1998 PLP 391 (PTD)

2. The brief facts of the case are that the assessee, an individual derives income from dealings in paper. The appellant filed a return to declare income at Rs.68,000 under S.A.S. The appellant during the year under consideration purchased a shop in Urdu Bazar, Lahore for a consideration of Rs.4,00,000 which the assessing officer found to be under stated. Besides the assessing officer held that the declared and assessed income of the appellant was not adequate to purchase the shop for a consideration of Rs.4,00,

000. Therefore, the case was set apart and processed under normal law.

3. However, at the time of assessment on scrutiny of wealth statement and record the assessing officer accepted the value declared by the appellant for the purchase of shop. Sales were estimated at Rs.10 lac to which G.P. rate at 10% was applied. Income from cutting machine was estimated at Rs.10,

000. Addition under the head expenses was made at 84.6,

000. Thus total income of the appellant was determined at Rs.1,11,

500. The appellant being aggrieved filed an appeal before the CIT(A) who reduced the sales to Rs.9 lac whereas the income from cutting machine was reduced to Rs.5,

000. Appellant's plea with regard to acceptance of return under self-assessment scheme was rejected.

4. During the course of the hearing the learned D.R. stated that as the assessee had purchased a shop and therefore the learned CIT(A) and ITO were justified in deciding to proceed under normal. On the other hand the learned A.R., of the assessee stated that if the department had any reason to doubt the assessee's legibility of acceptance under self-assessment scheme they should have confronted him. In the instant case he would have been able to satisfy the authorities for acceptance of return. He also cited the following reported cases: (1) 1995 PTD (Trib.) 1432. (2) 1994 PTD 494. (3) 1995 PTD (Trib.) 1152. (4) 1993 PTD 1007. (5) 1995 PTD (Trib.) 1149.

5. We have heard the parties and gone through the orders passed by the authorities below and also perused the case-laws cited by the learned A.R. In the instant case the case was selected for detailed scrutiny without disclosing the reasons of the same to the assessee. It is ironical that the ITO set apart the case for assessment under normal law as he found the value of the property to be under-stated when at the time of assessment the declared value was accepted. The most relevant case law in this case is a reported decision of the Karachi High Court 1994 PTD 494 for assessment year 1991-92 in which it has been held: "S.59

CBR Circular No.22 of 1991 dated 21-7-1991 para. 4(ii)-- Self assessment Scheme 1991-92, para. 4(ii)

Selection of assessee's case for detailed scrutiny in accordance with C.B.R. Circular No.22 of 1991

Material upon which action under para. 4(ii) of the Circular has been taken has to be disclosed to assessee

Failure to disclose said material to the assessee would render such action completely arbitrary and discriminatory. "

6. This case-law is applicable to the assessee on all fours as the appellant was never informed as to why his case was set apart from detailed scrutiny. Furthermore the declared value of the shop was accepted by the department during the assessment proceedings. In view of the above the ITO is directed to accept the assessee's return under section 59(1). C.M.S./406/Trib. Order accordingly.