxpayers who have only one source of income .and that is from house property, need not increase their income to remain covered within the scheme of self-assessment. In this case since the assessee income is entirely from property the condition precedent was to accept the return and then proceed under law and rules. I, therefore, direct that the same should be accepted. Needless to mention that assessee's case does not fall in any of the categories mentioned in clause 7 of the said circular.
7.A word of caution is .required here. Filing of return and acceptance of the case under SAS obviously does not debar the department to look into inadmissible claims against property income. The department could always add back by invoking section 59(3), legally inadmissible claim etc. However this is apparently not the situation in this appeal, hence direction to accept this case under SAS is hereby repeated.
8. Order accordingly.
C.M.A./212/Tax (Trib.)Order accordingly.