Law: Income Tax Ordinance, 2001

Section: 59,62

Income Tax Ordinance (XXXI of 1979)--- ----Ss.59 & 62---Circular No.5 of 1990, 22 of 1991---Circular No. 16 of 1992 dated 1-7-1992---Self Assessment Scheme---Selection for total audit---Appellate forums setting aside decision of Assessing Officer, whereby cases of assessees were selected for total audit---Plea raised by authorities was that action by Assessing Officer was within the mandate of Circulars and suspicion was sufficient for selecting case for total audit---Validity---Definite information could become basis of setting apart a case before its finalization under S. 59(1) of Income Tax Ordinance, 1979, however the same definite information could become cause of an action under S. 65 of Income Tax Ordinance, 1979, if the case was finalized---Contention that mere suspicion was required for setting apart a case for audit, was negated by Circular itself---'State does not cheat the citizens' is the doctrine which leads subjects to follow schemes/invitation by government---Any unscrupulous action by a department under such schemes would lead to mistrust and result anarchy---Requirement of definite information was not met by authorities, therefore, High Court answered question of authorities in the affirmative---Reference was replied accordingly. Income-Tax Officer and another v Messrs Chappal Builders 1993 PTD 1108 = 1993 SCMR 1108 ref. JUDGMENT SHAHID JAMIL KHAN, J.---This judgment shall dispose of captioned I.T.A. along with I.T.A. No.76 of 2000, I.T.A. No.77 of 2000, I.T.A. No.153 of 2000 and I.T.A. No.186 of 2000, having identical facts and same legal proposition. 2. All these appeals are filed by the department against orders passed by erstwhile Income Tax Appellate Tribunal ("the Tribunal"). The respondents/assessees filed their returns under Self-Assessment Schemes ("the Schemes") for the assessment years 1990-91, 1991-92 and 1992-93. The Schemes were issued vide Circular No.5 of 1990 dated 25-6-1990, Circular No.22 of 1991 dated 21-7-1991 and Circular No.16 of 1992 dated 1-7-1992 respectively. The returns of respondents were set apart (excluded from the Schemes) for total audit (normal assessment), because gross understatement of income was…

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