2001 PLP 3016 (PTD)

2000, dated 17‑7‑2001 which reads as follows:‑‑ "GOVERNMENT OF PAKISTAN REVENUE DIVISION CENTRAL BOARD OF REVENUE C. No. 7(7)S.Asst./2000 Islamabad, the 17th July, 2001 To All Regional Commissioners of Income Tax, Northern/Eastern/Central/Southern and Corporate Regions, Islamabad/Lahore/Multan acid Karachi. SUB: SELF‑ASSESSMENT SCHEME FOR THE ASSESSMENT YEAR 2000‑2001‑‑‑SELECTION OF CASES FOR TOTAL AUDIT BY RCIT‑‑‑POLICY DIRECTIONS. I am directed to refer to Board's letter of even number, dated 9‑6‑2001 on the above subject and to state that a number of representations have been received in the Board alleging that while selecting cases for total audit, under para. 6(b) of Board's Circular No.21 of 2000 as substituted by paragraph 4 of Board's Circular No.26 of 2000, field formations have not kept in view the policy directions on the subject and have arbitrarily selected cases. Some assessees have approached various forums on which no adjudication has so far taken place. (2) The Board has given the matter an anxious consideration. It has been decided that lists of all cases selected for total audit under para.6(b) of Board's Circular No.21 of 2000, shall be withdrawn. Further, in order to ensure a fair and just treatment to all assessees, it has been decided that the RCIT shall select cases for total audit only Where there is evidence, information or reason to believe that true particulars of income have been suppressed. Such selection may be based upon factors including an evidence decline in income, gross profit and net profit rates and any additions to the assets of an assessee. Further, RCIT may also confront the assessees and provide them due opportunity of being heard before final selection. (3) I am further directed to state that policy directions issued earlier vide Board's letter of even number, dated 9‑6‑2001 stands withdrawn. It is emphasised that selection of cases for total audit must be carried out in 'a judicious and. transparent manner. (Sd.) (Waqar Ahmad), Secretary (Assessment)."

6. The Advocate for the complainants and the complainants present on the date of hearing and Mr. Vakil Ahmad Khan, Member, C.B.R. with officers of the C.B.R. present on hearings held on 9th and 10th August, 2001 were heard at length. Mr. Ashraf Hashmi and Mr. Masood Ishaq, Advocates contended that after withdrawing list prepared under para. 6(b) a fresh list was prepared without following the guidelines, dated 9‑6‑2001. They also contended that as the C.B.R. by its letter, dated 2‑4‑2001 had declared and assured the assessees that no case shall be selected by Regional Commissioner Income Tax for total audit the department is estopped from selecting the cases for total audit. Mr. Kh. Riaz Hussain, Advocate reiterated the same contentions. Mr. Sh. Nisar Ahmed and Mr. Siddiq Ahmed Ch., Ch. Hafeezullah, Mr. Muhammad Shahid Abbas, Advocates and Dr. Anwar ul‑Haq all argued their cases. Mr. Vakil Ahmad Khan the learned Member, C.B.R. addressed arguments on behalf of the‑department. At the outset he stated that in view of the instructions, dated 17‑7‑2001 the entire list of assessees selected under para. 6(b) for total audit has been scrapped. It was further contended that since the list has been cancelled and no action is being taken in cases selected for total audit under circular letter, dated 9‑6‑2001 very little is left for consideration and proceedings be terminated. Mr. Vakil Ahmad Khan has contended that question of estoppel does not arise as the letter, dated 2‑4‑2001 referred and relied upon by the complainants was in reply to query made in respect of Northern Areas.

7. The plea of promissory estoppel is not sustainable. The complainants cannot press letter, dated 2‑4‑2001 in service as it was neither addressed to them nor the assurance contained therein was made to public by a declaration through any statutory or legal document. It was issued on 2‑4‑2001, after the returns under Self‑Assessment Scheme had been filed by the complainants. If such an assurance would have been given by any proper authority in a legal manner and acting upon such assurance the returns would have been filed, the complainants may have been justified in pressing this objection. This contention has no merit and is rejected. Mr. Riaz Ahmed contended that the Finance Ordinance, 2001 was promulgated on 18‑6‑2001 by which section 59(4) of the Income Tax Ordinance was added and therefore, there was no justification in hurrying up the completion of assessment. This contention suffers from inherit infirmity as the Finance Ordinance was promulgated by a Notification issued by the Government w.e.f. 1‑7‑2001 and not from 18‑6‑2Q

01. Faced with this situation the learned counsel did not press this objection. The learned counsel also contended that decline in income, gross profit and net profit rates cannot be made a ground for selecting a case for total audit. At the moment the list has been scrapped and if any selection for total audit is made in future on this basis the assessee would be given an opportunity to explain and defence himself before selection when he can press this objection.

8. The main question which has disturbed me throughout and I had made direct queries from both the parties that what is the effect of cancellation of the list under which cases for total audit were selected particularly in cases in which assessment has been completed. Mr. Ashraf Hashmi the learned counsel for the complainant contended that the entire proceeding will be void. Mr. Vakil Ahmad Khan the learned Member, C.B.R. also seems to be of the same view with reservation as to the agreed assessments. The question for consideration is that many assessees who have undergone the rigours of total auditing may be satisfied and may not like to re‑agitate the issue again. Cases may also arise where parties dissatisfied with the total audit assessment may have filed appeal, revision or challenged it before any other forum. Mr. Vakil Ahmed Khan made statement that no assessment will be finalised in cases selected under para. 6(b) in pursuance of instructions, dated 9‑6‑2001, any Commissioner who has taken up the case will not finalise it. He also assured that all Zonal Commissioners will be advised to vacate order of assessment and consider under new procedure. In case of ex parte assessment in total audit case the findings will be reversed and set aside suo motu.

9. There may be cases in which parties may be satisfied with the assessment made under total audit or for purchasing peace may not like to agitate the question again. In such cases if the assessees inform the Regional Commissioner Income Tax that they ‑do not wish to challenge the same, then such assessment may not be disturbed by the cancellation of the list.

10. After the hearing was completed Circular Letter C. No.7(7)S. Asst./2000, dated 10‑8‑2001 was received in this Secretariat which reads as follows:‑‑ "GOVERNMENT OF PAKISTAN REVENUE DIVISION CENTRAL BOARD OF REVENUE C. No.7(7)S.Asst./2000 Islamabad, the 10 August, 2001 To Regional Commissioner of Income Tax, Northern/Eastern/Central/Southern and Corporate Regions, Islamabad/Lahore/Multan and Karachi. SUB: SELECTION OF CASES FOR TOTAL AUDIT UNDER PARA. 6(B) OF C. B. R. CIRCULAR NO. 1 OF 2000‑‑ INSTRUCTIONS REGARDING. In continuation of Board's letter of even number, dated 17‑7‑2001 on the above subject, I am directed to state that Board has received a number of representation where queries have been raised as to what would happen to the cases where assessments have already been completed in pursuance of selection, under para. 6(b) of C.B.R:'s Circular No.21 of 2000, for total audit on the basis of policy directions issued, vide Board's Letter No.7(7)S.Asst./2001, dated 9 :6‑2001 and withdrawn later.

2. The matter has been examined in the Board. Such taxpayers can avail their legal remedy either by filing appeals before the Appellate Additional Commissioners/Commissioners of Income Tax (Appeals) or revisions before the Zonal Commissioners. It has been decided that in cases where taxpayers opt to avail the benefit of revision before the Zonal Commissioners, the assessments in those cases may please be set aside. Such cases may, however, be re‑considered for selection of total audit in the light of Board's fresh instructions on the subject, issued vide letter of even number dated 17‑7‑2001.

3. I am further directed to request that utmost care must be exercised in taking such decisions and the above facility would not be extended to the cases where assessments have been finalized on agreed basis. (Sd.) (Waqar Ahmad), Secretary (Assessment)."

11. Before parting with this decision I wish to place on record my appreciation for the realistic policy decision made by the C.B.R. and its acceptance by the learned counsel for the assessees and taxpayers with trust and confidence. This proceeding is historic and a landmark. It is a milestone and a turning point in the attitude and understanding of the C.B.R. Never before any Government Department may have responded so swiftly and positively to accede to the just demands of the taxpayers. This amply demonstrates healthy change in thinking and approach of C.B.R. to A taxpayers' problems. A visible difference from the past. This is the beginning of change in the tax culture of our country for which I have been striving hard to bring about. It is a matter of great satisfaction that immediately on filing of complaints in large number and issuance of notice from this office, the C.B.R. realising the gravity of situation reassessed their position in a realistic and objective manner and offered a solution by withdrawing their instructions regarding total audit under para. 6(b) of the Self‑Assessment Scheme, 2000 thereby creating an atmosphere of trust and confidence which positively has been responded by the assessee.

12. It is recommended that:‑‑‑ (i) Commissioners who have taken up the case for assessment in respect of an assessee who was selected for total audit under para.6(b) shall B not finalize and the proceedings be terminated. I not be finalized in cases selected under para.6(b) in h instructions dated 9‑6‑2001 and the proceedings be (iii) As assured by the learned Member, the C.B.R. to advise all Zonal Commissioners to vacate order of assessment except in cases in which the assessees agree to accept the assessment already made which will not be disturbed. (iv) In case of ex parte assessment in the total audit cases the assessment shall be set aside suo motu. (v) In agreed assessment the assessee if he thinks proper may file appeal and Commissioner, Income Tax (Appeal) to follow the above directions. (vi) In case the department wishes to select any case for total audit under para.6(b) the same shall be selected by the Regional Commissioner of Income Tax and no other officer keeping in view the parameters fixed by the C.B.R. in circular/letter dated 17‑7‑2001 which includes a show‑cause notice to the assessee before selection. M.B.A./123/Tax Order accordingly.