I.T.A. NO. 148/IB-1985 OF 1986, DECIDED ON 25TH AUGUST, 1987. Versus I.T.A. NO. 148/IB-1985 OF 1986, DECIDED ON 25TH AUGUST, 1987.
ORDER
Brief facts giving rise to this appeal are that the assessee who is an individual, derives income from the purchase and sale of tape-recorders, their repairs and recording of cassettes. He filed a return to declare net profit of Rs.14,500 under the Self-Assessment Scheme. However, in view of Circular No.13 of 1981, case of the assessee was excluded from the purview of Self-Assessment Scheme. In consequence thereof, case of the assessee was set apart for a detailed scrutiny under section 62 of the Income Tax Ordinance, 1979 thereinafter called the Ordinance). As a result of investigation, Income of the assessee was determined at Rs.41,150. The assessee having taken exception of finalization of assessment under section 62 of the Ordinance, filed an appeal before learned A.A.C. which was disposed of vide Appeals Nos.185 and 186, dated 20-5-1985. While disposing of appeal of the assessee for the charge year 1981-82, learned A.A.C. concluded that the assessee was neither a manufacturer nor a dealer in respect of electrical and electronic appliances and therefore, his case did not qualify for assessment order the detailed scrutiny scheme Based on this conclusion, he ordered that disclosed income of the assessee may be accepted under Self-Assessment Schema In this connection, relevant part of learned A.A.C s order is set out below:-
"Mere sale purchase of cassettes, in my view, do not make the assessee electronic dealer. I am supported in this view with the fact that in another leading case of cassettes dealer by the name of National Cassettes House, it was not selected for a detailed scrutiny in the same circle."
The department having taken exception to findings of learned A.A.C. flied second appeal before the Tribunal. In this connection, sections of the department are listed below:-
(i) That since the assessee had not contested selection of his case for a detailed scrutiny at the time of assessment, learned A.A. C. was not justified to entertain objection of the assessee at the time of hearing in view of section 131(4) of the Ordinance.
(ii) That since the assessee was not a dealer in respect of electrical and electronic appliances his case did not fall within the purview of a detailed scrutiny for the charge year 1981-82.
(iii) That case of the assessee was rightly set apart for a detailed scrutiny in view of Circular No.13, of 1981. It was accordingly stated that appropriate relief may be given to the department by the Tribunal.
3. First objection of learned DR relates to the fact that since the assessee ha` not contested selection of his case for a detailed scrutiny during the assessment proceedings, learned A.A.C. was not justified to entertain objection of the assessee in this regard in accordance with the provisions of subsection(4) of section 131of the Ordinance. To resolve the controversy, the said subsection is set out below:-
"Appellate Assistant Commissioner shall not admit any documentary material or evidence which was not produced before the Income Tax Officer unless he is satisfied that the appellant was prevented by sufficient cause from producing such material or evidence before the Income Tax Officer.
In respect of case before me, stand of the assessee was that he was neither a manufacturer nor a dealer of electrical and electronic appliances. Therefore, he took the stand before learned AAC that his case fell beyond the ambit of cases which could be selected for a detailed scrutiny. In making this submission, reliance was placed on Circular No.13 of 1981. Having heard both the parties at some length on this point, I have noted that Self-Assessment Scheme is governed by the provisions of section 59 of the Ordinance and instructions and orders issued under it. For facility of reference, the said section is reproduced below:-
"Where a return of total income for any income year furnished by the assessee under section 55 qualifies for acceptance in accordance with the provisions of scheme of Self-Assessment made by the Central Board of Revenue for that year or any instructions or order issued thereunder, the Income Tax Officer shall assess, , by any order in writing, the total income of the assessee on the basis of such return and determine the tax payable on the basis of such assessment."
5. From a plain reading of the above section 59, which governs the Self-Assessment Scheme it is abundantly clear that Self-Assessment Scheme for each year is governed by a scheme devised by the Central Board of Revenue for that year. Therefore, any controversy with regard to the fact whether return of the assessee for a particular year should be accepted under the Self-Assessment Scheme or not, is a mixed question of law and facts. Since in respect of the case before me, objection of the assessee related to a mixed question of law and facts, he was perfectly entitled to raise it at any stage including that of learned AAC. Even otherwise, in the absence of a finding in the appellate order, it can be safely presumed that learned AAC had rightly concluded that the assessee was prevented by sufficient cause from not producing material or evidence on the basis of which request was made subsequently before learned AAC for excluding assessee's case from the purview of a detailed scrutiny. On account of the foregoing reason, first objection of the department having no merit is turned down.
6. Second point for consideration before me relates to the fact whether the assessee was a manufacturer or dealer of electrical and electronic appliances or not? In this connection, it is relevant to put on record that by virtue of circular No.13, of 1981, the following class of cases were set apart for a detailed scrutiny for the charge year 1981-82:-
"Manufacturers and dealers of electrical and electronic appliances."
7. Before recording a finding whether or not the assessee was a manufacturer and dealer of electrical and electronic appliances, it is desirable to be sure that what kind of goods had been purchased and sold by the assessee during the previous year relevant to the charge year 1981-82? After having read the assessee's reply dated 30-5-1985, available on page 3 of assessment order, there is no manner of doubt left with me that the assessee dealt in the purchase and sale of tape-recorders and recording of cassettes. Besides he had also derived income from repairs thereof. Next question for consideration is whether case of the assessee fell under the definition of a manufacturer and dealer of electrical and electronic appliances or not? To resolve this controversy, it is necessary to refer to the definition of electrical as is given in Chambers Twentieth Century Dictionary, page 416. According to it, electrical means "pertaining to electricity, charged with or capable of being charged with electricity producing or produced by conveying, operated by or making use of electricity. " Since the assessee had been recording cassettes, the process of recording them was undoubtedly through the means of a VCR, which is run on electricity. Therefore, case of the assessee falls under the definition of a dealer in electrical goods. This case is also covered under the definition of electron, and therefore, assessee is held to be a dealer in electronic appliances.
8. Finally, it was argued by learned counsel of the assessee that since both the conditions i.e. being a manufacturer and dealer of electrical and electronic appliances were not present in respect of the case before me, this case could not be set apart for a detailed scrutiny Having read the relevant part of the circular, it is my considered opinion that the word "and" after manufacturer means "or" and therefore, has to be read in disjunctive sense. Since the assessee was positively dealing in the purchase and sale of tape-recorders and recording of cassettes, his case fell beyond the purview of Self-Assessment Scheme for the charge year 1981-82.
9. Finally, plea of learned counsel of the assessee that since the parallel case was not set apart for a detailed scrutiny, case of the' assessee should also have been excluded from detailed scrutiny, has no merit at all. So far as case of the assessee is concerned, it was rightly set apart for a detailed scrutiny and it is for the department to take appropriate action in respect of the parallel case that has been mentioned on page 2 of the appellate order and on which reliance was placed by learned A AC.
10. On account of the above reasons, I hereby vacate order of learned AAC and on consequence thereof. I further hold that this case was rightly set apart for a detailed scrutiny.
11. Since learned AAC did not record a finding with regard to quantum of assessed income, case of the assessee is remitted to him with a directive that he should do it in accordance with law.
12. In consequence of the above order, appeal of the department succeeds to the extent and in the manner indicated above.
M.B.A/441/T Order accordingly.