2004 PLP (Trib (PTD)

The learned AR at the very beginning of his arguments challenged the setting aide of the assessment for de novo proceedings as the learned first appellate authority by duly noticing the legal flaws has yet simply set aside which is not legal and quoted which favour the following reported judgments: (I) (2003) 87 Tax 129 (Trib.); (II) 2003 PTD (Trib.) 242 and (III)Vol. 5 No. 10 Tax Forum 27 By drawing force from the judgments ibid the Learned AR argued that impugned assessment shall have been cancelled. Secondly the learned AR took the plea that creditors/lenders when have filed their duly sworn in affidavits then the appellant/assessee has completely discharged his onus and such loans shall have been accepted. Thereafter it is the duty of the lenders to prove the money in their hands before the Assessing Officer because such lenders of money are liable to be burdened with an addition of kind and not the appellant/ assessee. In support of this argument the learned AR favourably quoted ` the following judgments: (I) 1997 PTD.(Trib.) 2344; (II) 1997 PTD 1184 and (iii) 1990 PTD . (Trib.)

774. Thirdly the learned AR pleaded, before us that the income‑tax return duly accompanied by wealth tax return was filed to avail the Self‑Assessment Scheme. The figures of the assets appearing in the previous years were also available for comparison with the wealth tax return for this year, wherein the cost of construction of house was declared but despite this, the assessment under section 59A was completed on 13‑6‑1997. The filing of wealth tax return alongwith the Income Tax Returns was, a prerequisite for availing the benefit of Self‑Assessment Scheme. The Assessing Officer, instead of scrutinizing the material facts regarding construction of house available in the wealth tax return, accepted the income‑tax return without mentioning as to the service of such order and subsequently invoked the provisions of section 65 due to the same facts which were already available on record and were considered prior to an order under section 59A. So forming two different opinion in respect of the same available facts on record is not legal. The learned AR also argued that Assessing Officer has not complied with the provisions of Self‑Assessment Scheme wherein it has been provided that case of concealment shall not be processed in Self‑Assessment Scheme but should be set apart for proceedings under normal law. With these submissions the learned AR concluded his arguments on this issue on initiating of proceedings under section 65 and thereafter passing of order under section 65 as illegal and not maintainable. In support of his these arguments the learned AR referred reported judgment with citation as (2003) 88 Tax 245 (Karachi High Court). Fourthly, the leaned AR pleaded before us that there was "definite information" with the Assessing Officer as firstly the Assessing Officer noticed that there is a difference of figures as given in the wealth statement and the wealth tax return which was due to non‑disclosure of the liability of Rs.5,00,000 received as loan from five different persons i.e. Rs.1,00,000 from each such lender, which needed to be probed but later on the declared cost of construction of house was taken as understated. So it was by further reasoning and enquiries that later on by bringing more information, on record that such 65 proceedings, took a quite different shape than what was initially stated in the opening sentences of the assessment order. In support of these submissions the learned AR referred to the following reported judgments that in such circumstances proceedings under section 65 cannot be legal:‑‑‑ (1) 1993 SCMR 1108 = 1993. PTD 1108 and (II) (2003) 88 Tax 158 (Trib.). Fifthly the learned AR pleaded that on the basis of parallel cases, the addition under section 13(d) by invoking the provision of S.65 is not legal and. supported his this argument by referring to the following reported case‑law::‑‑‑ (I) 2003 PTD (Trib.) 714; (II) 1989 PTD 311 and (III) Vol. 6 No. 12 Tax Forum 25 On the other hand .the learned DR as usual without the assessment record has pleaded that the impugned order is quite fair and proper but when his attention was drawn that no findings has been given in respect of initiating of proceedings under section 65 " and also the necessity of framing the assessment under section 59‑A on 13‑7‑1997 and also on not observing the provisions of relevant Self‑Assessment Scheme making the Assessing Officer duty bound to set apart the cases of concealment there was no explanation for all this at the assessment stage. The learned DR was not able to quote any case‑law demolishing what has been submitted before us by the learned AR alongwith supporting case‑law. We have heard the arguments and have perused the available record. Prior to dilating the issues, it would be better to reproduce in this order the, provisions of section 59A as under: (1) "If the Deputy Commissioner is satisfied without requiring the presence of the assessee or the production by him of any evidence that a return furnished under section 55 is correct and complete, he shall, by an order in writing assess the total income of the assessee and determine the tax payable on the basis of such return. (2) The provisions of subsection (3) of section 59 shall apply to an assessment and determination under this section as they apply to an assessment and determination under that section." It would be quite pertinent to mention here that the Assessing Officer has passed the order under section 59A which the legislature has brought in the statute book for accepting the return where the Assessing Officer is satisfied without requiring the presence of the assessee or the production of any evidence that return under section 55 is correct and complete, so the same is to be accepted by a proper order in writing. As is evident, from the language of section 59A ibid that the Assessing Officer by, passing an order under section 59‑A has accepted in letter and spirit whatever information filed by the assessee is 100% correct thus without requiring, the collecting of further information or probe, so the Assessing Officer now has been bound by his own conduct not to take a stand which is contrary to the earlier one when order under section 59A was passed. Prior to passing of order under section 59‑A the Assessing A Officer Was duty bound to firstly make it sure that without requiring further details/evidence the order for assessing the income under section 59 could be made, and secondly to follow the provisions of Self Assessment Scheme wherein it is clearly written in para. 2(i) of the broad based Self‑Assessment Scheme of Income Tax for assessneent year, 1996‑97 in Circular No.4 of 1996, dated 1st July, 1996, that no concealment of income cases shall be processed under Self‑Assessment Scheme. Here the Assessing Officer by subsequent finds is drawing a conclusion that it is a case of concealment so section 65 is to be invoked. The Honourable Karachi High Court in the case‑law with citation (2003) 88 Tax 245 (Trib.) has not upheld action, of the Assessing Officer in such a circumstances, this case‑law is on all fours to the issues before us. The reopening is also devoid of any definite information in the light of the verdict of the Honourable Apex Courts in the reported judgment with citation as (1993) 68 Tax 1 (S.C. PA.). The Assessing Officer has totally flouted the same principles while proceedings under section 65 in the instant case so the initiating of proceedings under section 65 and thereafter passing of order under section 65 are illegal and void ab initio, therefore, all the subsequent steps taken by the Assessing Officer on the basis of such proceedings by invoking the proceedings under section 65 are also illegal, therefore, on the issues which have emanated from the illegal action are also illegal which do not require any type of findings by this Tribunal. So keeping in view the discussion supra we do not have any hesitation in declaring as illegal the initiating of proceedings under section 65 and also the passing of order under section 65 as void ab inito which is not enforceable in law, so the assessment framed under sections 65/62 is hereby cancelled with the direction that declared income be accepted under Self‑Assessment Scheme. As a result the appeal succeeds in the manner as indicated above. C.M.A./155/Tax (Trib.) Appeal accepted.