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I.T.A. No. 343(IB) of 1985-86, decided on 16th December, 1986.

---S. 134--Appeal--Additional grounds of- appeal having been taken before Tribunal being a pure question of law, were allowed to be argued by the Tribunal.

---Ss. 59(1) & 65(4)--Central Board of Revenue's Letter No. C.1(3)/ I.T.-IV/81, dated 26-1-1981--Self-Assessment Scheme 1980-1981--Return filed under Self-Assessment Scheme accepted--Assessment re-opened under S. 65 on basis of list approved by Central Board of Revenue vide its Letter No. C.1 (3)/IT-IV/81, dated 26-1-1981 and re-assessment was made after examination of books of account--Income-tax Officer, held, had rightly re-opened assessment under S.65 in circumstances.

From the words qualifies for acceptance in accordance with provisions of Self-Assessment Scheme made by the Central Board of Revenues for that year or under any instructions or order issued thereunder'; clearly stipulate that acceptance of return under section 59(1) of the 1979 Ordinance has been subordinated to the provisions of the Scheme of Self-Assessment for that year or under any instructions or orders issued thereunder by the Central Board of Revenues. The concession of Self-Assessment Scheme therefore, is not absolute but is subject to the Scheme of Self-Assessment for that particular year.

According to the C.B.R. Circular which spells guidelines for making of assessments under the Self-Assessment Scheme, all cases which qualified for processing under paragraph 7 were to be picked up and assessments made under section 59(1) of the Ordinance. Subsequently such cases or class of cases selected by the Central. Board of Revenues could be earmarked for assessment under section 65 of the Ordinance. The power to do it was provided vide paragraph 4 of the said circular.

Support is also found from section 65(4) of the Ordinance. Therefore, case of the assessee having been selected .for a detailed scrutiny, assessment was made -in accordance with law under section 65 of the Ordinance.

Mian Zahooruddin and Muhammad Hayat for Appellant.

Maqbool Hussain Shah D.R. for Respondent.

Date of hearing: 15th December, 1986.

.--This appeal on behalf of the assessee is directed against the impugned order of learned C.I.T. (Appeals) in consequence of which he modified assessment relating to the charge year 1980-81.

2. Brief facts giving rise to this appeal are that the assessee, a registered firm, derives income from running an oil mill and an ice factory. It filed a return to disclose net income of Rs.88,000 under the Self-Assessment Scheme. It was accepted on the basis of original order passed on 15-11-1980 under section 59(1) of the Income-tax Ordinance, 1979 (hereinafter called the Ordinance). Subsequently, this assessment was reopened on the basis of a list approved by the Central Board of Revenues vide its Letter No. C.1(3)/IT-IV/81, dated 26-1-1981. As name of the assessee was in it, re-assessment was made as a result of which after examination of books of accounts, its income was computed ac Rs.5.76,455. Income so assessed was contested in appeal before learned C.I.T (Appeals) who by virtue of Appeal Nos. 631 and 764, dated 23-1-1981, modified assessment relating to the charge year 1980-81. The assessee having felt dissatisfied with the adequacy of relief filed second appeal before the Tribunal. In this connection, objections of the assessee are fisted below:-----

(i) That yield of cotton seed oil as adopted by the Income-tax officer and subsequently confirmed by learned C.I.T. (Appeals) was excessive.

(ii) That crushing expenditure allowed at Rs.4 per 40 KGs was inadequate.

(iii) That learned C.I.T. (Appeals) did not allow adequate relief in respect of sale of oil cakes.

(iv) That average sale rate per block as adopted by the Income-tax Officer and subsequently confirmed by learned C.I.T. (Appeals) was excessive.

3. Learned counsel of the assessee during the course of hearing filed an additional ground of appeal which is set out below:--

"That income of the assessee having been assessed under section 59(1) of the Ordinance, there was no justification to reopen assessment relating to the charge year 1980-81 without any definite information.,"

4. The additional ground of appeal taken up before us by learned counsel of the assessee relates to a pure question of law and, therefore, we have allowed him to argue it before us.

5. Learned counsel of the assessee has argued at length to establish that there was no justification with the income-tax officer to have reopened this assessment as it was finalized under subsection (1) of section 59 of the Ordinance. In support of this contention, he has pointed out that once an assessment is made under section 59(1) of the Ordinance, it could not be reopened unless definite information fell into the hands of the Income-tax Officer necessitating action against it under section 65 of the Ordinance. Since this was not the case, reopening of assessment under section 65 of the Ordinance was ab initio illegal. He has accordingly made a strong plea that assessment made under section 65 of the Ordinance should be annulled.

6. Learned D.R. on his part, has strongly contested what has been stated before us by learned counsel of the assessee. In support of his arguments, reliance has been placed on section 59(1) and instructions of the Board governing Self-Assessment Scheme for the charge ear 1980-81. Based on section 59(1) and instructions of the Board, learned D.R. has stated that assessment was rightly framed under section 65 of the Ordinance.

7. On the basis of information available on record, it is true that income of the assessee was originally assessed under section 59(1) of the Ordinance by virtue of Income-tax Officer's order, dated 15-11-1980. However, subsequently this assessment was reopened under section 65 of the Ordinance as name of the assessee was approved for a detailed scrutiny vide Central Board Revenue s Letter No. C.1(3)/IT-[V/81, dated 26-1-1981. The question for consideration, therefore, is whether the Income-tax Officer had rightly reopened this assessment under section 65 of the Ordinance or not

8. The original assessment as is evident from record, was made under section 59(1) of the Ordinance which reads as under:--

"Where return of total income for any income year furnished by the assessee under section 55 qualifies for acceptance in accordance with the provisions of Self-Assessment Scheme made by the C. B. R. for that year or under any instructions or orders issued thereunder, the Income-tax Officer shall assess on the basis of such return and determine tax payable on the basis of such assessment. "

9. From the words "qualifies for acceptance in accordance with provisions of Self-Assessment Scheme made by the Central Board of Revenues for that year or under any instructions or order issued thereunder", clearly stipulate that acceptance of return under section 59(1) of the Ordinance has been subordinated to the provisions of the Scheme of Self-Assessment for that year or under any instructions or orders issued thereunder by the Central Board Revenues. The concession of Self-Assessment scheme, therefore, is not absolute but is subject to the Scheme of Self-Assessment for that particular year. To resolve this issue, we have examined the Self-Assessment Scheme in pursuance to Central Board of Revenues instructions in respect of the charge year 1980-81. In this connection, we have examined Circular No. 18, dated 30-7-1980. According to it which spells guidelines for making of assessments under' the Self-Assessment Scheme, all cases which qualified for processing under paragraph 7 were to be picked up and assessments made under section 59(1) of the Ordinance. Subsequently such cases or class of cases selected by the Central Board Revenues could be earmarked for assessment under section 65 of the Ordinance. The power to do it was provided vide paragraph 4 of the said circular, which is set out below for facility of reference:--

--The following cases shall not qualify for processing under the Self-Assessment Scheme ..............

(v) cases selected for a detailed scrutiny by the Board.",

10. What has been stated hereto before, also finds support from section' 65(4) of the Ordinance. Therefore, in our opinion, case of the assessee having been selected for a detailed scrutiny, assessment was made in accordance with law under section 65 of the Ordinance by virtue of income-tax officer's order, dated 27-2-1983. First objection of learned counsel of the assessee, therefore, fails.

11. In respect of crushing, the Income-tax Officer made an addition of Rs. 43, 536 on account of low yield in oil. Brief facts leading to this addition are that the assessee disclosed yield of oil at 4 Seers 14 Chhitanks to a Maund. This yield was considered to be low by the income-tax Officer in the following words:--

"The account being defective, reliance can only be placed on the declared results of other parallel cases."

M. B. A./354/T Appeal partly accepted.

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