2016 PLP (Trib (PTD)

CH. ANWAAR UL HAQ (JUDICIAL MEMBER).

The titled appeal has been preferred at the instance of Revenue against order dated 16.01.2013, passed by the learned CIR(A), Multan (camp at Sialkot).

2. Brief facts leading to disposal of present appeal are that the taxpayer in this case is an individual derives income by running a cloth shop. Return for the tax year 2007 under section 113A of the Ordinance, was filed declaring total turnover from business at Rs.36,50,000/-. On receipt of a complaint, the assessing authority sought permission under section 176 from concerned Commissioner and in order to probe the allegation leveled in the show cause notice, notice under section 176 was issued requisitioning certain documents/information/details. The taxpayer responded to the notice and filed the requisite documents/information. On perusal, it was observed by the assessing authority that the taxpayer is maintaining bank a/c with Faysal Bank and there were credit entries appearing in the account at Rs 3,77,81,654/- which were more than the figure of sales declared at Rs.36,50,000/-. Accordingly the assessing authority issued statutory notice under section 122(9) for amendment of assessment. The taxpayer duly responded to the notice and filed his explanation but the same found unsatisfactory by the assessing authority Consequently, the amended order under section 122(1)/(5) was passed whereby difference of credit entries appearing in the bank vis-a-vis turnover declared amounting to Rs.51,61,433/- was taken as sale proceeds during the year which was subjected to 15% GP rate. As a result, income for the year was computed at Rs.36,13,003/-. On appeal filed, the learned CIR(A) annulled the impugned order after observing as under:-- "

7. Under these facts and circumstances of the case, it is held that the DCIR was not justified to amend the already completed assessment as there was no definite information available in the possession of the Department because credit entries were fully explained by the appellant, it is observed that the treatment of the DCIR is against the judgments of the higher appellate fora cited supra. It was desirable that when the appellant fully explained his position regarding credit entries/balance entries, the DCIR should have dropped the proceedings for amendment of assessment under sections 122(1)/122(5) of the Ordinance instead of treating the same as consumed sales, which is not approved of. In view of the above, the impugned order is hereby annulled".

3. The Revenue has assailed the order of the learned CIR(A) as contrary to law and supported the order passed by the assessing officer. On the other hand, the learned AR taken a preliminary objection that admittedly during the year the taxpayer has filed statement of final taxation under section 113A of the Ordinance and the said statement could neither be treated as return under section 114 nor the same be treated as deemed assessment order under section 120 of the Ordinance. Therefore, the provisions of section 122 cannot be invoked in the present case. He further supported the order of the learned CIR(A).

4. I have heard both the representatives and also perused the available record. Admittedly, the taxpayer filed statement whereby he opted to pay turnover tax under section 113A instead of filing regular return of income under section

114. Here, I deem it appropriate to reproduce the relevant portion of Section 113A as it was prior of its substitution through Finance Act, 2013:-- "1134. Tax on income of certain persons:

(1) Subject to this Ordinance, where a retailer being an individual or an association persons has turnover upto rupees five million for any tax year, such person may opt for payment of tax as a final tax at the rates specified in Division IA of Part I of the First Schedule. Perusal of said section 113A of the Ordinance further reveals that where a retailer being an individual or an association of person has turnover upto rupees five millions for any tax year, such person may opt for payment of tax as a final tax at the rates specified in Division-IA of Part-I of the 5th Schedule to the Ordinance. The tax so paid under this section shall be a final tax on the income arising from the turnover as specified in subsection (1). The retailer shall not be entitled to claim any adjustment of withholding tax collected under any head during the year.

5. By furnishing statement and opting to pay turnover tax under section 113A, the taxpayer duly fulfilled its legal obligation for the year under appeal and it is no more required to file return under section 114 of the Ordinance as its income is subject to final taxation under section 113A. Therefore, there was no justification for the department to subsequently issue notices and make amendment of assessment in the presence of statement filed under section 113A, under section 122(1)/(5) of the Income Tax Ordinance, 2001. Since, the very assumption of jurisdiction by the assessing authority is fatal and nullity in the eye of law, the subsequent superstructure built thereupon is bound to be fall down. Therefore, the notices issued and subsequent proceedings initiated and orders passed is liable to be declared null and void and I order so.

6. Departmental appeal FAILS. HBT/54/Tax(Trib.) Order accordingly.