Law: Income Tax Ordinance, 1979

Section: 59,62

ORDER This is the case of an individual who derived income from sale of cloth. The assessee filed return under the Self-Assessment Scheme (SAS) declaring income of Rs. 121,000. The case was selected for total audit with the approval of the learned RCIT given vide his letter dated 15.6.2001 under para 6(b) of CBR's circular No.21 dated 11.9.2000. 2. During the course of assessment proceedings the assessee filed wealth statement. However no account books were produced. The assessing officer observed that the business was situated in Urdu Bazar, Sargodha which was the main business center of the city and that the assessee enjoyed good reputation in this line of business. Income last assesses was Rs. 80,000 under the SAS. The learned assessing officer estimated sales at Rs. 1,353,333. A GP rate of 15% was applied and expenses were allowed at Rs. 33,000. Income was accordingly assessed at Rs. 170,000. 3. The assessee filed appeal before the first appellate authority stating that the case qualified under SAS and the selection of the case under para 6(b) of the SAS and estimation of income etc. were against law and facts of the case. The learned AR of the assessee submitted before the learned AAC that guidelines or conditions precedent to the selection were laid down in CBR's letter No. 7(7)S.Asstt./2000 dated 9.6.2001 which have not been followed in the instant case. The learned AR submitted that the case of the assessee was wrongly selected under para 6(b) of the said circular and therefore there was no justification to make assessment under normal law u/s 62 of the Income Tax Ordinance, 1979. The learned AAC has discussed the issue in detail in his order. It is worthwhile to reproduce hereunder relevant portion, though a longish one, from the order of the learned AAC:- "4) Having examined the record and after going through Board's circular on Self-Assessment Scheme for assessment year 2000-01, it is ascertained that circular No.21 of 2000 laid down cases of returns of income filed under SAS of selection of cases for audit. It refers to para 6(b) of aforementioned circular which reads as under:- "SELECTION OF CASES FOR AUDIT" From among the returns filed order SAS…

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