2010 P T D (Trib.) 30
[Income-tax Appellate Tribunal Pakistan]
Before Jawaid Masood Tahir Bhatti, Judicial Member
I.T.A. No. 567/LB of 2009, decided on 20/08/2009.
Income Tax Ordinance (XLIX of 2001)---
----Ss.121, 120(1) & 177---Best judgment assessment---Issuance of notice under S.121, of the Income Tax Ordinance, 2001 suggesting certain alterations/amendments---Assessee did not attend the audit proceedings---Taxation Officer passed ex parte order under S.121 of the Income Tax Ordinance, 2001 and had assessed the income---Assessee contended that Taxation Officer could not make an assessment when there was already an assessment order in the field in the shape of deemed assessment order or in any other shape---Under Sub. S(6) of S.177 of the Income Tax Ordinance, 2001 it had been specifically provided that after completion of audit under Sub. S(5) or Sub. S. (8) the Commissioner may if consider necessary after obtaining taxpayer's explanation on all the issues raised in the audit, amend the assessment under Sub. S(1) or Sub. S(4) of S.121 of the Income Tax Ordinance, 2001, as the case may be---Once there was an assessment order in the field without cancelling that order a new order could not be passed---Order may be amended, rectified or reviewed if provided under the law but in the presence of one order same authority could not pass the assessment order under S.121 of the Income Tax Ordinance, 2001---Validity---Contention of the department that "once the matter was selected for total audit and it was established that the case of the taxpayer was not in accordance with the criteria selected for the acceptance of the return, the Taxation Officer was fully authorized to pass the new order and already passed order will automatically become invalid was repelled---Until and unless the order in the field was not cancelled in accordance with law that will not become invalid---Assessment already passed that may be deemed or otherwise may be amended or rectified under the specific provision of law---Regarding the cases selected for audit it had specifically been mentioned in Sub. S(6) of S.177 of the Income Tax Ordinance, 2001 that after obtaining taxpayer's explanation on all the issues raised in audit, the assessment will be amended under Sub. S(1) of Sub. S(4) of 5.122 of the Income Tax Ordinance, 2001 as the case may be---Cancellation of order by the First Appellate Authority was upheld by the Appellate Tribunal and departmental appeal was dismissed.
(1968) 18 Tax 111; 1973 PTD 446; (1947) 15 ITR 61 and 2006 PTD 734 ref.
2006 PTD 734 rel.
M. Tariq, D.R. for Appellant.
Kh. Riaz Hussain for Respondent.
ORDER
JAWAID MASOOD TAHIR BHATTI, (JUDICIAL MEMBER)--The department through this appeal has objected to the impugned order of the learned CIT(A) dated 20-11-2008 for the tax year, 2003 on the following ground:--
"That the learned Commissioner of Income Tax (Appeals) was not justified to cancel the order passed under section 121 of the Income. Tax Ordinance, 2001 without any cogent reasons as it was made in accordance with the provisions of law and as per facts of the case."
I have heard the learned representatives from both the sides and have also perused the impugned order of the learned CIT(A), and the assessment order. I have found that the taxpayer in this case is running a business of manufacturing of custom made interior furniture. Return was filed declaring net income at Rs. 142,654 which was treated as an assessment order in terms of section 120(1) of the Ordinance, 2001. Subsequently, the case was selected for audit under section 177 of the Ordinance and the assessee was informed vide letter dated 4-1-2007. Due to persistent non-cooperative attitude of the assessee towards issuance of statutory notices/letters as .mentioned in the assessment order the Taxation Officer issued notice under section 121 of the Ordinance dated 26-5-2008 suggesting certain alterations/amendments as mentioned on Page 3 of the impugned order. On due date the assessee did not attend the audit proceedings, therefore, the Taxation Officer has passed ex parte order under section 121 of the Ordinance and has assessed the income.
The assessee filed appeal before the learned CIT(A) who has cancelled the order passed by the Taxation Officer under section 121 Placing reliance on the decisions reported as (1968) 18 Tax 111 (H.C. Kar.); 1973 PTD 446 and (1947)15 ITR 61. The learned CIT(A) has also placed reliance on the decision of the Honourable Karachi High Court reported as 2006 PTD 734 wherein at para 38 it has be held that in case of failure of a person to furnish return of income after being required by a notice under subsection (3) or subsection (4) of section 114, the Commissioner may make a best judgment assessment under section 121 and after doing so shall issue the assessment order to the taxpayer. However, if no return has been filed under section 114 and no notice under subsection (3) or (4) of section 114, has been issued no assessment order shall be made, or issued or taken to have been issued.
Mr. Muhammad Tariq has appeared on behalf of the appellant-Department and has contended that there was no justification for cancelling the assessment order passed under section 121 as the assessee failed to appear before the Taxation Officer despite the notices and, therefore, the Taxation Officer has no option except to invoke section 121 of the Ordinance. He has in this respect referred sub-clause (d) of subsection (1) of section 121 according to which where a person failed to produce before the Commissioner, or any person employed by a firm of Chartered Accountant under section 177, accounts, documents and records required to be maintained under section 174, or any other relevant document or evidence that may be required by him for the purposes of making assessment of income and determining of tax due thereon, the Commissioner may base on any available information or material and to the best of his judgment, make an assessment of taxable income of the person and the tax due thereon. The learned DR is, therefore, of the view that the treatment meted out by the Taxation Officer was in accordance with law which should have been upheld.
On the other hand, the learned counsel representing the respondent/assessee is supporting the impugned order of the learned CIT(A). He is of the view that there cannot be double assessment in any case and the Taxation Officer cannot make an assessment when there is already an assessment order in the field in the shape of deemed assessment order, assessment order or in any other shape. The learned counsel in this regard has referred section 177 of the Ordinance, 2001. He has contended that under subsection (6) of section 177 it has been specifically provided that after completion of the audit under sub-section (5) or subsection (8) the Commissioner may if consider necessary after obtaining taxpayer's explanation on all the issues raised in the audit, amend the assessment under subsection (1) or subsection (4) of section 121, as the case may be. He has argued that once there is an assessment order in the field without cancelling that order a new cannot be passed. The order may be amended, rectified or reviewed if provided under the law but in the presence of the one order same authority cannot pass the assessment order under section 121 of the Ordinance. He, is, therefore, of the view that the learned CIT(A) has rightly cancelled the order.
After considering the facts of the case I am of the view that the learned CIT(A) has rightly cancelled the order. Sections 120 and 121 are regarding assessment while section 122 is regarding amendment of the assessment. I do no find force in the contention made by the learned DR that once the matter is selected for total audit and it is established that the case of the taxpayer was not in accordance with the criteria selected for the acceptance of the return, the Taxation Officer is fully authorized to pass the new order and already passed order will automatically become invalid. I am of the view that until and unless the order in the field is not cancelled in accordance with law that will not become in-valid. However, the assessment already passed that may be deemed or otherwise may be amended or rectified under the specific provision of law. I am of the view that regarding the cases selected for audit it has specifically been mentioned in subsection (6) of section 177 referred above that after obtaining taxpayer's explanation on all the issues raised in audit, the assessment will be amended under subsection (1) or subsection (4) of section 122 as the case may be. Even otherwise the Honourable High Court has also discussed this issue in a case reported as 2006 PTD 734 placing reliance on which the learned CIT(A) has cancelled the order passed by the Taxation Officer. I, therefore, find no warrant for interference in the impugned order which is upheld and the appeal filed by the department is dismissed.
C.M.A. 121/Tax (Trib.)??????????????????????????????????????????????????????????????????????? Appeal dismissed.