2003 PLP 2484 (PTD)

Muhammad Ali Shah, D‑CIT for Respondent. The complaint has been filed by an `individual' who runs a shop for dyeing of ladies‑wear under the name and style: Karachi Dying Works. The complainant alleges arbitrary and harsh assessment under the influence of Survey Team, and without application of mind, thus mala fide resulting in 'maladministration'.

2. The facts in brief are that return for the year 2001‑2002 was filed under SAS declaring Income at Rs.106,

700. This was selected for Total Audit through computer ballot. The Assessing Officer then issued the statutory notices and finally framed the assessment, enhancing Receipt from the declared at Rs.223,000 to Rs.1.5(M) to which GP was applied at 50% and Overhead expenses deducted at Rs.109,263 (claimed Rs.116,000) to leave Total Income at Rs.690,737 against the declared Rs.106,

700. The Assessing Officer relied upon the report by Survey Team where the turnover was estimated at Rs.1.5(M) and for Form was duly signed by a son of the complainant.

3. The Respondent in parawise comments, dated 6‑11‑2002, in addition to routine objection about competence of the complaint for admission, has denied 'maladministration' contending that reliance was placed upon the Survey Form with which the complainant was duly confronted. The fairness in the dispensation has been stressed by pointing out that the Assessing Officer, at his own, allowed cost of material to the extent of 50%, despite there being no such claim by the complainant.

4. The learned counsel submitted that the complainant is an old man of more than 80 days of age hence not physically capable to carry on business on a scale to earn Receipts at Rs.5,000 per day from a petty operation of dying ladies‑wear. It was pleaded that reliance on the Survey Form was not justified because the Team quite obviously erred in making a realistic estimate of the quantum of business activity. It was pleaded that vindictiveness was evident inasmuch as in identical cases, such as the one existing at NTN 118‑03‑505 much less income was assessed even under Total Audit. The learned counsel referred to decisions reported as 2002 PTD 1828; 2002 PTD 2562, 2002 PTD 1466 and 2002 PTD 1823. It was submitted that these decisions deprecated arbitrary action and departure from the history, both of which were glaring in the complainant's case.

5. The representative of the Revenue on his turn submitted that admittedly accounts were not maintained and simply an Income and Expenditure Statement was filed on pure estimate basis. Therefore, the declared version had to be rejected whereafter the Assessing Officer had no alternative but to place reliance on the report of the Survey Team comprising of the Military Authorities, the Sales Tax officials as also those from Income‑tax. This Form is signed by one of the sons who was obviously looks after the business when the complainant became incapacitated due to old age and poor health. The D.R. emphasized on the judicious treatment of the Assessing Officer in deducting 50% of Receipts as `cost of materials' (i.e. apply GP @ 50%) which was a generous gesture considering that no such claim was made by the complainant.

6. The investigation of record reveals that preceding several returns showing gradually increasing income were accepted under SAS. In the year 1992‑93 assessment was framed under Total Audit determining income at Rs.58,270 (after relief in appeal) against the declared Rs.31,

970. Receipts in that year were finally fixed at Rs.75,000 (disclosed Rs.48,701). The 20. times jump in the estimate of Receipts, in the absence of any positive evidence about the increase in the nature and size of the business or the injection of fresh investment, appears a rather unjust dispensation. True, no protest was made against the estimate proposed in the Report of Survey Team, yet it would be shutting eyes to the reality that an establishment undertaking dyeing of assorted ladies wear, on retail basis, would have Receipt of approximately Rs.5,000 per day to aggregate at Rs.1.5(M) in a year, It also is undeniable that the complainant is an illiterate person and his sons too have rudimentary education. These surrounding circumstances cast a shadow of unreasonableness on the accuracy of the Report by the Survey Team, which primarily is the reason for arbitrariness as has crept into the assessment. It is, therefore, recommended that:‑‑ Fresh enquiry be initiated to determine the extent and volume of business where after assessment may be amended so as "to levy the correct amount of tax" as envisaged by section 122 of the Income Tax Ordinance, 2001.

7. Compliance be reported within 45 days of the receipt of this order. C.M.A./806/FTO Order accordingly.