1985 PLP (Trib (PTD)

Officer, L Dated 19-11-1981 To, Messrs A. R. C. M. M. B., L . Sub : Assessment Year 1981‑82 Your case has been selected for Detailed Scrutiny for the assessment year 1991‑82 by the C. B. R. in persuance of para. 4 (ii) and para. 5 of Board's Circular No. I1 of 1981. This is for your information. (Sd.) (A) Income‑tax Officer L This letter was also received by the assessee on the Fame date i. e. 19‑11‑1981. It may be stated here that the identity of the assessee is not in dispute. The assessee vide his letter dated 23‑11‑19111 informed the Assessing Officer that his income had already been assessed in individual capacity up to the assessment year 1980‑81 at No. 085(083‑MN of Circle‑C, Multan and that Income‑tax return for the assessment year 1981‑82 bad also been filed under Self‑Assessment Scheme through I. A. C. Range‑II M. Subsequently, in reply to notice under section 62 the assessee, vide his letter dated 12‑6‑1982 again informed the I.‑T.O. that his return earlier filed at N.T.R. 04‑22‑0856083 had been filed under section 55 and had been accepted on 23‑11‑1981. It was also specifically pleaded before the I.‑T. O. in the same letter that since the assessment had already been completed under Self‑Assessment Scheme no other assessment could be made and the notice issued under section 62 was uncalled for. The I.‑T. O. however, probably unmindful of his earlier order, proceeded to make detailed scrutiny of the case and passed a fresh order of assessment under section 62 on 17‑6‑1982 which is the subject‑matter of appeal before the Tribunal.

5. This case was earlier heard by me on 22‑2‑1984 when certain querries were made from the D. R. and the case was adjourned. The learned D. R. has read out the reply received from the I.‑T. O. to the querries raised earlier. In his reply it has been explained by the I.‑T. O. that the notice under section 56 was issued by mistake on the basis of the survey report and it was by mistake that second N. T. R. No. was allotted to the assessee. It has also been admitted that the assessee's original N. T. R. No. is 04‑22‑0856083 and is the first N. T. R. which was allotted to him in circle M. It may be noted that in reply to the notice under section 56 of the I. T. Ordinance the assessee filed a return which was designated as the duplicate return. It was contended by the learned A. R. and has been conceded by the learned D. R. that no notice under section 65 of the I. T. Ordinance was issued to the assessee.

6. The undisputed facts in short are that the assessee's return under Self‑Assessment Scheme was accepted by the order of the I. T.O., dated 23‑11‑1981. During the pendency of his return the I. T. O. obviously by mistake and on the basis of the survey report allotted another N. T. Number and issued a notice under section 56 of the I. T. Ordinance in reply to which the assessee filed duplicate return. Before the order tinder Self‑Assessment Scheme was passed, a letter was issued by the I. T. O. on 19‑11‑1981 intimating the assessee that his case had been selected for detailed scrutiny. In spite of it the assessee's first return was accepted under section 59(1). The case of the assessee was not reopened under section 65 of the I. T. Ordinance nor any notice to this effect was issued to him. The Assessing Officer continued to proceed against the assessee on the basis of the second return in spite of the information supplied to him by the assessee that his original return had been accepted under the Self‑Assessment Scheme. In such situation what the I. T. O. should have done was that the moment it came to his notice that new N. T. R. had wrongly been allotted to the assessee and notice under section 56 had been issued under a mistake, he should have filed the proceedings and should have issued a notice under section 65 of the Ordinance to reopen the case, already accepted undo Self‑Assessment Scheme, on the ground that it had selected for detailed scrutiny. On the contrary what the I: T. O. did was that he continued with the second proceeding without reopening the earlier case finalized under section 59(1) and he passed a fresh order on 17‑6‑1982 with the result that when the second order was passed by the I.‑T. O. the first order of assessment under section 59(l) still subsisted. The mistake was realised by the I.‑T. O. after passing the order on 17‑6‑1982 and he made a report to the C. I.‑T. to this effect. Consequently the C. I.‑T. on the basis of the report of the I.‑T. O. and without issuing any notice to the assessee cancelled the first assessment .made on 23‑11‑1981 under sec tion 59(1) on the ground that the first assessment "being illegal and infruc tuous is hereby cancelled". The learned counsel for the assessee has contended‑that during the subsistence of the first assessment second assessment could not be made. It was further contended that notice under section 56 was also illegal as the assessee had already filed the return which was pending when the notice under section 56 was issued. The third contention of the learned counsel for the assessee was that the assessment order dated 23‑11‑1981 still subsists as the C. I. T's. order cancelling that order is illegal and void.

7. So far as' the C. I. T's. order is concerned that suffers from man infirmities. Firstly the C, I.T. has no omnibus power under section 138 of the Ordinance to pass any order as it may does fit. As a matter of fact this is a power of revision which could only be exercised in favour of the assessee either on his own motion or on an application of the assessee. Such a power cannot be exercised which is against the assessee and in favour of the department. Section 138(1) is reproduced below :- "The Commissioner may either of his own motion or on an application made by the assessee for revision, called for the record of any pro ceeding under this Ordinance in which an order has been passed by any authority subordinate to him and may make such inquiry or cause such inquiry to be made and subject to the provisions of this Ordinance, may pass such order thereon, not being an order prejudicial to the assessee as he thinks fit." The words "not being an order prejudicial to the assessee" makes i abundantly clear that the power under this section could only be exercised in such a manner that it is not prejudicial to the assessee. In the circum stances of the present case when the return under Self‑Assessment Scheme had been accepted and a second order had been passed against the assessee, the order of the C. I. T. cancelling the earlier order was obviously prejudicial to the assessee which could not be passed by him under section

138. Secondly the principle of audi alteram parterm has been violated in this case by the C, I.T. in that no opportunity of being heard was provided to the assessee a before passing that order. .

8. For the foregoing reasons the order of the C, I.T. being illegal and void ab initio has to be ignored and it is deemed to be non‑existent in the eye of law. Therefore, the position as it now stands is that there are two assess ment orders for the same assessee the same assessment year which is not premissible under the assessee has relied upon the salient features of the Self‑Assessment Scheme for the assess ment year 1981‑82 which is reported at page 108 of (1981) 44 Taxation. Under clause (d) of the scheme it is laid down that the detailed scrutiny, cases would be selected by the C. B. R. but only one assessment either for accepting the return under Self‑Assessment Scheme or for detailed scrutiny would be made. But it has not shown as to who has given out the salient features of the Self‑Assessment Scheme and what is the legal value of this scheme. However, even under the Ordinance itself there could only be one assessment either under section 59(1) or under section 62 or section 63 for the same assessment year unless the assessee's case is re‑opened either under section 65 of the I. T. Ordinance or under section 66(A) in the given circumstances. Admittedly the assessee's case has not been reopened under clause (G) of sub section (1) of section 65 under which a case already accepted under Self -Assessment Scheme could be re‑assessed. Therefore, in the wake of the first assessment made under section 59(1) on 23‑11‑1961 second assessment could not be made by the I.‑T. O. without giving notice under section

65. The contention of the learned D. R. that notice issued under section 56 could be regarded as a notice under section 65 is without any force for two reasons. Firstly when the notice under section 56 was issued that was under a mistake on the assumption that the assessee was not an existing assessee and that he had not filed any return under section

55. This fact has been admitted by the I. T.O. in his report. Secondly, when the notice was issued under section 56 assessment under section 59(1) had not been made by that time and therefore, there was no question of re‑opening of the case under section 65.

9. For the foregoing reasons the order of the I.‑T. O. passed by him on 17‑6‑1482 was without jurisdiction and is of no legal effect with the result that the order of the I: T. O. as well the appellate order of A. A. C. are cancelled. The order earlier passed by the I.T. O. on 23‑11‑1981 still continues to be a legal order notwithstanding the order of the C. I. T. under section 138 cancelling the same. However, the Assessing Officer can stilt reopen the case of the assessee under section 65 if the limitation has not expired.

10. Since the assessee's appeal for the assessment year 1981‑82 has been accepted on legal grounds I do not feel necessary to go into the merits of the case. Assessment year 1982‑83.‑‑The assessee declared sales at Rs. 2,00,000 with G. P. rate of 12% of against which the I .T. O. estimated the sales at Rs. 6,00,000 and applied G. P. rate at 12.5%. On appeal, the learned A. A. C. reduced the sales to Rs 5,10,000 but G. P. rate applied was maintained. Expenses were claimed by the assessee at Rs. 10,260 but the I.-T. O. allowed the expenses at Rs. 10,600 which has been increased by the learned A. A. C. to Rs. 15,000.

11. The learned counsel contended that by virtue of paragraph 6 of Circular No. 20 of 1982, dated 3‑I1 1982 it was laid down by the C. B. R. that if the income declared by an assessee for the assessment year 1982‑83 is higher by 20 or more as compared to the highest assessed income in any of the three preceding years. Such a case would be immune from detailed scrutiny. It was, therefore, contended that the assessee's case being covered by the aforesaid scheme should have been accepted under Self‑Assessment Scheme. It was submitted that the assessee declared his net income at Rs. 13,000 which was higher by 20 % of the assessed income in any of the three preceding years in which the income was assessed at Rs. 13,000, Rs. 73,000 and Rs. 13,500 respectively for the assessment years 1979‑80, 1980‑81 and 1981‑82.

12. Since I have already held in the assessment year 1981‑82 that the' income assessed under section 59(1) at Rs. 13,500, still subsists, therefore the assessee's case is covered by paragraph 6 of Circular No. 20 aforesaid and, therefore, the assessee's case was immune from detailed scrutiny. It is, there fore, directed that the assessee's case should be accepted under Self‑Assessment Scheme. However, in case the assessee's case is re‑opened for the assessment year 1981‑82 as has been observed in my order for the assessment year the I. T. O. would be at liberty to re‑open the case of the assessee for this year as well if the circumstances of the case so warrant.

13. In view of my orders in the assessee's appeals above, the departmental appeals are dismissed for both the years. M. B. A. Appeals dismissed.