JUDGMENT This writ petition has been directed to challenge the validity of the notice dated 28-5- 1981 (Annexure F) whereby the Income Tax Officer, Contractor Circle-II, Lahore informed the petitioner that his case has been selected for detailed scrutiny vide para (B) clause (iv) of C.B.R's Circular No. 3 of 1980 as the refund of the assessment year 1980-81 exceeded Rs. 10,000/-. The petitioner was accordingly required to make compliance of notice issued under Section 65 of the Income Tax Ordinance, 1979 (hereinafter called the Ordinance 1. It was further mentioned in the notice that notice earlier sent under Section 22(4) of the Ordinance was issued inadvertently which was withdrawn and a fresh notice under Section 61 was issued for 4-6-1981.
2. The facts giving rise to the filling of the present petition are that the petitioner filed its income- return for the accounting year 1979-80, assessment year as 1980-81 on 31 7-1981 declaring therein net income at Rs. 3,07,285/-. The respondent No. 1 by an order dated 30-9-1980 (Annexure A) accepted the declared income under the Self-Assessment Scheme as provided by sub-section (1) of Section 59 of the Ordinance, subject to an addition of Rs. 42,715/-on account of certain additions from profit and loss account and thereby accepted assessable income of Rs. 3,50,000/-. The total super tax in the name of the petitioner was calculated at Rs. 95,425/- which was adjusted against the tax as Rs. 1,22,678/- deducted at source and notice was issued creating a refund payable to the petitioner at Rs. 27,253/- and notice dated 30-9-1980 (Annexure B) was issued stating therein that a refund in the sum of Rs. 27,253/- has been determined to be payable to the petitioner. On 10-5- 1981, the respondent No. 1 issued a notice under Section 65 of the Ordinance requiring the petitioner to furnish the return on or before 19-5-1981. As per report received from respondent No. 1, the Income Tax Officer made a mistake in the issuance of the notice on the old form instead of issuing the same on the revised form, specimen of which has been placed on record as Annexure 'A' to the report.
3. The learned counsel for the petitions has challenged the validity of the impugned notice on the following grounds:-
(a) Firstly, the notice under Section 65 of the Ordinance was wholly without jurisdiction, inasmuch as, the proceedings under subsection (2) of Section 65 of the Ordinance, for additional assessment cannot be initiated unless definite information has come into the possession of the Income Tax Officer or he has obtained the previous approval of the Inspecting Assistant Commissioner of Income tax in writing before initiating the proceedings. In the instant case, neither there was any definite information nor the Income Tax Officer had obtained the approval in writing of the Inspecting Assistant Commissioner of Income tax.
(b) Secondly, it is submitted that the proceedings cannot be initiated and the re-assessment cannot be made on the basis of Circular No. 3 of 1980 issued by the Central Board of Revenue.
(c) Lastly, it is contended that after withdrawal of notice issued under Section 22(4) of the repealed Income Tax Act, 1922, a fresh notice under Section 61 of the Ordinance was of no avail.
4. Section 65 of the Ordinance reads thus:- "65. Additional Assessm ent.-(1) If, in any year for any reason,-
(a) any income chargeable to tax under this Ordinance has escaped assessment; or
(b) the total income of an assessee has been under-assessed, or assessed at too low a rate, or has been the subject of excessive relief or refund under this Ordinance; or
(c) the total income of an assessee or the tax payable by him has been assessed or determined under sub-section (I) of Section 59 and no order of assessment has subsequently been made under this section or any other provision of this Ordinance, The Income Tax Officer may, at any time, subject to the provisions of sub-sections (2), (3) and (4), issue a notice to the assessee containing all or any of the requirements of a notice under Section 56 and may proceed to assess or determine, by an order in writing, The total income of the assessee or the tax payable by him, as the case may be, and all the provisions of this Ordinance shall, so far as may be, apply accordingly: Provided that the tax shall be charged at the rate or rates applicable to the assessment year for which the assessm ent is made.
(2) No. Proceedings under sub-section (1) shall be initiated unless definite information has come into the possession of the Income Tax Officer or he has obtained the previous approval of the Inspecting Assistant Commissioner of Income Tax in writing to do so.
(3) No order under sub-section (1) shall be made in respect of any income year after the expiration of ten years from the end of the assessment year in which the total income was first assessable.
(4) Nothing contained in sub-section (2) shall apply to any such case or class of cases to which clause (c) of sub-section (1) applies as may be specified by the Central Board of Revenue."
5. There is great force in the argument that in terms of sub-section (2) of Section 65 of the Ordinance, the Income Tax Officer cannot initiate proceedings unless he had definite information in his possession or has obtained prior approval of the Inspecting Assistant Commissioner. The argument, however, is not applicable to the impugned proceedings which have been initiated on the basis of para B-IV of Circular No. 3 of 1980 issued by the Central Board of Revenue. The relevant portion of the Circular in question, reads thus:- "As provided in paragraph 5 of Circular No 18 of 1981, dated July, 28, 1980, the Central Board of Revenue has decided to select the following classes of cases for detailed scrutiny for the assessm ent year 1980-81 out of company and non-company returns filed up to 6-11-1980:- Non Company cases:
(iv) Cases where the refund of income tax for the assessment year 1980-81 is more than Rs.
10,000/-"
6. The petitioner's case admittedly falls within the purview of para B-IV of the said Circular and therefore, no exception can be taken to the impugned proceedings. The scope of the Self- Assessm ent Scheme for the year 1980-81 is governed by the provisions of Section 59 of the Ordinance read with the provisions of the scheme of Self-Assessment made by the Central Board of Revenue for a particular year under any instructions or orders issued thereunder. The salient features of the Self-Assessm ent Scheme for the year 1980-81 are covered by Circular No. 18 of 1980.
Paragraph 7 provides the method of processing of case under the Self-Assessment Scheme. Sub- para (1) of para 7 provides:- "(i) Assessm ent in all cases including those earmarked for detailed scrutiny under Paragraph 5, but not including those referred to in paragraph 4 above, shall be completed under Section 59(1) of the Income Tax Ordinance, 1979. The tax payers will not be called to office even where the requisite documents have not been filed along with the return. In such cases the documents will be obtained through correspondence by registered post".
7. Para 8 of the Circular lays down the conditions of processing of cases set apart for detailed scrutiny. The relevant portion reads thus:- "As mentioned in para 7 (1) above, all such cases shall be processed in the first instance under Section 59 (1) of the Income Tax Ordinance, 1979. Such cases or classes of cases as are earmarked by the Board under sub-section (4) of Section 65 shall be reopened for detailed scrutiny without requiring the approval of the IAC".
8. If would thus be seen that Circular No. 18 of 1980 itself provides that in the first instance all cases qualifying under Self-assessm ent Scheme shall be assessed under Section 59(1) of the Ordinance.
Thereafter, such cases as were selected by the Central Board of Revenue for detailed scrutiny of accounts through Circular No. 3 of 1980 were to be re-opened under Section 65(1) (c) of the Ordinance and assessm ent framed in the normal manner under Section 62 or 63 as the case may be. It is true that ordinarily where the assessment is framed under the Self-Assessment Scheme, the detailed scrutiny of the accounts is normally not undertaken. In the instant case, however, the petitioner's case admittedly falls within the purview of para B-IV of Circular No. 3 of 1980. The petitioner's case also falls within the mischief of Section 65 (l)(c) of the Ordinance, inasmuch as, the total income of the petitioner/the tax payable by him has been assessed/determined under sub-section (1) of Section 59 of the Ordinance and no order of assessment has subsequently been made under Section 65 or any other provision of the Ordinance. It is specifically stated in para 5 of the report submitted by the Income Tax Officer that the petitioner's case had neither been scrutinised for the assessm ent year 1979-80 nor the declared income for 1980-81 showed an increase of 20% or more over the highest assessed income of the last three preceding years. The instant case had been assessed only for two years, i.e.. 1978-79 and 1979-80. The highest assessed income for 1979-80 amounted to Rs. 5,28,257/- whereas the returned income for 1980-81 is Rs.
3,07,285/-. There is thus a short-fall of Rs. 2,20,972/- over the highest assessed income. I am therefore of the view that the petitioner's case stands qualified for detailed scrutiny of accounts in terms of para B-IV of Circular No. 3 of 1980 dated 8-12-1980 and no exception can be taken to the impugned proceedings. In order to initiate proceedings under Section 65(l)(c), there is no need at all that there be any "definite information" of concealment or evasion. Sub-section (4) of Section 65 of the Ordinance expressly provides that the requirement of "definite information" stipulated in sub- section (4) of Section 65 shall not apply to cases as may be selected for detailed scrutiny by the Central Board of Revenue.
9. As regards the technical error in issuing the notice under Section 22 (4) of the repealed Act, no prejudice has been caused to the petitioner as the same was subsequently withdrawn and superseded by a valid notice under Section 61 of the Ordinance. The mere irregularity in the form of notice does not have the effect of vitiating the impugned proceedings as' provided under Section 155 of the Ordinance which reads thus:- " Certain mistakes not to vitiate assessment, etc.-No assessment order, notice, warrant or other document made, issued or executed or purporting to be made, issued or executed under this Ordinance shall be void or otherwise inoperative merely for want of form, or for a mistake, defect or omission, if not 'of a substantial nature prejudicially affecting an assessee."
Reference may also be made to The Tarig Transport Company, Lahore v. The Sargodha-Bhera Bus Service and 2 others (PLD 1958 S.C. 437) in which it was held that it is sound rule, recognised by almost all general codes of procedural law and absolutely essential for the preservation of all duly considered verdicts, that an omission or error in procedure, unless it has occasioned a failure of justice or prejudiced a party in the presentation of his case, Is hot a Sufficient ground for reversing the decision.
10. In the instant case, the mistake in sending the notice under the repealed law which was subsequently rectified by issuing a proper notice has not resulted in failure of justice or prejudice to the petitioner in any manner whatsoever.
11. A preliminary objection has been raised by the learned 'Deputy Attorney-General that the writ petition under Article 9 of the Provisional Constitution order No. 1 of 1981 is not maintainable unless the petitioner exhausts adequate legal remedies of appeal and revision available under the Ordinance. 1 agree with the learned Deputy Attorney-General that where there is another adequate and efficacious remedy open to the petitioner, a petition under Article 9 of the Provisional Constitution Order, 1981 would be incompetent unless the legal remedies as well as the remedies provided in the Ordinance are exhausted. There is, however, an ample authority on the proposition that where the question of jurisdiction of the hornety passing the impugned order Is "raised, the remedy of appeal is not adequate and efficacious as the writ jurisdiction of the High Court and consequently in such cases, a petition under Article 9 of the Provisional Constitution would be competent. Reference may be made to Messrs Haroon and others v. The Collector of Customs, Karachi (PLD 1959 S.C. (Pak.) 1977); it, Col. Nawabzada Muhammad Amir Khan v. The Controller of Estats Duty (PLD 1961 S.C. 119); Premier Cloth Mills itd., v. The Sales Tax Officer (1972 S.C. M. R. 257); Salah-ud-Din and others v. Frontier Sugar Mills (PLD'1975 S.C. 244); The Burmah Oil Co. (Pakistan Trading) itd. Chittagong v. The Trustee of the Port of Chittagong. (PLD 1962 S.C. 113); Pakistan and another v. Qazi Ziauddin (PLD 1962 S.C. 4401; Nagina Silk. Mitts. Lyallpur v. The Income tax Officer and another (PLD 1963 S.C. 322); Abdul Ghani arid another v. Subedar shoeded Khan Company and others (PLD 1968 S.C. 131); Messrs Usmania Glass Sheet Factory itd., Chittagong v. Sales tax Officer, Chittagong (PLD 1971 S.C. 205); and The Murree Brewery Co. itd. v. Pakistan, etc. (PLD 1972 S.C. 219).
The preliminary objection, therefore, falls and is hereby overruled. However, I find no merit in the petition as discussed above.
The upshot of the above discussion is that this petition fails and is hereby dismissed in limine.