1997 PLP 47 (PTD)

S. 65(1)

Additional assessment

Notice under S.65(1), Income Tax Ordinance, 1979

Essentials

Assessing Officer is required to apply his mind cautiously and indicate to the assessee under S.65(1), as to on what grounds his assessment was sought to be re-opened, for re-opening of a case to some extent was a penal action and assessee had to be prepared to meet the consequences of re-opening of assessment

Where the notice did not indicate the reasons to reassess the income of the assessee, it was defective and the error was not curable. Moeen ud Din Qureshi for Petitioner. Fauzi Zafar for the Department. The petitioner through this petition under Article 199 of the Constitution seeks that the notices issued under sections 65 and 61 of Income Tax Ordinance, 1979, for the Assessment year 1991 by respondent No. 1 be declared ab initio, illegal, void and of no legal effect.

2. Briefly facts of the case giving rise to the petition are that the petitioner was assessed as individual for the Assessment year 1982-83 at National Tax Number 06-06-1452093; later on he became a partner of firm working in the name and style of "Baby-Own", which was dissolved with effect from 1-7-1989; resultantly the petitioner became Member of A.O.P. The A.O.P. was assessed at N.T. No. 06-11-1451274 for the Assessment years 1986-1987 to 1989-1990; as one of the other members A.O.P. expired; hence the A.O.P. ceased to exist from 1-7-1989. The petitioner filed his return of total income for the year 1990-1991 at Rs.86,000 as individual at the same number of A.O.P. under Self-Assessment Scheme, the return was accepted accordingly under section 59(1) of the Ordinance on 28-2-1991; later the respondent issued a show-cause notice dated 16-11-1995 alleging therein that the petitioner was a new assessee and was wrongly assessed under section 59(1) of the Ordinance; to which the petitioner replied, later on again issued notice under section 65 of the Ordinance on 2-12-1995 followed by notice under section 61, dated 6-2-1996.

3. I have heard the learned counsel for both sides at length and perused the record.

4. Provisions of section 65 stipulate three conditions for issuance of notice under section 65 of the Ordinance; firstly, the income chargeable to A tax has escaped; secondly income has been under-assessed; or assessed at too low a rate or has been the subject of excessive relief for a refund and thirdly if assessment is made under section 59(1) and there are reasons to believe that any of the aforementioned defects exists in assessment order.

5. The notice, dated 21-2-1995 under section 65 aforementioned issued to the petitioner does not indicate under what subsection of the section has been issued; when confronted, the learned counsel for the department contended that as already show-cause notice was issued to the petitioner; to which the petitioner had submitted explanation; is understood that the notice has been issued under sub-para. (C) of section 65(1) of the Ordinance, which is misconceived; as under the law, the assessing officer is required to apply his mind cautiously and to indicate the assessee under section 65(1) under what reason; his assessment is sought to be reopen; as reopening of a case to some extent :s a penal action; so the assessee be prepared to meet the consequences of reopening of an assessment. As the notice prima facie is defective and the error is not curable as it does not indicate the reason to reassess the said income already assessed in the hands of the petitioner.

6. Without discussing the merits of the case; as the notice itself, being illegal ab initio, the proceedings initiated on the basis of the said notice are set aside, the petition is accepted accordingly. M. B. A./B-11/L ???????????????????????????????????????????????????????????????????????????????? Order accordingly.