1994 P T D (Trib.) 598

[Income-tax Appellate Tribunal Pakistan]

Before Abrar Hussain Naqvi, Chairman, Nasim Sikandar, Judicial Member, Inam

Ellahi Sheikh, Accountant Member, Muhammad Mushtaq, Accountant Member

and M. Sarwar Khawaja, Accountant Member

LTA. No. 444/KB of 1989-90, decided on 19/12/1993.

(a) Constitution of Pakistan (1973)---

----Art. 264(b)(c) & (e)---Repeal of law---Effect---Ordinance stands repealed after living its life of four months and except for the past and closed transactions and pending acts as covered by Art.264(b)(c) & (e) of the Constitution is not endowed with any savings of the amendments-- Notifications issued under a repealed Ordinance are not calculated to be saved by the Constitution.

(b) Maxim-

----Lex non cogit ad impossibilia---Individual or an institution representing individuals including a Government cannot be required or expected to do anything which is factually not possible.

(c) Finance (Revised) Ordinance (XXII of 1988)---

----Preamble---Promulgation of Finance (Revised) Ordinance, 1988 comprising all the amendments earlier contained in Finance Ordinance 1988; Income Tax (Amendment) Ordinance, 1988 in view of the situation then prevailing in the country could not be said to be open to exception as Constitution itself did not prohibit in so many words the re-enactment of any expired/expiring Ordinance.

The situation resulting from dissolution order of Assemblies, dated 29-5-1988 till the enforcement of the Finance Act, 1988 (Act VI of 1988) was clearly extraordinary and apparently not contemplated by the framers of the Constitution. Therefore, while re-enactment of an Ordinance by the President when the National Assembly exists may have some turbidity, re-promulgation of Finance (Revised) Ordinance 1988 on October 26, 1988 comprising all the amendments earlier contained in the Finance Ordinance (II of 1988), dated 26-6-1988 and Income Tax (Amendment) Ordinance (IX of 1988) in view of the situation then prevailing in the country cannot be said to be open to exception. The Constitution does not prohibit in so many words the re-enactment of an expired/expiring Ordinance.

PLD 1949 Dacca 1; AIR 1987 SC 579 and (1987) 1 SCC 378 distinguished.

(d) Income Tax Rules, 1982---

----Rr. 35-A, 35-B, 35-C, 35-D, 35-E, 35-F & 35-G [as inserted by S.R.O. No.808(1)/88, dated 15-9-19881---Rules 35-A to 35-G only pertained to procedural mechanism and did neither provide for any additional liability nor impose disability on any assessee---Said rules provided for substitution of a panel for the existing institution of Income Tax Officer for the purpose of framing of assessment in certain cases and whatever an Income Tax Officer could do the panel substituting Income Tax Officer under the said rule could very well perform---No one having a vested right in a procedure, the objection that panels constituted under the said rules could not frame or re-open assessments in respect of assessment years prior to 1988-89 was repelled.

Shiv Bhagwan Mod Ram Saroji v. Onkarmal Ishar Dass AIR 1952 Bom. 365 and Adam Hossen and others v. Federation of Pakistan PLD 1962 (W.P.) Kar. 21 ref.

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

----Ss. 2, 4 & 5---Income Tax Rules, 1982, Rr.35-A, 35-B, 35-C, 35-D, 35-E, 35-F & 35-G---Finance Ordinance (II of 1988), Preamble---Income Tax (Amendment) Ordinance (IX of 1988), Preamble---Tax Laws (Repeal) Ordinance .(XXIII of 1988)---Notification S.R.O. No.808(1)/88, dated 15-9-1988---Amendment in Ss. 2, 4 & 5 of the Income Tax Ordinance 1979 providing for creation of panels and powers of C.B.R. to make Rules in respect thereof consistently being there till their incorporation in the Finance Act, 1988 enforced on 26-12-1988 the panels and the Rules framed by Central Board of Revenue in that regard were validly constituted---Said panels having only substituted the original forum of assessment by an I.T.O. could perform all or any of the acts earlier performed by an I.T.O. in the cases of class of assessees or of persons as directed by the competent Authority.

Ittefaq Foundary v. Federation of Pakistan PLD 1990 Lah. 121; Rehmat Khan v. Federation of Pakistan PLD 1993 Lah. 70; PLD 1989 SC 75; Government of Punjab v. Ziaullah Khan 1992 SCMR 601; Tirathmal v. The State PLD 1959 Kar. 594; Shariat Petitions Nos. 1-7/88, 14-18/88, 20 to 23/88 and 1-31/8q etc. dated 20-2-1991; Khan Anjuri Khan v. The Government of West Pakistan and others PLD 1958 (W.P.) Pesh. 191; Karachi Building Control Authority v. Hashwani Sales and Services Ltd. PLD 1993 SC 210; The Province of East Pakistan v. Sirajul Haq Patwari and others PLD 1966 SC 854; PLD 1949 Dacca 1; AIR 1987 SC 579; (1987) 1 SCC 378; Shiv Bhagwan Moti Ram Saroji v. Onkarmal Ishar Dass AIR 1952 Bom. 365 and Adam Hossen and others v. Federation of Pakistan PLD 1962 (W.P.) Kar. 21 ref.

Rehan Hassan Naqvi, I.N. Pasha and Kh. Muhammad lqbal for Appellants (in both I.T.As.).

Nasrullah Awan, L.A. and Muhammad Saeed Khan, DR for Respondents (in both I.T.As.).

Date of hearing: 28th November, 1993.

ORDER

NASIM SIKANDAR (JUDICIAL MEMBER).--These two appeals have been consolidated for the purpose of disposal of common questions of law arising there in.

2. In the first case the appellant is a Private Limited Company and is engaged in manufacture and sale of hollow concrete blocks. The income declared by the appellant for the assessment years 1985-86, 1986-87 and 1987-88, in the first instance was accepted as exempt under clause 119 (now deleted with effect from 7-1-1991) of the 2nd Schedule to the Income Tax Ordinance, 1979 in view of the location of the concern at Hab Chowki, District Lasbella in the Province of Balochistan. While the said assessment orders for the three years were subject matter of appeals on various other aspects before Commissioner of Income Tax (Appeals) Zone-III Karachi, notices under section 65 of the I.T. Ordinance were issued by IAC/Chairman Panel-4 Companies Karachi-3. Ultimately the proceedings under section 65 of the Income Tax Ordinance were completed and the assessments made for all the three years disallowing certain claimed losses and holding income/receipts from building contracts to .be non-exempt. The appeals filed against these assessments were disposed of by CTT (Appeals)-III Karachi through the impugned order dated 31-3-1990 wherein the appellate authority dealt with the legal objection raised regarding competency of the panel to initiate reopening proceeding under section 65 of the Ordinance, 1979 in the following words:---

"I do not agree with the learned counsel for the appellant that the Income Tax Panel was not competent to initiate proceedings under section 65 of the Income Tax Ordinance for the years prior to the assessment year 1988-89 because. retrospective effect is not permissible in law. This argument would have been forceful if the panel had framed the original assessment but this is the case of the re opening of assessment already completed. Since the institution of the Income Tax Officer was replaced by the CBR with the Income Tax Panel headed by an Inspecting Assistant Commissioner, the panel is the once authority which can re-open the assessment already completed. When the learned counsel was confronted as to who will be authority to execute the provision of section 65' after the elimination of the institution of the Income .Tax Officer, he failed to give any proper explanation. The action of the Income Tax Panel in this respect is, therefore, upheld."

(Underscored for emphasis)

In the further appeal filed before this Tribunal the assessee appellant has assailed the re-assessment orders as well as the resultant assessments framed, inter alia, on the following two legal grounds:---

(i) That the learned Commissioner of Income Tax Appeals Zone-III, Karachi has erred in holding that the Income Tax Panel was competent to initiate proceedings under section 65 of the Income Tax Ordinance 1979 although system of assessment by Panel was introduced for the. assessment year 1988-89 and onward.

(ii) That without prejudice to the above ground No.2 the learned Commissioner of Income Tax, Appeals-111 Karachi has erred to confirm assessment under section 65 of the Income Tax Ordinance 1979 by the Income Tax Panel 04, Companies-III, Karachi.

3. In the other appeal the appellant is a Multi National Public Limited Company and is engaged in manufacturing Pharmaceutical products. For the assessment year 1988-89 as against declared income of Rs. 1,92,54,190, it was assessed at a total income of Rs.2,76,08,701. In the process the assessing officer disallowed sales promotion expenses besides disallowing the claimed tax credit under section 107 and rebate on export sales etc. On appeal, the learned first appellate authority set aside the addition made by the assessing officer by invoking provisions of section 79 of the Ordinance and disallowing of tax credit under section 107 and remanded the case for a fresh decision. However, the addition ordered by the assessing officer on account of sales promotion expenses by invoking certain provisions of Drug Rules was confirmed. This order was challenged by way of an appeal before this Tribunal on various grounds including agitation against the remand of case on the above said two accounts as also confirmation of disallowance by invocation of the provisions of Drug Rules of 1976. However, during the pendency, the appellant on 22-2-1992 prayed for permission to raise the following additional ground as well:---

"Section 5(1)(cc) having been introduced in the Income Tax Ordinance, 1979 vide the amendment of the Finance Ordinance, 1988 which lapsed on 25-10-1988, the constitution of the Panel on 9-10-1988, being void, assessment made `by it is equally void and liable to be annulled."

5. Since this additional ground also raised an objection to the competency of the Income Tax Panels to frame or re-open assessments, this second appeal was heard alongwith the above stated appeal in which the following question of law was framed by the Tribunal earlier on 19-11-1991:---

"Whether under the facts and circumstances of this (these) appeal(s) the learned Chairman of the Panel had the jurisdiction to issue notices under section 65 of the Income Tax Ordinance. If not whether the orders rendered by the learned Chairman/CIT (Appeals-A) are without jurisdiction."

6. Through this order this Bench proposes to rule upon the above objection which apparently arose in view of the following peculiar circumstances. The National Assembly as well as the four Provincial Assemblies were dissolved by way of a Presidential decree on 29-5-1988. The National Assembly being not in session, the President of Pakistan promulgated Finance Ordinance-II of 1988 (PLD 1989 Central Statutes 28) on 26-6-1988 in order to give effect to the financial proposals of the Federal Government for the year 1988-89. This Ordinance, inter alia, contained following amendments in Ordinance XXXI of 1979 (hereinafter called the Income Tax Ordinance, 1979):---

Section 2, subsection (25-A):

"Income Tax Panel" means a panel comprising an Inspecting Assistant Commissioner, as its Chairman, and one or more Income Tax Officers";

(2) in section 3,--- .

(a) in subsection (1), after clause (d), the following new clause shall be inserted, namely:

"(dd) Income Tax Panels:"

(b) In subsection (1-A), after the words "Assistant Commissioners of Income Tax", 'comma and words", Income Tax Panels," shall be inserted; and

(c) In subsection (2), after the words. and comma "Inspecting Assistant Commissioner,", the words and comma "Income Tax Panels," shall be inserted;

(3) In section 4, after subsection (1), the following new subsections shall be inserted, namely:--

"(1-A) The Regional Commissioner, or, where the Board directs, the Commissioner may appoint as many Income Tax Panels as may be necessary.

(1-B) The Central Board of Revenue may make rules in respect of constitution, procedure and working of the Income Tax Panels."

On .22nd September, 1988 the President enforced another Ordinance, namely, the Income Tax (Amendment) Ordinance, 1988 (published on 24-9-1988) as Ordinance IX of 1988. This Ordinance came into being at once and introduced, inter alia, following, amendments in section 5 of Income Tax Ordinance (Ordinance XXXI of 1979):--

AMENDMENT OF SECTION 5 ORDINANCE XXXI OF 1979.

In the said Ordinance, in section 5, in subsection (1),--

(a) in clause (c), the word "and" at the end shall be omitted; and

(b) after clause (c), amended as aforesaid, the following new clause shall be inserted, namely:---

(cc) Notwithstanding anything contained in clause (c), the Commissioner may, by general or special order .in writing, direct that all or any powers conferred on the Income Tax Officer and the Inspecting Assistant Commissioner shall, in respect of all or any proceedings relating to specified cases or classes of cases or specified persons or classes of persons; be exercised by the Income Tax Panel and the Commissioner, respectively, and for the purposes of any proceedings in respect of such cases or persons, references in this Ordinance or in any rules made thereunder to `Income Tax Officer' and `Inspecting Assistant Commissioner' shall be deemed to be references to "Income Tax Panel and `Commissioner' respectively:

Provided that, any function performed by the Income Tax Officers as members of the Income Tax Panel, on the directions of the said Inspecting Assistant Commissioner, shall be deemed to have been, performed in exercise of the powers conferred on the Income Tax Panel:

Provided further that an order made by the Income Tax Panel under any provision of this Ordinance shall be made only by the said Inspecting Assistant Commissioner:

Provided further that, if any one member of the Income Tax Panel, other than the Chairman, is absent from any silting of the Income Tax Panel, the proceedings of the Panel may continue, and no act; proceedings or order of the Panel shall be- invalid or be called in question merely on the ground of such absence; and."

This Ordinance introducing the above reproduced amendment was repealed through the Tax Laws (Repeal) Ordinance, 1988 which came into effect on 26th October, 1988.

6-A. Since the National Assembly still stood dissolved and the Finance Ordinance (Ordinance II of 1988) having lived its prescribed life of four months as stipulated under Article. 89(2)(a)(i) of the Constitution, the President of Pakistan on 26-10-1988 re-enacted and enforced almost verbatim the Ordinance-II of 1988 and promulgated the same as the Finance (Revised) Ordinance (Ordinance XXII of 1988) (PLD 1989 Central Statute 193). This Ordinance contained in similar words the amendments in the Income Tax Ordinance which were introduced earlier by Ordinance II of 1988, with the exception that clause (cc) in section 5 as reproduced above was added which was earlier introduced by Income Tax (Amendment) Ordinance 1988 and was not a part of original Finance Ordinance II of 1988. After the elections to the National as well as the Provincial Assemblies were held, the National Assembly promulgated Finance Act VI of 1988 which, after receiving the Presidential assent became law on 26-12-1988 (PLD 1989 Central Statute 175). Section 8 of this Act repealed the Finance (Revised) Ordinance XXII of 1988. In the meanwhile the Central Board of Revenue, on 15-9-1988 through SRO 808(1)/88 inserted "Part III-A" in the Income Tax Rules 1982 providing for Income Tax Panels (Constitution, Procedure and Working) Rules. The Rules so added from Rules 35-A to 35-G contained provisions defining respectively the "Chairman" and a "panel", constitution of panel, jurisdiction of panel, sittings of the panel, powers of the Chairman, working of the panel and application of Rules 35-A to 35-F.

7. In the perspective of the aforesaid facts, the objections of the appellants as raised at the bar in a nut-shell are:---

(i) That the Finance Ordinance (Ordinance II of 1988) having ceased to be a part of the statute book after expiry of four months, none of the proposals or the amendments brought about in the Income Tax Ordinance, 1979 including those detailed above outlived the said Ordinance;

(ii) That none of the actions taken or a notification issued in pursuance of any of the amendments contained in Ordinance II of 1988 could subsist after the automatic repeal of the Ordinance and, therefore, neither the said amendment in the Income Tax Rules, 1982 nor other actions taken under the authority emanating from the said Ordinance could be allowed to exist beyond four months;

(iii) That at any rate the aforesaid amendment in the Income Tax Rules inserting "Part-III-A" having necessarily been allowed or permitted under the provisions of the said amendment also vanished on deemed repeal of the Ordinance on expiry of the four months;

(iv) That the amendment in Rules providing for addition of Rules 35-A to 35-G through SRO 808(1)/88, dated 15-9-1988 having ceased to exist after automatic repeal of the Finance Ordinance II of 1988 as also the Income Tax (Amendment) Ordinance on 26-10-1993, the Income Tax Panels constituted through these Rules lost their authority to function. The ultimate objection in these appeals respectively being that issuance of notices under section 65 or framing of assessment by the respective panels after 26-10-1988 (date of expiry of Ordinance II of 1988) and repeal of Income Tax (Amendment Ordinance) was coram non judice and therefore illegal. Further that, even if the legality. of these rules is accepted for the sake of arguments, their retrospective application to assessments years earlier to the year 1988-89 is not warranted. Therefore, the respective panels being creation of these Rules notified 'on 15-9-1988 could not frame assessments in respect of or reopen assessments already framed earlier to assessment year 1988-89.

(v) That the re-enactment of Ordinance II of 1988 and provisions of section 5(1)(cc) of the Income Tax (Amendment) Ordinance, 1988 (Ordinance IX of 1988) in the guise of Finance (Revised) Ordinance XXII of 1988 was per se illegal being verbatim reproduction of the earlier Ordinances and that the Finance Act (VI of 1988) was the only next legal document after Finance Ordinance II of 1988 which was promulgated in accordance with the provisions of the Constitution; and '

(vi) That on the relevant date of issuance of notice under section 65 of the Ordinance for reopening of assessment in the case of first appeal and on the date of framing of assessment in the case of second appeal the provisions of Ordinance II of 1988 having lapsed, the rules framed thereunder also evaporated and thus the concerned panels had no jurisdiction to either reopen or frame the impugned assessments respectively.

8. In support of these objections the appellants have relied upon an unreported judgment of the High Court of Sindh, Karachi wherein a short order was passed on a number of Constitutional petitions on 18-2-1993 and reasons for the order were delivered on 15-3-1993. A reported case-of Lahore High Court cited as PLD 1990 Lah. 121 re: Ittefaq Foundry v. Federation of Pakistan has also been cited in support of the aforesaid contentions. The Revenue, on the other hand defends the vires of the aforesaid amended Rules by referring to the provisions of section 165 of the Ordinance under which the said amendments in Rules were notified as also the ratio of a reported case of Lahore High Court cited as PLD 1993 Lah. 70 re: Rehmat Khan v. Federation of Pakistan.

9. The aforesaid unreported judgment of the Sindh High Court has heavily been relied upon by the appellants and, therefore, needs to be mentioned and discussed at a length. Through this order a learned Division Bench of the Sindh High Court disposed of as many as seventy Constitutional petitions beginning with Petition No.D-440 of 1991 till Petition No.D-2493 of 1992. The relevant portion of the short order is reproduced below to know the exact nature of the order passed in these petitions:---

(a) It was within the powers and competence of the President of Pakistan to issue an Ordinance touching a subject (Money Bill) covered by clause (2) of Article 73 of the Constitution of Pakistan, 1973, as provided in Article 89 of the same Constitution. Accordingly the Finance Ordinance of 1988, as regards section 5 thereof, to the extent of bringing about insertion of section 25-B in the Customs Act, 1969, during the period of its operation, is a valid piece of legislation.

(b) The insertion of section 25-B of the Customs Act, 1969, as above, pursuant to such Ordinance and issuance of Notification bearing No.610(1)/88, dated 30-6-1988 by the Central Board of Revenue, in exercise of powers thereunder are also, accordingly, valid. However, both section 25-B and the said Notification ceased to remain operative upon the expiry of four months' time from the date of the promulgation (26-6-1988) of the referred Finance Ordinance-II of 1988, such Ordinance on efflux being deemed to have been repealed in terms of Article 89(2)(a)(i) of the Constitution of Pakistan.

(c) The follow-up Ordinance namely the Finance (Revised) Ordinance XXII of 1988 issued by the President of Pakistan on 26-10-1988 with respect to re-insertion of section 25-B, in the Customs Act, 1969 is ab initio void and of no legal effect the President of Pakistan having no power whatsoever to re-enact an Ordinance upon the expiry of four months' period from the promulgation of a previous Ordinance which in this case was Finance Ordinance 11 of 1988

(underlining in ours)

(d) All rights acquired, obligations accrued and liabilities incurred pursuant to section 25-B of the Customs Act and notifications or orders issued thereunder while Finance Ordinance II of 1988, occupied the field were and remain valid, since such would fall in the category of past and closed transactions. However, any notification or order issued in terms of section 25-B and in exercise - of delegated powers under Notification bearing No. 610(1)/88 dated 30-6-1988 beyond 26-10-1988 when section 25-B ibid stood repealed upon the deemed repeal of Ordinance II of 1988 would be invalid in law, except in situations covered by Article 264(c) of the Constitution.

This results from the delegated power having ceased to be effective upon the expiry of Ordinance II of 1988 and the corresponding repeal of the relevant provision of law where under Notification No.610(i)/88 of the Central Board of Revenue was issued. Accordingly the levies and the demands raised pursuant to the contravening notifications on the strength of Notification No.610(1)/88 dated 30-6-1988 detailed in each of the petitions would be invalid and of no legal effect. Resultantly, the relevant notifications no longer hold the field and there being no independent delegation and no notification on the strength of a subsisting delegation under section 25-B of the Customs Act, which having been re-enacted under the Finance Act of 1988, could encompass a fresh delegation by the Central Board of Revenue but no corresponding resort thereto having been made the cases, covered by these Constitutional Petitions, upon the foregoing findings, shall have to go back to the Customs Authorities and assessments shall have to made in terms of section 25 of the Customs Act, where under, till the promulgation of section 25-B ibid, such matters were being dealt with. The Central Board of Revenue, however, would be free to issue fresh notifications in terms of section 25-B of the Customs Act, 1969, as re-enacted under the Finance Act of 1988."

While giving detailed reasons for the said order, the learned Division Bench examined a number of cases of the superior Courts including PLD 1989 SC 75 re: Reference No. l of 1988 by the President of Pakistan, 1992 SCMR 601 re: Government of Punjab v: Ziaullah Khan and PLD 1969 Kar. 594 re: Tirathmal v. The State. The learned Judges concluded that Ordinance making power could not be exercised so as to extend the life of an expired Ordinance repealed by efflux of time through another Ordinance. Their Lordships noticed the difference between the extension of an Ordinance by another Ordinance and re-enactment of an earlier Ordinance and on the authority of a Full Bench judgment of the Sindh High Court in Shariat Petitions Nos. 1-7/88, 14-18/88, 20 to 23/88 and 1-31/89 etc. dated 20-2-1991 concluded that Finance (Revised) Ordinance XXII of 1988 could not be legislated upon and thus was a bad law. Further, that if it existed on the statute book it existed only in name and, therefore, could be disregarded; that the impugned notification issued under the Finance Ordinance 11 of 1988 on June 30, 1988 came to an end on 26-10-1988 the day this Ordinance stood repealed at the expiration of four months from its promulgation; the Finance Ordinance II of 1988 having come to an end on 26-10-1988 by force of Constitution, Notifications under the Repealed Ordinance were also not calculated to be saved by the Constitution and, therefore, came to an end with the repeal of the Ordinance itself. In this connection PLD 1990 Lah. 121 re: Ittefaq Foundry v. Federation of Pakistan was referred to with favour.

9-A. Before proceeding further, it would be useful to quote Saeeduzzaman Siddiqui, J, as his Lordship then was which he obser4ed while speaking for the Bench and disposing of the above cited Shariat petitions:---

"The next preliminary objection relates to the maintainability of petitions filed under the 2nd Ordinance. It is contended that the 2nd Ordinance was not competently promulgated by the President and as such the proceedings instituted under it are not maintainable. Mr. Khalid M. Ishaq and the other learned counsel appearing for the petitioners did not seriously challenge this contention. A reading of the 2nd Ordinance will show that it is reproduction of the first Ordinance. It is not disputed before us that upon expiry of the period of four months from the date of its promulgation the 1st Ordinance stood repealed. There is no power under Article 89 of the Constitution which authorised the President to repromulgate an Ordinance which stood repealed in terms of clause 2 of Article 89 ibid. In the case of D.C. Wadhwa and others v. State of Bihar and others AIR 1987 SC 579, the Supreme Court of India struck down Bihar Intermediate Education Council Ordinance, 1985, as unconstitutional and void for the reason that the Governor has been repromulgating the Ordinance without getting it placed before the Assembly and approved it as an Act. To the same effect are the observations in the Moulvi Tamizuddin Ahmed v. The Province of East Bengal PLD 1949 Dacca 1, where it was held that the Governor cannot extend the life of an Ordinance by promulgating another Ordinance."

10. As is evident from the penultimate para, the Constitutional petitions assailed a notification issued by Central Board of Revenue deriving authority from an amendment brought into being by way of Ordinance II of 1988 as section 25-B in the Customs Act, 1969. Through this amended section 25-B, the Central Board of Revenue was empowered either itself or through an authorised officer to fix valuation of goods specified in First and Second Schedule to the Customs Act. The Board, through the impugned notification delegated the authority to the Collector of Customs Evaluation who in turn issued a number of the consequential notifications. The main contention in these Constitutional petitions was that the impugned SRO 610(1)/88 dated 30-6-1988 ceased to remain in force on 26-10-1988 when section 25-B (Supra) its sanctioning provision inserted by Finance Ordinance II. of 1988 disappeared from the statute book on the deemed repeal of such Ordinance on the expiry of four months' time from the date of its issuance. It goes without saying that the Ordinance II of 1988 in question before their Lordships and the effect of the amendments brought by that Ordinance as also the notification allegedly issued under the amendments introduced by the Ordinance are being assailed before us on exactly the same grounds. However, there are necessarily distinguishing features that characterise the facts, as also the points of law involved before their Lordships and now being agitated through these appeals before us.

11. In the first instance the Revenue has stressed that no notification was ever issued under the amended section 4(1-B) of the Ordinance Il of 1988. Instead the Rules were added/amended by CBR under the authority derived from and-in accordance withs the provisions of section 165 of the Income Tax Ordinance. Secondly, that the amended rules provide only for a procedural mechanism and had nothing to do with the levy of tax or otherwise fixation of any tax rate etc., a matter which was main consideration for the conclusions of their Lordship in the case relied upon by the appellants qua the impugned notifications. In the said unreported judgment of the Sindh High Court their Lordships were dealing with a notification delegating power of fixation of Customs Duty under the Act which was allowed under section 25-B as introduced by way of the aforesaid Ordinance Il of 1988. The Revenue further distinguishes the facts m hand from those involved in the aforesaid petitions by pointing out that even in case of Ittefaq Foundry v. Federation of Pakistan PLD 1990 Lah. 121 which was cited with favour by their Lordships, the impugned notification also contained revised Central Excise Duty and sales tax rates. From this the Revenue argues that levy of a cess or its evaluation directly or under a delegated authority can only be done when it is specifically permitted by the legislature through a provision of law while in case of presently impugned SRO no such authority was needed from the impugned Ordinance or for that matter from the Income Tax Ordinance itself as the amendment in Rules merely provided for a procedural matter or forum of assessment and, therefore, was fully covered by the general powers conferred on CBR by section 165 of the Income Tax Ordinance. Reliance in this regard is placed on a case re.: Khan Anjum Khan v-. The Government of West Pakistan and others reported as PLD 1958 (W.P.) Pesh. 191 wherein a Full Bench of the Court observed that "it is an accepted principle of law that rules framed under an enactment acquired same force which other provisions of the enactment possess." Learned counsel for the Revenue further contends that in a recent case PLD 1993 SC 210, re: Karachi Building Control Authority v. Hashwani Sales and Services Ltd. the Supreme Court held that once a Court finds that the Rules/Regulations under the statutory power are within the ambit of relevant statute, it cannot sit in judgment over the wisdom and effectiveness or otherwise of the policy laid down by the regulation making body and it cannot declare Regulations to be ultra vires merely because the Court considered that the impugned Regulation will not serve the object and the purpose of the Act According to Revenue somewhat similar principle was earlier laid down by Supreme Court in PLD 1966 SC 854 re: The Province of East Pakistan v. Sirajul Haq Patwari and others. It is further contended that leaving aside the academic discussion about their legality, there does not appear any doubt that these rules were necessarily beneficial for the assessees and provided for a more considered mode of assessment. There is safety in numbers, so goes the dictum and provisions for panel of two Income Tax Officers headed by a senior officer viz IAC expressed manifestation of this desire of CBR. Further, that the scheme which subsequently appears to have gone out of vogue is still a part of the Rules and the concerned Commissioner may appoint as many panels as are necessary to perform the functions of Income Tax Officer as contained in Chapter VII of the Ordinance or any other functions that may be assigned to it by the Commissioner in respect of any cases or class of cases of persons or classes of persons. Learned LA., however, impliedly conceded that the only objection which could be made is that the Rules having substituted or provided for an additional machinery as against the institution of ITO was ultra vires of the provisions of the Ordinance and therefore could not stand upon their own legs in absence of an express authority from the Ordinance. Accordingly he attempted to answer the supposed objection in the background of the scheme of the Ordinance and the actual practice treaded upon while making assessments. However, we do not feel inclined to thrash this issue further as the matter can be decided on other considerations which follow.

12. We respectfully subscribe to the views expressed by their Lordships of the Sindh High Court that an ordinance stands repealed after living its natural life of four months and that except for the past and closed transactions and pending actions as covered by Article 264(b)(c) and (e) is not endowed with any savings of the amendments. The distinction drawn by their Lordships between the provisions and application of Article 264 of the Constitution and section 6 of the General Clauses Act and the conclusion that notification issued under a Repealed Ordinance are also not calculated to be saved by the Constitution again appear a settled preposition. The question whether the President could validly re-enact an expired Ordinance, as rightly observed by their Lordships is a moot point till an authoritative pronouncement by the' Supreme Court. The reliance of the Revenue in this connection on PLD 1993 Lah. 70 re: Rehmat Khan v. Federation of Pakistan in which a Full Bench judgment of the West Pakistan High Court Karachi re: Terith Mal v. The State (Supra) was followed indicates a difference of opinion between the two High Courts.

13. However, after having heard the parties on the issues of re-enactment of the Ordinance on 26-10-1988 and alleged retrospective effect of the amended Rules we will submit that the appellants before us are not entitled to a favourable reply to their preliminary objections for a number of reasons. The situation which necessitated re-promulgation of the last mentioned Ordinance was clearly the one not visualised by the Constitution which provided for holding of elections w' thin a period of 90 days in case of dissolution of National Assembly. Secondly there can be no denial of the proposition that an individual or an institution representing individuals including a Government cannot be required or expected to do anything which is factually not possible. Hence the maxim LEX NON COGIT AD IMPOSS IBILIA, the law does not compel 'a person to do which he cannot possibly perform. Again it would not be incorrect to say that the country could not be governed without laws and the case of financial proposals to be adopted for the next financial year was all the more precarious and compelling. Of course, this is not the place to discuss as to why and in what circumstances the concerned authority failed to announce and hold elections within the time prescribed by the Constitution. It is, however, certain that the situation demanded the President of Pakistan to refer the matter to the Supreme Court for an opinion under Article 186 of the Constitution to the competency of the Federal Government to incur day to day expenditure from the Federal consolidated fund in the following words (Reference No. l of 1988) PLD 1989 SC 75):--

"In view of the aforementioned circumstances what measures may be adopted to enable the Federal and Provincial Governments to authorise incurring of expenditure out of the Federal and Provincial Consolidated Funds mentioned above in the absence of National and Provincial Assemblies after 31-10-1988 till the respective Budgets are passed by the new National and Provincial Assemblies to be elected in the ensuing general elections as aforesaid."

14. It may be noted that this reference pertained to the same period which is now under discussion. Their Lordships of the Sindh High Court in the said Constitutional petitions also referred to the opinion recorded by the Supreme Court in Reference No. l (Supra). There is no doubt that their Lordships of the Supreme Court while answering the reference did not approve of the enforcement of an Ordinance for the purpose of allowing/incurring expenditure from the Federal and Provincial consolidated funds yet it was only in view of the expressed prohibition of the fixed period of four months provided for in Article 86 of the Constitution of Pakistan that the Supreme Court held:---

"Therefore, in view of the aforesaid express prohibition neither the Federal nor the Provincial legislature can achieve through the Ordinance what is otherwise prohibited by the express terms of the Constitution. It is well-established that where power is given to do a certain thing in a certain way, the thing must be done in that way or not at all. Other methods of performance are necessarily forbidden. This principle should apply with greater force when a Constitutional provision has provided for a method of performance and prescribed a limitation of time for the doing of a thing. This would imply that any contrivance which would amount to circumventing the Constitutional provision is necessarily prohibited."

The Supreme Court after holding by a majority opinion:---

"Since the National Assembly and the Provincial Assemblies will stand reconstituted on 16-11-1988 and 19-11-1988 respectively it is only after those dates that the provisions of Article 86 can become operative. However, by these dates the period of four months prescribed for completing the procedures under Articles 82 and 83 will have expired. But as already observed the scheme of Article 86 is that after the dissolution of the National Assembly it must be reconstituted to enable it to comply with the procedure under Articles 82 and 83. This shows that the scheme of this Constitutional provision that at least one month must be available with the re-constituted National Assembly for compliance with the procedure prescribed under Articles 82 and 83. Thus, in the facts and circumstances of the present case a period of one month after the declaration of results of the General Elections scheduled for 16-11-1988 and 19-11-1988 would be available to the Federal and Provincial Governments for authorization of the expenditure from the Consolidated Funds concerned. Needless to say that it is well-established that a Constitution has to be interpreted as an organic whole and its various provisions read as parts of one integral scheme and operated together in harmony."

proceeded to express the peculiarity of the situation in the following words:--

"We would like to make it clear that the present opinion has been rendered in view of the special facts and circumstances of the case where the election could not be held within ninety days on account of the lapse, inter alia, of the Parliament in not complying with the provisions of Article 222(2) read with Article 51(3), and this Court has also in its order, dated 5-10-1988 held that in the exceptional situation, the elections scheduled on 16-11-1988 and 19-11-1988 are valid under the Constitution. This opinion, therefore, cannot serve as a precedent for the future or can be understood to be laying down the law that if the elections are held after the stipulated period of ninety days, the Government concerned shall still have some period beyond four months prescribed under Article 86 to incur expenditure from the Consolidated Funds."

15. As for the reported cases PLD 1949 Dacca 1 (Supra) and AIR 1987 SC 679 = (1987) 1 SCC 378 (Supra) referred to by their Lordships while deciding the Shariat Petitions these are clearly distinguishable. The earlier mentioned decision of the Dacca High Court relates to a different matter of extention in the life of an Ordinance by another Ordinance and hence does not need to be discussed further. In the other case from the Indian jurisdiction, the Supreme Court of India held the practice of large scale repromulgation of some Ordinances repeatedly in a routine manner to be usurpation of legislative function by executive, a colourable exercise of power and therefore a fraud on Constitutional provisions. Their Lordships found that the Government of Bihar made it a settled practice to deliberately go on repromulgating certain ordinances from time to time on a massive scale in a routine manner. Bhagwati, CJ., giving the facts leading to the filing of Constitutional petitions stated thus:

"Petitioner No. 1 carried out a thorough and detailed research in the matter of repromulgation of Ordinances by the Governor of Bihar from time to time and the result of this research was complied by him and published in a book entitled `Repromulgation of Ordinances: Fraud on the Constitution of India'. Some of the relevant extracts from this book have been annexed to the writ petition indicating the number of Ordinances repromulgated repeatedly by the Governor of Bihar. It is clear on a perusal of these extracts that the Governor of Bihar promulgated 256 Ordinances between 1967 and 1981 and all these Ordinances were kept alive for periods ranging between one to 14 years by repromulgation from time to time. Out of these 256 Ordinances 69 were repromulgated several times and kept alive with the prior permission of the President of India." The Court considered the matter in the light of the provisions of Article 213 of the Indian Constitution which confers power on a State Governor to promulgate Ordinances, while the Legislative Assembly of a State is not in session and which will cease to operate at the expiration of six weeks from the re-assembly of the Assembly or upon an earlier resolution disapproving an Ordinance. The wisdom of this Article was explained by the Court in these words:---

"The object of this provision is that since the power conferred on the Governor to issue Ordinances is an emergent power exercisable when the legislature, is not in session, an Ordinance promulgated by the Governor to deal with a situation which requires immediate action and which cannot wait until the legislature re-assembles, must necessarily have a limited life. Since Article 174 enjoins that the legislature shall meet at least twice in a year but six months shall not intervene between its last sitting in one session and the date appointed for its first sitting in the next session and an Ordinance made by the Governor must cease to operate at the expiration of six weeks from the reassembly of the legislature, it is obvious that the maximum life of an Ordinance cannot exceed seven and a half months unless it is replaced by an Act of the legislature or disapproved by the resolution of the legislature before the expiry of that period. The power to promulgate an Ordinance is essentially a power to be used to meet an extraordinary situation and it cannot be allowed to be `perverted to serve political ends'."

The Court noted that the Indian President possessed with a similar authority under. Article 123 of the Constitution never repromulgated a single Ordinance since the year 1950. Nevertheless the Court, visualising a situation (which is much less grievous than the one we were placed in during the relevant period) observed:---

"Of course, there may be a situation where it may not be possible for the Government to introduce and push through in the. legislature a Bill containing the same provisions as in the Ordinance, because the legislature may have too much legislative business in a particular session or the time at the disposal of the legislature in a particular session may be short, and in that event, the Governor may legitimately find that it is necessary to repromulgate, the Ordinance. Where such is the case, repromulgation of the Ordinance may not be open to attack."

Thus, not only the facts before their lordships of the Indian Supreme Court were necessarily different but also the Court did show a consideration for a situation which might make it difficult to get an Ordinance matured into an Act by an act of Parliament.

16. From the opinion rendered on Reference No. 1 of 1988 we have concluded that the situation resulting from Dissolution Order dated 29-5-1988 till the enforcement of the Finance Act, 1988 (Act VI of 1988) was clearly extraordinary and apparently not contemplated by the framers of the Constitution as aforesaid. Therefore, while re-enactment of an Ordinance by the President when the National Assembly exists may have some turbidity, re promulgation of Finance (Revised) Ordinance 1988 on October 26, 1988 comprising all the amendments earlier contained in the Finance Ordinance (JI of 1988), dated 26-6-1988 and Income Tax (Amendment) Ordinance (IX of 1988) in view of the situation then prevailing in the country cannot be said to be open to exception. Needless to emphasise that the Constitution does not prohibit in so many words the re-enactment of an expired/expiring Ordinance.

17. As to the retrospectivity of the impugned Rules, the contentions made by Mr. Rehan Hassan Naqvi, learned counsel for one of the appellants are clearly misplaced. Firstly these rules, as submitted by the Revenue, only pertained to procedural mechanism. These did neither provide for any additional liability or impose disability on any assessee or for that matter on the appellants before us. It is Trite Law that no one has a vested right in a procedure. The rules provided for substitution of a penal for the existing institution of I.T.O. for the purpose of framing of assessment in certain cases. At the most it was a change in forum for certain kinds of cases. Therefore, whatever an Income Tax Officer could do the panel substituting an Income Tax Officer under the aforesaid provisions of Rules could very well perform. The Indian Supreme Court in the landmark case on the subject, reported as AIR 1952 Bom. 365 re: Shiv Bhagwan Moti Ram Saroji v. Onkarmal Ishar Dass which was referred to with favour and relied upon in PLD 1962 (W.P.) Kar. 21 re: Adam Hossen and others v. Federation of Pakistan held that no party had a right to a particular procedure or a particular forum. The objection that the panels constituted under the said rules could not frame or reopen assessments in respect of the assessment years prior to 1988-89, therefore, is not well-based. As such we find ourselves partly in agreement with the findings of the learned first appellate authority, which it recorded on this topic in case of first appeal. The observation of CIT (Appeals) that the objection would have been forceful if the panels had framed original assessments, however, is not endorsed.

18. Accordingly we will return a negative answer to the question framed in these appeals.

19. The amendments in sections 2, 4 and 5 of the Income Tax Ordinance providing for creation of panels and powers to CBR to make rules in respect thereof consistently being there till their incorporation in the Finance Act, 1988 enforced on 26-12-1988, the panels and the Rules framed by CBR in this regard were, validly constituted. Also, these panels having only substituted the original forum of assessment by an ITO could perform all or any of the acts earlier performed by an ITO in the cases of class of assessees or of persons as directed by the competent authority.

20. These appeals shall now be heard on merits. We would like to express that our answer does not prohibit the appellants from objecting to the reopening of the assessments or the disallowances ordered by the panels on other grounds based upon the facts and circumstances of the each case.

ABRAR HUSSAIN NAQVI (CHAIRMAN).--I agree with the conclusion, though not with all the reasoning.

(Sd.)

(Inam Ellahi Sheikh),

Accountant Member

(Sd.)

Muhammad Mushtaq

Accountant Member

M. SARWAR KHAWAJA (ACCOUNTANT MEMBER).--I fully agree both with the reasoning as well -as the conclusions.

M.B.A./22/T.T.Order accordingly.