BIBI SAMIM FATIMA Versus ABDUL GHAFOOR

1. HAIDER ALI PIRZADA, J.‑ The petitioner is a partnership firm and is a contractor and is borne on N. T. No. 10‑18‑26.61687 with the respondent No. 1. The petitioner for the assessment year 1983.84 filed income‑tax return under the scheme and declared income of Rs. 2,81,227 and claimed immunity from detailed scrutiny in terms of circular No. 8 of 1983 but the respondent No. I by his order dated 7‑12‑1983 asked for filing Balance‑sheet, trading account and profit and loss account. The petitioner addressed a letter dated 27‑1‑1983 to the Commissioner of Income‑tax stating that it is a case of no account of contractor and only requirement in the case of contractor which has been prescribed vide circular of O.B.R. No. 1 (3) IT‑3/82‑83, dated 2‑8‑82 that where any sub‑contractor is claimed name, address and details of payment, and nature of sub‑contract is to be given with the return. In the aforesaid matter there are no sub‑contractors. The Commissioner of Income-tax vide his order dated 28‑2‑1983 rejected the submission of the petitioner and stated therein that section 59 (1) is only attracted where assessee filed trading and profit and loss account and income and expenditure account. The petitioner filed representation on 9‑3‑1983 before the respondent No. 3. The respondent No. 3 vide its order dated 27‑1‑1985 conveyed its inability to accede to the request of the petitioner. The petitioner being aggrieved by the above actions of the respondents has filed this present petition

2. Mr. Rehanul Hassan Naqvi, the learned counsel for the petitioner has contended that the scheme purported to have been made under section 59 of the Income‑tax Ordinance, 1979 is binding and the case of the petitioner falls within the category of the tax‑payers who are immune from detailed scrutiny.

3. On the other hand, Mr. Shaikh Raider, the learned counsel for the Department has submitted that the petitioner was not qualified under the scheme its case was to be scrutinized in detailed scrutiny. In support Of his submission, he cited the following cases :‑‑

(1) 30 I T R 163.

(2) (1940) 8 I T R 442

(3) (1963) 48 I T R 1

(4) 1975 P T D 50.

5. Unreported judgment of a Division Bench of this Court dated 23‑10‑1984 in the case of Burhan Engineering Company Ltd. v. The Income‑tax and others.

4. Before taking up the contentions of the learned counsel for the parties, it may be pertinent to observe that the Central Board of Revenue has been empowered to frame self‑assessment scheme in terms of section 57 read with section 59 of the Income‑tax Ordinance, 1979 for each assessment year through circular since the time of introduction in or about 1979. For the assessment year in question namely 1982‑83, the Board has issued circular No. 10 of 1982, dated 2-8‑1983 containing the self‑assessment scheme. It is pertinent to reproduce the relevant para. (b) (3) (ii) of the circular which reads as under:

5. "(i) where accounts are maintained.

6. 1 . . . . . . .

2. . . . .. .

3. . . . . . .

(ii) In case of registered firms and limited companies.

(a) Trading manufacturing accounts, profits and loss account and balance‑sheets; receipt act: expenditure statement. Whatever applicable."

7. It has been vehemently urged by Mr. Rehanul Hassan Naqvi that the petitioner is a contractor and it is a case of no account, as such the preparation of trading account and profit and loss account is concerned, it cannot be prepared. The submission of trading account and profit and loss account does not arise in the instant case.

8. On the other hand Mr. Shaikh Haider has submitted that if under a provision of statute certain benefits are allowed on fulfillment of certain conditions, the person claiming such benefits should comply which the terms and conditions so prescribed, failing which he cannot claim the benefits. His submission is that unless the petitioner furnishes copies of trading account and profit and loss account, the petitioner is not entitled to the benefits as it has not fulfilled certain condition.

9. We have seen the self‑assessment scheme a copy whereof was placed by the learned counsel for the petitioner before us at the hearing of this petition.

10. The words "wherever applicable" appearing in 2 (d) (b) (ii) of Circular 10 of 1982 means "in any case in which the word 'applicable' means 'germane' fit and relevant".

11. His submission is that the words "wherever applicable" means wherever applicable and not to all registered firms and limited companies whether they maintain accounts or not,

12. A reading of the above paragraph will show that where the assessee has filed an income‑tax return under the self‑assessment scheme and has complied with all the requirements of the scheme, the assessment is to be made by the Income‑tax Officer under the scheme. In the instant case, it e is admitted position that the petitioner does not maintain any crook of accounts.

13. Mr. Naqvi, the learned counsel for the petitioner, has vehemently urged that the Income‑tax Officer accepted all returns of the petitioner filed under the self‑assessment scheme prior to the assessment year 1982‑83. He has further submitted that all the requirement of the self‑assessment scheme were duly complied with by the petitioner. It is not disputed that the petitioner in the assessment year prior to the disputed year, also did not produce any books of accounts but was assessed under the self -assessment scheme. It is also not disputed that the objection regarding non‑production of trading account and profit and loss account, all other requirements of self‑assessment scheme were complied with.

14. The income‑tax authorities were not accepting the request of the petitioner on the sole ground that the copies of trading and profit and loss account and income and expenditure account were not furnished. We have examined in detail the scheme and hold that the income‑tax return filed by the petitioner fulfilled all the requirements of the scheme and the respondents cannot call upon the petitioner to produce the copies of trading and profit and loss account and income and expenditure account unless it is found that return tiled by the petitioner did not disclose the correct income. They could not reject the same and proceed to decide under the detailed scrutiny. This question has been considered by a Division Bench of this Court. In Commissioner of Income‑tax v. Khushi Muhammad (I. T: R. No. 314 of 1972), decided on 31‑3‑1983 followed by the Division Bench of this Court in the case of Commissioner of Income‑tax v: Manzoor Hussain Abdul Karim (1983 P T D 291) in which our learned brothers have come to the conclusion after giving cogent reasons that "if the income‑tax return filed by the assessee fulfilled all the requirements of the scheme then unless it is found by the Income-tax Officer that the return filed by the assessee did not disclose the correct income it could not reject the same and proceed to decide the same in accordance with the normal procedure prescribed under the Act." We are in respectful agreement with these decisions of our learned brothers for the reasons given by them in these decisions and as such we are of the, opinion that the actions of respondents are not in accordance with the`' provisions of the scheme. The actions were, therefore, not legal.

15. In view of this the decisions cited by the learned counsel for the Department are not applicable with the facts of this case.

16. In these circumstances we allow the petition and declare that the petitioner's case is covered by the scheme and therefore, he is liable to assessed under the self‑assessment scheme and therefore, is the impugned orders dated 7‑12‑1982, 28‑2‑1983 and 27‑1‑1985 are without lawful authority and of no legal effect. The return therefore is to be considered pending before the respondent No. 1 and the same shall be decided in accordance with law. In the peculiar circumstances the parties will bear their own costs.

17. M. B. A. Petition allowed.