WAJIHUDDIN AHMED, J.--This Constitution petition calls into question notice/order dated 26-5- 1988 under section 61 of the Income-tax Ordinance, addressed by the respondent No. 1 to the petitioners.
2. The controversy in the case started with a notice from the respondent No. 1 to the petitioners, dated 10-4-1988, wherein, in relation to petitioners Income-tax Return under the Self-Assessment Scheme, for the assessm ent year 1987-88, by way of discrepancies, it was pointed out that payment of Rs. 57,00,000, towards purchase of Plot No.9/2, Street SR-2, Hasrat Mohani Road, Karachi was shown to have been made upto 30-6-1987, whereas commencement of construction of the project, to be raised on such plot, in the name and style of "Chapal Plaza" could only be taken in hand, after obtaining of the "No Objection" certificate from the Building Control Authority, which came about on 24-12-1987, thereby rendering the expenditure inadmissible, not being relatable to an ongoing project and, besides, "Electric Estimate" to the tune of Rs. 14,73,999 also remained to be explained. Explanation was sought by 18-4-1988. Such explanation was rendered through letter dated 16-4-1988 from the petitioners' learned counsel. It was, inter alia, explained that the petitioner did not submit any "trading account" but only a "receipt and expenditure statement" in consonance with CBR Circular No. 9 of 1987, dated 26-10-1987, (Self-Assessment Scheme of Income-tax 1987- 88) and that the sum of Rs. 57,00,000 was correctly shown on the debit side of the "receipt and expenditure account" in consonance with the practice of the assessee since the year 1984-85, regarding which no objection was ever raised. It was recalled that notice under Section 65 of the Income-tax Ordinance, 1979, was issued in relation to the assessment years 1984-85 and 1986-87, to question which Constitution Petitions Nos. 204/88 and 205/88 were filed and admitted and stay also operated therein. As to the "Electric Estimate" it was said that the amount of Rs. 14,73,999 was not an estimate but actual expenditure. This resulted in letter dated 19-4-1988 from the respondent No. 1. It was admitted that the assessee had not maintained "trading account" but only "receipt and expenditure account". However, as to the claim of Rs. 57,00,000, by way of expense, it was said that such expense was not related to receipts declared and, therefore, was not an admissible expense.
As to the practice of the assessee, it was maintained that the assessment for the assessment year 1984-85 was completed under Self-Assessment Scheme and as such alleged illegality was not noticed. Since it was noted, in the foregoing circumstances, the assessee were required to furnish sale-deeds of plots purchased during the assessment years 1984-85, 1985-86 and 1986-87, as also receipts, in accordance with a suggested pro forma. As to the payment of electricity charges, amounting to Rs. 14,73,999, due evidence was sought. The assessee replied through letter No. 416 dated 26-4-1988 from counsel. In such letter, it was said that since the assessee was following "cash system", therefore, in the "receipt and expenditure statement", it was indicating whatever cash was coming in or going out. Sale-- deeds in respect of plots, purchased during the assessm ent years 1984-85, 1985-86 and 1986-87, were declined on the ground of pendency of the above said two petitions. As to electricity payments some documents were submitted. This last letter occasioned the impugned notice, dated 26-5-1988, in which on the grounds that details and particulars not having been provided and explanations offered, being found unsatisfactory, the case, for the assessm ent year 1987-88, was set apart from the purview of the Self-Assessment Scheme. All necessary details, in pursuance, were asked for. This led to the filing of the present petition on 5-6---1988 which, on submission of comments, was admitted to regular hearing.
3. The contention, from the side of the petitioners, based inter alia on the decision of the Supreme Court of Pakistan in the case of Frontier Sugar Mills (PLD 1975 S.C. 244) is that the impugned notice is bad, being without jurisdiction and without lawful authority. As to availability of alternative relief, which could come in the way of relief under Article 199 of the Constitution, it is urged that no appeal or other remedy against such an excessive exercise of jurisdiction is available under the Income- tax Ordinance, 1979 or the Scheme. This seems to be so. Mr. Shaikh Haider, learned counsel for the department, however, contends that no excess in exercise jurisdiction is involved and that the petitioners, being guilty of concealment, stand deprived of preferential treatment under the Self-- Assessm ent Scheme. This will require examination. However, if the respondents did exceed jurisdiction and if no alternative remedy be available correction or other remedial measures can be sought under Constitutional jurisdiction a emanating from Article 199 of the Constitution of Pakistan.
4. The Self-Assessm ent Scheme, continued by the Central Board of Revenue, under Section 59 of the Income-tax Ordinance, 1979, is calculated to benefit assessee and to simplify procedures thereby reducing, avoidable burden from the assessing authorities. It is no doubt true that in order that an assessee should qualify and benefit under the Scheme there must be a proper and strict compliance with the terms and requirements of the Scheme. It is indeed laid down that in case of failure so to comply the benefit of the Scheme would not be available to the assessee. Likewise, under para. 8 of the Scheme, "where positive evidence of concealment exists or comes into the possession of the department, during the pendency of the assessment" the case "shall fall outside the purview of the Self-Assessm ent Scheme irrespective of the claim for exemption from total audit". The Department appears to have acted under such para. Of the Scheme,
5. As regards the payment of purchase price of the above-said plot, we find that the dispute may really be one of accounting. The petitioners, avowedly, have been following "cash system" of accounting procedure and if expense is shown in one accounting year, resulting in curtailment of income for that year, the same should adequately be offset in a subsequent year, when income on the basis of such expenditure comes to accrue. This, however, may result in some foreseeable results, which can be adverse to the Revenue. Consequences, depending upon subsequent developments of facts, may very well be escapement of taxable income or, at least, confusion giving rise to complications. As such, whatever is the relevant procedure, generally, in vogue, may have to be closely examined in juxtaposition with that followed by the assessee, on the merits or demerits of either of which, we do not, at this stage, wish to say anything more.
6. On the question of expense for electricity, it is to be seen that, as to such payment of Rs. 11,52,968 made on 15-8-1987, the assessee has related back the expense to the period prior to 30-6-1987, when it fell due, thereby claiming benefit of the payment during the assessment year under reference. This could be in consonance with "Mercantile system" of accounting and not "cash system" as has, purportedly, been followed by the assessee in relation to the above plot. It is thus patent that the assessee has inexplicably followed two different systems of accounting in the context of one and the same return. It seems to have taken advantage of either system where it suited. This may constitute approbation and reprobation at the same time. It is clearly not permissible. Whether such conduct constitutes "concealment" within the meanings of para. 8 of the Self-Assessm ent Scheme, justifying the action of the department remains to be seen but in the overall context.
7. Another ingredient in relation to the electricity payments are sums totalling Rs. 17,130 shown to have been paid by the assessee on behalf of some 74 parties. This, also, according to the respondents constitutes "concealment". This may not be so. Such payments shall have to be related back to the relevant payments made for the various bookings in the project concerned.
Whether or not such payments were made to the assessee by the parties involved shall, first, have to be examined and only thereupon the matter would mature, conclusively or otherwise, for determination as to the element of "concealment", if any Action on this point was, therefore, premature.
8. While we agree with the Department on the two conflicting modes of accounting followed by the assessee and uphold the contention of Mr. Shaikh Haider that the conduct of the assessee leaves much to be desired and that the explanations called for from the assessee were, substantially, in order, we observe that no positive finding that such omissions or digressions constituted clear-cut acts of "concealment", which is what is required in order to keep a case apart from the "purview" of the Self-Assessm ent Scheme, was recorded by the Department.
9. In our view, "concealment" here involves a positive act, of commission or omission, calculated, intentionally, to hide or to suppress something with a view to make fraudulent or unlawful gains.
The acts on the part of the assessee may solely have been the result of over-zealousness to avoid and to evade, what they could have thought an unnecessary burden. If an incons1stency is manifest and inexplicable on bona fide grounds, it would not constitute "concealment". Expense on the plot, as observed above, even if approved in the relevant year, would have inflated the income in the ensuing period. As to electricity payment of Rs.11,52,968 the expense, according to the departmental stand, is in line with "Mercantile Accounting System" and becomes bad only when considered on the basis of "cash system". We, therefore, are of the view that all such matters required to be closely examined on due hearing being accorded to the petitioner and unless a finding of "concealment" was clearly recorded the matter could not be set apart for detailed scrutiny. This has to be so, as adoption of the alternative deprives the assessee of a valuable right, earned by it, on duly qualifying for the benefits of the Self-Assessment Scheme.
10. Further, it need hardly be stressed that fiscal statutes are to be liberally construed in favour of the assessee but strict interpretation is to be made in so fat as technical requirements projected by the Revenue are concerned.
11. Keeping in view all the above factors and circumstances we do think that the notice/order dated 26-5-1988 was wanting in prerequisites but, at the same time, we agree with the department in holding that due explanations were required from the assessee, which was its obligation to provide but, which it failed so to provide on an erroneous impression as to its rights. Therefore, while notice/order dated 26-5-1988 is found to be without lawful authority and is quashed, the earlier action(s) on the part of the respondent No. 1, as represented by the correspondence on the subject, is/are maintained and the Department would be free to see that proper accounting procedures are followed and the income is duly assessed in accordance therewith. Further if the case, on due examination, is found to present evidence of concealment the same, on due recording of such a finding, can also be kept apart for total audit.