Law: Income Tax Ordinance, 1979

Section: 65,63

(a) Income-tax Ordinance (XXXI of 1979)--Ss. 65 & 63--Re-opening of assessment--Essentials-Powers of Inspecting Assistant Commissioner to accord approval--Extent--Change of opinion--Permissibility--Best assessment--Meaning--Where Income-tax Officer had no definite information in his possession he was not justified, to re-open assessment notwithstanding approval of the I. A. C. There must either be some definite information, which has come to the knowledge of the Assessing Officer or he must have obtained prior approval of the I.A.C. for reopening the assessment. In the present case, there was a report from the D.I.T. stating that yield of cloth per pound of yarn was less than the one shown immediately before the year under appeal (1974-75). The Assessing Officer [not the same who had finalised the earlier orders under section 23(3)] estimated the sales at still higher figures for all the years under appeal and applied the same G.P. rate. It appears that the Assessing Officer considered the earlier estimate of sales to be inadequate. If this process is allowed to continue, there will be no end to the estimates and the sky would be the limit. If this is not a change of opinion what else it could be. Legislature has not delegated unfettered authority to any of its functionaries muchless to the Income-tax Department. Even section 63, which gives wide powers to the I.T.O. to make assessment for non-compliance of statutory notices, has been termed as Best Judgment assessment. The words best are very significant as volumes have been written by judicial authorities on this topic which in substance, mean that the orders of the Assessing Officers should not be arbitrary in nature. An arbitrary assessment, therefore, could be made when man is at his worst separated from law or justice. He is at his best when he acts within the four corners of law and when his findings are not arbitrary. The Income Tax Ordinance, 1979, nowhere has given unfettered discretion to any of its authorities described in section 3 of the Income Tax Ordinance. Even the I.A.C. before according approval to a case for re-opening under section 65 of the Income-tax Ordinance has to examine it with a…

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