ITA NO. 1096/LB OF 1990-91 VS ITA NO. 1096/LB OF 1990-91
1994 P T D (Trib.) 83
[Income Tax Appellate Tribunal Pakistan]
Before Abrar Hussain Naqvi, Chairman and A.A. Zuberi Accountant Member
ITA No. 1096/LB of 1990-91, decided on 31/05/1992.
Per Abrar Hassan Naqvi, Judicial Member, A.A. Zuberi, Accountant Member, agreeing.
(a) Income Tax Ordinance (XXXI of 1979)---
----Ss.130, 131 & 32---Appeal to Appellate Assistant Commissioner---Form of appeal---Limitation---Held, unless the requirements of S.130, Income Tax Ordinance, 1979 are fulfilled the assessee's appeal is not admitted for hearing and therefore there is no occasion for following the procedure as provided by S.131 of the Ordinance and taking the decision in appeal under S.132 of the Ordinance.
(b) Income Tax Ordinance (XXXI of 1979)---
----S.131---Appeal to Appellate Assistant Commissioner---Limitation---Appeal to AA.C. has to be filed in the prescribed form and within prescribed period of limitation---If the requisites are not fulfilled and the AA.C. does not extend the period of limitation it cannot be said that an appeal has been really filed--Any order passed by AA.C. refusing to entertain the appeal cannot be termed as "order in appeal" for such an order would be an order refusing to admit appeal.
Akhtar Ali Pervaiz v. Altafur Rehman PLD 1963 Lah. 390 fol.
Mela Ram and Sons v. CIT, Punjab (1956) 29 ITR 607; Gour Mohan Mullick v. Commissioner of Agricultural Income-tax, West Bengal (1952) 22 ITR 131; CIT v. Shahzadi. Begum and others (1952) 21 ITR 1; Shivnath Prasad v. CIT Central (1935) 3 ITR 200; CIT v. Mysore Iron and Steel Works (1949) 17 ITR 478 and Dewan Chand v. CIT (1951) 20 ITR 621 distinguished.
(c) Income Tax Ordinance (XXXI of 1979)--
----S. 132---Appeal---Order passed by AA.C. under 5.132---Nature.
Every order passed by an AA.C. cannot be termed as an order on merits confirming the assessment within the meaning of section 132 of the Income Tax Ordinance. An order passed under section 132 of the Ordinance is only that order where after the date of hearing has been fixed under section 131 of the Ordinance and the parties have been heard on merit and then AA.C. passes an order either to set aside, confirm, reduce, or annul the assessment or passes such other orders as he thinks fit. The power to pass an order is inherent in section 130 itself. An AA.C. has to give a finding under section 130(1) as to whether an appeal is within the prescribed period or not. Similarly when an application to condone the delay is filed, the AA.C. has to give a finding to this effect and has to pass an order accepting or rejecting the application. The power to pass such an order is inherent and implied in section 130 of the Ordinance. It is therefore, not correct to say that such an order would be disposing of an appeal under section 132 of the Ordinance. At best it could be disposing of an application for condonation of delay and not the appeal. Till an appeal is admitted for hearing all or any order passed by the Appellate Authority cannot be said to have been passed "in appeal proceedings".
(d) Income Tax Ordinance (XXXI of 1979)---
----Ss.130(3), 131 & 132---Appeal to Appellate Assistant Commissioner-- Limitation---Condonation---Procedure---Expression "the Appellate Assistant Commissioner may admit an appeal after the extension of the period"-- Connotation.
It is evident from the expression "the Appellate Assistant Commissioner may admit an appeal after the extension of the period" in section 130(3) that an order has to be passed by an AA.C. either for admitting the appeal or refusing to admit it and such an order can only be passed under subsection (3) of section 130. Unless such an order is passed under section 130(3) admitting the appeal, there is no question of invoking section 131 for following the procedure laid down therein nor there is any question to reach section 132 for disposing of the appeal. When the appeal is not admitted for hearing, there is no question of its disposal.
Section 3 of the Limitation Act provides that every suit or appeal and application made after the period of limitation prescribed therefore by the First Schedule of that Act "shall be dismissed". Then section 29 of the same Act provides that where a special or local law prescribes for any suit, appeal or application, a period of limitation different from the period prescribed therefore by the First Schedule, the provisions of section 3 shall apply as if such period were prescribed therefore in that Schedule.
Once it is held that the appeal is beyond limitation it is obligatory on the appellate authority to dismiss such an appeal under section 3 of the Limitation Act. Under subsection (3) of section 130 of the AA.C. has been empowered to admit an appeal after the expiration of the period of limitation. This power includes not to admit the appeal. Not only such a power is inherent but it is also provided under section 21 of the General Clauses Act. Where an authority has a power to pass an order it has also power to undo it.
A right of appeal is in fact by way of remedy and in the case of appeals there is no distinction between the right and remedy. Moresoever, the right of appeal is not absolute but subject to certain conditions and qualifications. If an appeal is beyond limitation, it has to be dismissed under section 3 of the Limitation Act and, therefore, it could not be said that an appeal filed beyond limitation should be still regarded as an appeal. Unless the appeal is filed in the prescribed form and unless it is- filed within the period of limitation and unless time is not extended, it cannot be said to be a legally filed appeal and; therefore, the AA.C. is debarred under the law from adjudicating upon the appeal. In such a case the order is not passed "in appeal" but the A.A.C. refuses to entertain the appeal and, therefore, does not and cannot apply his mind at all to the contents of appeal. In such a case the AA.C. does not travel beyond section 130 of the Income Tax Ordinance and the stage of reaching to section 132 never arises. Section 132 of the Ordinance provides how the appeal is to be disposed of. In the first place it may be seen that clause (a) of subsection (1) deals with an order of assessment. Clause (b) deals with any order imposing penalty and clause (c) deals with any other order. Section 132 starts with the words "in disposing of an appeal; the Appellate Assistant Commissioner...". From the bare reading of this section it is abundantly clear that this section is dealing with the situation where the AA.C. has to "dispose of" and decide the appeal on merits. In cases where the appeals are rejected as time-barred there is no question of disposal of an appeal nor there is any question of application of mind of the Appellate Authority. Where an appeal does not fulfil the' conditions under which the appeal has to be filed as for instance if it is not in the prescribed form or it is beyond limitation, the appeal cannot be disposed of unless it is first admitted. As a matter of fact before the admission of appeal the grounds of appeal are not before the Appellate Authority nor the Appellate Authority is entitled to apply its mind on the grounds of appeal. What is before the Appellate Authority in such cases is the memo of appeal. The right of appeal is a statutory right and is a creature of the statute. It could not be assumed unless expressly given by a statute.
Since an order dismissing the appeal as time-barred is an order under section 130 of the Income Tax Ordinance read with sections 3 and 29 of the Limitation Act and since section 134 of the Income Tax Ordinance, 1979 does not provide an appeal against an order passed under section 130 of the Income Tax Ordinance appeal is incompetent.
Mela Ram and Sons v. CIT Punjab (1956) 29 TTR 607; Gour Mohan Mullick v. Commissioner of Agricultural Income-tax, West Bengal (1952) 22 ITR 131; CIT v. Shahzadi Begum and others (1952) 21 ITR 1; Shivnath Prasad v. CIT Central (1935) 3 ITR 200; CIT v. Mysore Iron and Steel Works (1949) 17 ITR 478 and Dewan Chand v. CIT (1951) 20 ITR 621 distinguished.
Akhtar Ali Pervaiz v. Altafur Rehman PLD 1963 Lah. 390; Commissioner of Income-tax v. Syeda Sarwat Sultana and others 1986 PTD 368; Ibrahim v. Muhammad Hussain PLD 1975 SC 457; Farman Ali Dewan v. Munawar Ali PLD 1962 Dacca 214 and PLD 1963 Dacca 129 ref.
Per A. A. Zuberi, Accountant Member---
(e) Income Tax Ordinance (XXXI of 1979)---
----Ss.130(3) & 132---Appeal---Limitation---Condonation---Order passed by Appellate Assistant Commissioner/Commissioner of Appeals refusing to admit an appeal filed after the expiry of the period prescribed by law, does not fall under any of the clauses of S.132(1) of the Ordinance and being an order under S.130(3) is not appealable before Appellate Tribunal.
(f) Income Tax Ordinance (XXXI of 1979)-
----S.134---Appeal to Appellate Tribunal---Contingencies.
Appeals to Income Tax Appellate Tribunal can be filed under three contingencies:
--- An order passed by an AA.C. under section 111 or section 132 or subsection (2) of section 148; or
---An order made by an AA.C. under section 156; or
----An order made by an IA.C under section 66-A...
Appeal to the Tribunal lies against orders under section 132 (i.e. adjudication on appeals filed adhering to the provisions of section 129 of the Ordinance) which relate to the orders passed by the assessing officers. It should not be difficult to infer that only those orders passed directly by the AA.C./C.I.T. (Appeals) as distinct from those involving adjudication on orders by the assessing officers, can be appealed against before the Tribunal which are passed under section 111, section 148(2) and section 156. There is no mention in section 134(1) of the appeals against order passed under section 130 which is indicative of the intent of the legislature not to make an order (passed by the AA.C./C.I.T.(A) refusing to admit an appeal, liable to objection before the Tribunal.
Appeals to Income Tax Appellate Tribunal can be filed only against orders passed under three sections mentioned above and not against orders under section 130 of the Ordinance.
(g) Income Tax Ordinance (XXXI of 1979)---
----Ss. 130 & 132---Appeal---Limitation---Appeal filed beyond the prescribed period of limitation is not an "appeal" as envisaged by S.130(2) --- If the A.A.C. feels satisfied about genuineness of reasons that resulted in delay, he may exercise discretion under the enabling provisions S.130(3) to admit such belated appeal---Unless such discretion is exercised by the AA.C. the documents presented to him do not become "appeal" as such warranting adjudication under 5.132 of the Ordinance.
(h) Income Tax Ordinance (XXXI of 1979)---
----Ss.130,131 & 132---Appeal---Competence---Law analysed.
Naved A. Andrabi for Appellant.
Mian M. Masood, D.R. for Respondent.
Date of hearing: 3rd October, 1991.
ORDER
ABRAR HUSSAIN NAQVI (JUDICIAL MEMBER).--This is an appeal filed by a Private Limited Company deriving income from manufacturing and sale of Enamelled Copper Wire and P.I. Stripts. The appeal relates to the assessment year 1989-90.
2. The facts of the case are that the assessee's appeal had been dismissed by the learned CIT(A) as time-barred on the ground that the demand notice had been served on 25-1-1990 but the appeal was filed on 3-3-1990. The appeal was therefore, barred by time and was dismissed as such. Before the learned CIT(A) the assessee's contention was that the demand notice had not been served on the Managing Director, Secretary, Managing Agent or Accountant and therefore, that was not a valid service. It was also contended before the learned CIT(A) that the limitation would start from the date of knowledge of the assessee. This contention of the assessee was not accepted. Firstly the assessee had himself indicated in the memo of appeal the date of service as 25-1-1990. Secondly, the original copy of the demand notice appended with the appeal also bore the date of 25-1-1990. Thirdly, the learned CIT(A) had observed that the assessee had not filed any application for condonation of delay alongwith the appeal and these pleas were taken only when the assessee was pointed out that his appeal was time-barred.
3. The learned counsel for the assessee before us has taken altogether a fresh ground. Before us the first contention of the learned counsel for the assessee was that the assessee had sent the appeal on 25-1-1990 through postal service and it is not the fault of the assessee that the assessee's appeal had reached the CIT(A)'s office on 3-3-1990. Another contention of the learned counsel for the assessee was that notwithstanding the dismissal of the assessee's appeal as time-barred the Tribunal can go into the merits of the case. It was contended that if the second contention of the assessee is not acceptable then right of appeal of the assessee given by the Statute would become redundant.
4. However, at the outset we confronted the learned counsel for the assessee as to the maintainability of the appeal before the Tribunal. An appeal to the Tribunal lies against the order passed by the Appellate Assistant Commissioner under section 111 or 132 or subsection (2) of section 148 or under section L56 or order passed by an UC under section 86A of the Income Tax Ordinance. It may be noted that right of first appeal has been provided to the assessee under section 129 of the Ordinance and section 130 of the same Ordinance prescribed the form and the limitation within which appeal is to be filed. Section 130 of the Income Tax Ordinance may here be reproduced:---
"Form of appeal and limitation: --(1) Every appeal under section 129 shall be in the prescribed form and shall be verified in the prescribed manner, and shall be accompanied by a fee of twenty-five rupees.
(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 the 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."
5. Then the procedure in appeal has been provided in section 131 of the income Tax Ordinance which inter alia provides that the AA.C. has to give notice for hearing of the appeal to the Appellant and to the I.T.O. Then section 132 of the Ordinance has empowered the AA.C. to take decision in appeal. Section 132 of the Ordinance may also here be reproduced:---
"Section 132. Decision in appeal.---(1) In disposing of an appeal, the Appellate Assistant Commissioner may,---
(a) in the case of an order of assessment,---
(i) set aside the assessment and direct the assessment to be made afresh after making such further inquiry as the Appellate Assistant Commissioner may direct or the Income Tax Officer thinks fit.
(ii) confirm, reduce, enhance or annul the assessment;
(b) in the case of an order imposing a penalty, confirm, set aside or cancel such order or enhance or reduce the penalty; and
(c) In any other case, pass such order as he thinks fit.
(2) The Appellate Assistant Commissioner shall - not enhance an assessment or a penalty or reduce the amount of refund unless the appellant has been given a reasonable opportunity of showing cause against such enhancement or reduction, as the case may be.
(3) Where, as the result of an appeal, any change is made in the assessment of a firm or an association of persons or a new assessment of a firm or an association of persons is ordered to be made, the Appellate Assistant Commissioner may authorise the Income Tax Officer to amend accordingly any assessment made on any partner of the firm or any member of the association.
(4) On the disposal of an appeal, the Appellate Assistant Commissioner shall communicate the order passed by him to the appellant and to the Income Tax Officer and the Commissioner."
6. Now before an appeal is admitted for hearing section 130 of the Ordinance provides that it should be:---
(1) In the prescribed form and verified in the prescribed manner and is to be accompanied by a fee of twenty-five rupees;
(2) The appeal has to be presented within 30 days from the date on which the intimation of the order is served. Subsection (3) provided the provision in which the learned AA.C. has been empowered to entertain an appeal after expiration of the period of limitation if he is satisfied that the appellant was prevented by a sufficient cause from presenting the appeal.
How reading all these sections together what emerges is that unless the requirements of section 130 are fulfilled the assessee's appeal is not admitted for hearing and therefore there is no occasion for following the procedure as provided under section 131 of the Ordinance and for taking the decision in appeal under section 132 of the Ordinance. The precise question therefore is as to whether an appeal dismissed as time-barred and delay is not condoned such an order is under section 130 or under section 132 of the Ordinance. If such an order is considered to be under section 132 of the Ordinance then appeal to the Tribunal would lie under section 134 of the Ordinance. But if it is to be held that such an order was passed under section 130 of the Ordinance then the order would not be appealable to the Tribunal as section 130 is not one of the sections mentioned in section 134 of the Ordinance.
7. The learned counsel for the assessee however, contended that any order passed by an A.A.C. rejecting the appeal even on technical ground, such as rejecting the appeal as time-barred, is an order under section 132 of the Ordinance. It was contended that section 130 of the Ordinance, though prescribes the limitation and power to condone the delay, does not give the power of disposing of the appeal which power is given in section 132 of the Income Tax Ordinance. Therefore, whatever order is passed by an AA.C. that would be deemed to have been passed under section 132 of the Ordinance and therefore, appeal lies to Tribunal against such an order. The learned counsel for the assessee, in support of his contention has relied upon three cases of the Indian jurisdiction:---
(1) Mela Ram and Sons v. CIT Punjab, decided by the Supreme Court reported as (1956) 29 ITR 607.
(2) Gour Mohan Mullick v. Commissioner of Agricultural Income Tax West Bengal, decided by the Calcutta High Court reported as (1952) 22 ITR 131.
(3) CIT v. Shahzadi Begum and others, decided by the Madras High Court reported as (1952) 21 ITR 1.
It may be stated that this, question has been subject of controversy and contradictory decision have been given by the various High Courts of India. The first case on this point was of the Allahabad High Court in the case of Shivnath Prasad v. CIT Central reported as (1935) 3 ITR 200. In that case Allahabad High Court held that where an appeal is dismissed by an AA.C. as time-barred there is no order under sections 31, 32 and 33 of the repealed Income Tax Act and therefore no further appeal lay against that order. This view was followed by the Bombay High Court in the case of CIT v. Mysore Iron and Steel Works reported as (1949) 17 ITR 478. In that case the High Court, discussing the earlier decision on the issue, came to the conclusion that an order passed by an AA.C. dismissing the appeal as time-barred under section 130 and not under section 31 of the repealed income-tax Act. Following observation of the Bombay High Court may here be reproduced for references:--
"Now, the scheme under sections 30 and 31 of the Act is a fairly clear. As assessee has statutory right to present an appeal Within thirty days without any order being required from the Appellate Assistant Commissioner for admission of the appeal. But if the time prescribed expires, then that statutory right to present an appeal goes; and an appeal can only be entertained provided it is admitted by the Appellate Assistant Commissioner after condoning the delay. Therefore before an appeal could be admitted in this case, an order from the Appellate Assistant Commissioner was requisite that the delay had been condoned and it was only on such an order being made that the appeal could be entertained by the Appellate Assistant Commissioner. Now section 31 deals only with such appeals, which are presented within the prescribed period or admitted after the delay has been condoned, and the procedure laid down in section 31 with regard to the hearing of appeals only applies to such appeals. Therefore, in my opinion, when the Appellate Assistant Commissioner refused to condone the delay, there was no appeal before him which he could hear and dispose of as provided under section 31 of the Act."
This view was also followed by the Punjab High Court in the case of Dewan Chand v. CIT reported as (1951) 20 ITR 621 wherein the Punjab High Court also held that order passed by an AA.C. dismissing the appeal as time-barred was not appealable under section 33 of the repealed Act.
8. However, contrary views were expressed by Madras High Court in CTT v. Shehzadi Begum reported as (1952) 21 ITR 1 (which has now been relied upon by the learned counsel for the assessee) as well as by the Calcutta High Court in Gour Mohan Mullick v. CIT, West Bengal reported as (1952) 22 ITR 131. Both these High Courts came to the conclusion that any order passed by an AA.C. rejecting the appeal as time-barred or refusing to condone the delay, was an order disposing of the appeal under section 31 of the repealed Income Tax Act and therefore appealable to the Tribunal. Finally this controversy was set at rest by the Supreme Court of India in Mela Ram's case reported as (1956) 29 TTR 607. In this case the Supreme Court discussed the various contradictory views of the different High Courts including the ones referred to above and finally agreed with the views of the Calcutta and Madras High Courts and dissented from the view of the Allahabad High Court.
9. The reasoning of the Calcutta and Madras High Courts as well as that of the Supreme Court in arriving at the conclusion that an order passed rejecting an appeal as time-barred was an order under section 131 of the repealed Act were as under:---
(1) An appeal whether competent or incompetent is an appeal and therefore has to be disposed of as such.
(2) An appeal is a substantive right and such a right having been conferred by the Statute and the period of limitation only bars the remedy but does not extinguish the right. '
(3) An appeal presented out of time is an appeal and an order rejecting such an appeal as time-barred is one passed `in appeal'.
(4) There is no power with the A.A.C. for passing an order under section 30 of the repealed Act in the case the appeal is held to be time-barred. The only power for disposing of the appeal was provided by section 31 of the repealed Act and therefore, such an order would be deemed to have been passed under section 31.
(5) An order rejecting an appeal as time-barred in fact confirms the assessment and therefore should be considered as having been passed under section 31 of the repealed Act."
10. We have considered the arguments and reasoning contained in the aforementioned cases. All the reasoning of the Courts in the cases referred to above are based on two assumptions:---
(1) Once an appeal is filed, whether competently or incompetently, all orders subsequently passed rejecting the appeal are orders under section 31 of the repealed Income Tax Act (corresponding to section 132 of the Income Tax Ordinance) thus confirm the assessment.
(2) Secondly, since there is no power to pass any order under section 30 of the repealed Act (corresponding section is 130 of the Ordinance) therefore, all such orders must be deemed to have been passed under section 31 of the repealed Act.
11. With utmost respect to the above views of the Indian Courts we could not persuade ourselves to agree and contribute to the views stated above inasmuch as both the assumptions on the: basis of which the above views have been taken are not on sound footing. In the first place the law provides that an appeal has lo be filed before the AA.C. in the prescribed form and within the prescribed period of limitation. If these two requisites are not fulfilled and the AA.C. does not extend the period of limitation, it cannot be said that an appeal has been legally filed "Therefore, any order passed by the AA.C. refusing to entertain the appeal cannot be termed as order in appeal" because such an order is refusing to admit an appeal. In other words the order is to admit or not to admit an appeal and not in the appeal proceedings'. This distinction was explained by the late Chief Justice Manzoor Qadir in a Full Bench decision of Akhtar Ali Pervaiz v. Altafur Rehman reported as PLD 1963 Lah. 390. The facts in that case were that a petition for the ejectment under the West Pakistan' Urban Rent Restriction Ordinance, 1959 was filed and section 13(6) of that law provided that on the first date of hearing the Rent Controller would direct the tenant to deposit the arrears of rent. The question in that case was if the tenant raised objection to the jurisdiction of the Rent Controller on the ground that the relationship of landlord and tenant did not exist, whether without first determining this question, the Controller could direct the tenant to deposit the rent. At page 402 of the report the High Court generalised the proposition as under:---
"If a Tribunal of special jurisdiction is created to deal with a special field and proceedings alleged by one of the parties to be within that field are instituted in Special Tribunal and the other party denies that those proceedings are within that special field, can the special Tribunal proceed to exercise any of its powers before determining the issue whether the proceedings are or are not, within the field in which he has the authority to act?
The general question itself appears to me to be a species of the still more general question--
"When objection is taken to the competency of a Tribunal to deal with a certain matter, can the Tribunal deal with the matter in any way before deciding whether it is competent or incompetent to deal with the matter."
12. While drawing the distinction between the objection 'to' the proceedings and objection in the proceedings the Court further held as under:---
"An issue concerning the very existence of the power to decide is not an issue between the parties, though the existence of that power may be asserted by one party and denied by other. It is in reality, an issue between the Court itself and the party whom the Court is asked to exercise power. The issue as to the rights or liabilities of the parties, on the other hand, effect only the parties and arise only as between them. This leaves the Court unaffected. This point may be put in another way.
Objections raised `to' the proceedings must be distinguished from objections raised `in' the proceedings."
The Indian Courts, with respect, 'have .not kept this distinction in view while holding that all the orders passed by an AA.C. whether on an incompetent or competent appeal, whether on preliminary objection or on merits, are on one and the same footing although this distinction, as shown by the West Pakistan High Court in the case cited above, must in all cases be kept in view. An order rejecting an appeal as time-barred, cannot be equated with an order where the AA.C. passes an order on merits and confirms the assessment. Obviously the two orders cannot be on the same footings. The Indian High Courts have held that even the preliminary orders refusing to entertain a time-barred appeal is an order confirming the assessment as if the order has been passed on merits. As a matter of fact these Courts have assumed that there was no power with the AA.C. under section 30 of the repealed Act and therefore whenever such an order is passed that could only be passed under section 31 of the repealed Act. I would lately show that the AA.C. has the power to reject the appeal independent of section 31 of the repealed Act but at the present moment I would like to give an instance to show the fallacy of the reasoning of the Indian Courts. Take for instance a case where an appeal is filed by an assessee before the A.A.C. who has no jurisdiction to hear the appeal. As for instance an order passed, say by an ITO at Peshawar and the appeal is filed at Karachi. Now if the A.A.C. refuses to entertain the appeal and reject it as having been incompetently filed on the ground that he has no jurisdiction to decide the appeal, could such an order by the AA.C. Karachi be said to be under section 132 of the Income Tax Ordinance? Obviously the answer is no. It therefore follows that every order passed by an AA.C. cannot be termed as an order on merits confirming the assessment within the meaning of section 132 of the Income Tax Ordinance. An order passed under section 132 of the Ordinance is only that order where after the date of hearing has been fixed under section 131 of the Ordinance and the parties have been heard on merit and then AA.C. passes an order either to set aside confirm, reduce, or annul the assessment or passes such other orders in regard to the penalties etc. as he thinks fit. The assumption that the AA.C. has no power to pass an order under section 30 of the repealed Act is also incorrect. Firstly, the power to pass an order is inherent in section 130 itself. An AA.C. has to give a finding under section 130(1) as to whether an appeal is within the prescribed period or not. Similarly when an application to condone the delay is filed, the AA.C. has to give a finding to this effect and has to pass an order accepting or rejecting the application. The power to pass such an order is inherent and implied in section 130 of the Ordinance. It is therefore, not correct to say that such an order would be disposing of an appeal under section 132 of the Ordinance. At best it could be disposing of an application for condonation of delay and not the appeal. Till an appeal is admitted for hearing all or any order passed by the Appellate Authority cannot be said to have been passed "in appeal proceedings". Section .130(3) lays down "The Appellate Assistant Commissioner may admit an appeal after the expiration of the period ..................
13. It is evident from the reading of these words that an-order has to be passed by an AA.C. either for admitting the appeal or refusing to admit it and such an order can only be passed under subsection (3) of section 130. Unless such an order is passed under section 130(3) admitting the appeal, there is no question of invoking section 131 for following the procedure laid down therein p nor there is any question to reach section 132 for disposing of the appeal. When the appeal is not admitted for hearing, there is no question of its disposal.
14, Secondly, Section 3 of the Limitation Act provides that every suit or appeal and application made after the period of limitation prescribed therefore by the First Schedule of that Act "shall be dismissed": Then section 29 of the same Act provides that where a special or local law prescribes for any suit, appeal or application, a period of limitation different from the period prescribed therefor by the First Schedule, the provisions of section 3 shall) apply as if such period were prescribed therefor in that Schedule. For Reference sections 3 and 29 of the Limitation Act are reproduced below:---
"See 3. Dismissal of suit, etc., instituted, etc., after period of limitation,- Subject to the provisions contained in sections 4 to 25 (inclusive), every suit instituted, appeal preferred, and application made, after the period of limitation prescribed therefor by the First Schedule shall be dismissed, although limitation has not been set up as a defence."
Sec. 29. Saving: -(1) Nothing in this Act shall effect section 25 of the Contract Act, 1872 (IX of 1872).
(2) Where any special or local law prescribes for any suit appeal or application a period of limitation different from the period prescribed therefor by the First Schedule the provisions of section 3 shall apply, as if such period were prescribed therefor in that Schedule-----"
Reading both these sections together it emerges that every appeal filed beyond limitation has to be dismissed by an Appellate Authority. This meets the objections of the Indian Courts that the AA.C. had no power to pass an order after holding that the appeal was time-barred. Such a power has been provided by section 3 of the Limitation Act read with section 29 of that Act. As a matter of fact once it is held that the appeal is beyond limitation it is obligatory on the appellate authority to dismiss such an appeal under section 3 of the Limitation Act. Under subsection (3) of section 130 of the AA.C. has been empowered to admit an appeal after the expiration of the period of limitation. This power includes not to admit the appeal. Not only such a power is inherent but it is also provided under section 21 of the General Clauses Act. Where an authority has a power to pass an order it has also power to undo it.
15. The Indian Supreme Court in Mela Ram's case has also made another assumption by observing that the appeal is a substantive right and it cannot be extinguished by the law of limitation. This was held on the principle that the law of limitation only bars a remedy and does not extinguish the right. The Lahore High Court in the case of CIT v. Syeda Sarwat Sultana and others reported as (1986) PTD 368 while discussing the question of limitation has held that law of limitation is part of procedural law and no one can have substantive right in procedure. Again with utmost respect we would point out that a right of appeal is in fact by way of remedy and in the case of appeals there is no distinction between the right and remedy. Moreover the right of appeal is not absolute but subject to certain conditions and qualifications. If an appeal is beyond limitation, it has to be dismissed under section 3 of the Limitation Act and, therefore, it could not be said that an appeal filed beyond limitation should be still regarded as an appeal. In our humble view unless the appeal is filed in the prescribed form and unless it is filed within the period of limitation and unless time is not extended, it cannot be said to be a legally filed appeal and, therefore, the AA.C. is debarred under the law from adjudicating upon the appeal. In such a case the order is not passed "in appeal" but the AA.C. refuses to entertain the appeal and, therefore, does not and cannot apply his mind at all on the contents of appeal. In such a case the AA.C. does not travel beyond section 130 of the Income Tax Ordinance and the, stage of reaching to section 132 never arises. Section 132 of the Ordinance provides how the appeal is to be disposed of. In the first place it may be seen that clause (a) of subsection (1) deals with an order of assessment. Clause (b) deals with any order imposing penalty and clause (c) deals with any other order. Section 132 starts with the words "in disposing of an appeal, the Appellate Assistant Commissioner..." From the bare reading of this section it is abundantly clear that this section is dealing with the situation where the AA.C. has to "dispose of and decide the appeal on merits. In cases where the appeals are rejected, as time-barred there is no question of disposal of an appeal nor there is any question of application of mind of the Appellate Authority. Where an appeal does not fulfil the condition under which the appeal has to be filed as for instance if it is not on the prescribed form or it. is beyond limitation, the appeal cannot be disposed of unless it is first admitted. As a matter of fact before the admission of appeal, the grounds of appeal are not before the Appellate Authority nor the Appellate Authority is entitled to apply its mind on the grounds of appeal. What is before the Appellate Authority in such cases is the memo of appeal. The right of appeal is a statutory right and is a creature of the statute.. It could not be assumed unless expressly given by a statute. In Ibrahim v. Muhammad Hussain reported as PLD 1975 SC 157, the same view was held. That was a case of West Pakistan Urban Rent Restriction Ordinance, 1959, wherein the appealable orders were mentioned in section 15 as under section 4, 10, 12 or 13. Subsection (6) of section 13 empowered the Rent Controller to direct the tenant to deposit the rent. It was held in that case that such an order was an interlocutory order and was not appealable under section 15 of that Ordinance. In the case of Farman Ali Dewan v. Munawar Ali reported as PLD 1962 Dacca 214 the question before the Court was as to whether an appeal dismissed as time-barred could be called a decree. It was held in that case that this was not a decree as what the Appellate Authority had rejected was the memo of appeal and, therefore, that order was not held to be appealable. Similarly in PLD 1963 Dacca 129, it was held that an Appeal rejected on technical grounds means as if no appeal filed.
16. For the foregoing reasons, we would humbly disagree with the views expressed by the Indian Supreme Court in Mela Ram's case and the views of Calcutta and Madras High Courts but respectfully agree with the views expressed by the Allahabad, Bombay and Punjab High Courts in the cases cited above. Since an order dismissing the appeal as time-barred is held to be an order under section 130 of the Income Tax Ordinance read with sections 3 and 29 of the Limitation Act and since section 134 of the Income Tax Ordinance, 1979 does not provide an appeal against an (sic) order passed under section 130 of the Income Tax Ordinance, we hold that this appeal is incompetent and we refuse to entertain this appeal as such.
17. Before parting with this order, we would be failing in our duty if we do not pay tribute to Mr. Naveed Andarabi Advocate who argued the case very ably before us and provided considerable assistance in arriving at the above conclusion. It was particularly creditable as the learned counsel had argued the case before the Tribunal for the first time.
A-A. ZUBERI (ACCOUNTAN MEMBER).--I am in complete agreement with the conclusion by my learned brother, the Judicial Member, that the order passed by an AA.C./Commissioner (Appeals) refusing to admit an appeal filed after the expiration of the period prescribed by law, can by no stretch fall under any of the clauses of subsection (1) of section 132 of the Ordinance and being an order under section 130(3), is not appealable before this Tribunal. While I wholeheartedly. endorse the views by my learned Brother, I would like to add a word or two of my own to lend strength to his reasoning and conclusion.
In order to adjudicate on the appeal we thought it of prime importance to see whether it is covered by the provisions of subsection (1) of section 134 of the Income Tax Ordinance. For facility of ready reference this provision is quoted below:
"134. Appeal to the Appellate Tribunal.---(1) An assessee objecting to an order passed by an Appellate Assistant Commissioner under section 111 or 132 or subsection (2) of section 148, or an order made by the Appellate Assistant Commissioner under section 156 (or an order made by an Inspecting Assistant Commissioner under section 66A) having the effect of enhancing the assessment or reducing a refund or otherwise increasing the liability of the assessee may appeal to the Appellate Tribunal against such order."
It is evident that appeals to this Tribunal can be filed under three contingencies:
An order passed by an AA.C. under section 111 or section 132 or subsection (2) of section 148; or
An order made by an AA.C. under section 156; or
An order made by an I. A. C. under section 66-A
A further careful analysis would show that appeal to the Tribunal lies against orders under section 132 (i.e. adjudication on appeals filed adhering to the provisions of section 129 of the Ordinance) which relate to the orders passed by the assessing officers. It should not be difficult to infer that only those orders passed directly by the AA.C./C.I.T. (Appeals) as distinct from those involving adjudication on orders by the assessing officers, can be appealed against before the Tribunal which are passed under section 111 and section 148(2) and section 156. There is no mention in section 134(1) of the appeals against order passed under section 130 which is indicative of the intent of the legislature not to make an order (passed by the AA.C./C.I.T.(A) refusing to admit an appeal, liable to objection before this Tribunal).
"The deck having been cleared that appeals to this Tribunal can be filed only against orders passed under three sections mentioned above and not against orders under section 130 of the Ordinance, we now examine as to what is to be treated as an order under section 130, or (more precisely) order under subsection 3 of section 130. This section reads as under:---
"130. Form of appeal and limitation.---(1) Every appeal under section 129 shall be in the prescribed form and shall be verified in the prescribed manner, and shall be accompanied by a fee of twenty-five rupees.
(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 the 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." (Underlined by us).
needs no detailed arguments to canvass that as a general rule the appeal filed beyond the prescribed period of limitation is not an appeal as envisaged by subsection (2) of section 130. However, if the AA.C. feels satisfied about genuineness of reasons that resulted in delay, he may exercise discretion under the enabling provisions of subsection (3) of section 130 to admit such belated appeal. Unless this discretion is exercised by the learned AA.C., the documents presented to him do not become "appeal" as such warranting adjudication under section 132 of the Ordinance which is reproduced below:
"Section 132. Decision in appeal: --(1) In disposing of an appeal, the Appellate Assistant Commissioner may,---
(a) in the case of an order of assessment,--
(1) set aside the assessment and direct the assessment to be made afresh after making such further inquiry as the Appellate Assistant Commissioner may direct or the Income Tax Officer think fit;
(ii) confirm, reduce, enhance or annul the assessment;
(b) in the case of an order imposing a penalty confirm; set aside or cancel such order or enhance or reduce the penalty; and
(c) in any other case, pass such order as he thinks fit.
(2)..........................................
(3)..........................................
(4) ..........................................
It would not escape attention of even a casual reader that clauses (a), (b) & (c) of section 132(1) relate only to orders passed by the I.T.O. and not by an AA.C. because these clauses deal with "an order of assessment", "an order imposing a penalty" or "any other case". In the arguments by Mr. Naveed A. Andrabi the learned counsel for the Appellant, an appeal not admitted by the learned AA.C./CIT(A) should be treated to have been adjudicated under clause (c) of section 132(1). This argument does not appeal to us because like section 132, section 130 also classified appeal for purpose of, adjudication under section 132, as made:
| Classification of Appeals | Adjudication by A.A.C./CIT(Al |
| relating to Assessment cl. (a) of S.130(1): | cl. (a) of S:132 |
| relating to party cl.(a) of S.1.30(1): | cl. (b) of S.132 |
| relating to any other case cl (b) of S.130(1):.: | cl. (c) of S.132 |
One may ask: what orders may fall under clause (b) of section 130 (2) or clause (c) of section 132(1) to be called "any other case"? The answer to this also does not present any difficulty because appealable sections specified in subsection (1) of section 129 fall into following groups:
: Assessments = under sections 59, 59A, 62, 63, 65, 75, 80, 80A and 98.
:Penalty = under sections 91, 108,109, 110, 111,112 and 114.
Other cases= under section 68, 75, 78, 98, 99, 105, 106, 107, 108, and 156
All orders in respect of the above are to emanate for the assessing officer on which the AA.C./Commissioner(A) would adjudicate thus merging these in an order passed by him under section 132 of the Ordinance which is appealable before this Tribunal per subsection (1) of section 134 of the Ordinance. It at once stands out that the Legislature has consciously kept a distinction between orders passed by an ITO and these by an AA.C./CIT(A) in the exercise of this respective independent jurisdiction under sections 111, 148(2) and 156 which precisely is the reason that the orders passed by the I.T.O. are appealable before the AA.C./(A) under section 129(1), those by the AA.C./CIT(A) are directly appealable to the Tribunal under section 134(1). The logical contention is that as respects orders independently passed by the CIT(A) in the exercise of his discretion, appeal has been specifically provided under section 134. The conscious omission section 130, from section 134 leads to the inescapable conclusion against an order by the AA.C./C.I.T.(A) refusing to exercise distinction under section 130(3) no appeal lies to this Tribunal. If this discretion is exercised to admit the appeal and thereafter adjudication made, the same would be appealable in its character as an order under section 132.
With the above observations I concur with the view that the appeal is incompetent and is not to be entertained.
M.B.A./2592/TAppeal not entertained.