2005 PLP (Trib (PTD)

JAVED TAHIR BUTT, ACCOUNTANT MEMBER.

This appeal has been filed by the assessee assailing the order passed under section 66A of the Income Tax Ordinance, 1979 by the Inspecting Additional Commissioner of Income Tax.

2. Facts briefly stated are that the assessment in this case was framed under section 59(1) of Income Tax Ordinance., 1979 on 30-5-2002. The IAC examined the assessment record and observed that the computation chart appended with the return reveals difference of Rs.15,94,000 on the credit and debit side of the trading account and inferred that assessee has concealed the sales which resulted in suppression of income and, therefore, the assessment finalized under section 59(1) is erroneous insofar as prejudicial to the interest of Revenue. A show-cause notice under section 66A of the Income Tax Ordinance, 1979 was issued on 8-7-2002 for compliance on 15-7-2002. The assessee's reply was received wherein it was stated that the purchases have inadvertently been shown at Rs.3,583,000 as against Rs.1,988,000 and this happened due to rush of work at the time of filing of return and that alleged concealment of sales never occurred as the incorporated figure of purchase at Rs.3,582,000 is a clerical mistake. The IAC rejected the explanation of the assessee being unsatisfactory and. assessment finalized under section 59(1) for the assessment year 2001-2002 was cancelled under section 66A of the Income Tax Ordinance, 1979.

3. We have heard both sides and have also perused the relevant record available on file. The AR of the assessee argued that order under section 66A is illegal and not maintainable. The AR of the assessee submitted that assessment in this case for the assessment year 2001-2002 was completed under section 59(1) of the Income Tax Ordinance, 1979 on 30-5-2002 and a show-cause notice under section 66A was issued on 8-7-2002 requiring compliance on 15-7-2002 and that with the promulgation of S.R.O. No.381(I), dated 15-6-2002, section 65A has been repealed w.e.f. 1-7-2002.

4. The Income Tax Ordinance, 2001 was promulgated and came into force on 1-7-2002 vide 8.R.O. quoted above. Under the new Ordinance amendment of assessments can be made under section 122 of Income Tax Ordinance, 2001 which is reproduced as under:- "(122). Amendments of Assessments

(1) Subject to this section, the Commissioner may amend an assessment order treated as issued under section 121, (or issued under sections 59, 59A, 62, 63 or 65 of the repealed Ordinance,) by making such alterations or additions as the Commissioner considers necessary to ensure that the taxpayers is liable for the correct amount of.tax for the tax year to which the assessment order relates. (2) An assessment order shall only be amended under subsection (1) within five years after the Commissioner has issued or is treated as having issued the basement order on the taxpayer."

5. The AR of the assessee contended that the section 66A has been repealed vide S.R.O. 381(1), dated 15-6-2002 and that no savings clause has been provided under section 239 of the Income Tax Ordinance, 2001 and that action if at all is to be taken for the assessment year 2000-2001, the same could have been taken under section 122 of the Income Tax Ordinance, 2001 and not under section 66A of the Income Tax Ordinance, 1979 and issuance of notice under section 66A of the repealed Income Tax Ordinance, 1979 is illegal.

6. We have given conscious consideration to the averments submitted by the AR of the assessee as well as that of the departmental representative. The submissions made by the AR of the assessee carry weight. After the promulgation of the Income Tax Ordinance, 2001 w.e.f 1-7-2002 which gives powers of amendment to the Commissioner of Income Tax under section 122 of Income Tax Ordinance, 2001, the action under section 66A of Income Tax Ordinance, 1979 on 8-7-2002 in case of assessment finalized under section 59(1) of the repealed Ordinance, 1979 is not legally tenable in the absence of saving clause. Therefore, without going into the merits of the case, the issuance of notice under section 66A of the repealed Income Tax Ordinance, 1979 on 8-7-2002 is without jurisdiction. The order framed by the IAC under section 66A of the Income Tax Ordinance, 1979 is held to be illegal and is, therefore, cancelled.

7. The appeal of the assessee succeeds. H.B.T./434/Tax (Trib.) Appeal accepted.