2005 PLP (Trib (PTD)

Date of hearing 9th September, 2004. These appeals by Revenue arise out of order passed by the CIT(A), Bahawalpur Zone, Bahawalpur, dated 5-8-2003.

2. It is the departmental contention that the First Appellate Authority has failed to dispose off Ground No.2 filed by assessee challenging the validity in law of assessments finalized under section 63 on 18-9-2002 when notice under section 61 was issued on 6-9-2002 for appearance on 12-9-2002. Reduction in estimate of sales is also contested.

3. According to learned DR the assessee repeatedly defaulted to the terms of notices' issued under section 61 as detailed in the body of the assessment order and final notice under section 61 was issued on 6-9-2002 for 12-9-2002. Earlier a show-cause notice under section 62 had also been issued on 9-4-2002 indicating intention to finalize net income at Rs. 1,22,500 and Rs. 140,000 for the assessment years 2000-2001 and 2001-2002 and the notice too remained uncomplied with. Under the circumstances the Assessing Officer finalized assessments ex parte at the figure for total income confronted to the assessee. Admittedly the consolidated assessment order for the two years is, dated 18-9-2002 which is not the date cited in the final notice issued under section

61. However, it is the DR's contention that passing of formal order on 18-9-2002 when default under section 61 has indeed occurred albeit on 12-9-2002 will not invalidate the assessments made. Moreover, the persistent default on assessee's part would appear to indicate a deliberate intention to avoid appearance before the Assessing Officer and to get the assessments finalized ex parte. In the case of turnover estimated the learned DR emphasises that notice under section 62 issued on 9-4-2002 duly confronted the assessee with an intended estimate of sales of Rs.700,000 and Rs.800,000 in the two years respectively. The assessee having failed to respond to the notice under section 62 also an adverse inference was statedly rightly drawn and the CIT(A) has unjustifiably reduced the assessee sales on sheer whim.

4. AR of assessee/respondent emphasis that finalization of assessments ex parte on a date later than that intimated to the assessee in the final notice under section 61 has been held by the Tribunal to be illegal in a number of judgments. That being so, it is contended that the assessments for the two years were liable to be treated as untenable in law on this score alone. As far as the relief accorded by the CIT(A) it is argued that the same was fair and reasonable and the department should have no objection on the matter.

5. I have heard both sides and have examined the available record and in my - considered judgment default under section 61 is patent. Notices under section .61 have been issued on as many as six occasions. In the case of notice under section 61 issued on 9-4-2002 for 17-4-2002, the assessee sought adjournment for 23-4-2002 and the same was granted by the Assessing Officer. However, on the due date there was no compliance. Looking at the matter in its entirety, it appears to me that default under section 61 is patent and persistent and appears to be deliberately contrived to force the Assessing Officer's hand and gain un warranted benefit in appeal. The assessee has defaulted not only in the case of notices issued under section 61 on as many as six occasions but has also failed to respond to notice under section 62 issued on 9-4-2002. The ambient circumstances are thus very compelling and lead to the inescapable conclusion that the assessee has deliberately avoided appearance before the Assessing Officer. As for finalization of assessments under section 63 on 18-9-2002 as against final notice under section 61 issued for 12-9-2002 I find that judgments of the Lahore High Court (1996 PTD 1125 & PLD 1975 Lah. 893) lend strong support to the validity of the Assessing Officers action. In these two judgments the High Court has held unequivocally that finalization of assessment ex parte on a date later than the date for which final notice for appearance had been issued was not illegal provided default on the due date was established. As the facts and circumstances in the cited judgment of the High Court are broadly similar to assessee's case these judgments must prevail and any contrary decision recorded by the ITAT is required to be ignored. Ex parte assessments finalized for assessment years, 2000-2001 and 2001-2002 on 18-9-2002 as against notice under section 61 issued for 12-9-2002 are thus found to be in order As for the quantum of relief accorded by the First Appellate Authority in the case of sales estimates for the two years, I find that the First Appellate Authority has indeed acted whimsically and has reduced the assessed sales arbitrarily in an ad hoc manner. The proposed computation of income for the two years as confronted by the Assessing Officer through notice issued under section 62 on 9-4-2002 appears to be fair and reasonable given the facts and circumstances of assessee's case including status of the business/nature of business etc. I will, therefore,, vacate the orders of the CIT (A) and reinstate the assessments as made for the two years by the Taxation Officer.

6. The departmental appeals succeed. H.B.T./322/Tax (Trib.) Appeal accepted.