The petitioner in this Conkitutional petition is a registered firm and derives income from an Ice Factory at Wassanpura, Lahore. For the assessment year 1992-93 its disclosed income at Rs.185,000 was enhanced to Rs.265,989 after selection of its case for total audit through computer ballet. In the process the disclosed sales at Rs.7,45,975 were estimated at Rs.7,75,000 G.P. (a) 50% as per history.
2. The assessm ent order so framed was partly modified by C.I.T.
(Appeals) on 18-9-1993 inasmuch as the estimation of sales was reduced to Rs.7,50,000 and some relief was allowed in profit and loss account
3. Subsequently the petitioner was served with the impugned notice under section 66,A of the Income Tax Ordinance, 1979 confronting that the estimation of sales had not been worked out as per production' formula applicable in the case of Ice Factories. Also that in similar cases a rate of 55% being applicable the same ought to have been applied in the case of the assessee as well.
4. That show-cause notice has been assailed through this Constitutional petition on the ground that under section 66-A(a)(b) of the Ordinance, 1979 the issue of estimation of production having already merged in the appellate order/the I.A.C. Could not exercise its power to modify or cancel the same. Reliance in this regard has been placed upon re: Glaxo Laboratories Ltd. v. Inspecting Assistant Commissioner of Income-tax and others PLD 1992 SC 549 = 1992 PTD 932 and re: Mrs. Anjuman Shaheen v. Inspecting Assistant Commissioner of Income-tax, Zone-A, Lahore and another 1993 PTD 1113.
5. After hearing the learned counsel for the parties, I will readily agree that notice issued in this case clearly militates against the doctrine of merger as elucidated by the Supreme Court of Pakistan in re: Glaxo Laboratories Limited and this Court in re: Mrs. Anjuman Shaheen (supra). The assessment framed for the year under review after its selection for total audit was thoroughly examined by the Assessing Officer, who had applied a rate of 50% as per history of the case and had also enhanced the declared sales to some extent.
6. Learned First Appellate Authority having allowed partial relief in case of estimation of sales, the assessm ent order. Dated 31-1-1993 merged in the said appellate order. The issue before the First Appellate Authority exactly being the total production of factory, the I.A.C. In exercise of his revisional jurisdiction could not lay his hands upon the issue on which the assessee had been allowed partial relief by the Appellate Authority.
7. That being so this Constitutional petition is allowed and in view of the ratio settled in the aforesaid judgments, the impugned notice under section 66-A of the Ordinance, 1979, dated 21-12- 1993 by the I.A.C. Is declared to be without lawful authority. .