M. MAHBOOB AHMAD J.- 1. By this order, we propose to deal with PTR No. 11/89 and PTR No. 12/89 as similar questions are sought to be formulated for decision by this Court.
2. The facts leading to the References aforementioned, briefly stated, are that the petitioner is a registered firm and inter alia carries on the business of sale of sweet-meats. On information received by the Income Tax Officer from M/S. Packages Limited, the suppliers of cartons to the assessee- petitioner which indicated that the purchase of package material did not tally with the packing expenses shown by assessee firm, the Income Tax Officer issued to it notices dated 31st March, 1986 and 6th April, 1986 under Section 65 of the Income Tax Ordinance, 1979, calling upon the assessee to file 'returns' for the years 1984-85 and 1985-86 in the prescribed form respectively by 15th April, 1986 and 20th April, 1986. The 'returns', however, were filed by the assessee after 30 days of the notices aforementioned.
3. The Income Tax Officer completed the reassessment for the two years in question by his order dated 31st August, 1988.
4. The petitioner-assessee filed appeals against the order of the Income Tax Officer before the Commissioner of Income Tax (Appeals), Zone-IV, Lahore, who by his order dated 17th January, 1989 decided the appeals and afforded some relief in respect of the sale assessments.
5. Still dissatisfied, the petitioner-assessee preferred appeals before the Income Tax Appellate Tribunal (hereinafter referred to as the Tribunal), Lahore Bench, Lahore. Feeling aggrieved of the relief granted to the assessee by the Commissioner of Income Tax (Appeals), Lahore, the Department also preferred three appeals before the same Tribunal. All these six appeals, which pertained to the assessm ent years 1983-84, 1984-85 and 1985-86, were dealt with by the Tribunal together and were disposed of by one order dated 14th June, 1987.
6. The petitioner thereafter instituted two reference applications before the Income Tax Appellate Tribunal under Section 136(1) of the Income Tax Ordinance, 1979. These reference applications pertained to the assessm ent years 1984- 85 and 1985-86. In this manner the controversy between the assessee and the Department so far as the year 1983-84 was concerned stood concluded. In the reference applications before the Income Tax Appellate Tribunal, which again were decided by one order dated 22nd February, 1989, the petitioner framed the following four questions of law. As referable to this Court for decision:
1. Whether under the facts and circumstances of the case the Income Tax Officer was justified to curtail the period of Notice under Section 65 from 35 days against the instructions of C.B.R. Given in Circular No. 10 of 1975?
2. Whether under the facts and circumstances of the case the instructions given in the Circular of C.B.R, were binding on the Income Tax Officer?
3. Whether under the facts and circumstances of the case the assessment framed after violating the instructions of C.B.R., was legal?
4. Whether under the facts and circumstances of the case the estimate of sales at excessive level was legal and justified when the purchases were confirmed and accepted.
7. The learned Income Tax Appellate Tribunal by its afore-mentioned order dated 22nd February, 1989 held that the questions as reproduced above are not such questions of law which could be referred to this court and accordingly dismissed the applications.
8. The petitioner has, therefore, come up to this Court with the present reference applications filed under Section 136(2) of the Income Tax Ordinance, 1979.
9. To canvass that questions framed at serial Nos. 1, 2, and 3 above are questions of law referable to this Court, the learned counsel contended that the notices issued by the Income Tax Officer under Section 65 of the Income Tax Ordinance, 1979 were illegal having afforded a period of 15 days only to file the returns inasmuch as the same were violative of Circular No. 10 of 1975 which was issued on 14th of July, 1975 by the Central Board of Revenue and laid down under clause (d) thereof that 35 days time shall be allowed to furnish the return of income and the period will not be curtailed without prior approval of the Inspecting Assistant Commissioner. In the same context, the learned counsel submitted that by virtue of Section 8 of the Income Tax Ordinance, the Circulars issued by the Central Board of Revenue have a binding force for compliance by the officers performing their duties under the Ordinance.
10. The only other contention raised by the learned counsel for the petitioner was as regards question No. 4 above. The learned counsel in this respect submitted that the question has become a question of law in view of the position that although the Income Tax Officer has admitted the purchase yet the assessm ents of sale have been arrived at without reference thereto.
11. Having given consideration to the controversy, we are of the view that the contentions raised on behalf of the petitioner have no force. Taking up the first contention, it may be observed that return envisaged by the notice under Section 65 of the Ordinance has to be filed as provided by Section 56 of the Income Tax Ordinance. The said Section 56 is reproduced hereunder for facility of reference:- "The Income Tax Officer may, at any time by notice in writing, require any person who, in his opinion, is chargeable to tax for any income year to furnish a return of total income for such year within thirty days from the date of service of such notice or such longer or shorter period as may be specified in such notice or as the Income Tax Officer may allow".
12. A plain reading of the above quoted provision, shows that the period prescribed for the notice for filing of return under the statute is "within 30 days" and the said period can be curtailed or increased as may be deemed fit in the circumstances of the case by the Income Tax Officer. The notices under Section 65 calling upon the petitioner to file the return within a period less than 35 days as given in clause (d) of Circular No. 10 of 1975 issued by the Central Board of Revenue being, in accord with the statutory provision of law cannot, be held to be invalid or suffering from a legal infirmity as the intent of law had been complied with and the violation, if any, of a circular which itself goes beyond the scope of the basic statute, would not render the same illegal, especially when no prejudice of any nature whatsoever, what so sav of material nature, is shown to have been caused to the petitioner by giving a period of 15 days for filing of the return; it t-;ing the admitted position throughout that the returns were filed by the petitioner after 30 days of the receipt of the notice and, therefore, the substantial compliance of the circular referred to above had also been made.
13. We, therefore, find that the learned Income Tax Appellate Tribunal has rightly refused to refer questions Nos. 1,2 and 3 above to this Court for decision.
14. Adverting now to the only other contention of the learned counsel for petitioner, we suffice by observing that the question as formulated is essentially a question of fact and cannot in any manner be taken as one referable to this Court for answer as a question of law.
15. For a better comprehension of the position tabulation as under of the sale assessments made by the various functionaries under the Ordinance may be useful:-- Assessm ent year. Sale assessm ent per return of the assessee. Assessment by I.T.O. Assessment by the Commissioner, Appeals. Assessm ent by the, Tribunal.
1984-85 6,71,429.00 46,00000.00 35,00000.00 Confirmed that of the Commissioner.
1985-86 25,70,390.00 92;00000.00 70,00000.00 Confirmed that of the Commissioner. {{TABLE MISARRANGED}}
16. From a perusal of the above tabulation, it would be clearly seem that the functionaries below have fully applied their mind to the controversy involved and on the basis of the available record determined the question of fact about the assessment of sales. We do not think we need detain ourselves more on this aspect of the matter and would suffice by referring to a portion of the order of the learned Income Tax Appellate Tribunal dated 14th June, 1987, whereby the appeals of the assessee and the Department were disposed of. The controversy which has been raised before us today has been succinctly dealt with in the following words:- "For the charge years 1984-84 and 1985-85 amount spent on purchase of packing material does not have any direct bearing on quantum of sales of sweetmeats rather it could be only one of the considerations to judge the extent of the assessee's sales. The assessee having not contested the rejection of accounts, declared version cannot be accepted. It is established that in these years substantial packing material was damaged due to fire on two different occasions. Taking into consideration the fact that the assessee's purchases of sweetmeats for these years have been accepted unconditionally, there occurred loss in packing material on account of fire and the cartons of different weights could not necessarily contain the same weight of sweetmeats as printed, we' feel that the estimates of sales as fixed by the learned CIT (A) at Rs.35,00,000/- and Rs.70,00,000/- are reasonable. By confirming the estimate of sales as fixed by the learned CIT (A) we are seeking guidance from the principle that no one can be punished twice for the same omission. Despite failure of the departmental officers in locating any purchases over and above the supplies, we feel satisfied in maintaining the estimates fixed in appeal, on pro rata basis of consumption of cartons over and above the recorded version after exclusion of loss in fire and riots.
No further interference is called for therein at the instance of the either party." .
A bare reading of the above para of the judgment of the Appellate Tribunal shows full application of mind and we are unable to understand in the attendant circumstances of this case, as to how the sale assessm ent determination could be challenged as a question of law in a reference application before this Court under Section 136(2) of Income Tax Ordinance, 1979. The second contention of the learned counsel for the petitioner also, therefore, fails.
17. In view of the foregoing discussion, there being no question of law shown as having arisen out of the order of the Tribunal, there is no merit in this reference application which is accordingly dismissed in limine.