(a) Income Tax Ordinance (XXXI of 1979)---

----S.65---Income-tax Act (XI of 1922), S.34---Scope and application of both the provisions---Income escaping assessment--Essentials---Additional assessment---Requirements----Once all facts had been fully disclosed by the assessee and considered by the Assessing Officer and the assessment had been consciously completed and no new fact had been discovered, there could be no' scope for interference with such concluded transactions on the ground that the income chargeable to tax had escaped assessment or had been under assessed etc.

Under section 34 of the Income-tax Act or under section 65 of the Income Tax Ordinance although assessment made by the Income-tax Officer can be re-opened on the ground that any income has escaped assessment in any year or the tax of the assessee has been under-assessed or has been assessed at too low a rate or has been subjected to excessive relief or refund etc. but mere change of opinion by the Income-tax Officer would not be permissible under the said provisions of law. Once all the facts had been fully disclosed by the assessee and c6nsidered by the Income-tax Authorities and the assessments had been consciously completed, and no new fact had been discovered there could be no scope for interference with these concluded transactions under the provisions of section 65 of the Ordinance on the ground that the income chargeable to tax under the Ordinance had escaped assessment or had been under-assessed, etc. in the meaning of clause (a) or (b) of subsection (1) of section 65 of the Ordinance.

Edulji Dinshaw v. Income Tax Officer PLD 1990 SC 399 fol.

(b) Income Tax Ordinance am of 1979)---

----S.136---Reference---Question whether the action taken against the assessee fell within the ambit of S.34, Income-tax Act, 1922 being a mixed question of law and fact, and both Appellate Commissioner and the Tribunal on consideration of facts having concluded that action did not fall as such, High Court declined either to confirm the said findings or upset them as the question calling for determination was not a pure question of law.

Nasrullah Awan for Applicant. Nasim Ahmed Khan for Respondent.

Date of hearing: 14th January, 1992.

JUDGMENT

MAMOON KAZI; J.---The respondent in this case is a non-resident company whose assessment for the year 1975-76 was finalised by the Income Tax Officer. The assessment was completed on 26-12-1977 but subsequently the return of income was revised showing an income of Rs.2,41,32,405. In the revised return of income the respondent included Rs.21,44,702 as capital gain which was accepted by the Income Tax Officer. However, the department reopened the respondent's case under section 34 and the assessment was finalised by the Income Tax Officer adding Rs.21,44,702 to the income as revenue gain. The respondent approached the learned Commissioner of Income Tax (Appeals) who held that the gain of Rs.21,44,702 being discount on treasury bills was not a revenue receipt. Against the said order of the learned Commissioner of Income Tax the department filed appeal before the learned Income Tax Appellate Tribunal but the order passed by the learned Commissioner. was confirmed by the Tribunal vide order, dated 17-4-1985. It was observed by the Tribunal as follows:---

"We have heard both the learned Departmental Representative as well as the learned respondent at length and have also perused both assessment as well as impugned order. In our view, the learned Commissioner of Income Tax (Appeals) has reached conclusion and her order calls for no interference. If on facts and circumstances A, B, C, D an Income Tax Officer comes to conclusion N, his successor cannot come to conclusion F the facts and circumstances remaining same. This would be the case of change of opinion. However, if his successor finds either of the facts and circumstances A; B, C, D incorrect or discovers facts `X' in addition to facts, A B, C, D, he can definitely come to a different conclusion and it would not be a case of change of opinion. In all the cases, which were referred to by learned Departmental Representative, some additional material had come before Income Tax Officer who re-opened the assessment. Either the assessee had given facts to Income Tax Officer which proved to be false subsequently or the Income Tax Officer came across some additional facts. However, in the instant case, all the facts and circumstances have remained the same and the incoming Income Tax Officer has not agreed with the conclusion of his predecessor. He has reopened the assessment because to use his own words:--

"While framing the assessment, however, the discount on treasury bills received by the assessee was neither discussed in the order nor included in the total income of the assessee due to oversight.

But, with due respect to learned Income Tax Officer, his observation is not factually correct. As, such, if the reason given by him has gone the assessment order is left with no legs to stand upon. It is important to note that he has not given any other reason, except the one mentioned above. However, from grounds of appeal it appears that it was reopened on receipt of definite information. It is clear departure from the original stand. We, therefore, decline to consider this aspect. Thus, under the facts and circumstances of the case we have no reason to disagree with impugned order. The appeal stands rejected."

The department was, however, not satisfied and, therefore, the following question has been referred to this Court for determination:--

"Whether on the facts and in the circumstances of the case and a decision of the learned High Court Lahore in Commissioner of Income Tax v. Khurshid Alam Malik 1988 PTD 771 the Tribunal was right in holding that the proceedings initiated under section 34 of the Income Tax Act, 1922 were not valid in law."

2. Learned counsel have pointed out that the question involved in the present case has already been dealt with by the Supreme Court in the case of Edulji Dinshaw v. Income Tax Officer PLD 1990 SC 399. In this case past assessment of the assessee for the previous nine years had been re-opened under section 65 of the Income Tax Ordinance, 1979 which corresponds with the section 34 of the repealed Income Tax Act. The contention that the Income Tax Officer had acted beyond jurisdiction because all material facts were already on record of the Income Tax Department on the basis of which his predecessor assessed the tax liability of the assessee was accepted by the Honourable Supreme Court and it was held that the action of the Income Tax Officer was without jurisdiction.

3. We would like to point out that the question would depend upon the facts of each individual case. Under section 34 of the Income-tax Act or under section 65 of the Income Tax Ordinance although assessment made by the Income-tax Officer can be re-opened on the ground that any income has escaped assessment in any year or the tax of the assessee had been under assessed or has been assessed at too low a rate or has been subjected to excessive relief or refund etc. but mere change of opinion by the Income-tax Officer would not be permissible under the said provisions of law. As has been held by the Supreme Court in the case just referred to by us in this judgment, "Once all the fact has been fully disclosed by the assessee and considered by the Income-tax Authorities and the assessments have been consciously completed, and no new fact has been discovered there can be no scope for interference with these concluded transactions under the provisions of section 65 of the Ordinance on the ground that the income chargeable to tax under the Ordinance has escaped assessment or has been under-assessed, etc. in the meaning of clause (a) or (b) of subsection (1) of section 65 of the Ordinance."

It may, however, be pointed out that there is hardly any question of law arising in the present case because the question whether the action taken against the respondent fell within the ambit of section 34 of the repealed Income Tax Act was a mixed question of law and fact. Both the learned Appellate Commissioner and the learned Income Tax Appellate Tribunal on consideration of facts came to a conclusion that the action did not fall within g the ambit of section 34 of the repealed Act. We are not in a position either to confirm the said findings or upset them as the question calling for determination is not a pure question of law. However, so far as the principle of law propounded by the Supreme Court is concerned, we find that no deviation appears to have been made therefrom either in the order of the Appellate Income Tax Commissioner or the Appellate Income Tax Tribunal. Consequently, barring any question of fact, the view taken by the learned Tribunal on the question of law was correct and to that extent, we answer the question in the affirmative.

The Reference stands disposed of accordingly.

M.B.A./C-269/K ??????????????????????????????????????????????????????????????????????????????? Reference answered.