VS, 2008 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 179 (2007)

Income Tax Ordinance (XLIX of 2001)---

----S.122(5A)---Amendment of assessment---Assessment was amended in manners that tax @ 5% was charged on the declared receipts earned so as to bring same within the scope of presumptive tax regime---First Appellate Authority annulled the orders passed under S.122(5A) of the Income Tax Ordinance, 2001 with the conclusion that neither it was erroneous nor prejudicial to the interest of Revenue---Validity---First Appellate Authority had in detail dilated upon the two conditions required for invoking the provisions of S.122(5A) of the Income Tax Ordinance, 2001 which were that firstly the Commissioner could amend an order if it was erroneous and secondly it was also prejudicial to the interest of Revenue---Revising authority without bringing on record any legal justification for converting the income which had already been processed under the normal tax regime by conscious application of mind, had brought it into the scope of presumptive tax regime merely on surmises which could not be approved---For determining as to whether a particular income which fell in the presumptive tax regime proper parameters had been laid down in the statute, still the revising authority preferred to proceed arbitrarily without making the basis known for so proceedings in the manner---Exercise by the revising authority had been undertaken when application in form of complaint before the Federal Tax Ombudsman was lodged on not receiving the determined refund that proceedings under S.122(5A) of the Income Tax Ordinance, 2001 were initiated and finalized in haste---Held, orders were unexceptionable which did not call for any interference at level of Appellate Tribunal---Department appeals were rejected by the Appellate Tribunal being devoid of any merit.

Muhammad Akram Tahir, D.R. for Appellant.

Nemo for Respondent.

ORDER

NASEER AHMAD (ACCOUNTANT MEMBER).---The captioned appeals have been filed by the Revenue against order dated 25-4-2005 recorded by the learned CIT (A), Zone-V, Lahore relating to the assessment years 2003, 2004 and 2005 to agitate the cancellation of assessments passed by the Assessing Officer under section 122(5A) of the Income Tax Ordinance, 2001.

2. Facts in brief giving rise to filing of the appeals are that the Income Tax returns were filed by declaring net income for rendering sales promotion services to various clients, in a manner that expenses were deducted from the gross receipts. The returns were accepted under self-assessment scheme for each year. Such completed assessments were subjected to an action under section 122(5A) of the Income Tax Ordinance, 2001 for the reason that the case falls in presumptive tax regime so assessments were amended accordingly by passing order under section 122(5A) simply on the basis of income tax returns, which were already on record. It is pertinent to mention that the assessment was amended uniformly for each year in a manner that tax @ 5% was charged on the declared receipts earned so as to bring it within the scope of presumptive tax regime, the income tax returns already processed under normal tax regime with the contention, that providing Sales Promotion Services are chargeable under presumptive tax regime. Accordingly after proceeding upon the issue in this way that a justification for action under section 122(5A) was made. The undenied backdrop of it is that the respondent/assessee lodged a complaint before the learned FTO on, not getting the determined refund till tax year 2003. During the pendency of 'this complaint, that despite requesting twice for adjournment of the proceedings that the revising authority by rejecting the requests, finalized the proceedings and order under section 122(5A) was passed for tax year 2003. By this exercise, resultantly the refund was vanished. In both the subsequent two assessments, by proceeding on this very basis i.e. the treatment accorded in the tax year 2003, that the amended assessments were finalized.

3. The learned First Appellant Authority by two separate orders annulled the orders passed under section 122(5A) for each of the impugned year, commonly with the conclusion that neither it is erroneous nor prejudicial to the interest of Revenue.

4. The DR on behalf of the Revenue agitated against the decision of learned CIT (A), Zone-V, Lahore as per grounds. On the other hand, there was none present on behalf of the assessee-defendant therefore; the appeals are taken up for decision ex parte on merits.

5. We have heard the DR and perused the available records. The order of the learned CIT (A), it is observed has comprehensively covered the applicability of section 122(5A) of the Income Tax Ordinance, 2001. In this behalf we would like to refer to page 6 of the impugned appellate decision where under the head "Prerequisite for invoking the section 122(5A)" the learned/First Appellate Authority has in detail dilated upon the two conditions required for invoking the provisions of section 122(5A) which are that firstly the Commissioner can amend an order if it is erroneous and secondly it is also prejudicial to the interest of Revenue. In this case the learned First Appellate Authority has placed reliance on reported case of Superior Appellate Forums in which the word erroneous and prejudicial to the interest of Revenue have been defined and elaborated. So both the conditions being missing in the instant case the observations of the learned First Appellate Authority are upheld. Similarly on the issue of ex parse assessment the order of the learned First Appellate Authority is quite clear and according to law and facts of the case as well as reported decision of the Superior Appellate Forums. Therefore, on these two issues we do not find any reason to interfere with the first appellate decision. The Revising Authority without bringing on record any legal justification for converting the income which has already been processed under the normal tax regime by conscious application of mind has brought it into the scope of presumptive tax regime merely on surmises which cannot be approved. For determining as to whether a particular income which falls in presumptive tax regime proper parameters have been laid down in the statute, still the Revising Authority preferred to proceed arbitrarily without making the basis known for so proceedings in the manner. The exercise by the Revising Authority has been undertaken when application in form of complaint before the learned FTO was lodged on not receiving the determined refund that proceedings under section 122(5A) supra were initiated and finalized in haste. In a nutshell, we are of the considered opinion that the impugned orders are unexceptionable, which do not call for any interference at level of Tribunal. The departmental appeals being devoid of any merit stand rejected.

C.M.A./164/Tax(Trib.)???????????????????????????????????????????????????????????? Appeals rejected.