I.T.A NO. 583/PB/OF 1986-87, DECIDED ON 9TH JUNE, 1987 Versus I.T.A NO. 583/PB/OF 1986-87, DECIDED ON 9TH JUNE, 1987
ORDER
1. Mr. Abdul Latif, the assessee herein, has filed this appeal questioning the order of learned A. A. C. , dated 9-12-1986 regarding charge year 1983-84 by which he upheld the assessed income under S. 62 of the Income Tax Ordinance, 1979.
2. The appellant is an individual, deriving income from business and property which he declared as under:--
3. Income from business
4. Rs. 800
5. Income from property
6. Rs.19,200
7. The return being unaccompanied with any proof was not accepted under S. 59(1) and the case was processed under regular law. As a result, income was assessed as under:-
8. Property net income as declared
9. Rs. 19,224
10. Business income total annual sales Rs.800 x 300 days
11. Rs.2,40,000
12. G.P. @ 15%
13. Rs. 36,000
14. Less P&L expenses on estimate
15. Rs. 6,000
16. Net income
17. Rs. 30,000
18. The assessee appealed before the A.A.C. to contest the above estimate. Per his order aforesaid the learned A. A. C. disposed of the appeal rejecting the plea that the case was qualified to be accepted under section 59(1). He relied on the provisions of subsection (4) of section 59 which preclude the case to be handled under section 59(1) after 30th day of June of the financial year next following. However, he set aside the case for re-consideration observing as under:--
19. "On perusal of the assessment order, it is found that no basis, whatsoever, was given by the I.-T.O. for the estimate of sales at Rs.2,40,000. The G.P. rate applied at 15% appears to be excessive. The assessment is, therefore, set aside with the directions that proper basis should be made out for the estimate of sales. The G.P. rate should be applied as in other parallel cases of the same nature of business. The assessment stands set aside."
20. Not satisfied, the assessee came here on further appeal. The main plea raised is that the case qualified to be accepted under section 59(1) and could not have been handled under section 62, notwithstanding the fact that the return was submitted late. It was pointed out that by virtue of Circular No. 1(56) I-T-9-83-84, dated 11-4-1984 of the C.B.R. even belated returns were allowed to be accepted under section 59(1).
21. Further, it was pointed out that for reason of any document being short required under para 2(d)(i)(a)(i) of Circular 8 of 1983, the case under section 59 could not be rejected, because no opportunity was, afforded to the assessee to make up the deficiency. Under para 5(b) of the Circular notice was required to be given to the assessee to make up the deficiency within a period of one month and if he failed thereafter the case could be examined in detailed scrutiny. Simply on noticing any deficiency, without notifying it to the assessee, the case could not be held disqualified under para. 4, it was added.
22. That no notice was given to the assessee for supplying the short documents is not denied. It is also not denied that such a notice was required to be given to the assessee before denying him treatment under section 59(1). It was, however, contended that process under section 59(1) had to be completed by the 30th June of the financial year next following and as it was not so completed the case could be processed under section 62. Undoubtedly, there is a limit set for finalising case under section 59(1) before the end of the next financial year, but the return was submitted well in time, before the end of the year in any case, and could have been processed before the end of the financial year. It is not clear why the I.-T.O. failed to process it before the financial year ended. In fact he did not reject the case for the reason that the period fixed had expired. Even otherwise the provision cannot be used to the detriment of a tax-payer but to his benefit, as otherwise it would be open to the assessing officer to delay any case to be able to process it under section 62. This does not appear to be the intention of the legislature, to give free hand to the assessing officer in dealing with cases under section 59(1). If it were so, then the object of the whole scheme would be frustrated. It is clear that where a case qualifies under section 59(1) it has to be accepted as such. However, it can be re-opened if it be so justified under section 65.
23. It is also clear that wealth-statement was subsequently filed and the source of investment seems to have been explained, no addition having been made under section 13.
24. So, looked at from any angle the case qualified to be accepted under section 59(1), even though the return was belated. Accordingly, I accept the appeal and direct that the return be accepted as submitted under section 59(1).
25. M.B.A./440/T Order accordingly.