VS, 2009 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 1856 (2009)

Income Tax Ordinance (XLIX of 2001)---

----Ss.122(5A), 115(4), 153(6A) & Second Sched., Part-IV, Cls.(40) & (41A)---C.B.R. Circular No.1 of 2005, dated 5-5-2005, Para.22---Amendment of assessment---Tax year, 2005---Filing of return---Amendment of assessment for the tax year, 2005 on the basis of statement filed for the tax year, 2004---Assessee contended that requirement to avail option had duly been met with and he had rightly filed his return for tax year, 2005 instead of statement under S.115(4) of the Income Tax Ordinance, 2001---Department contended that taxpayer having filed statement under S.115(4) of the Income Tax Ordinance, 2001 for the tax year, 2004 was committed to file statement for the tax year, 2005 also as such option for presumptive tax regime was final and irrevocable---Validity---On behalf of taxpayer no declaration had been furnished opting for the presumptive tax regime for the tax year, 2005---No justification was available for amending the order on the basis of statement filed for the tax year, 2004 as the restrictions of three years had already been completed exercising the option by the tax payer from the assessment years 2002-2003 to tax year, 2004---First Appellate Authority had not correctly considered the relevant provisions of law---Order of First Appellate Authority was vacated and order passed by the Taxation Officer under S.122(5A) of the Income Tax Ordinance, 2001 was cancelled by the Appellate Tribunal.

2008 PTD (Trib.) 929 rel.

Sh. M. Yousaf, ITP for Applicant.

Mrs. Sabiha Mujahid, D.R. for Respondent.

ORDER

The appellant through this appeal has objection to the impugned order of the learned CIT(A), dated 24-11'-2008 on the following grounds:--

(1) "That the learned CIT(A) was not justified to confirm the reopening of assessment being erroneous in law and so far as prejudicial to the interest of revenue.

(2) That the CIT(A) was not justified to confirm the order passed under section 122(5A) which is illegal ab initio.

(3) That the CIT(A) was not justified to confirm the supplies at Rs.40,73,151 and tax thereon Rs.142,560 being full and final discharge".

We have heard the learned representatives from both the sides and have also perused the impugned order of the learned CIT(A), assessment order and other relevant record of the case.

The learned counsel representing the appellant has contended that since the provisions of subsection (6A) was inserted through Finance Act, 2005 in which manufacturers were restricted from filing statements under section 115(4) and required only to submit return of total due on 30-9-2005. Clause (40) of Part-IV of Second Schedule has been-deleted in which taxpayer was required to opt for presumptive tax regime. Therefore the manufacturers are not entitled to file statement under section 115(4) by inserting subsection (6A) of section 153 and by deleting corresponding provision of clause (40) of Part-IV of Second Schedule. He has contended that the assessee has rightly filed the return of total income instead of statement under section 115(4) on 29-9-2005. Learned counsel has further elaborated that the provision of clause (41A) of Part-IV of Second Schedule to the Income Tax Ordinance, 2001 which has been inserted through S.R.O. No.1130(I)/2005, dated 14-11-2005 which was too late after filing of return on 29-9-2005. He has contended that clause (41A) is a new enactment in law which cannot be made through S.R.O. Hence, the addition of this provision was also illegal. He has contended that according to provision of Clause (41) a written irrevocable declaration for opting the PTR must be submitted by the taxpayer within three months on the commencement of the year but the appellant has never submitted any written option of PTR. In this regard referring the decision of this Tribunal reported as 2008 PTD (Trib.) 929. He has contended that where the taxpayer has not filed a written option he may opt out of PTR any time even before completing of three years. He has argued that proviso regarding option to be taxed under section 80C of the late Ordinance, 1979 for three years have been introduced in Finance Act, 1998 and written option was required within three months to avail the payment of tax being final discharge. According to the learned counsel this option was firstly exercisable from assessment year 1999-2000 and the appellant has availed this option upto six years i.e. from assessment years 1999-2000 to tax year, 2004. Hence, the requirement to avail the option has duly been met with and the appellant/taxpayer has rightly filed his return for the tax year, 2005 instead of statement under section 115(4). Therefore there was no justification for reopening and passing the order under section 122(5A) by the Taxation Officer. Learned counsel has placed before us the Circular No. 1 of 2005, dated July, 5, 2005 issued by the Central Board of Revenue in para.22 explaining important provisions relating to amendment in the Income Tax Ordinance, 2001 through Finance Act, 2005. It has been explained as under:--

"Withdrawal of option to manufacturers cum suppliers. (Section 153).

Under clause (40) of Part-IV of the Second Schedule, manufacturers of goods (other than those from whom special rates of deduction have been specified) could exercise the choice to opt for PTR in respect of payments on account of supply of goods manufacturers by them from which tax was deductible under section 153.

It was observed that the manufacturers were invariably opting for PTR only when the final tax liability under the PTR worked out to a lesser figure as compared to the tax liability which would be payable if they were taxed under the normal tax regime on their taxable profits. This misuse of concession was considered undesirable especially in the case of some fully documented large corporates which were not paying taxes in accordance with their book profits. Accordingly clause (40) has been omitted with retrospective effect. At the same time a new subsection (6A) has been inserted in section 153, also with retrospective effect, so that the option available to manufacturers-cum-suppliers stands withdrawn- retrospectively. It has also been provided that any past decisions/judgments of a Court or a Tribunal or an income tax authority shall not have any effect whatsoever.

The intent is to forestall any future leakage of revenues and also to retrieve the revenue already lost. The option already filed by the taxpayer shall stand automatically rescinded."

The learned counsel has also placed before us the decision of this Tribunal rep9rted as (2008) 97 Tax 347 (Trib.) wherein the amending assessment under section (5A) has not been approved in a case where on behalf of the assessment no declaration has been furnished opting for presumptive tax regime in the similar circumstances which are the case of the assessee.

The learned representative of the D.R. is supporting to the impugned orders. She has contended that statement under section 115(4) filed by the Tax Payer for the Tax Year, 2003 amounts option in terms of clause (40) of Part-IV of the Second Schedule to the Income Tax Ordinance, 2001 as is provided in this clause. She is of the view that option for presumptive tax regime filed by manufacturer is irrevocable and remained operative for the succeeding three years. Taxpayer having filed statement under section 115(4) for the tax year, 2004 was committed to file statement for the tax year, 2005 also as such option for presumptive tax regime was final and irrevocable. She has argued that the facts framed by the taxpayer opted for the presumptive tax regime for filing statement under section 115(4) for the tax year, 2004 and was bound to file statement for the tax year 2005 also. According to the learned DR clause (40) of Part-IV of the Second Schedule was deleted by Finance Act, 2005 and clause (41A) was inserted by S.R.O. No.1130(1)/2005, dated 14-11-2005. According to her even the omission of clause (40) does not support the appellant due to insertion above referred clause (41A). She has argued that the appellant was obliged to file statement under section 115(4) and is not to do so to file under the presumptive tax regime.

After considering the rival arguments from both the sides we are of the view that there was no justification for amending assessment under section 122(5A). We find no force in the arguments of the learned D.R. that the taxpayer has opted for the PTR for the tax year, 2004. Therefore, he should have to file statement for the tax year, 2005 also as the taxpayer has exercised the option from assessment year 1999-2000 and has availed the option up to six years from assessment year 1999-2000 from assessment years 1999-2000 to 2001-2002 and from assessment year 2002-2003 to tax year, 2004. Hence, the requirement to avail the option of three years was up to tax year, 2004 and that cannot be stretched to next year which was not under review i.e. 2005. Even otherwise, keeping in view the explanation of the C.B.R. through above referred Circular No.1 of 2005 and the decision of this Tribunal referred by the learned counsel, we are of the view that on behalf of the taxpayer no declaration has been furnished opting for the presumptive tax regime for the tax year under review i.e. 2005 and therefore there was no justification for amending the order on the basis of the statement filed for the tax year, 2004 as the restriction of three years has already been completed exercising the option by the Tax Payer from the assessment years 2002-2003 to Tax year 2004. We are of the view that the learned CIT(A) has not correctly considered the relevant provisions of law and therefore the impugned order of the learned CIT(A) is vacated and the order passed by the Taxation Officer under section 122(5A) is-cancelled.

The appeal of the assessment is allowed.

C.M.A./93/Tax(Trib.)Appeal allowed.