2005 PLP (Trib (PTD)

2003 PTD (Trib.) 2276, 2001 PTD (Trib.) 2902, 2003 PTD 1530, 1987 PTD 249 and 1991 PTD (Trib.) 812.

7. The DR argued that the provisions of section 66A had been rightly invoked as the total income declared as per return was less than 1/3rd the capital declared as a new assessee-thus violating the express stipulation made in para. 2 (vi) of the Self-Assessment Scheme for 2000-2001 and resultantly it is contended that the assessment made is rendered both erroneous as well as prejudicial to the interest of Revenue and it is so expressly stated in the IAC's order under section 66A. There is thus no defect of law and procedure in the IAC's order.

8. We have heard both sides and have examined the available record and have also perused the case law cited and our findings are recorded as under: Prima facie, the AR of appellant is patently wrong in his view that as per the provisions of section 59(4) assessment in assessee's case could not possible have been finalized under section 59(1). This is evident from the fact that subsection (4) of section 59 was not on the statute in the period 1st July, 2000 to 30th June, 2001 (i.e. assessment year, 2000 2001) ,and the limitation laid down therein was thus not effective in this period. It appears from the ambient circumstances that the Assessing Officer was also labouring under this misconception when he finalized assessment under section 59A. As the 30th June deadline had, in the ITO's (erroneous) view, expired, when he took up assessment in assessee's case in July, 2001, therefore, the ITO felt compelled to finalize proceedings under section 59A and not under section 59(1). (2) Before the IAC the assessee never stated that return for 2000-2001 had not been filed under self-assessment law. Even in the Grounds filed before the Tribunal there is no express assertion to this effect and it is only while making his oral arguments before the Tribunal that the AR has taken this stance. Apparently the AR is labouring to establish that the return for 2000-2001 is outside the purview of the self-assessment scheme. From the ambient circumstances it is clear that this is a belated assertion contrived artificially to derive unwarranted benefit. Very importantly, the assessee's AR's repeated reference to the provisions of section 59(4) make it all too evident that the return had in fact been filed under self-assessment law as section 59(4) is expressly concerned with the processing of self-assessment returns and not with normal law returns. (3) All returns filed voluntarily under section 55(1) by the "due date" are to be treated self-assessment returns UNLESS there be a specific reason to treat the return otherwise. In assessee's case there is no indication whatsoever that it is not a return filed under self-assessment law and the assessee made no submission in this regard when the IAC issued show-cause notice under section 66A. The conclusion is therefore inescapable that this is a self-assessment return and is required to be processed under section 59 (1) unless it stood disqualified under the law. The ITO should have straight away rejected the return under SAS as the total income declared was not consistent with the express stipulation made in the SAS for 2000-2001 that where "capital" declared by a new assessee the total income declared should be at least 1/3rd the amount of cited capital. In assessee's case this was not so. Also, the assessee had not appended particulars of sources of investment which too is a mandatory requirement under the SAS for 2000-2001. Thus assessee's return should have been taken up for normal law assessment and a probe made regarding source of investment. However, having failed to find any defect in assessee's return, under self-assessment law, the ITO should then have finalized assessment under section 59(l) and he was not bound to do so by 30-6-2001 as the provisions of section 59 (4) had been omitted from the statute in assessment year, 2000-2001. (4) Section 59A is not concerned with the processing of self-assessment returns at all. Where a return qualifies under self assessment law, it is bound to be processed under section 59(1). Where the return does not qualify it is to be taken up for assessment under normal law. Such a return is not to be processed under section 59A. Only such returns as have not been filed under self-assessment law (viz. a return filed under section 57) can be taken up for assessment under section 59A. As return filed by the assessee is to all intents and purposes a C self-assessment return the order passed under section 59A is required to be treated as an order under section 59(1) as the ITO has accepted a self-assessment return which he could only have done if the return duly qualified under SAS. In other words as the ITO considered assessee's return to be free of all disqualifications listed in the SAS for 2000-2001, "acceptance" of such a return could only have been made under section 59(1) and not under section 59A. Assessee's AR's contention that the provisions of section 66A cannot be brought into play in the absence of a "written order" of assessment' has been looked into and in our judgment this too has no force as following his "acceptance" of assessee's return for 2000-2001 under section 59A [which as explained Supra is actually an order under section 59(1)] and issuance of a "No Demand Notice' and Form I.T. 30, the Assessing Officer is `deemed' to have passed an order under section 59(1) just as for any other assessment year where the provisions of section 59(4) are operative the ITO is deemed to have passed an order under section 59(1) on 30th June next following the income year in respect of Which a return has been filed under section 55(1) where no assessment is made by 30th June. It has been held by the Tribunal in reported judgment cited as 2003 PTD (Trib.) 2276 that that such deemed order is at par with a written order. It may also be pointed out here that in amendment made in section 59(4) proviso through Finance Act, 1995 it has been expressly laid down that the printed Acknowledgement given when the self-assessment return is handed in is to constitute an assessment order and demand notice. That being so the provisions of section 66A can certainly be invoked with reference to such deemed order under section 59A [which, as explained Supra is, actually an order under section 59(1)] as section 66A refers to `any order' under the Ordinance where such order is found to be erroneous insofar as it is prejudicial to the interest of Revenue. In the case of the present assessee it is all too clear that the assessee filed return under section 55(1) voluntarily by the due date as a `new assessee' AND declared Capital in the wealth statement appended with the return. However the total income declared in the return was much less than 1/3rd of the capital declaration. As the return was to all intents and purposes a self-assessment return and was to be so treated in the absence of any explicit assertion to the contrary by the assessee the said return could only have been "accepted" by the Assessing Officer at the returned figure if it met ALL the conditionalities stipulated in the self-assessment scheme for the year. Assessee does not meet the conditionality with regard to quantum of income vis- -vis quantum capital declared by a new assessee. Additionally, the assessee has not rendered any explanation with regard to sources of capital which was also mandatory under the Self-Assessment Scheme for 2000-2001. There was thus no justification for `acceptance' of such a patently erroneous/defective return that was also prejudicial to the interest of Revenue as higher tax would have been realized if the return had been correctly filed as per the parameters laid down in the self-assessment scheme for the year. The case law cited has been looked into and is found to be of no avail to the assessee. ITAT judgment cited as 1991 PTD 812 does not relate to assessments finalized under section 59(1)/59A. The absence of a written order in assessments "other than those finalized under self-assessment law" after amendment in section 59(1) proviso through Finance Act, 1995 would certainly be fatal to any action taken under section 66A. However this is not so in the case presently before us. Similarly with regard to judgment cited as 1987 PTD

249. This judgment too precedes promulgation of self-assessment law. Judgment cited as 2003 PTD 1530 deals with reopening of already completed assessment under section 59(1) which is clearly not the case here. Very importantly, it is explained in this judgment that "...In absence of assessment order in writing till addition of proviso by Finance Act No. 1 of 1995, dated 2-7-1995 in section 59(1) no additional assessment could be framed unless order sought to be reopened was assessment order in writing under any of provisions of late Ordinance". The case of the present assessee falls in assessment year, 2000-2001 which is well after above amendment in law and the implications of same quite obviously in favour of Revenue. Judgment cited as 2001 PTD (Trib.) 2902 records the very important observation that " Order" would include a deemed order unless the law specifically excluded the same". (para. 5 page 48). In the present appeal this clearly helps Revenue's case. Also in the case of the present assessee, prejudice to Revenue is patent given the clear violation of self-assessment conditionality with regard to quantum of income vis-a-vis quantum of capital. In the appellant's case this is not so. Judgment cited as 2003 PTD (Trib.) 2276 is a `per incurium' judgment as it fails to take cognizance of the fact that a `deemed' order under section 59(1) is at par with a written order. As explained Supra, the order passed under section 59A in the case of the present assessee is required to be treated as an order passed under section 59(1) and the ratio of order cited as 2003 PTD (Trib.) 2276 is thus fully applicable here.

9. For the reasons recorded Supra we hold that no exception can be taken to the exercise of revisionary jurisdiction by the IAC as the (deemed) order acted upon is both erroneous and prejudicial to the interest of Revenue.

10. Resultantly, the appeal in rejected. H.B.T./317/Tax (Trib.) Appeal rejected.