Messrs MUSHTAQ COLD STORAGE, LAHORE vs INCOME-TAX/WEALTH TAX

' This Constitutional petition was admitted for regular hearing on 29-10-2001. The admission note reads as under:-- "It is contended that case of petitioner falls within the ambit of section 59(3) of the Income Tax Ordinance, 1979 and the provision of rule 7(b) of the Third Schedule of the Income Tax Ordinance, 1979 was not attracted in the circumstances of the case. Point raised needs consideration. Admit.

Notice."

2. The petitioner as an assessee of the Income Tax Department is operating a cold storage at Ravi Bund Road, Lahore. For the assessm ent year 2000-2001, a return was filed under Self-Assessment Scheme declaring income at Rs,15,10,000 on total receipts of Rs,1,34,43,200.

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3. The revenue through income Tax Officer, Circle-19, Zone-C, Lahore on 17-4-2001 issued a show- cause notice expressing the intention to refuse concession of Self-Assessment Scheme to the petitioner on the sole ground that the assessee sold an old car for a sum of Rs,1,30,000 while the W.D.V. Of that car as on 30-6-1999 was shown at Rs,39,136. According to the Revenue Officer the assessee earned a profit of Rs,90,864 which he failed to offer for tax. Although no express mention of a provision of the section was made in the notice, yet presumably it was issued under para. 4(j) of the Self-Assessm ent Scheme notified for the year, 2000-2001 through Circular 21 of 2000 on 11-9- 2000. That clause detailed returns which were not eligible to avail the concession of Self- Assessm ent Scheme for the year 2000-2001.

4. In reply the petitioner submitted that having disclosed the sale price as well as the W.D.V. Of the vehicle in question there was no concealment on his part and that after having been confronted through the aforesaid notice he immediately deposited the difference of tax after treating the aforesaid sum as income for the year under consideration. Therefore, it was requested that instead of refusing the concession of Self-Assessment Scheme the Assessing Officer ought to have made an adjustment under section 59(3) of the late Income Tax Ordinance read with the provisions of 3rd Schedule to that Ordinance. On refusal of the Department the petitioner has approached this Court in Constitutional jurisdiction..

5. Heard the learned counsel for the parties. Learned counsel for the respondent-Revenue relies upon a judgment of the Hon'ble Supreme Court of Pakistan In re: Messrs Punjab Beverage Company (Pvt.) Limited v. Central Board of Revenue and 4 others (2001 PTD 3929) to contend that it is a disputed question of fact and, therefore, the High Court should not involve itself in a thorough probe or investigation. However, the submission made against maintainability of the petition is not convincing. As rightly pointed out by the learned counsel for the petitioner there is no disputed fact which requires any investigation by this Court. The issue if on having declared the sale price of the vehicle in question as well as its Written Down Value the case of the assessee was covered by the provisions of section 59(3) of the late Ordinance does not require any inquiry or investigation.

Subsection (3) of section 59 provided that in cases of returns filed under Self-Assessment Scheme the Assessing Officer will determine the total income and the tax payable under subsection (1) and may make such adjustments as may be necessary including those warranted under section 34 to 38, 50, 53 or 54, the rules made under section 165, the First Schedule and the Third Schedule. These provisions were clearly attracted in the facts in hand. The purpose of these provisions in the late Ordinance was to supplement the Self Assessment Scheme so that in matters of minor discrepancies on the part of the assesses an Assessing Officer could proceed to complete the assessm ents without making resort to correspondence or issuance of notices to the assessee which were germane only to regular assessment proceedings under section 62 of the late Ordinance.

6. The assessee in this case having made a complete declaration of not only the sale price of the vehicle in question but also its W.D.V. Could not be said to have been guilty of concealment. It is correct that the computation chart attached with the return was not happily prepared yet all necessary details having been provided therein, the allegation of concealment could not be accepted on its face value. All the moreso, when after being confronted the assessee immediately deposited the difference between the tax already paid and the one computed on taking the profit of vehicle as part of income.

7. In a number of recent judgments this Court stressed the need on the part of the Assessing Officers to be objective in their approach particularly in Self-Assessment Scheme and to ignore an honest omission in the return if it is not calculated to deceive the ReVenue. The assessee in the case in hand did not do anything which could be said to have amounted to concealment. The provisions of section 59(3).In fact cast a duty upon an Assessing Officer to make adjustments in cases covered by the provisions of the Ordinance detailed therein. Schedule 3 of the late Ordinance provided for computation of depreciation allowance. A clear reference was made to this Schedule in subsection (3) of section 59. Therefore, the Assessing Officer was required under the law to make adjustment instead of proceeding to disqualify the return for the purpose of Self- Assessm ent Scheme only on that score. The issuance of the impugned notices, therefore, being contrary to his duty as cast upon him under subsection (3) of section 59 of the late Ordinance, it shall be set at naught.

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