2002 PLP 2813 (PTD)

(a) Declared income of Rs.95,000 under (USAS) was accepted and demand of 5,750 as raised in the return was also accepted; but (b) Rejected the claim of senior citizen on the basis of Circular No. 7(55) S.Asst/99 dated 27‑9‑1999. The complainant has pleaded that the rebate of senior citizen is a statutory allowance and cannot be taken away through circular letters and that by not allowing the senior citizen rebate the respondent has travelled beyond his jurisdiction. It. is requested that the same may be directed to be allowed.

2. Respondent in its rely submitted that the complainant filed return of income for the assessment year 1999‑2000 within due date under USAS. Tax amounting to Rs.5,750 was calculated on the declared income of Rs.95,

000. However, out of the total tax rebate of 50% was claimed by the complainant on account of senior citizen allowance. The return of income filed by the complainant under USAS did trot qualify for acceptance under USAS as tax payable thereon amounting to Rs.5,750 was not fully paid and therefore the Assessing Officer rightly took the return out of the scope of USAS The claim of senior citizen allowance of the complainant for availing USAS is misconceived as the clarification issued by the Central Board of Revenue vide C. No.7(55)S.Asstt/99, dated 27‑9‑1999 reads as under:‑‑ Rebate to senior citizens available under clause (IV) of proviso (6) to para. A of Part I of the First schedule to the Ordinance is not allowed under USAS in view of the overriding effect of para. AA. It was further submitted by the Department that the contention of the complainant that rebate of senior citizen is a statutory allowance and cannot be taken away through circular letter is also based on misconception as the same was not available in accordance with para AA of Part I of the First Schedule to the Income Tax Ordinance, 1979 inserted in the statute through Finance Act, 1999 for the purpose of USAS: In view of the above, no maladministration is involved.

3. On the date of hearing Mr. Rana Saeed Advocate, submitted that the assessment order unifier section 63 for assessment year 1999‑2000 is self‑contradictory as the case has been treated under the normal law but disallowance of the rebate has been made on the basis of the USAS circular. It was pointed out that in para. 1 and para. 4 of the assessment order contradiction is visible as the Assessing Officer states himself that "the case does not qualify under Self‑Assessment Scheme" and "case of the assessee was taken up under normal law" while disallowing rebate on the basis of circular related to USAS: It was pleaded that as a notice under section 61 was duly issued calling the assessee, the case was processed under normal law and not under the USAS. The Deputy Commissioner of Income Tax Mr. Manzoor Ahmad, on behalf of the respondent reiterated the points given in the Department's reply. It was further admitted by the DCIT that the case was processed under normal law and the declared income of Rs.95,000 was accepted on which tax payable was Rs.5,

750. The claim of senior citizen rebate was rejected, as per CBR circular dated 27‑9‑1999 and a demand of Rs.2,875 was created. It was contended that para AA of Part‑1, First Schedule covers all the relevant points.

4. Arguments of both sides were heard and considered. It is seen that the senior citizen allowance is a part of Income Tax Ordinance, 1979. In the instant case it has also been observed that it was admitted by the assessing officer in the assessment order itself that the case was being processed under the normal law arid not under USAS therefore quoting the circular relating to USAS in the case which was treated under the normal law is not correct legally. Further para AA, Part‑I of the First Schedule to the Income Tax Ordinance. 1979 was inserted in the statute through Finance Act, 1999 for the purpose of Self‑Assessment Scheme. In the instant case notice under section 61 was issued and case admittedly was processed under normal law. The said circular would have been applicable had the case been finalized under the Self‑Assessment Scheme. The income was accepted at Rs.95,000 and case processed under normal law therefore the tax was payable under para. A of Part I of the First Schedule to the Income Tax Ordinance, 1979 which includes the provision of 50% tax rebate for persons aged 65 years or above.

5. It is recommended that: (i) A rectification be made by the Assessing Officer to re‑calculate the tax on the complainant's assessed income in accordance with the provision of. para A of the First Schedule Part‑I to the (A Income Tax Ordinance, 1979. (ii) Compliance to be reported within 30 days. C.M.A./M.A.K./436/FTO Order accordingly.