2008 P T D 1960

[Lahore High Court]

Before Ali Akbar Qureshi, J

Messrs BILAL IKRAM

Versus

FEDERAL BOARD OF REVENUE through Chairman, Islamabad and 2 others

Writ Petition No.5786 of 2008, decided on 22/09/2008.

Income Tax Ordinance (XLIX of 2001)---

----S. 177(4)--CBR Circular No.1 of 2004 dated 24-7-2004---Constitution of Pakistan (1973), Art.199---Constitutional petition---Universal Self-Assessment Scheme---Assessee had filed its return of income under Universal Self-assessment Scheme and had paid tax due---Department selected the case of assessee for audit in terms of S.177(4) of Income Tax Ordinance, 2001 and issued notice---Assessee, in terms of CBR Circular No.1 of 2004 dated 24-7-2004 had revised its income tax return by increasing 20% higher tax as compared to the tax payable on the original return but the department, instead of accepting the revised return of assesses, selected the case for audit under S.177(4) of the Income Tax Ordinance, 2001---Contention of the assessee was that the assessee having complied with the terms of CBR Circular No. 1 of 2004, department was bound to accept the revised return---Validity---Held, department having failed to rebut the contentions raised by the assessee, constitutional petition of the assessee was to be allowed by High Court and thus notice in question was declared to be illegal, unlawful and without lawful authority.

Commissioner of Income Tax and others v. Fatima Sharif Textile, Kasur and others (2006) 94 Tax 317 and Messrs Iftikhar Brothers, Civil Quarters Road, Sheikhupura v. Central Board of Revenue through Chairman, Islamabad and another 2006 PTD 2452 ref.

Muhammad Ajmal Khan and Zulfiqar Khan for Petitioner.

Sajjad Hussain Jafari for Respondents.

ORDER

ALI AKBAR QURESHI, J.---Through this Constitutional petition, the petitioner has challenged the validity of a notice bearing No.C.I.T/Audit-II/242 Annexure-B whereby the Return for the Tax year 2003 declaring income at Rs.1,65,000 has been selected for audit. It is stated in the petition that the petitioner filed its Income Return for the year 2003 declaring Income at Rs.1,65,000 under Universal Self Assessment Scheme and due tax was paid. The respondent No.2 without any cause and reason selected the case of the petitioner for audit in terms of section 177(4) of the Income Tax Ordinance 2001 and issued the notice, impugned herein. The respondent on 24-7-2004 issued a circular whereby the Federal Board of Revenue to facilitate the non-Cooperate Tax Payer and whose case have been selected for audit to provide an option of refusing income tax return by paying 20% higher tax as compared to the tax payable on the original return. The petitioner, in terms of the aforesaid circular revised its Income Tax Return by increase 20% higher tax as compared to the tax payable on the original return but the respondent department instead of accepting the return of petitioner, selected the case for audit under section 177 (4) of the Income Tax Ordinance 2001. Learned counsel for the petitioner in support of his contention submitted that the petitioner complied with e terms of the circular and the respondent is bound to accept the revised return. Reliance is placed on Commissioner of Income Tax and others v. Fatima Sharif Textile, Kasur and others (2006) 94 Tax 317 (S.C. Pak) and Messrs Iftikhar Brothers, Civil Quarters Road, Sheikhupura v. Central Board of Revenue through Chairman, Islamabad and another (2006 PTD 2452). Honourable Supreme Court of Pakistan in the aforesaid judgment observed in para-5 which is as under:--

"In view of the above arrangement between the parties, the appeals are disposed of with consent, consequently, the portions of impugned judgment reproduced herein-above are deleted with the observation that let appellants issue fresh notices to the respondents in terms of section 177 of the Ordinance, as it was prevailing at the relevant time, disclosing criteria/reasons for selecting their cases for purpose of audit. As far as the cases in respect whereof observations have been made herein-above relating to Circular C. No. 1 (1)s (ITAS)/2004 or otherwise if the returns have been revised and payment has been made by the assessees no further action shall be taken against them. The parties are left to bear their own costs. Order accordingly."

2. Consequently, the learned counsel for respondent failed to rebut the contentions raised by the learned counsel for the petitioner as well as the legal proposition settled by the Honourable Supreme Court of Pakistan.

3. Resultantly, this petition is allowed and notice bearing No.C.I.T./Audit-II/242 Annexure-B is declared to be illegal, unlawful and without lawful authority. No order as to costs.

M.B.A./B-29/L??????????????????????????????????????????????????????????????????????????????????? Petition allowed.