Law: Income Tax Ordinance, 1979

Section: 59

Income Tax Ordinance (XXXIX of 1979)---S. 59---C.B.R. Circular No.22 of 1991, dated 21-7-1991, para.4(ii)---Self -Assessment Scheme 1991-92, para. 4(ii)---Selection of assessee's case for detailed scrutiny in accordance with C.B.R. Circular No.22 of 1991---Material upon which action under para. 4(ii) of the Circular has been taken has to be disclosed to assessee---Failure to disclose said material to the assessee would render such action completely arbitrary and discriminatory. Pakistan Educational Society v. The Government of Pakistan 1993 PTD 804 applied. JUDGMENT MAMOON KAZI, J: --The petitioners are aggrieved as they have received a notice from the respondent No.2, dated 15-12-1992 informing them that their case had been selected for detailed scrutiny for assessment year 1991-92 under paragraph 4(ii) of Circular No.22 of 1991, dated 21-7-1991 issued by the Central Board of Revenue under Self-Assessment Scheme of 1991-1992. The main contention raised on behalf of the petitioners is that, as is plainly evident from paragraph 4(ii) cases for detailed scrutiny, can be selected when gross understatement of income is suspected upon definite information, based on material evidence. However, no such material has been disclosed by the respondent No.2 to the petitioners. Consequently, the impugned action is arbitrary and invalid. Reliance has been placed in this regard upon a judgment of a Division Bench of this Court in Pakistan Educational Society v. The Government of Pakistan 1993 PTD -804. In this case also such action had been impugned and it was held that it was imperative for the said respondent to disclose material upon which action was based under paragraph 4(ii) of Circular No.22. The relevant observations which appear at page 816 of the report are as under: Consequently, the validity of the exercise of power by the concerned Income Tax Officer or the fact that such action has been taken by him in good faith; would always be open to question unless the material upon which such action has been taken is disclosed to the assessee. Failure to disclose such material to the assessee would render such action completely arbitrary and discriminatory because…

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