FINDINGS /DECISION This is a complaint by an individual who is statedly the present proprietor of a business by the name of Messrs Personality, Peshawar which carries on dealings in readymade garments. The main points in the complaint are as under:
(i) The complainant succeeded in the business of Messrs Personality on 30-6-1998 by purchasing the same from one Mr. Amin Khalil.
(ii) For the assessm ent year 1999-2000 the complainant filed an income-tax return in his own name.
(iii) On 17-3-2000 the complainant received an income-tax assessment order for the assessment years 1997-98 to 1999-2000 in the name of his predecessor, Amin Khalil.
(iv) As the complainant was successor in the business he had no alternative but to file appeal against the assessm ents before the C.I.T. (Appeals) Zone 'A', Peshawar.
(v) The C.I.T. (Appeals) rejected the appeals in limine on the ground that these had been filed by the successor instead of the person who actually carried on the business during the period.
(vi) The C.I.T. (Appeals) had heard arguments relating to the quantum of income on merits but surprisingly the appeals were rejected in limine although the issue relating the proper person to have filed the appeals was not brought up during the hearing.
(vii) The history of the case is that for the assessment year 1996-97 the assessed sales of Rs.1,000,000 were reduced in appeal to Rs.500,000 but for the assessments years 1997-98 to 1999- 2000 the sales were again estimated at Rs.1,500,000, Rs.1,300,000 and 1,500,000 without making any inquiry.
It has been prayed that since the C.I.T. (Appeals) had no justification for dismissing the appeals in limine his order may be annulled and he be directed to decide the appeals on merit by reducing the sales to bring them in consonance with the history of the case.
2. The respondent's. Reply has been received and the complainant and the representatives of the complainant and the respondent have attended and have been heard. The main points in the respondent's reply are as follows:---
(i) There is nothing on record to show that any intimation was given regarding the discontinuation of business by the complainant's predecessor as required under section 72 of the Income Tax Ordinance.
(ii) According 'to the complainant he succeeded in the business on 30-6-1998 and it is correct that he filed his income-tax return for the assessment year 1999-2000 in the relevant circle.
(iii) On 17-3-2001 the assessm ents for the years 1997-98 to 1999-2000 were framed in the name of Mr. Amin Khalil but were received by the successor Mr. Muhammad Imran Khan, the complainant.
(iv) The complainant filed appeals against the assessments made in the name of his predecessor but these were dismissed in limine by the C.I.T. (Appeals) as the appeals were not filed by the concerned assessee himself and no power of attorney had been furnished by the complainant.
(v) No maladministration is involved in the case as the C.I.T. (Appeals) has passed an order in accordance with the law.
3. During the hearing, the complainant's representative stated that the appeals filed in connection with the assessm ents made in the case of the complainant's predecessor were quite valid and in this connection referred to an order of the Income-tax Appellate Tribunal reported as 1987 PTD (Trib.) 534. Without going into the legality or otherwise of the dismissal of the appeals by the C.I.T.
(Appeals), however, the following points relating to the complainant are quite evident:
(i) For the assessm ent year 1999-2000 the business was carried on by the complainant and not by his predecessor and a return for that year was also filed by the complainant. The combined assessm ents in the name of the predecessor Mr. Amin Khalil A includes the assessment for the year 1999-2000 also which is obviously invalid and which also means that the assessment for the same year may also be made separately in the case of complainant.
(ii) If the tax demand created as a result of the assessments in the name of Mr. Amin Khalil was to be recovered only from the predecessor, the complainant could have no possible grievant B but the complainant can become liable to pay the tax under section 73(3) of the Income Tax Ordinance and his concern, relating to the assessment, is thus quite legitimate.
As mentioned above the appeals against the assessments for the years 1997-98 to 1999-2000 in the name of Mr. Amin Khalil were dismissed in limine by the C.I.T. (Appeals). This means that the assessm ents stand without having in any way been modified or affected by the appellate order.
4. Since the complainant's concern is found to be genuine as indicated in para. 3 above, it is recommended that the Commissioner of Income-tax may exercise his suo motu powers under section 138 of the Income Tax Ordinance in order to:
(i) Reconsider the assessm ents for the years 1997-98 and 1998-99 with a view to ascertain the reasonableness of the incomes assessed particularly in the light of the history of the case.
(ii) Ascertain whether for the assessm ent year 1999-2000 the business was actually carried on by the complainant and if so to cancel the assessment in the name of Mr. Amin Khalil with the direction that the assessm ent may be made in the complainant's own name on the basis of the return filed by him.
5. Action as per recommendations in para. 4 above be taken within 60 days and a final report on the action taken be furnished within 15 days thereafter. .