2004 PLP 1788 (PTD)

Add net income declared = Rs.45,000 Income for addition = Rs.97,500 Add backs out of P&L = Rs. 2,500 Account Net income = Rs.100,000

4. In his application under section 156 filed on 12‑9‑2002 the complainant pointed out that in computing the complainant's income the declared gross profit of Rs.97,500 should have been deducted from the assessed gross profit (Rs.105,000) instead of the amount of Rs.52,500 actually deducted. It was thus requested that the mistake be rectified.

5. In his rectification order, dated 1‑1‑2003 the Taxation Officer, Circle 02, Sargodba observed as follows:‑‑ "The perusal of assessment record reveals that the order was passed for Rs.100,000 and the assessment form IT‑30A was also prepared for complainant's income of Rs.100,

000. The demand notice was also issued for the balance amount of tax calculated at Rs.100,

000. It appears that both the figures i.e. gross sales, GP and GP declared has inadvertently been taken as under‑‑‑ Sales Rs.700,000 GP Rs.105,000 Less GP declared Rs.52,500 Balance Income Rs.52,500 The same might be as under:‑‑ Sales estimated Rs.100,000 GP @ 15 % Rs.150,000 Less GP declared Rs.97,500 Balance income Rs.52,500 In my opinion the income has rightly been assessed at Rs.100,000 which is apparent from record. In view of above, rectification application filed by the assessee is hereby rejected."

6. A bare perusal of the above portion of the order under section 156 shows that it is based on a complete lack of understanding of the scope of section

156. Obviously the Assessing Officer could not enhance the estimate of sales in the rectification order as he had to operate within the framework of the original assessment order. In this order the sales had been estimated at Rs.700,000 and after working out the gross profit @ 15 % amounting to Rs.105,000 the incorrect figure of GP amounting to Rs.52,500 was deducted to arrive at the trading account addition instead of deducting the actual declared gross profit of Rs.97,

500. The only thing required to be done in the rectification order was to re compute the trading account addition to the complainant's income after deducting Rs.97,500 from the assessed GP of Rs.105,000 and it was not for the Assessing Officer to replace any estimate of sales for the already assessed sales. The rectification order as passed is thus the result of obvious maladministration.

7. Similarly the complainant is right in pointing out that his return for the assessment year 2002‑2003 qualified under the self assessment scheme on the basis the actual assessed income for the year 2001‑2002 (as in the complainant's rectification application) and it had, therefore, been wrongly excluded from the Self‑Assessment Scheme.

8. In the light of the above it is recommended that:‑‑ (i) The rectification order for the assessment year 2001‑2002, dated 1‑1‑2003 be again rectified in the light of the observations in para. 6 above. (ii) A letter of warning be issued to the Assessing Officer who passed the order under section 156 telling him to refrain from such illegal action in future. (iii) The complainant's return for the year 2002‑2003 be considere4 as qualifying for self‑assessment scheme as far as the comparison with the 'last tax payable is concerned. The return my thus be accepted under the self‑assessment scheme if it meets the other requirements of the scheme. (iv) Compliance report with reference to recommendations at (i), (ii) and (iii) above be furnished within 30 days. C.M.A./982/FTO Order accordingly.