1993 P T D (Trib.) 1622
[Income-tax Appellate Tribunal Pakistan]
Before Nasim Sikandar, Judicial Member
I.TA. No.731/LB of 1988-89, decided on 02/09/1993.
(a) Income Tax Appellate Tribunal Rules, 1981---
----R.20(2)---Assessee (respondent) had failed to appear in spite of service of notice---Tribunal took up the appeal for disposal by resort to R.20(2).
(b) Income Tax Ordinance (XXXI of 1979)---
----S 130(3)---Appeal---Delay in filing appeal ---Condonation of delay-- Appellate Authority has to mention the exact number of days by which the appeal was barred by time and record its reason for exercising discretion in favour of the assessee.
PLD 1974 SC 22 distinguished.
(c) Income Tax Ordinance (XXXI of 1979)---
----Ss. 130(3), 134(4) & 136(15)---Limitation Act (IX of 1908), S.5---Appeal-- Limitation---Delay in filing of appeal ---Condonation of delay---Principles-- Even bona fide mistake or ill-advice by the counsel would not constitute sufficient cause for condoning the delay---Plea for condoning delay could only be looked into where delay of each day had been calculated and explained and in absence thereof Court was not bound even to take into consideration such a plea---Question of limitation would not be lightly interfered with in purported exercise of jurisdiction under S.5, Limitation Act, 1908 for it created a valuable right in favour of party against whom proceedings had been initiated---Words "sufficient cause" used in S.5, Limitation Act, 1908 and Ss. 130(3) & 134(4), Income Tax Ordinance---Connotation---True guide for a Court in the exercise of the discretion was whether the appellant had acted with reasonable diligence in presenting his appeal.
PLD 1974 SC 22 distinguished.
Muhammad Ramzan and 4 others v. Masooda Hassan and others PLD 1993 Quetta 88; PLD 1983 SC 262; PLD 1983 SC 385; 1984 SCMR 1068; 1988 SCMR 2; 1989 SCMR 1948; PLD 1991 SC 102; PLD 1992 SC 529; PLD, 1992 SC 917 and Karam Bux v. Daulat Ram 183 Pb. Rec.1888 ref,
(d) Income Tax Ordinance (XXXI of 1979)--
----S. 138---Revision by Commissioner---Word "waiver" as used in S.138(2)(1)(a) of the Ordinance ---Connotation---Assessee having the right of appeal had invoked the revisional jurisdiction of the Commissioner of Income tax---Assessee having done so, Held, waived his right of appeal as such case was not of pursuing remedy in some wrong appellate forum under some misconception of fact or law but was a case of intentional relinquishment of known right and electing a particular forum for pursuing remedy.
NTR (1993) Trib. 169 fol.
(e) Income Tax Ordinance (XXXI of 1979)---
----Ss. 130(3), 134(4) & 136(1)---Appeal---Limitation---Condonation of delay in filing appeal---Exercise of discretion by Appellate Authority---Essentials.
The exercise of discretion without stating sufficient reasons and proper application of mind was clearly inappropriate.
Failure of forum/authority discharging judicial or even quasi-judicial authority to state reasons for the conclusions reached by it is indicative of arbitrariness of thought and action.
A Court, Judicial Tribunal or even a Quasi-Judicial Tribunal entrusted with the duty to determine the valuable rights of the parties arraigned before them were required to act deliberately and after proper application of mind to the matter before them. Thus with every discretion allowed to an authority functioning in a judicial or quasi-judicial capacity under a statute a tag of caution is invariably attached that its exercise shall be fair, reasonable and not arbitrary.
The Assessing Officer possessing the discretionary powers under the statute has to exercise them on sound principles and not mechanically as a ministerial act.
1980 FM (Trib.) 55; 1993 PTD 731; 1993 PTD (Trib.) 1144; PLD 1993 Lah.706; 1991 PTD 968 and 1993 FM 332 ref.
Shaukat Ali Sheikh, D.R. for Petitioner.
Nemo for Respondent.
Date of hearing: 13th June 1993.
ORDER
In this departmental appeal for the assessment year 1987-88 an order of CIT (A), Multan dated 2-1-1989 is assailed on * the ground that the first appellate authority was not justified in condoning the delay and, therefore, entertaining the appeal filed by the present respondent. Setting aside of the assessment framed under section 63 of the Ordinance and remand of the matter to the assessing officer in the circumstances of the case is also agitated against.
2. I-earned D.R. for the Revenue is present and has been heard. The respondent has failed to appear in spite of service of notice. Therefore, this appeal is taken up for disposal by resort to Rule 20(2) of the Income Tax Appellate Tribunal Rules, 1981.
3. The respondent registered firm deriving income from an oil mill and an ice factory was served with a notice under section 56 of the Ordinance on 17-4-1988. In response thereto a return was filed declaring net loss at Rs. 170,569. The return was not accompanied with a copy of account statement, and therefore, notices under sections 61 and 62 were issued for compliance on 13-7-19,88 and on failure of the assessee to appear, again for 14-7-1988. These notices were duly served but neither the assessee himself appeared nor a request for adjournment was received. Accordingly the assessing officer by rejecting the declared version proceeded to frame a best judgment assessment under section 63 of the Ordinance estimating the income at Rs. one lac. As per record the assessment order was framed on 14-7-1988 and an appeal was instituted on 10-10-1988. The impugned order does not expressly mention the date of service of demand notice upon the assessee nor even the date on which the appeal was instituted before it. No separate application for condonation of delay appears to have been made before the first appellate authority either. Following grounds of appeal qua filing of a revision application and condonation of delay were taken before the first appellate authority which were reproduced in the impugned order:
(1)That our counsel/AR made Revision Petition instead of making an appeal and we understood it as an appeal. He told us that in his view it was a better way as well as form to attain early relief. He did not disclose to me about the withdrawal of right of 2nd appeal or we could file revision petition after the decision of 1st appeal.
(2)That our counsel made revision petition honestly in a good faith to obtain relief early and near the door step but it was a wrong advice to the legal benefits and rights of the firm. In this regard it was held by the Privy Council of India and the Supreme Court of Pakistan:
"A wrong advice of the counsel given honestly in good faith in a sufficient cause for condonation of delay."
AIR 1937 PC 276; PLD 1974 SC 22
(3)That we filed appeal and withdrew revision petition but for the same relief. It was held by the Supreme Court of India:
"Section 14 is applicable only when same relief is claimed in both the litigations."
AIR 1951 SC 16
Section 14 is also applicable if:
"Appeal filed but subsequently held suit to be proper remedy."
AIR 1938 Mad. 41
(4) That on merits and for justice sake balance of convenience goes to appellant.
When we felt that there is no use of filing revision petition because the learned CIT, Multan did not hear our case at an early date and there was no scope of early hearing we instructed our counsel to withdraw the revision petition and file an appeal before the CIT (Appeals), Multan.
Under the aforesaid circumstances, your good self is prayed to condone the delay in filing appeal and admit our appeal please."
4. The learned appellate authority after reproducing the abovesaid grounds proceeded to condone the delay in the following words:--
"I have considered the position. In view of the arguments raised by the learned AR the delay is condoned and the appeal is treated in time."
5. Thereafter he set aside the assessment and remanded the case for framing of fresh assessment after concluding that the notices were not served upon the proper person.
6. Learned D.R. contends, that on the facts of the case the appellate authority was not justified in entertaining the appeal, condoning the delay and then setting aside the case for de novo proceedings. After going through the impugned order almost whole of which has been reproduced earlier we have come to the conclusion that the appellate authority acted in a very cursory manner to decide the matter before it. The period of limitation and the discretion of the appellate authority to condone delay in filing of an appeal have been given in subsections (2) and (3) respectively of section 130 of the Income Tax Ordinance in the following words:
Section 130: --(1).. .
(2)The appeal shall be presented within thirty days of the following date namely:--
(a)where the appeal relates to any assessment or penalty, the date of service of notice of demand relating to the said assessment or penalty, as the case may be; and
(b)in any other case, the date on which intimation of the order to be appealed against is served.
(3)The Appellate Assistant Commissioner may admit an appeal after the expiration of the period specified in subsection (2) if he is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within that period.
7. Learned D.R. assails the impugned order on three grounds: Firstly that the assessee having failed to file an appeal within the prescribed period a valuable right of finalisation of assessment framed in this regard had accrued to the Revenue and, therefore, the appellate authority was not justified in condoning the delay without proper application of mind; that proper appreciation of facts leading to delay in filing of appeal was never made by the appellate authority and that the assessee admittedly having filed revision application under section 138 of the Ordinance disentitled himself to agitate the matter before the first appellate authority, his subsequent withdrawal of the revision petition notwithstanding.
8. The contentions of the Revenue as stated above are solidly based and in the given facts of this case are cogent and relevant. As observed earlier the first appellate authority did not care even to mention the exact number of days by which the appeal was barred by time, did not record its reasons for exercising discretion in favour of the assessee as available to it under subsection (3) of section 130 of the Ordinance. The reported cases mentioned in the body of the grounds of appeal and reproduced in the appellate order as aforesaid were mostly of foreign jurisdiction. The only reported judgment of the Supreme Court of Pakistan cited as PLD 1974 SC 22 re: Nazir Muhammad and another v. Mst. Shahzada Begum and another was clearly distinguishable. In this case their Lordships held the explanation offered by the respondent to be a sufficient ground for condonation of the delay in these words:
"The explanation of the respondent was that she had ascertained from Qazi Muhammad Yaqub, a local lawyer, who, after consulting a book on limitation informed her that period of limitation for filing an appeal is 90 days. Respondent No.l further stated that she is a Pardahnasheen lady and she came alongwith her father to Lahore and met Raja Muhammad Anwar, Advocate who after seeing a book on law of limitation known as Tagore Law Lectures by Mitra, informed the respondent that under Article 162 Act IX of 1870 period of limitation for leave to appeal is 90 days from the date of decree. appealed against. According to the respondent No.l, the delay in filing the appeal beyond limitation was not intentional and was based on the mistaken legal advice by a legal practitioner."
9. The ratio of this case was not applicable to the case under discussion before us for a number of reasons, the most important of which being the fact of the appellant being a Pardahnasheen lady living in Mofussil and visiting principal seat of the Court with her father and in good faith relying on the advice of the Advocate so tendered as regards the period prescribed under the law for filing of an appeal. The assessee before the first appellate authority, on the other hand, statedly relied upon the advice of his counsel suggesting a more efficient forum or expeditious way of obtaining relief. The Baluchistan High Court in a recently reported case cited as PLD 1993 Quetta 88 re: Muhammad Ramzan and 4 others v. Masooda Hassan and others after considering a host of cases including PLD 1983 SC 262 and 385, 1984 SCMR 1068, 1988 SCMR 2, 1989 SCMR 1948, PLD 1991 SC 102 and PLD 1992 SC 529 and 917 concluded that even bona fide mistake or ill-advice by the counsel did not constitute sufficient cause for condoning the delay. Their Lordships further held that a plea for condoning delay could only be looked into where delay of each day had been calculated and explained and that in absence thereof a Court was not bound even to take into consideration such a plea. With reference to section 5 of the Limitation Act (IX of 1908) their Lordships remarked that question of limitation would not be lightly interfered with in purported exercise of jurisdiction under section 5 of the Limitation Act, 1908 for it created a valuable right in favour of party against whom proceedings had been initiated. The provisions of section 5 of the Limitation Act are not expressly made applicable to the appeal proceedings before the first appellate authority nor even before this Tribunal except in cases of applications under section 136(1) of the Ordinance. However, since the language used in subsection (3) of section 130 of the Income Tax Ordinance regarding appeals before the AAC, of subsection (4) of section 134 pertaining to appeal before this Tribunal, and section 5 of the Limitation Act (IX of 1908) being in pari materia and couched in similar words, the principle settled by the Superior Courts as detailed in the aforesaid judgment will be relevant for the purpose of delineating exercise of discretion in condonation of delays by AAC as also this Tribunal. The key words "sufficient cause" as a condition for the exercise of discretionary powers used in section 5 of the Limitation Act (and in both of the said provisions of the Income tax Ordinance) have consistently been interpreted since the year 1888 in the light of the guidance provided by their Lordships in re: Karam Bux v. Daulat Ram 183 PR (Punjab records) 1888 (FB) wherein it was held "we think the true guide for a Court in the exercise of this discretion is whether the appellant has acted with reasonable diligence in presenting his appeal". The rule holds good till today.
10. The other contention of the learned DR that the assessee having filed a revision petition before the Commissioner under section 138 of the Income Tax Ordinance expressly waived his right to approach an appellate forum provided under the Ordinance again bears weight. Recently a Division Bench of this Tribunal dilated upon this issue in a case reported as NTR (1993) Trib. 169 considering at length the meanings and connotation of the word "waiver" (with reference to its use in subsection (2)(1)(a) of section 138 of the Income Tax Ordinance). The assessee in that case was placed in almost similar situation as that of the present assessee. In that case the assessee filed a revision petition before Member (Judicial) CBR on 18-4-1992 but was informed on 16-7-1992 that the authority to whom the revision petition was addressed (Member Judicial) was not competent to hear the same against the order passed by the AAC due to change of law. The assessee-respondent before us expressly admitted to have filed a revision petition before the Commissioner but subsequently withdrew the same on account of failure of the Commissioner to hear the case at an early date. The said Division Bench after examining the issue if the appellant continued to possess the right of appeal even after waiver and preferring of revision petition under section 138 of the Income Tax Ordinance, 1979 concluded that the waiver being an intentional relinquishment or abandonment of a known existing legal right an assessee/appellant could not be allowed to turn round and again assert the same right. Accordingly, it was held that the law permitted an assessee to waive his right of appeal and to invoke the revisional jurisdiction of Commissioner of Income Tax and that the assessee admittedly having done the same clearly waived his right of appeal. In this connection the learned Division Bench further observed that such like cases were not of pursuing remedy in some wrong appellate forum under some misconception of fact or law but cases of intentional relinquishment of known rights and, therefore, electing of a particular forum for pursuing remedy. Being in respectful agreement with the principle laid down in the said decision of the Division Bench which is clearly attracted to the facts before us, we will also hold accordingly.
11. The exercise of discretion in favour .of the assessee, as observed earlier, without stating sufficient reasons and proper application of mind by the first appellate authority was clearly inappropriate. In the first instance the appellate order in this regard is devoid of the basic requirements of a judicial order. It is by now well established that failure of forum/authority discharging judicial or even quasi-judicial authority to state reasons for the conclusions reached by it is indicative of arbitrariness of thought and action. This Tribunal in at least three cases two of which are quite recent has depreciated such practice by the Revenue Officers exercising the powers of first appellate authority. These being 1980 PTD (Trib.) 55, 1993 PTD 731 and 1993 PTD (Trib.) 1144. A decision of the Lahore High Court reported as PLD 1993 Lah. 706 re: Brig (Retd.) Mazhar-ul-Haq and another v. M/s. Muslim Commercial Bank, Islamabad and another also needs mentioning wherein their Lordships observed that "a Court, Judicial Tribunal or even a Quasi-Judicial Tribunal entrusted with the duty to determine the valuable rights of the parties arraigned before them were required to act deliberately and after proper application of mind to the matter before them". Thus with every discretion allowed to an authority functioning in a judicial or quasi judicial capacity under a statute a tag of caution is invariably attached that its exercise shall be fair, reasonable and not arbitrary. The preposition also finds support from the dictum laid down by the Supreme Court of Pakistan in a case reported as 1991 PTD 968 referred to by their Lordships of the Lahore High Court in 1993 PTD 332. Their Lordships of the Supreme Court quoted Smith from his book "Judicial Review of Administrative Action" (4th Edition) to conclude that the assessing officer possessing the discretionary powers under the statute had to exercise them on sound principles and not mechanically as a ministerial act.
12. In view of what has been said above we find ourselves in agreement with the submissions made by the Revenue that there was no justifiable reason for condonation of delay by the first appellate authority, that the order recorded in this connection being devoid of any reasoning smacked arbitrariness, that the assessee having opted for revisional jurisdiction of Commissioner of Income Tax waived his right of appeal before the first appellate authority and, therefore, was disentitled to any kind of relief and that exercise of discretion by the first appellate authority in favour of the assessee and against the Revenue was clearly unreasonable. Accordingly the impugned order is set aside with the result that the assessment framed on 14-7-1988 in respect of the assessee-respondent shall stand restored.
13. Before parting we would like to record our appreciation of the labour and devotion by Mr. Shaukat Ali Sheikh IAC/DR for his assistance in prosecuting the cause of Revenue before us.
M.B.A./2590/T Order accordingly.