2010 PLP (Trib (PTD)

KHAWAJA FAROOQ SAEED, CHAIRPERSON.

This appeal on behalf of the taxpayer is against selection of the case for audit under section 177, assessment under section 121 and additions made in purchases, wastage and salaries. The A.R. of the assessee vehemently challenged the selection. His main emphasis is on the argument that the selection has been held to be as illegal in the famous case of Mohsin Raza v. Chairman, F.B.R. etc. reported as 2009 PTD 1507. Further that the procedure provided in the case of Fauji Terminal & Distribution Co. Ltd, Karachi v. Additional Commissioner/Taxation Officer-A, Audit Division, Karachi and 2 others reported as 2006 PTD 734 has also not been observed in letter and spirit. On the other hand, the case of the department is that during the audit proceedings the assessee was found having availed bank over draft facility of Rs.50,00,

000. The assessee was asked to file the wealth statement which he failed. There was, therefore, a definite information in terms of the over draft liability which he availed The querries of the assessing officer in that regard and on others were not replied. The case, therefore, has rightly been processed in view of the provisions of section 177 and the subsequent continuation under section 122 is valid and legal; hence needs no interference. Record perused. The AR as well as DR both have been heard. This court in a number of judgments following the judgment of the High Court Karachi in the case reported as 2006 PTD 734 Fauji Terminal & Distribution Co. Ltd., Karachi v. Additional Commissioner/ Taxation Officer-A, Audit Division. Karachi and 2 others has already dilated upon the issue in a recent judgment bearing. I.T.A. No.346/LB of 2010 CIR (Legal Division), RTO, Lahore v. Dr. Yasmin Rashid, Lab-146/1, Shadman Colony, Jail Road, Lahore dated 20-4-2010. It has been observed therein that unless the assessment which is a deemed assessment in terms of section 122 is cancelled there cannot be another assessment in the presence thereof. The learned DR appears to be right in saying that in this case definite information was there. However, there is nothing on record to prove that the jurisdiction of section 122(5) was invoked in continuation thereof and the finalized deemed assessment was cancelled for the purpose of modification etc. There obviously cannot be another assessment in the presence of one in existence. The deemed assessment is not parallel to the return of income. It has attained finality having the sanction of law. The audit proceedings are a process to reach to a conclusion from where the jurisdiction under section 122(5) and then an assessment within the said provision can be modified. All the assessments have to be under section 122 and before embarking upon such proceedings, the requirements of section 122(5) are to be fulfilled in letter and spirit. The selection of audit in itself does not mean an assessment or modification of assessment. As already mentioned it is only a route to reach to a stage where the revenue department has reasons to believe that the finalized assessment was either under assessed or assessed at to a low rate etc. as has clearly been provided in the referred provision of section 122(5). The assessment can be reversed under section 122(5A) also but there again certain separate parameters have been provided. One, therefore, can modify his earlier assessment after holding that the same is either under-assessed on the basis of definite information under section 122(5) or is erroneous and prejudicial to the interest of revenue under section 122(5 A). In this regard judgments referred above provide full guideline. As a result this assessment is not sustainable in the eyes of law and the same is cancelled. The appeal, therefore, is decided in the manner to the extent mentioned above. C.M.A./65/Tax(Trib.) Appeal accepted.