2008 PLP 896 (PTD)

Amount Year of Adjustment CB No. 01 30-5-2001 Rs.5,00,000 1997-98 63/184

8. The complainant's A.R. contended that the Commissioner of Income Tax Appeal Zone-VI, in his order dated 31-5-1999 ordered to allow expenses as admissible under section 23 of the repealed Income Tax Ordinance,' 1979. He further, stated that orders whereby appeal effect was given under section 132 for the assessment years 1996-97 and 1997-98 had not been received by the complainant.

9. The Authorized Representative of the complainant has produced copy of the relevant entry of the Peon book in support of his contention that the rectification application was filed on 29-4-1999 in Circle-C-7, Zone-C, Karachi. There is no stamp of the circle against receipt of the said application. The complainant's A.R. has also failed to identify as to who had received the rectification application. The name of the recipient is also not legible. The claim of filing the rectification application is therefore, not established.

10. The photocopy of grounds of appeal furnished by the D.R. however, confirms that the impugned issue of expenses admissible under section 23 was raised at serial No.5 of the ground of appeal in the following words:- "That the Deputy Commissioner of Income Tax has erred in taking entire sales of fishing appliances at Rs.1,66,05,026 without allowing and deduction as provided in under section 23 of I.T. Ordinance, 1979."

11. The perusal of appellate order of the Commissioner of Income Tax Appeal Zone-VI, Karachi dated 31 5-1999 confirms the contention of the complainant's A.R. that the Commissioner Appeal had directed to compute the income under sections 22 and 23 of the repealed Ordinance, 1979. The relevant extract is reproduced hereunder:- "I further hold that the assessee's income should be computed in the manner as laid down under sections 22 and 23 of the Ordinance, 1979 which is accordingly ordered."

12. The Departmental Representative in his written arguments dated 9-12-2003 has also confirmed that no appeal was filed before the Income Tax Appellate Tribunal by the department or the complainant against the order of C.I.T. (Appeals) dated 31-5-1999.

13. The departmental representative has also filed the photocopy of the order passed under sections 63/132 of the repealed Ordinance, 1979 dated 20-6-2000.

14. The perusal of the order shows that the assessment was completed ex parte under section 63 for non-compliance of notices under sections 61 and 62 issued for 20-9-1999. The departmental representative has failed to produce the relevant order sheet from which issuance of notices and compliance thereof could be ascertained. Order is however, dated 20-6-2000, which was passed for non-compliance of notices on 2-9-1999. The ex parte order could not be passed after a lapse of more than nine months from the date of non-compliance 'of' statutory notices i.e. 2-9-1999 without recording any reasons/justification therefor on the order sheet. The allegation of the complainant that the aforesaid order under sections 63/132 dated 20-6-2000 was not served on the complainant so far stands established as the D.R. has not been able to produce any evidence that the impugned order was served on the complainant or any other authorized person earlier. The order was however, served on 3-12-2003. The D.R. has not been able to explain this gross irregularity in service of order after a lapse of about two and half years. It is however confirmed that no expenses were allowed against substantial receipts in the ex parte order passed under sections 63/132 of the repealed Ordinance. It is pertinent to point out that even an ex parte assessment is to be made strictly on merit. It has been repeatedly held by the superior Courts that ex parte assessment must be best judgment assessment. This is a clear case of mal?administration committed by the assessing officer.

15. The facts stated above clearly establish that the order passed by the assessing officer under sections 63/132 on 20-6-2000 was arbitrary, unreasonable, unjust and oppressive. It is therefore, recommended as under:-- (i) The C.B.R. direct the concerned Commissioner of Income Tax to set aside the order passed under sections 63/132 dated 20-6-2000 for the year 1997-98 with the directions to the taxation officer to pass a fresh order strictly following the directions of the C.I.T. (Appeals) and after providing a reasonable opportunity to the complainant to present his case. (ii) The compliance be made within 30 days of receipt of this order and reported within a week thereafter. M.I./266/F.T.O.?????????????????????????????????????????????????????????????????????????????????? Order accordingly.