2003 PLP 2270 (PTD)

Ashok Kumar for the Complainant. Dr. Kazi Afzal, D.C.I.T. for Respondent. The complainant, an individual, in dealing in the business of Tea as distributor of Messrs Tapal Tea. Return of income was filed on 1-10-2001 showing an income of Rs.70,540 which was supported with evidence of tax paid under section 50(7E) and under section 54 of the Income Tax Ordinance, 1979 (Repealed).

2. Notice under section 61 was issued but as per assessment order of the Assessing Officer it was not complied with. Another notice under section 62 of the Income Tax Ordinance, 1979 (repealed) was issued on 16-5-2002 for compliance on 29-5-2002 wherein the assessee was asked to file certain details and documents. However, on this date also the assessee failed to report compliance. The Assessing Officer for alleged failure of the assessee to file documents and details on or before 11-9-2002 passed a best judgment order under section 63 of the Income Tax Ordinance, 1979 (repealed) at a total income of Rs.400,000 and levied tax amounting to Rs.50,

820. The grievance of the complainant is that the return of income filed by him under Self-Assessment Scheme was not accepted and his case was dealt under normal law. It has further been alleged that the assessment for the year 2001-2002 is against all past history of the case. The complainant has furnished details showing the declared income since and from 1996-97 to 2000-2001 wherein income was never assessed beyond Rs.70,

000. It is for the first time that the complainant's income has been assessed at a sum of Rs.400,000 without making any inquiry and bringing on record any material fact to justify this estimate. The complainant is a distributor of Messrs Tapal Tea and has been given a fixed commission of approximately 3 % on the sale to the shop-keepers. He has also filed price structure wherein distribution margin has been shown against various brands of Tapal Tea. The percentage of commission works out approximately to 3 %. The total sales disclosed for the relevant assessment year has been shown at Rs.12,34,190 on which tie complainant has derived an income of Rs.36,000 by way of commission. His contention is supported by the price structure given by the company. In the preceding year i.e. 2000-2001 total turnover was disclosed at Rs.18,06,422 and his income was assessed at Rs.70,000 as against the declared income of Rs.50,000.

3. The Assessing Officer has finalised the assessment as stated above under section 63 of the Income Tax Ordinance, 1979 to the best of his judgment. However, this assessment is contrary to the previous I history of the assessee and is not based on any cogent reason. The determination of income at a sum of Rs.400,000 is contrary to past history and is unjust, unreasonable and perverse. The Assessing Officer has not brought on record any material evidence to justify the computation of income at Rs.400,000.

4. For the aforesaid reasons, it is recommended that:-- (i) the order passed for the year 2001-2002 be amended under section 122 of the Income Tax Ordinance, 2001 and income worked out in accordance with law and facts after providing adequate opportunity to the assessee. (ii) A compliance report be sent to this office within 45 days of the receipt of this order. C.M.A./827/FTO Order accordingly.