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Income-tax Appeal No.322 (1B) of 1985-86, decided on 15th April, 1.986.

---Ss. 56 & 61--Issuance of notices under Ss. 56 & 61--Notice served simultaneously--Ex parte assessment--Reasonable period opportunity for complying with notices served on assessee either under S.56 or "S.61, has to be given.

Notices under sections 56 and 61 of the Income-tax Ordinance, 1979 were served simultaneously on the assessee on 25-4-1984 for presence of 29-4-1984. This manner of service of both the notices is not proper. The Income-tax Officer to begin with should have served notice under section 56 of the Ordinance requiring the assessee to file its return of income. For complying with this notice, the assessee should have been given a reasonable opportunity which in the instant case was denied to it. Thereafter, notice under section 61 of the Ordinance should have been served on the assessee and it should have been given a reasonable opportunity to comply with its requirements. Even in respect of this notice, reasonable opportunity was denied to the assessee as both the notices were served simultaneously on 25-4--1984 for compliance on 29-4-1984. Thus, it is abundantly clear that a reasonable opportunity for complying with the notices served on the assessee either under section 61 or under section 61 of the Ordinance was not extended to it.

A period of 4 days to comply with the terms of a notice under this section cannot be considered by any standard to be a reasonable period. Therefore, on this ground ex parte assessment could not be legally made by the Income-tax Officer.

---Ss.56 & 63--Income-tax Officer is required to allow a period of 30 days to file a return from date of service of such notice--However, longer or shorter period as may be specified in such notice or/as the Income-tax Officer may allow, can also be given--For allowing longer or shorter period, Income-tax Officer, is required to record reasons for that--Where no reason was recorded by the Income-tax officer for curtailing period of 30 days for complying with the terms of a notice served on assessee under S. 56, assessment in that case, held, could not be made legally under S.63.

Javed A. Qureshi for Appellant

Ihsan Ellahi Tariq D.R. for Respondent.

Date of hearing: 15th April, 1986

This appeal on behalf of the assessee is directed against the impugned order of the learned A.A.C. by virtue of which he confirmed assessment relating to the charge year 1983-84.

2. Brief facts giving rise to this appeal are that the assessee, namely, Messrs. War Iqbal, Jared Iqbal, derives income from plying bus No.4533-T HA can commission with the Government Transport Service, Gujrat As the assessee did not care to respond to notices served on it under sections 56 and 61 of the Income-tax Ordinance, 1979, assessment relating to the charge year 1983-84 was finalized under section 63 of the said Ordinance. In this view of the matter, by allowing expenditure alt 55% of the net receipts, income of the assessee was computed at Rs.82,463. To this income was added income amounting to Rs.4,158 so as to tax the assessee on total income of Rs.86,621. The Income so assessed was contested in appeal before the learned A . A . C who by virtue of Appeal No.1155 dated 2-9-1984, confirmed assessment relating to the charge year 1983-84. This finding of the learned A . A . C . having been objected to by the assessee was contested in appeal before the Tribunal. In this connection, grievances of the assessee are listed below: -

(i) That the order of the learned A.A.C. confirming assessment was illegal and factually misconceived.

(ii) That confirmation of assessed income was not based on any methodical computation.

(iii) That adequate expenditure was not allowed to the assessee at both the stages below.

(iv) That depreciation to which the assessee was legally entitled was not allowed by both the Officers below.

3. We find that in this case, assessment relating to the charge year 1983-84 was made ex parte under section 63 of the Ordinance ibid. In this connection, relevant part of the assessment order is set out below:-

"Notices under section 56 and 61 were then issued and marked to the Circle Inspector for proper affixture or otherwise. He has served these notices upon the assessee on 25-4-1984 for attendance on 29-4-1984. On 29-4-1984, neither the assessee has attended this office to represent his case nor any application has been moved by him for adjournment. This all shows that the assessee not pat all Interested in representing his case and he thinks beneficial to get his assessment complete ex parte under section 63 of the income-tax Ordinance, 1979. In these 2irctsmstances of the case there is left no other alternative to complete assessment ex parte. "

4. After hearing learned counsel of the assessee, we find that notices under sections 56 arcs 4111 of tile Income-tax Ordinance, 1979, were served simultaneously on the assessee on 25-4-1 984 for presence of 29-4 1984. This manner of service of both the notices, in our opinion, is not roper. The Income-tax Officer to begin with should have served notice under section 56 of the Ordinance ibid requiring the assesse to file its return of income. For complying; with this notice, the assessee should have been given a reasonable opportunity which in the instant case was denied to it thereafter, notice under section 61 of the Ordinance should have been served on the assessee arid it should haves been given a reasonable opportunity to comply with its requirements. Even in respect of this notice, reasonable opportunity was denied to the assessee as both the notices were served simultaneously on 25-4-1984 for compliance on 29-4-1984. Thus it is abundantly clear that a reasonable opportunity for complying with the notices served on the assessee either under section 56 or under section 61 of the Ordinance ibid was not extended to it. In coming to this conclusion, we have relied to begin with on section 56 of the Ordinance ibid which is given below: --

"The Income-tax Officer may, at any time by notice in writing, require any person who, in his opinion, is chargeable to tax for any income year to furnish a return of total income for such year within thirty clays from the date of service of such notice or such longer or shorter period as may be specified on such novice or as the Income tax Officer may allow."

5. From a plain reading of section 56 of the Ordinance ibid, it is abundantly clear that normally the Income-tax Officer is required to, allow a period of 30 days to file a return from the date of service of such notice. However, longer or shorter period as may be specified in R such notice or as the Income-tax Officer may allow, can also be given. In our opinion, for allowing longer or shorter period, the Income-tax Officer, is required to record reasons for it. In the instant case, no reason was recorded by the Income-tax Officer for curtailing period of 30 days for complying with the terms of a notice served on the assessee under section 56 of the Ordinance ibid. Therefore, for its non-compliance, assessment could not be made legally under section 63 of the Ordinance ibid.

6. We also find that notice under section 61 of the Ordinance ibid was served on the assessee on 2 5-4-1984 for compliance on 29- 4-1984 Under this section, no period has been specified for the production of documents or books of accounts after the service of notice on the assessee. In the absence of specific period having been mentioned in this section, it must be construed to mean a reasonable period. In our considered opinion, a period of 4 days to comply with the terms of a notice under this section cannot, considered by any standard to be reasonable period. Therefore, on this additional ground ex parte assessment could not be legally made by the Income-tax Officer. City have, therefore, no hesitation in stating that the learned A. A. C. fell into an error in confirming assessment which is legally defective. In this view of the matter, we vacate his order and set aside the assessment to be made de novo in accordance with law and the facts of this case.

7. As relief has been allowed to the assessee on a preliminary objection, it is not necessary for us at this stage to pass on a judgment on other grounds of appeal set out in the grounds of appeal.

8. In consequence of the above order, appeal filed by the assessee succeeds to the extent and in the manner indicated above.

M.B.A. Appeal partly accepted.

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