FINDINGS /DECISION ' This complaint has been filed contesting the selection of complainant's for total audit under para. 9(a)(ii) of the Self-Assessm ent Scheme 2002-2003 as unjustified.
2. Brief facts of the case are that the complainant derives income from commission as distributor of Nestle Milk Pack Ltd. And Haidri Beverages (Pvt.) Ltd. Return was filed declaring income of Rs,748,048 under Self-Msessm ent Scheme. The RCIT, Northern Region, Islamabad vide his letter, dated 22-1-2003 confronted the complainant with the following basis for the proposed selection of the case for total audit: "Gross receipts declared at Rs,14,263,761 against which P and L expenses claimed at Rs,13,515,718.
Sales were assessed by the survey team at Rs,240,000,000. The assessee has declared vehicles in his own name in the survey form but the wealth statement is silent in this regard. Rent paid Rs,999,000 through cash may attract the provisions of section 21(1) of the Income Tax Ordinance, 2001."
3. The complainant, in his reply to the RCIT, pointed out that as a distributor he received commission of Rs,14,263,761 against sale of Rs,332,275,823 conducted on behalf of the principals which were more than the sales assessed by survey team at Rs,240.,000,000. As regards vehicles these were declared in the balance sheet and a list of vehicles owned by the complainant and obtained in lease was furnished. In respect of rent it was stated that the same was paid through cheques and details of cheques were also furnished contending that the provisions of section 20(1) of the Income Tax Ordinance, 2001 were not attracted as envisaged by the RCIT. The complainant's contentions were however not accepted by the RCIT and the case was selected for total audit; hence this complaint.
4. The respondent's reply has been received in which selection of the case for total audit has been stated to be quite valid being in accordance with the C.B.R.'s guidelines. It is stated that the declared commission/margin at Rs,1,426,376 does not commensurate with the receipts assessed in the survey at Rs,240,000,000. Moveover the entire rent of Rs,999,000 has been paid in cash attracting the provisions of section 24(ff) of the repealed Income Tax Ordinance, 1979, while the investment introduced towards purchase of vehicles also requires probe.
5. The contentions of the two sides have been considered and their representatives heard. The AR of the complainant stated that being distributor of different companies the commission receipts declared.Were fully verifiable. It is further stated that the sale price of articles is also fixed and the complainant cannot charge more of his own. Sales effected during the year at Rs,332,275,832 are definitely much more than estimated by the survey team at Rs,240,000,000. The complainant had filed copy of Rent Ledger containing details of cheques through which rent was paid. A copy of the bank statement has also been filed now which indicates that payments were made through crossed cheques. The AR of the complainant objected to the contents of the respondent's reply regarding intended probe into the investment introduced towards purchase of vehicles on the plea that this was an afterthought of the RCIT as the complainant was not confronted with any such basis. It was however, stated that no investment was made on this score during the year under consideration.
6. In view of the above, all three basis adopted by the RCIT for the selection of the case for total audit are not found valid. It is therefore, recommended that:--
(i) The case of the complainant be excluded from the list of cases selected for total audit and return be accepted under the Self-Assessment Scheme.
(ii) Compliance be reported within 30 days of the receipt of this order.