2005 PLP (Trib (PTD)

Later on, re‑assessment proceedings in this case were initiated by issuing a notice under section 61 on 26‑3‑2002. In response to the said notice, the AR vide his letter Ref: No. H&C/329/2002, dated 16‑4‑2002 that an appeal against the order under section 66A has been filed before the learned ITAT and the case should be kept in abeyance till the decision by the learned ITAT. But the request of the learned AR in this regard was rejected and he was asked to, associate in the assessment proceedings which were not done and an ex parte assessment order was passed for both the years after obtaining a report from the Inspector of the Circle regarding the scale of the assessee's business and due to non‑cooperative attitude of the assessee, the ex parte assessments were framed and the income of the assessee was completed as under:‑‑ Net income for 1998‑99 Rs.2,00,000 Net income for 1999‑2000 Rs.2,10,000 In his arguments before us, the learned AR of the assessee submitted that assessee had filed his first return of income in the then Circle `C' of Zone‑A, for the assessment year, 1986‑87 and subsequent assessments were framed in the same Circle up‑till the assessment years 1993‑94, 1994‑95 and 1995‑96 which were framed through a combined order under section 62 of the Income Tax Ordinance. According to the learned AR, later the jurisdiction over the case of the assessee was transferred to Circle‑17, Zone‑A, Lahore and the assessment was framed under section 59(1) for the assessment year, 1996‑97 on 31‑12‑1997. The learned AR further submitted that the jurisdiction over the case of the assessee was later transferred to Circle‑03, Zone‑A, Lahore which assessed the case of the assessee under section 59(1) for assessment years, 1998‑99 and 1999‑2000. At this point of time, the jurisdiction was again changed to Circle‑16, Zone‑A, Lahore and the IAC invoked section 66A for both the assessment years, 1998‑99 and 1999‑2000 on 14‑1‑2002 with the following observations:‑‑ "(1) That you have been conducting business at 155‑A, Circular. Road, Lahore since long which falls under the territorial jurisdiction of Circle‑16; Zone‑A, Lahore. (2) You have yourself filed return of total income for the assessment year, 2000‑2001 in Circle‑16, Zone‑A, Lahore declaring net income at Rs.2,25,000 which has been accepted under Self- Assessment Scheme. (3) For previous years i.e. assessment years, 1,998‑99 to 1999‑2000 you have filed return in Circle‑03, Zone‑A, Lahore under Self Assessment Scheme and had been accepted at returned income. (4) You have filed returns for these years in Circle‑03, and Assessing Officer passed order under section 59 without jurisdiction and due to this reason, provisions of section 66A are attracted in your case for the assessment years, 1998‑99 to 1999‑2000". It was argued by the learned AR before us that the assessee had filed his returns of income for assessment years, 1998‑99 and 1999‑2000 in Circle‑03, Zone‑A, as he was not aware of the fact that jurisdiction had again been transferred to Circle‑16, Zone‑A, Lahore as pointed out in the show‑cause notice under section 66A by the learned IAC. It was pointed out by the learned AR that there was no element of tote assessment framed under section 59(1) for both the assessment years as erroneous, and prejudicial to the interest of Revenue because the same was not highlighted by the learned IAC in his show‑cause notice under section 66A. Furthermore, the AR contended that in case these returns had been filed with Circle‑16, Zone‑A, then there could have been no justification for invoking action under section 66A as done by the learned. IAC. The AR further submitted that all the legal requirements of the SAS for the assessment years 1998‑99 and 1999‑2000 had been met by the assessee when he discharged his legal obligation of filing the income‑tax returns for the two years. According to the AR, the assessee had acquired a vested right for being eligible for the SAS which could not be taken away by the sheer inadequacy of the working of the income‑tax department. To support his contention, the learned AR drew our attention to a reported case viz. 2003 PTD 1795 which was according to him had settled a similar issue by the Hon'ble Lahore High Court, Lahore. It would be very educative to reproduce the gist of the Hon'ble Lahore High Court in the case which is as under:‑‑ "Once a subject responds to an offer made by the State/Revenue then it unbecoming of a State to fish out ways and means to retrieve that concession. Self‑Assessment Scheme, in our country are in no way a bounty of the State. Almost invariably these Schemes are available only to those who make payment of more tax than the one paid in the previous year. In that manner an assessee in fact purchases the concession. Therefore, its retrieval on far‑fetched technicalities or vague allegations of concealment is not only unjustified but unfortunate as well. Even where such retrieval is legally justified, the Revenue ought to exercise restraint so that the assessee may not lose trust in it. No one can possibly hold a brief for a cheater and tax evader. However, unilateral withdrawal of a concession by the Revenue against an assessee who had paid fox it appears unjustified as the assessee/subject had performed his part of the contract by making more payment of tax. The provisions in Self- Assessment Scheme permitting detailed scrutiny of a certain percentage of cases, therefore, need to be resorted to as sparingly as possible. This is the only way that the confidence of the assessee in the Revenue and the credibility of the system can be restored. In the case in hand the Revenue once having accepted that the assessee was entitled to the concession on fulfilling of legal requirements; the same could to be withdrawn for the only reason that the return had been filed in the previous Circle. Therefore, this petition is allowed and the proceedings initiated, for framing of regular assessments in respect of the three 'years involved are declared to be, without lawful authority. In view of the judgment of the Hon'ble Lahore High Court, we are of the considered view that the case of the assessee is on all fours with the above cited judgment in view of which the orders under section 66A for the two assessment years 1998‑99 and 1999‑2000 are cancelled and the Assessing Officer is directed to accept the returns under section 59(1) for the assessment year 1998‑99 and 1999‑2000. The appeals succeed in the manner as discussed above. C.M.A./303/Tax (Trib.) Appeals accepted.