VS, 2008 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 691 (2007)

Income Tax Ordinance (XXXI of 1979)---

----S.59(1)---C.B.R. Circular No.7 of 2002 dated 15-6-2002, Paras.9(a)(ii), & 1.2, Explanation (iii)---Self assessment---Selection of case for total audit---First Appellate Authority directed the Assessing Officer to accept the return under Self-Assessment Scheme on the ground that an existing assessee took over the business of another existing assessee---Comparison of tax with tax payable by the successor was no doubt on the higher side and return filed under Self-Assessment Scheme had duly fulfilled the conditions of the Explanation of clause (iii) para. 1.2 of the C.B.R. Circular No.7 of 2002---No interference was warranted by the Appellate Tribunal and order of First Appellate Authority was upheld---Appeal filed by the department was dismissed.

Manzoor Hussain Shad, D.R. for Appellant.

Ahmad Nadeem Ahsan, I.T.P. for Respondent.

ORDER

JAWAID MASOOD TAHIR BHATTI, (JUDICIAL MEMBER).---The appellant through this appeal has objected to the impugned order of the learned C.I.T. (A), dated 7-10-2005 on the following grounds:---

"(1) That the order of the learned C.I.T. (A) is-against the facts and circumstances of the case as the case of the assessee for the charge year 2002-2003 was selected for Audit by the Regional Commissioner, Central Region, Multan vide under para 9(a)(ii) of C.B.R's. Circular No.7 of 2002.

(2) That order of the learned C.I.T. (A) is not maintainable in the eyes of the law as the Honourable Federal Tax Ombudsman had already rejected the view point of the assessee through complaint No.518 of 2003 dated 18-11-2003 on the basis of exclusion of case from SAS and selection thereof under para 9(a)(ii) of the Circular No.7 of 2002."

After perusal of the above said grounds, I am of the view that the -grounds are vague, un-specific and against the ITAT Rules, even otherwise, after perusal of the impugned order of the learned C.I.T. (A) I have found that he has given full justification directing to accept the return under S.A.S. Although it has been contended by the learned DR that after dismissal of the appeal filed before F.T.O. by the present assessee and two revision petitions before the Commissioner of Income Tax there was no justification for directing to accept the return of the assessee under S.A.S. but I am of the view that the directions made by the learned C.I.T. (A) considering the facts and circumstances of the case are in accordance with law. The observations of the learned C.I.T.(A) in this regard are re-produced hereunder:---

"I have heard the learned A.R. and considered contentions of both the parties perusal of record shows that return for the assessment year under consideration, was filed under S.A.S. declaring net income at Rs.6,80,000. The return was selected for total audit under para 9(a)(ii) of C.B.R's. Circular No.7 of 2002 by the R.C.I.T. Multan vide order, dated 21-1-2003 being the case of revenue potential one as well as for suppression of income. On selection of the case for the audit, a complaint before the Honourable F.T.O. was lodged which was disposed of against the appellant and even review application filed by the appellant was rejected as mentioned in the body of the impugned order. Proceedings for completion of assessment under total audit were started by issuing notice under section 61 accompanying a letter, dated 13-6-2005 as case was going to be barred by time on 30-6-2005. The contents of the said letter have been re-produced in the order. In response, the appellant's AR requested for adjournment twice. Finally, a show-cause notice dated 24-6-2005 along with notice under section 61 fixing the case for 28-6-2005 was issued. Contents of the said notice have also been quoted in the order. Reply dated 27-6-2005 was filed requesting to withdraw the aforesaid notice and keep the proceedings pending till the final, decision of the Honourable High Court. However, keeping in view fact of the limitation in the light of provisions of section 64 of the repealed Income Tax Ordinance and no stay order operative beyond six months of High Court the assessment was finalized at net income of Rs.11,00,000.

Contention of the learned AR is that selection of the case for total audit by the R.C.I.T. is against the spirit of the scheme of the S.A.S. for the assessment year 2002-2003. In fact, there were two schools which were being assessed under separate NTNs (i) Mrs. Salma Anwar Prop. Multan Gems School for Girls, Sher Shah Road, Multan Cantt., bearing NTN 04-16-0801398-5 and (ii) Miss Ayma Syed School Prop: Multan Gems School for Boys, 20-Abdali Colony, Multan having NTN 04-16-0720126-5. Through a valid contract between the above two assessees entered on 1-7-2001 the present appellant succeed the other school namely Multan Gems School for Boys. The present appellant declared income from both the schools under S.A.S. and paid tax as per scheme. To this effect, attention of this forum was invited towards para. 1.2. Explanation Clause (iii) of the Self Assessment Scheme for the year under consideration which reads as under:---

"Where an existing assessee takes over the business of another existing assessee, the compensation of tax shall be made with the tax payable by the Successor or the Predecessor, whichever is the higher."

It is stressed that the appellant fulfils the above condition as in the preceding year, higher tax paid by the appellant was Rs.80,300 whereas the predecessor paid tax at Rs.74,800 on agreed basis for the year 2001-2002 which was lower. Thus the appellant has paid tax amounting to Rs.1,15,500 for the assessment year under appeal which is in conformity with the said provisions of S.A.S. for the year under consideration. It is emphasized that when the appellant duty meets the requirements of the stipulations of the Self Assessment Scheme for the assessment year 2002-2003, there is no justification to deprive the appellant from the benefits of the said scheme by selecting the return as per guidelines of the R.C.I.T. which is not only arbitrary but also against the law.

In view of the aforesaid discussion, it is concluded that there is weight in the arguments of the learned AR para (iii) of the explanation of the said circular for the Self Assessment Scheme for the year under consideration is crystal clear on the issue involved. In this case an existing assessee took over the business of another existing assessee, the compensation of tax with tax payable by the successor is no doubt on the higher. Thus there is no ambiguity. Prima facie the return filed under S.A.S. duly fulfils the conditions of the explanation of clause (iii) para 1.2 of the said scheme. In view of the above, the Taxation Officer is directed to accept the return under S.A.S."

After considering the above said observations of the learned C.I.T. (A), I find no warrant for interference in his order which is up-held and the appeal filed by the department is dismissed.

C.M.A./12/Tax (Trib.)Appeal dismissed.