I.T.A. No. 2304/LB of 2003, decided on 26th July, 2004. Versus I.T.A. No. 2304/LB of 2003, decided on 26th July, 2004.
ORDER
1. This appeal has been filed by the assessee-appellant for the assessment year 2001-2002 against an order recorded by the learned CIT(Appeals-Zone-B), Lahore. The assessee has agitated that the learned CIT(A) was not justified to confirm the processing of the case under normal law in spite of the fact that all the legal requirements of SAS were fulfilled.
2. Brief and relevant facts of the case leading to this appeal are that the assessee-appellant, an Individual, derives income from purchase and sale of Pipes as well as Supplies. Return for the year under consideration was filed to declare net income at Rs.4,05,000. The Assessing Officer observed that under the provisions of Circular No. 12 of 1991 the assessee-appellant was under obligation to proportionate the P&L expenses among the income declared in IT-11B as well as statement under section 143B. The Assessing Officer worked out the actual working according to Circular No. 12 as under:--
3. Net Income as per IT-11B
4. Rs.405,000
5. Supplies
6. Rs.428,080
7. Total:
8. Rs.833,080
9. P&L expenses
10. Rs.355,000
11. Expenses attributed to income declared in IT-11 B:
12. 405,000 X 355,000/833,030 = 172,600
13. Expenses attributed to statement under section 143B:
14. 428,030 X 355,000 = 182,400
15. The Assessing Officer thus noticed that the assessee was required to declare a net income in IT-11B at Rs.587,400 whereas the income was declared at Rs.405,000. The assessee was duly confronted with this deficiency. The learned AR submitted that the computation chart of income furnished along with the return reflects the proportionate business position and all the legal facts including Circular No. 12 of 1991 were duly considered. The learned AR also submitted that the expenses reflected in the computation chart in fact have been declared on a pro rata basis and that at the time of preparing the return two separate computation charts were furnished. The learned AR also filed another computation chart wherein the expenses and other results were shown separately. The Assessing Officer found the reply of the learned AR to be just an outcome of an afterthought and rejected it. The assessment was accordingly finalized under section 62 at a net income of Rs.1,327,400. The assessee being aggrieved preferred appeals before the learned first appellate authority who upheld the treatment made by the Assessing Officer.
16. In the hearing before us, the learned AR contended that the case of the appellant was neither selected for "total audit" through the computer ballot held for that purpose not it was earmarked by the RCIT for normal law proceedings. There were no other criteria to proceed under normal law except the above mentioned category of cases. It was also stated that the assessee also did not receive any notice calling for short documents. Hence, the case of the appellant completely fell within the purview of self-assessment scheme for the year, 2001-2002. The learned AR further submitted that the assessee had duly prorated the expenses and claimed only those expenses in the computation chart appended with the IT-11B which relate to other sales. Thus, there was no violation of Circular No.12 of 1991. The learned DR, on the other hand, has supported the orders of the authorities below for the reasons stated therein.
17. After hearing both the sides and. going through the orders passed by the authorities below and also after perusing the bills of telephone and electricity furnished by the assessee-appellant, we find that the treatment given by the Assessing Officer is not based on legal grounds so that the Assessing Officer was not justified in observing that on the basis of pro rata expenses the assessee was required to declare net income in IT-11B at Rs.5,87,400 whereas the income was declared by the assessee at Rs.405,000. In view of this position, we hereby order that the case of the assessee-appellant be accepted under Self-Assessment Scheme because all the legal requirements of SAS were duly fulfilled by he assessee in view of which we hereby annul the order passed by the authorities below and direct them to accept the case of the assessee under Self-Assessment Scheme.
18. With this conclusion, the appeal filed by the assessee-appellant is hereby accepted accordingly.
19. C.M.A./299/Tax (Trib.) Appeal accepted.