2004 PLP 171 (PTD)

(iii) Personal expenses were deliberately concealed. The reply dated 22-1-2003 failed to satisfy the R-CIT who finally set apart the Return, vide order dated 13-3-2003, for the same reasons as conveyed in the show-cause notice. This is the cause of grievances.

3. Parawise comments by R-CIT, Lahore forwarded by the respondent, deny "maladministration" and justify selection as having been made through the prescribed procedure. It contends that the complainant's shop is one of the most reputed in the town which remains open even on holidays hence evidently sales were suppressed.

4. The learned counsel for the complainant submitted that in reply dated 22-1-2003 to the show-cause notice the complainant, had explained that GP rate at 23% could not be characterized as low because in the regular assessments made under section 62 for the years 1995-96 to 1997-98 in complainant's own case, the Department itself had applied a "rate of 20%". The position was an improvement of which due appreciation should have been shown rather than characterizing it `low'. As respects quantum of turnover it was submitted that sales at two shops for the year 1997-98, at the time of regular assessments, were estimated by the Assessing Officer at Rs.3.6 (M) against the declared Rs.3.09(M) which were finally upheld by the Tribunal at Rs.3.4(M). Conceding that those sales related to only two outlets whereas in the year under consideration there were four, the learned counsel averred that the present declared turnover at Rs.12.75 (M) was a drastic improvement deserving commendation rather than condemnation. Another point which the learned counsel raised related, to `set apart' on 30-3-2003 whereas the C.B.R., in Guidelines dated 17-12-2002, had directed that the process should be completed before 10-1-2003. Referring to Lahore High Court decision reported as 2002 PTD 1895 it 'vas canvassed that selection beyond the prescribe date was not lawful.

5. Ghulam Rasool ,(D-CIT) appearing for the Revenue adopted the arguments as conveyed in parawise comments by the R-CIT. He kept on insisting that CP rate was low as compared to the identical cases and that turnover was not adequate from four outlets etc.

6. The arguments from both the sides have been considered and record examined. There appears no merit in the plea that selection was made beyond the date prescribed by the C.B.R. this date was subsequently extended up to 31-3-2003 by C.B.R. Circular dated 22-2-2003. It is pertinent that when show-cause notice was issued on 7-1-2003, the cut-off date (i.e. 10-1-2003) for set apart of Returns had not expired. Again, when final selection was made on 30-3-2003, `the time-limit stood extended upto that date. Another argument that the extension related only to the companies is also devoid of force because two separate extensions were allowed by the C.B.R. The one concerning `company cases' was issued on 15-3-2003 and the one for `non-company cases' was issued on 22-3-2003. Both of these extended the final dates to 31-3-2003. This plea thus fails.

7. A look at the Guidelines issued by the C.B.R. on 17-12-2002 reveals the following parameters for set apart in prescribed Returns:-- (i) Evident decline in income. (ii) Disparity in expenses on utilities vis-a-vis income declared. (iii) Acquisition of new assets or increase in liability of over Rs.50,000 through non-institutionalized loan. (iv) Discrepancy vis-a-vis profile prepared at the time of Survey & Registration. On the basis of these parameters, the R-CITs were to determine whether the Returns represented "revenue potential" and were further expected to be in possession of evidence, information or reason to believe" that particulars of income have been suppressed. None of the above criterions was specified when setting apart complainant's Return, thus repeating the mistake committed in the preceding year, as identified by the C.B.R. in Circular dated 17-12-2002 (ibid), "this time it must be ensured that the selection is based on material evidence" to avoid selection on frivolous grounds. "Maladministration" is thus glaring as the Guidelines prescribed by the C.B.R. were not faithfully adhered. It is, therefore, recommended that:-- (i) Order for set apart dated 30-3-2003 passed by the R-CIT Eastern Region, Lahore be withdrawn. (ii) The Return of the complainant for the assessment year 2002-2003 be accepted under SAS.

8. Compliance be reported within 30 days of the receipt of this order. C.M.A./878/FTO Order accordingly.