This petition under Article 199 of the Constitution of Islamic Republic of Pakistan, 1973 calls in question the notice issued by the respondents under section 65 of the Income Tax Ordinance, 1979, whereby the petitioner has been informed that the Assistant Commissioner of Income-tax has proposed to reassess the income of the petitioner.
2. Admittedly, the petitioner had filed the return of his income for the year 1999-2000 under the Self-Assessm ent Scheme. However, on 15-5-2000, the impugned notice was issued by the respondent which is on printed proformas.
3. The learned counsel for the petitioner has contended that the impugned notice shows no application of mind nor the basis on which the case of the petitioner is proposed to be re-opened.
4. Before proceeding any further, it will be useful to produce the provision of section 65 of the Income Tax Ordinance, 1979 as well as the notice received by the petitioner, a copy of which is available with the writ petition as Annexure 'D":-- Section 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 rate, or has been the subject of excessive relief or refund under this Ordinance; or
(c) the total income of an assessee and the tax payable by him has been assessed or determined under subsection (1) of section 59 or section 59-A or deemed to have been so assessed or determined under subsection (1) of section 59 or section 59-A; the Deputy Commissioner may at any time, subject to provisions of subsections (2), (3) and (4), issue a notice to the assessee containing all or any of the requirement 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 subsection (1) shall be initiated unless definite information has come into possession of the (Deputy Commissioner) (and) he has obtained previous approval of the Inspecting (Additional Commissioner) of Income Tax in writing to do so.
Explanation.---As used in this subsection, 'definite information" includes information in respect of sales and purchase, made by the assessee, of any goods, and any information regarding acquisition, possession or transfer, by the assessee, of any money, assets or valuable articles, or any investment made or expenditure incurred by him. [(3) Notice under subsection (1), in respect of any income year may be issued within 10 years from the end of the assessment year in which the total income of the said income year was first assessable].
(Provided that, where the said notice be issued on or after the first day of July, 1987, this subsection shall have effect as if for the words '10 years' the words 'five years' were substituted.)
(3-A) Where a notice under subsection (1) is issued on or after the 1st day of July, 1982, no order under the said subsection shall be made after the expiration of one year from the end of the financial year in which such notice was served."
NOTICE UNDER SECTION 65 OF THE INCOME TAX ORDINANCE, 1979
(1) Whereas I have reason to believe that your income assessable to income tax for the assessm ent year 1999-2000 has
(a) escaped assessm ent;
(b) been under-assessed
(c) been assessed at too low a rate,
(d) been the subject of excessive relief.
I, therefore, propose to assess/reassess the said income that has
(a) escaped assessm ent,
(b) been under assessed,
(c) been assessed at too low a rate,
(d) been the subject of excessive relief
(2) Whereas your income assessable to income-tax for the assessment year 1999-2000 has been assessed under section 59(1), I propose to reassess the said income.
(3) I hereby, require you to deliver to me not later than 20-5-2000 of the receipt of this notice, a return in the prescribed form of your total income assessable for the said assessment year.
(4) Failure to make the return required by this notice will result in an exparte assessment under section 63 of the Income Tax Ordinance, 1979. Failure to furnish the return or to furnish it within the time allowed without reasonable cause or excuse, will also entail a penalty under section 108 or prosecution under section 117 of the said Ordinance or both.
5. It is evident from section 65 of the Income Tax Ordinance, 1979 reproduced above that it postulates four situations under which a notice could be issued. The notice served in the present case is on printed form and it has not been made clear as to under which clause of section 65(1), the respondents were acting. The power being statutory in nature has to be exercised by the concerned functionaries after due application of mind which should manifest itself from the notice for re-assessm ent issued under section 65 of the Ordinance. Baby Own v. Income Tax Officer 1997 PTD 47 supports the view which has been taken.
6. It may also be noted that subsection (2) of section 65 provides that no proceedings under subsection (1) shall be initiated unless definite information has come into possession of the Deputy Commissioner and he has obtained previous approval of the Inspecting Additional Commissioner in writing to do so. This requirement does not appear to have been met with in the present case Which does not disclose as to what information had come into possession of the Deputy Commissioner of Income-tax which necessitated issuance of notice under section 65 of the Ordinance.
In view of what has been said above, this petition is allowed, the impugned order is declared to be without any lawful authority and of no legal effect. The respondents shall, however, be at liberty to restart the proceedings, if they so desire, in accordance with law. No order as to costs. .