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

----S. 156---Rectification of mistake---Provision of S. 156, Income Tax Ordinance has a very limited scope of jurisdiction as under this provision only a mistake patent on record can be rectified---Unless there was such a mistake, the Income Tax Officer was not empowered to exercise the jurisdiction under S.156 of the Ordinance and this should be as on the date of the order.

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

----S. 132---Appeal---Appellate Assistant Commissioner is empowered to give directions to the Income Tax Officer and the said officer is under obligation to implement that order relating to a particular assessment year---Whatsoever the order had been passed by the Commissioner of Income Tax (Appeal) that was for the assessment year 1979-80---Any remarks made by the said Authority for the assessment year 1980-81 could at best be taken as a definite information by the Income Tax Officer, but could certainly not be taken as direction to be implemented under S. 132 of the Ordinance for the assessment year 1980-81-- Appellate Authority had no power ~ to give direction in respect of the assessment which was subject matter of appeal for a particular assessment year---Assessment year which was not subject matter of appeal before Appellate Authority, was beyond the scope of S. 132 of the Ordinance---Any remarks of the Appellate Authority for any assessment year which was not before it could not be implemented by the Income Tax Officer under S. 132 of the Ordinance.

Mothuradas B. Moths v. C.I.T. 1965 PTD 651 ref.

(c) Income Tax Ordinance (XXXIX of 1979)---

----Ss. 156, 132, 59 & 13---Addition---Self-assessment---Rectification of mistake---Case of under-assessment---Assessing Officer can exercise the powers and re-open the assessee's case as it would be a case of under assessment---Section 156 of the Ordinance, however, does not empower the Assessing Officer to make amendment in his earlier order validly passed under S. 59(1) of the Ordinance.

The assessee had constructed a building in the assessment years 1979-80 and 1980-81. While making the assessment for the year 1979-80 the Assessing Officer disbelieved the assessee's contention that the building was constructed in the two assessment years. According to him the building had been completed by the assessee in May, 1979 and, therefore, the entire expenses incurred on the construction of building were in that assessment year. The assessee had declared the total cost of construction at Rs.1,10,000 but the I.T.O. had estimated the cost of construction at Rs.4,61,160. After giving various allowances the Assessing Officer finally made an addition at Rs.1,74,521 in the assessment year 1979-80. The assessee filed appeal against that order. The C.I.T.(A) accepted the assessee's appeal partly in that he accepted the assessee's contention that the building was completed in the two assessment years i.e. 1979-80 and 1980-81, and he allocated Rs.1,23,361 to the assessment year 1979-80 and Rs.51,160 were to be allocated to the assessment year 1980-1981. The assessee filed further appeal before the Tribunal but he did not challenge the allocation of the investment in the two assessment years. Before the Tribunal the only contention was against the addition of Rs.1,23,361 made in the assessment year 1979-80. The Tribunal vide its older relating to the assessment year 1979-80 dated 8-7-1990 deleted the addition of Rs.1,23,361 on the technical ground that the assessing officer had not followed the procedure laid down in section 13 of the Income Tax Ordinance 1979. In the assessment year 1980-81 the assessee filed return under section 59(1) of the Ordinance which was originally accepted at an income of Rs.1,06,316 on 6-1-1981. Since the C.I.T.(A)'s order under which the allocation was made was passed on 13-6-1982, that order was not before the Assessing Officer when he passed the assessment, order. Subsequently the I.T.O. took up the case under section 156/132 of the Ordinance and made the addition of Rs.51,160 allocated by the C.I.T.(A). The assessee filed appeal before the C.I.T.(A) which was dismissed.

Held, the allocation made by the C.I.T.(A) in the assessment year 1979-80 could be taken into consideration by the Assessing Officer in the assessment year 1980-81 while passing the assessment order. But the difficulty of the I.T.O. while passing the order under section 59(1) was that he could not go into the details and had to accept the declared income of the assessee under section 59(1) of the Ordinance if it fulfilled the conditions laid down by the law.

Even otherwise the Appellate order of the AA.C. for the assessment year 1979-80 was not before the I.T.O. on 6-1-1981 when he passed the assessment order for the assessment year 1980-81 as the AA.C. passed the order on a subsequent date. Therefore, even if the I.T.O. wanted to make an addition, he could not do so when the assessment order was passed. The question was what was the remedy before the I.T.O. in such a case? The remedy lay under section 65 of the Ordinance. The Assessing Officer could exercise the powers and reopen the assessee's case as it would be a case of under-assessment. But section 156 of the Ordinance did not empower the Assessing Officer to make amendment in his earlier order validly passed under section 59(1) of the Ordinance.

Tribunal annuled the rectified order of the Assessing Officer passed under section 156/132 of the Ordinance with the result the assessee's original order passed under section 59(1) was restored. Assessing Officer was however not debarred to re-open the case under section 65 of the Ordinance if permitted under the law.

Mothuradas B. Moths v. C.I.T. 1965 PTD 651 ref.

Ahmad Nauman, I.T.P. for Appellant

Agha Sarwar Qazilbash, D.R. for Respondent

Date of hearing: 13th December, 1952.

ORDER

ABRAR HUSSAIN NAQVI (JUDICIAL MEMBER).---This is an appeal filed by an individual deriving income from dealing in cloth on wholesale basis and relates to the assessment year 1980-81. The assessee is aggrieved against the addition of an amount of Rs.51,160 under section 13 of ,the Income Tax Ordinance.

2. Brief facts of the case under which this appeal has arisen are that the assessee has constructed a building in the assessment years 1979-80 and 1980-81. While making the assessment for the assessment year 1979-80 the Assessing Officer disbelieve the assessee's contention that the building was constructed in the two assessment years. According to him the building had been completed by the assessee in May, 1979 and, therefore, the entire expenses incurred on the construction of building were in that assessment year. The assessee had declared the total cost of construction at Rs.1,10,000 but the I.T.O. had estimated the cost of construction at Rs.4,61,160. After giving various allowances the Assessing Officer finally made an addition at Rs.1,74,521 in the assessment year 1979-80. The assessee filed appeal against that order. The learned C.I.T.(A) accepted the assessee's appeal partly in that he accepted the assessee's contention that the building was completed in the two assessment years i.e. 1979-80 and 1980-81, and he allocated Rs.1,23,361 to the assessment year 1979-80 and Rs.51,160 were to be allocated to the assessment year 1980-81. The assessee filed further appeal before the Tribunal but he did not challenge the allocation of the investment in the two assessment years. Before the Tribunal the only contention was against the addition of Rs.1,23,361 made in the assessment year 1979-80. The Tribunal vide its order bearing ITA No.589/LB of 1982-83 relating to the assessment year 1979-80 dated 8-7-1990 deleted the addition of Rs.1,23,361 on the technical ground that the Assessing Officer had not followed the procedure laid down in section 13 of the Income Tax Ordinance 1979. In the asse4sment, year 1980-81 the assessee filed return under section 59(1) of the Ordinance which was originally accepted at an income of Rs.1,06,316 on 6-1-1981. Since the learned C.I.T.(A)'s order under which the allocation was made was passed on 13-6-1982, that order was not before the Assessing Officer when he passed the assessment order. Subsequently the I.T.O. took up the case under section 156/132 of the Ordinance and made the addition of Rs.51,160 allocated by the learned C.I.T.(A). The assessee filed appeal before the learned C.I.T.(A) which was dismissed and hence this appeal.

3. The learned counsel for the assessee's precise objection was that the Assessing Officer had no jurisdiction to rectify its own order under the Income Tax Ordinance as there was no mistake in the original order of the ITO passed on 6-1-1981. It was submitted that the order of the ITO having been passed without jurisdiction, therefore, has to be annulled. The learned D.R. on the other hand contended that what the ITO has done is that he implemented the order of the learned CIT(A) which he is bound to do under the Income Tax Ordinance.

4. We have considered the rival contentions. Section 156 of the Ordinance has a very limited scope of jurisdiction. In that section only a mistake patent on record could be rectified. Here in this case there was no mistake whatsoever in the order of the ITO, dated 6-1-1981 passed under section 59(1) of the Ordinance what to say a mistake patent on the record. Unless there is a mistake, the ITO is not empowered to exercise the jurisdiction under section 156 of the Ordinance and this should be as on the date of the order. It is obvious that there was no mistake in the original assessment order as it stood on 6-1-1981. As for section 132 of the Ordinance indeed an ITO is empowered to implement the Appellate order and it also empowers the Appellate Assistant Commissioner to give directions to the ITO and the ITO is under obligation to implement that order relating to -a particular assessment year. In this case whatsoever order had been passed by the learned CIT(A) that was for the assessment year 1979-80. Any remarks made by the Appellate Authority for the assessment year 1980-81, could at best be taken as a definite information by the ITO. These remarks could certainly not be taken as direction to be implemented under section 132 of the Ordinance for the assessment year 1980-81. The Appellate Authority has no power to give directions in respect of the assessment which is the subject matter of appeal for a particular assessment year. The assessment year which is not the subject matter of appeal before him, is beyond the scope of section 132 and therefore any remarks by the Appellate Authority for any assessment year which is not before him, cannot be implemented by the ITO under section 132 of the Ordinance. If any authority us needed Mathuradas B. Mohta v. CIT reported as 1965 PTD 651 may be cited. In that case the Bombay High Court while dealing with the scope of sections 30, 31 of the repealed Income Tax Act held that the Appellate Assistant Commissioner is competent to decide whether a particular item or a particular amount was income of that assessment year or not but he has no jurisdiction to decide in that appeal the appropriate year in which the said income would fall. It was further held that the Appellate Assistant Commissioner was not competent to give direction in relation to different assessment year which was not the subject-matter of appeal before him. The allocation made by the learned C.I.T.(A) in the assessment year 1979-80 could be taken into consideration by the Assessing Officer in the assessment year 1980-81 while passing the assessment order. But the difficulty of the I.T.O. while passing the order under section 59(1) was that he could not go into the details and had to accept the declared income of the assessee under section 59(1) of the Ordinance if it fulfilled the conditions laid down by the law. Even otherwise the Appellate order of the AA.C for the assessment year 1979-80 was not before the I.T.O. on 6-1-1981 when he passed the assessment order for the assessment year 1980-81 as the A.A.C, passed the order on a subsequent date i.e. (sic) Therefore, even if the I.T.O. wanted to make an addition, he could not do so when the assessment order was passed. The question was what was the remedy before the I.T.O. in such a case? The remedy lay under section 65 of the Ordinance. The Assessing Officer could exercise the powers and reopen the assessee's case as it would be a case of under assessment. But section 156 of the Ordinance did not empower the assessing officer to make amendment in his earlier order validly passed under section 59(1) of the Ordinance. We, therefore,, annul the rectified order of the Assessing Officer passed under section 156/132 of the Ordinance with the result the assessee's original order passed under section 59(1) is restored. This order, however, does not debar the Assessing Officer to re-open the case under section 65 of the Ordinance if permitted under the law.

5. As a result the appeal is accepted

M.B.A./15/TAppeal accepted.