I.T.A. No. 4258/LB of 2001, decided on 11th March, 2002. Versus I.T.A. No. 4258/LB of 2001, decided on 11th March, 2002.
ORDER
SYED NADEEM SAQLAIN (JUDICIAL MEMBER). ‑‑‑ Titled appeal for the assessment year 1999‑2000 at the instance of the assessee/appellant has been directed against the order, dated 13‑8‑2001 passed under section 66‑A of the Income Tax Ordinance, 1979 by the learned IAC.
2. Briefly stated the facts of the case are that assessment record was called for by the IAC and examined which revealed that return for the assessment year 1999‑2000 filed under USAS declaring income at Rs.1,99,000 and the assessment was finalized under section 59(1) of the Income Tax Ordinance, 1979. It was also observed by the learned revisional authority that the assessment for the assessment year 1996‑97 was finalized at the income of Rs.2,75,000 under section 62 of the Income Tax Ordinance, 1979 by an agreed assessment. The learned IAC was of the view that as per terms and conditions of USAS, the, case of the assessee qualified under Scheme if the declared income is higher than the last assessed income as per C.B.R. Circular No.18 of 1999, dated 11‑9‑1999. The learned IAC came to the conclusion that since the assessee did not comply with the above-said conditions and the declared income for the assessment year 1999‑2000 at Rs.1,99,000 being less than the last assessed income of Rs. 2,75,000 .for the assessment year 1996‑97, the assessment framed under section 59(1) was erroneous as well as prejudicial to the interest of Revenue. The learned IAC while invoking his revisional jurisdiction under section 66‑A of the Income Tax Ordinance, 1979 cancelled the assessment framed by the Assessing Officer and directed to make the de novo assessment. Feeling aggrieved by the above treatment the assessee is in appeal before us.
3. Both the parties have been heard and relevant orders perused. The learned A. R. has vehemently argued the case and contended that the learned IAC erred in law while re‑opening the assessee's case for the assessment year 1999‑2000 by wrongly interpreting C.B.R. Circular No.18 of 1999, dated 11‑9‑1999. The same is reproduced as under:
The income declared for Assessment Year 1999‑2000 is not less than the income last declared or assessed whichever is higher.
4. He elaborated that assessment for the assessment year 1996‑97 was completed on 19‑5‑1999 while thereafter assessment for the assessment year 1998‑99 which was deemed to be completed under section 59(4) on 30‑6‑1999. He submitted that since no formal assessment order was passed with regard to assessment for the assessment year 1998‑99, the assessment was deemed to be completed by operation of law on 30‑6‑1999 under section 59(4) of the Income Tax Ordinance, 1979. In this regard he took us through explanation of section 59(4) of the Income Tax Ordinance, 1979 which reads as under:
Subject to section 59(4) this acknowledgment shall be deemed to be an assessment order and a demand notice.
5. In support of his contention he also relied upon a judgment of the Tribunal, dated 7‑7‑2001 passed in I.T.A. No.2477/LB of 2001 (2002 PTD (Trib.) 167) (Assessment year 1999‑2000) and submitted that words "last declared or assessed" as used in SAS for 1999‑2000 does not mean last ever highest assessed in a number of years. It basically means "latest declared or latest assessed income in the preceding assessment year. In the case referred to by the learned A. R., the facts were somewhat similar to the assessee's case which is the subject‑matter of the appeal before us. In the supra case the assessee declared income of Rs.2,00,000 and filed his return under S.A.S. for the assessment year 1999‑2000. The return was neither selected for total audit nor a formal order was framed and assessment was completed under section 59(1). In the said case the learned IAC relied upon Circular No.18 of 1999 considered the income at Rs.2,00,000 to be less to the last highest assessed income of Rs.8,00,000 which was for 1996‑97. My learned brother, Judicial. Member, observed in tae above-said judgment that: "last declared or assessed whichever is higher, in the present case therefore, would mean relevant to assessment year 1998‑99. In case assessment for the assessment year 1998‑99 has not been finalized for any reason, the assessed income of 1997‑98 shall be the base if the same is higher from the declared income of 1998‑99."
6. The learned A.R. stressed that in the light of ratio settled in the supra judgment delivered by the Tribunal the comparison of the declared income for the assessment year 1999‑2000 was to be made with the preceding assessment year 1998‑99 in which assessment stood completed on 30‑6‑1998 by operation of law under section 59(4) of the Income Tax Ordinance, 1979 .and income declared at Rs.2,75,000 for the assessment year 1996‑97 could not be made basis ,for invoking section 66‑A of the Income Tax Ordinance, 1979. The learned D.R. has opposed the arguments advanced by the learned A. R.
7. After hearing the rival arguments advanced by both the parties, we find ourselves in full agreement with the assertion made by they learned A.R. at the bar. We have ‑no hesitation in observing that the learned IAC misinterpreted the Circular No.18 of 1999 since in the assessee's case the assessment in the preceding assessment year had already been completed‑on 30‑6‑1998 by virtue of section 59(4) of the Income Tax Ordinance, 1979, hence income declared for the assessment year 1998‑99 to be treated "income last declared" as envisaged by. Circular No.18 of 1999 dated 11‑9‑1999 and, not the highest income ever declared by the assessee in the number of years even preceding to the last assessment year. Our view also stands substantiated by the judgment of the Tribunal passed in ITA No. 2477/LB/2001, dated 7‑7‑2001 (2002 PTD (Trib.) 267).
8. For the foregoing reasons the order of the learned IAC passed under section 66‑A is hereby vacated. Appeal of the assessee succeeds in, the manner indicated above.
C.M.A./M.A.K./379/Tax(Trib.)
Appeal accepted.