These appeals in the above case have been filed by the Revenue against the order of the CIR(A) recorded by him vide Order No. 249 of 2009, dated 30.10.2009.
2. The revenue has agitated the cancellation of the order of the Assessing Officer by holding that there was no assessm ent order in this case hence there was no question of the cancellation of any, under the provisions of Section 122(5).
3. Brief facts of the case are that the assessee for the tax year, 2003 filed statement-under Section 115 of the Income Tax Ordinance, 2001. The statement filed under presumptive tax regime was treated as deemed assessm ent under Section 120 and on the basis of definite information it was modified under Section 122. The modification of the order under sub-section (5) of Section 122 Was challenged before the first appellate authority who accepted the arguments. Consequent learned first appellate authority held that the statement filed under Section 115 is neither a return nor there is any concept of deemed assessment order hence there is no question of subsequent modification, in this regard the reliance is on the judgment reported as 2003 PTD 739 (H.C. Sindh) in which it has inter alia been held:-
(i) that statement filed under Section 115 is not a return of income;
(ii) that there is no concept of deemed assessment order in presumptive tax regime;
(iii) Section 122(5) provides for cancellation of an assessment order and not an assessment.
4. Before us the revenue has challenged this treatment by arguing that the case relied upon is on different set of circumstances. The "honourable High Court finding that the statement filed under presumptive tax regime is not equal to return on the basis of the provisions of erstwhile Income Tax Ordinance, 1979. The assessm ent framed now i. e. For the tsp< year 2003 has got nothing to do with the said repealed Ordinance of 1979. The present proceedings are under the new law i.e. Income Tax Ordinance, 2001. The judgment, therefore, is not applicable on all fours, on the facts and circumstances of this case. Furthermore the leamed CIR(A), has totally ignored that it is a case of deemed assessm ent under the provisions of Section 169(3). This provision deals with the statement filed under the presumptive tax regime, It is correct that the said statement has been declared as a return of income tax by the Finance Act, 2002 but its applicability on proceedings in hand is beyond any doubt. Moreover, the explanation inserted by Finance Act, 2010 has not brought any change otherwise, lt has brought into the procedure a little more clarity but. In the presence of sub-section
(3) of Section 169 there was no embargo even earlier for cancellation of an assessment treated to have been so passed by the operation of law under Section 120. Lt also does not need any mentioning that the explanation only simplify the law which is already there. Unless it adds anything new it remains retrospective. Further, if the interpretation of the learned counsel which has been appreciated by the first appellate authority is accepted then the provisions o Section 122 shall become redundant. As a deemed assessment under sub-section (3) of Section 169 is not considered as an assessm ent order than the other deemed assessment under Section 120 in continuation to a return filed under Section 114 shall also have the same fate. Ln the other eventuality again there is an assessment without an assessment order either.
5. Learned counsel in his rebuttal produced another judgment of the honourable High court of Sindh reported as 2006 PTD 734 (H.C. Sindh), lt has been reiterated in this judgment that there, is no provision in law that provides for cancellation of a statement filed under Section 115. Lt is claimed that the spirit behind this opinion is obvious. The legislature has made the deduction as full and final discharge in respect of a number of business activities for the obvious reason that the same is to save the taxpayers from hassle especially from the departmental negative attitude. The purpose of declaring certain business activities as full and final discharge is to attach finality to the said deduction.
6. So far as the judgment referred before this court now is concerned, it is in fact distinguishable.
With full respect for the same it has not discussed the language of Section 169(3) in its true meanings. Section 169 declares tax collected or deducted as final tax in certain particular situation, lt has very clearly mentioned in it that withholding tax charged on the provisions mentioned therein to be as final discharge. However, it does not protect any other source of income of the assessee which is not covered by the said transaction. This obviously means that the other provisions of the Income-Tax Ordinance still remains intact. Under the above scheme of law some particular sources of income have been put under presumptive tax regime and have been declared as final discharge. However, the law makers in their wisdom through insertion of the words "an assessment shall be treated to have been , made under Section 120 and" have declared the filing of the statement, equal to an assessm ent. This phrase read with complete remaining Section i.e. "the person shall not be required to furnish a return of income under Section 114 for the year" has made the statement a substitute of the return u/s. 114. Further such assessment is treated to have been made under Section 120 (emphases added). This aspect and this part of the language pf the law has not brought to the knowledge of honourable Court. Thus now if we look into the provisions of sub-section (1) of. Section 122 it read as follows:- "122. Amendment of assessm ent.-(1) Subject to this Section, the Commissioner may amend an assessm ent order treated as issued under Section 120 or issued under Section 121, [or issued under Section 69, 59A, 62, 63 or 65 of the repealed Ordinance,] by making such alterations or additions as the Commissioner considers necessary."
7. Above provision inter alia deals with amendment of an assessment order treated as issued under Section 120 or issued under Section 121. The legislature in its wisdom has treated the statement as an assessm ent under Section 120 in continuation of treating the statement under Section 115 as a substitute of return under Section 114. For all practical purposes now the statement is a return and the consequence of assessment under Section 120 in respect of return under Section 114 shall follow in respect of statement under Section 115. The reason is obvious the statement having been declared as substitute of the return all subsequential treatments and benefits on its submission shall apply mutatis mutandis on the statements also. With full respect for the arguments and the judgments I hereby disagree with the treatment meted out by the first appellate authority. The order to the said extent, therefore, is cancelled. However the matter is remanded back to CIR(A) for deciding the other issues, which statedly have not been adjudicated upon by the first appellate authority as the appeal has been decided on other technical grounds.
Tax year 2008
8. The Revenue has challenged the order on the ground that the first appellate authority has deleted the addition by holding that the words date of discovery has not properly defined by the first appellate authority.
9. Brief facts in brief are that the revenue got information that the taxpayer has purchased some property on 26.6.2007. The department treated the same an information and after issuing a show- cause notice added the same in the previous tax year as was required under Section 111. The first appellate authority relied upon a judgment reported as 2003 PTD 739. Ln the said judgment the learned Tribunal has held the date of intimation to the revenue authority to be as the date of recovery, in fact this Court has also given similar view in one of the judgments. However, this view has not been approved by a Full Bench of this Tribunal. The Full Bench comprising of 3 members of this Tribunal have considered the date on which the matter came to the knowledge of the department to be as information, in their opinion the discovery is different from information or coming to knowledge. The information may come to the knowledge of person by mouth or any other source but 'discovery' can only be established when information is supported by reasonable evidence. Some evidence that leads to the reason to believe of the existence of the some undisclosed asset or income leads to the 'discovery'. The judgment in field therefore has taken a different view. The same is registered as I.T.As. Nos. 756 and 757/LB of 2009.
10. As a result this Court is bound to disagree with the findings in respect of 2008 as well. The principle of stare decisis demands following 'the full bench judgment in letter and spirit. Regarding other arguments which have not been disposed the matter is remanded for its disposal by the CIR(A) again.
11. Order accordingly.