I.T.A. No.1582/LB of 2002, decided on 20th January, 2007. Versus I.T.A. No.1582/LB of 2002, decided on 20th January, 2007.

ORDER

This appeal by assessee pertaining to assessment year 1998-99, arises out of order passed by the C.I.T.(A), Zone-IV, Lahore, dated 31-1-2002.

2. It is the appellant's contention that the C.I.T.(A) was not justified to hold the action of the A.C.I.T. for processing the case under normal law, in the absence of fulfilment of requirement of paras.4 and 5 of the Circular No.9 of 1998. It is contended in the ground of appeal that the assessee's return having qualified requirement of S.A.S., issuance of notice under section 61, without pointing out any basis for the same, is illegal, arbitrary and without jurisdiction. It submitted that the addition made under section 13(1)(aa) was not based on any material evidence but on presumption as the assessee had running capital of about Rs.15,00,000 during the year for business transaction from which the transaction of Rs.850,000 can easily be made.

3. The learned A.R. strongly challenged the processing of the case under normal law. It is submitted by the A.R. that the assessee filed return for 1998-99 under S.A.S. and the return was neither selected for Special Audit, as per the provisions of clause (5) of Circular No.9 of 1998-99 dated 21-7-1998, nor was there any default in compliance of any short document notice. It is contended by the A.R. that the case, therefore, could 'not be assessed under normal law. It is submitted by the A.R. that the department had only one action i.e. under sections 65/66A and for that purpose the assessment under section 59(1) should first be completed. It is argued by the learned A.R. that the learned C.I.T.(A) had summarily upheld the processing of the case under normal law without rebutting the legal arguments made before him.

4. The learned A.R. relied on the judgment of the Hon'ble ITAT reported as 1990 PTD (Trib.) 296; wherein it was held that:

"Where a return is qualified to be accepted under S.A.S. the Assessing Officer is not entitled to make any enquiry in regard to that return---in such a case, proper procedure for the Assessing Officer is to accept the return and pass an 'order before the 30th day of the June of the financial year next following the relevant assessment year in case the Assessing Officer had some material or definite information (regarding under statement of the cost of construction), he could re-open the assessee's case under section 65 of the Ordinance but he had no option but to accept the assessee's return if it was qualified to be accepted under the scheme."

5. We have heard both sides and have perused the orders passed by the Authorities below. The learned A.R. of the assessee argued before us that the proper procedure in case of return filed under the Self-Assessment Scheme was not strictly followed by the Assessing Officer who should have accepted the return firstly under section 59(1) and then reopened it in case of some element of concealment of income was detected by him. In support of his contention, the learned A.R. cited a number of reported cases like 1996 PTD (Trib.) 740, 1996 PTD (Trib.), 790 1988 PTD (Trib.) 16, 1983 PTD 291 and 1985 PTD (Trib.) 247 etc. in which the Honourable ITAT has held that in case of concealment of income was detected by an Assessing Officer then the return filed under Self-Assessment Scheme should be processed under section 59(1) and then it can be reopened under section 65 as the case may be. We have no hesitation in accepting the arguments of the learned A.R. and the case-laws cited (supra) which are on all fours in the present case before us. The Assessing Officer is directed to accept the return under section 59(1) of the Self-Assessment Scheme for the assessment year 1998-99. The rest of the issues need not be adjudicated by us.

6. The appeal of the assessee succeeds in the manner and to the extent as discussed above.

C.M.A./11/Tax(Trib.) Appeal accepted.