I.T.AS. NOS.583/KB AND 584/KB OF 1988-89, DECIDED ON 2ND OCTOBER, 1994. VS I.T.AS. NOS.583/KB AND 584/KB OF 1988-89, DECIDED ON 2ND OCTOBER, 1994.
1995 P T D (Trib.) 458
[Income-tax Appellate Tribunal Pakistan]
Before Muhammad Mujibullah Siddiqui, Chairman, Muhammad Amjad Malik Judicial Member, and Abdul Malik, Accountant Member
I.T.As. Nos.583/KB and 584/KB of 1988-89, decided on 02/10/1994.
Per Muhammad Mujibullah Siddique, Chairman; agreeing with Abdul Malik, Accountant Member--
(a) Income Tax Appellate Tribunal---
---- Powers and functions---History of legislation traced.
(b) Income Tax Ordinance (XXXI of 1979)---
----S. 134---Income Tax Appellate Tribunal Procedure Rules, 1981, R.14-- Appeal to Appellate Tribunal---Grounds to be taken in appeal---Question of jurisdiction---Appellate Tribunal is not bound to confine itself to the grounds urged on behalf of the parties but by virtue of proviso to R. 14, Income Tax Appellate Tribunal Procedure Rules, 1981, Tribunal can rest its decision on the ground of lack of jurisdiction provided the party affected by such decision has sufficient opportunity of being heard.
(c) Income Tax Ordinance (XXXI of 1979)---
----S. 133(6), proviso---Powers and functions of Appellate Tribunal are to be exercised and discharged by the Benches constituted from Members of the Tribunal by the Chairman of the Tribunal and the Bench shall consist of not less than two members of the Tribunal ---Exception to the rule has, however been made by empowering the Federal Government to direct that all or any of the powers and functions of the Tribunal shall be exercised by any one member or more members than one severally and singly.
The powers and functions of the Appellate Tribunal are to be exercised and discharged by the Benches constituted from Members of the Tribunal by the President/Chairman of the Tribunal and the Bench shall consist of not less than two Members of the Tribunal. Powers and functions of the Appellate Tribunal shall be exercised and discharged by a Bench which shall consist of not less than two members and by virtue of proviso to subsection (6) of section 133 of the Income Tax Ordinance, 1979 an exception to the rule was made empowering the Federal Government to direct that all or any of the powers and functions of Appellate Tribunal shall be exercised by any one member or more members than one severally and singly.
(d) Interpretation of statutes---
---- Proviso to a section cannot override the main section of the statute.
(e) Income Tax Ordinance (XXXI of 1979)---
----S. 133(6), proviso---Proviso to S.133(6) of Income Tax Ordinance, 1979 does not control the main section.
Although a proviso has influence upon the main section or provision of law but it is not necessarily of controlling nature. Although from the proviso to section 133(6), Income Tax Ordinance 1979, no such inference can be drawn that it overrides or supersedes the main section or the intention of the Legislature but even if such inference is drawn from any proviso it has to be ignored because the proviso cannot supersede the obvious intention of the Legislature and the expressed provision of law relating to the subject-matter involved. Where the enacting clause is general in language and purpose a proviso subsequently following should be construed strictly.
(f) Interpretation of statutes---
----Proviso---Proviso to a section is generally in the nature of exception to the substantive provision and it has to be construed harmoniously with the main provision---Proviso to a section cannot be construed in a manner which may destroy the main enactment or provision of law to which it stands as proviso.
A proviso is generally in the nature of exception to the substantive provision and it has to be construed harmoniously with the main provision. It cannot be construed in a manner which may destroy the main enactment or provision of law to which it stands as proviso.
The proviso is subordinate to the main enactment to which it stand and cannot override the main provision of law. The provisions contained in the main enactment and the proviso thereto is to be construed harmoniously in such a manner that the main purpose and intention of the legislature is not destroyed. The proviso is to be construed strictly and it is not permissible to construe the proviso in such a manner that the main provision and the statute is given a complete good-bye and the main enactment and the proviso are to be construed as whole and interpreted in a manner which advances the remedy and suppresses the mischief.
Proviso is in the nature of enabling provision only and it cannot override the main enactment.
Statutory Construction by Carwford, 1940 Edn., p.608; Life Insurance Corporation of India v. United Commercial Bank PLD 1962 Kar. 837; Abdul Rauf v. Abdul Aziz PLD 1963 Jour. 20; Altafuddin Kazim v. Province of East Pakistan PLD 1963 Dacca 472; Muhammad Nawaz Khan v. Salahuddin PLD 1967 Pesh. 99 and Hashim v. Saeeda Begum PLD 1963 Kar. 21 ref.
(g) Income Tax Ordinance (XXXI of 1979)---
----S. 133(6), proviso---Notification issued by the Federal Government in pursuance of the authority vested in it under S.133(6)---Proviso does not have the effect of nullifying the main enactment which confers authority on a Bench constituted by the Chairman of the Tribunal consisting of not less than two Members to exercise the powers and functions of the Appellate Tribunal.
The Notification issued by the Federal Government in exercise of the powers conferred by proviso to subsection (6) of section 133 of the Income Tax Ordinance, 1979 was an executive order. The Government had issued notification by virtue of the power delegated to it by the legislature and, therefore, a notification issued in pursuance of a delegated power cannot be inconsistent with the statutory provisions. Such notification cannot override the law enacted by the legislature and, therefore, it is not proper to say that the notification issued by the Federal Government in pursuance of the authority vested under the proviso has the effect of nullifying the main enactment which confers authority on a Bench constituted by the Chairman of the Tribunal consisting of not less than two members to exercise the powers and functions of the Appellate Tribunal. Although there is no inconsistency between the notification issued by the Federal Government in exercise of the powers conferred on it by proviso to subsections (6) of section 133 of the Income Tax Ordinance, 1979 and the provisions contained in subsections (5) and (6) of section 133 of the Income Tax Ordinance, 1979 but the established principle of the interpretation of the statutes is that if there is any inconsistency between the statute and any order, direction, notification, circular etc. issued in exercise of delegated authority the provision contained in the statute shall prevail to the extent of inconsistency.
(h) Income Tax Ordinance (XXXI of 1979)---
----S. 133(6), proviso---Government of' Pakistan Notification No.F.31(2)/ 80-A-II, dated 28-7-1980---Appellate Tribunal, jurisdiction of---Proviso to S.133(6), Income Tax Ordinance, 1979 and the notification issued thereunder does not restrain a Division Bench/Full Bench from hearing appeals in cases where income has been computed by the Income Tax Officer in excess of notified pecuniary jurisdiction.
Originally all the functions and powers of the Appellate Tribunal were exercised by a Bench consisting of not less than two members and subsequently an amendment was made whereby a proviso was added to subsection (6) of section 5-A of the repealed Income-tax Act, empowering the Central Government to direct that ail or any of the powers and functions of the Appellate Tribunal shall be exercised by any one member. By this amendment an exception was made and a provision for constitution of Single Benches was made. However, it appears that subsequently it was felt that such provision providing for empowering any one member' only may create confusion as it may not be taken that in respect of the appeals which were directed to be within the jurisdiction of the Single Bench may not be taken to the exclusion of other Benches and secondly the Federal Government was empowered to confer the exceptional jurisdiction on one member only. The jurisdiction could not be conferred on a Bench consisting of more than one members and, therefore, in order to remove this lacuna further amendment was made and it was provided that the Federal Government may direct that all or any of the powers and functions of the Appellate Tribunal shall be exercised (a) by any one member and (b) more members than one severally and singly. This amendment paved way for exercise of authority by the Federal Government conferring jurisdiction in respect of any case or cases on Single Bench, Division Bench or Full Bench. After this amendment the notification was issued by the Federal Government that all the powers and functions of the Appellate Tribunal shall be exercised severally and singly by the President-cum-Judicial Member, Judicial Member and an Accountant Member of the Tribunal in respect of such appeals pertaining to the assessee whose total income as computed by the I.T.O. does not exceed Rs. 30,000. The amount of total income was enhanced to Rs. 75,000 in the year 1980 and to Rs. 1,00,000 in the year 1987. By virtue of such notification the Federal Government conferred power on a Single Bench in which a member was required to sit singly and a Division Bench as well as Full Bench in which more than one members were required to sit severally. Thus, to the extent of pecuniary jurisdiction notified by the Federal Government Single Benches and Division/Full Benches were conferred concurrent jurisdiction. This concurrent jurisdiction exercised by the Single Benches as well as the Division Benches/Full Benches were derived by virtue of the notification issued by the Federal Government in exercise of the proviso of subsection (6) of section 133 of the Income Tax Ordinance, 1979 and the analogous provisions contained in the repealed Income-tax Act, 1922. In excess of the notified pecuniary jurisdiction the Division Benches and the Full Benches derived their authority from the provisions contained in subsections (5) and (6) of section 133 of the Income Tax Ordinance, 1979 and the analogous provision contained in the repealed Income-tax Act, 1922 independent of any notification by the Federal Government. In the Shorter Oxford English Dictionary the meaning of word "several" is given as more than one being one of a number of individuals of the same class, more than two or three but not many from among and as vague numeral. From the above meaning of the word "several" it is evident that the legislature delegated authority to the Federal Government to direct that all or any of the powers and functions of the Tribunal shall be exercised by any one member or by more members than one severally and singly. It means that the Federal Government is empowered to confer jurisdiction for exercising all or any of the powers of the Tribunal of the one member only or more members than one either sitting together meaning thereby sitting in Division Bench or Full Bench or sitting singly meaning thereby sitting in a Single Bench. The Federal Government has issued notification exactly in terms of the proviso conferring jurisdiction for exercising all the powers and functions of the Appellate Tribunal severally and singly by the President-cum-Judicial Member, a Judicial Member and an Accountant Member. Thus, the power to the extent of pecuniary jurisdiction notified by the Federal Government is conferred on the President/Chairman, a Judicial Member and an Accountant Member whether sitting in Single Bench or sitting in Division Bench or in Full Bench. The expression "severally" used does not convey meaning that the Notification has effect of limiting the jurisdiction of all the Division and Full Benches to the extent of pecuniary jurisdiction notified from time to time and taking away the jurisdiction conferred on the Division Benches and Full Benches under subsections (5) and (6) of section 133 of the Income Tax Ordinance, 1979. The only conclusion which can be drawn from examination of all the aspects is that the effect of proviso and the notification issued thereunder by the Federal Government is that to the extent of notified pecuniary jurisdiction the Single Benches, Division Benches and the Full Benches have the concurrent jurisdiction which is being practised in the Tribunal right from the year 1953 and in excess of the notified pecuniary jurisdiction the . powers of the Division Benches and Full Benches remain intact which is derived by virtue of the provisions contained in subsections (5)- and (6) of section 133 of the Income Tax Ordinance, 1979 which has been conferred by the legislature and cannot be taken away by notification. The proviso to section 133(6) of the Income Tax Ordinance, 1979 and the notification issued thereunder does not restrain a Division Bench/Full Bench from hearing appeals in cases where income has been computed by the Income-tax Officer in excess of notified pecuniary jurisdiction.
The Income Tax Appellate Tribunal is empowered to hear appeals under section 134(1) in respect of the orders passed by an Appellate Additional Commissioner under section 111 or 132 or subsection (2) of section 148 or an order made by the Additional Appellate Additional Commissioner under section 156 or made by an Inspecting Assistant Commissioner under section 66-A. The same sections have been referred in the notification issued by the Federal Government in exercise of the powers conferred by the proviso to subsection (6) of section 133 and, therefore, there is no question of curtailing of jurisdiction.
The jurisdiction conferred on Division and Full Benches under subsections (5) and (6) of section 133 of the Income Tax Ordinance, 1979 are intact and have not been affected by the notification issued by the Federal Government in exercise of the proviso to subsection (6) of section 133.
Per Abdul Malik, Accountant Member.---
(i) Words and phrases---
---- Phrases "several" and" severally"---Meaning.
Saeed Ahmed Farooqui for Appellant. Nemo for Respondent.
Date of hearing: 2nd October, 1994.
ORDER
MUHAMMAD AMJAD MALIK (JUDICIAL MEMBER).---After a long search and considerable amount of the research into Income Tax Ordinance, 1979 read with attendant Circulars and Notifications, a Notification bearing No.31(2)/80-A-II, dated July 28, 1980 came to my notice during the course of hearing. The text of Notification of July 28, 1980 is reproduced in extenso:-- .
"In exercise of the powers conferred by the proviso to subsection (6) of section 133 of the Income tax Ordinance, 1979 (XXXI of 1979), and in supersession of the Ministry of Law Notification No. F. 35 (4)/53-E, dated the 30th September, 1953, the Federal Government is pleased to direct that all the powers and functions of the Appellate Tribunal shall be exercised, severally and singly, by the President-cum-Judicial Member, a Judicial Member and an Accountant Member of the said Tribunal in respect of appeals against orders passed by the Appellate Assistant Commissioners under section 111, section 132, subsection (2) of section 148 or section 156 of the said Ordinance where such appeals pertain to assessee (including unregistered firms) whose total income as computed by the Income-tax Officer does not exceed (Seventy-five thousand) rupees."
Having read the notification very minutely and considered the same, my view, is that undoubtedly, the notification in its wisdom is unambiguous and clear on the point of exercise of powers and functions of an Appellate Tribunal established to decide appeals that are challenged by either Income-tax Department or the assessee. The Notification is so clear in respect of powers of the Tribunal that there cannot be two conflicting opinions over the exercise of powers that are vested upon the Tribunal. Since by virtue of Notification No.F.31(2)/80 A-II, dated July 28, 1980 the Appellate Tribunal can exercise powers and functions to the extent of a total income as computed by the Income-tax Officer which does not exceed Rupees seventy-five thousand, therefore, from July 1980 up to June 2, 1987 all cases including the present case where the total income as computed by the Income-tax Officer, exceed Rs.75,000 are dismissed for the reasons mentioned supra. It may further be mentioned that even otherwise too the jurisdiction of the Appellate Tribunal has been curtailed to the hearing of appeals which fall within the purview of section 66-A, section 111, section 132(2) and subsection (2) of section' 148 or section 156 of the Income-tax Ordinance, 1979. In view of this express limitation on the powers of Appellate Tribunal, appeals filed by the assessee or for that matter by the Department have to fall within the scope of sections expressed in the foregoing. All the cases which were decided by the Appellate Tribunal touching upon the merits of a case where total income of an assessee as computed by the Income Tax Officer exceeded Rupees seventy five thousand, shall stand as recalled and shall have no legal binding effect in view of the notification mentioned supra. As for the appeals which were filed after June 3, 1987 since the ceiling of the powers and functions of the Appellate Tribunal was increased to Rs. 1,00,000 by a notification of even member, dated 3-6-1987 by virtue of this Notification all appeals pending or decided and coming within the ambit of notification of 3-6-1987 shall stand as dismissed, and as a consequence will have no binding legal effect all. In deciding these appeals all other appeals, the one and the only aspect of the matter is clear that in the event any appeal which falls beyond the scope of the two notifications is decided, it would tantamount to be an excess of jurisdiction and in a situation where the Tribunal exceeds its jurisdiction beyond the limit provided by law; matter can be taken up by any citizen of Pakistan before the Courts of superior jurisdiction by way Writ of Quo Warranto, Certiorari and Mandmus. Resultantly in all the appeals where the total income as computed by the Income-tax Officer, exceeds the limits of notification, dated 28-7-1980 and 3-6-1987 read with section 134(1), Income-tax Ordinance, 1979 are ordered to be sent to the Income-tax Department wherever it is so located in Pakistan and the Income-tax Department in its turn can take recourse to the Income-tax Ordinance, 1979'to deal with each case individually. The Registrar in the different registries of the Tribunal are directed not to place any case for further hearing before any Member of the Tribunal where the total income as computed by the Income-tax officer exceeds Rs. 1,00,000 vide Notification supra.
(Sd.)
(Muhammad Amjad Malik),
Judicial Member.
ABDUL MALIK ACCOUNTANT MEMBER: --An order, dated 2-10-1994 was received on 6-10-1994 which was later on modified. Both the orders are in substance the same.
In this case the assessee is in appeal against order of the CIT (A).
The facts of the case are that the assessee filed a return of loss disclosing Rs.2,159. The return was filed under self-assessment scheme but was taken up for assessment under the ordinary law being a return declaring loss. The assessee operates a printing press. Sales declared in the immediately preceding years were as follows:--
1982-831983-841984-85
| Sales | 2,13,788 | 1,37,991 | 1,10,904 |
| G.P.Rate | 23.72% | 21.28% | 26.71% |
The overall returns for assessment years 1983-84 and 1984-85 declared losses. Assessment in 1983-84 was made at Rs.10,000. During the period under assessment the ITO estimated sales at Rs.2,00,000 and applied a G.P. rate of 30%.
The learned A.R. at the time of hearing did not press for acceptance of accounts, the only grievance was with respect to estimate of sales. He did not contest even the application of G.P. rate at 30%. His main argument was that the machinery is very old. The main partner is a very old person who is only running the business in order to keep himself employed. The other partner is a Chartered Accountant.
In the past only nominal additions were made but in this year the ITO made a harsh estimate of sales for which he did not confront the assessee.
The learned Judicial Member has decided this appeal on a legal issue and in the end he dismissed appeal of the assessee for the reasons stated by him in his order. The decision gives rise to certain issues which have to be examined and these are discussed as follows. The grounds taken were as follows:
"That the appellant maintained proper books of accounts. All the purchases and sales were vouched. The decline in receipt was due to non-availability of orders which the appellant was not getting as the printing machine used by the appellant was very old. Due to lack of business the appellant had advertised for sale of machinery without any response. In the circumstances the estimate of sales at Rs.2,00,000 as against the declared sales of Rs.1,10,904 and application of gross profit rate at 30% as against 26.6% shown and confirmed in appeal is not just, valid and proper.
In any case both the estimates are excessive."
The learned Judicial Member decided to dispose of this appeal on a ground which had not been taken by the learned D.R. as he was absent on this day. According to proviso of rule 14 if the D.R. had moved this ground he was required to file an additional ground on which the respondent had to be heard. Even if the ground is taken up by the Tribunal itself which can be done according to the rule; the respondent has to be heard on such ground. In the present case the right procedure was to refix the case for hearing.
The learned Judicial Member has dealt with proviso to section 133 of the Income-tax Ordinance, 1979. Section 133(6) reads as follows:
Section 133(6):
"(6) A Bench shall consist of not less than two members of the Tribunal, and shall be constituted so as to contain an equal number of Judicial Members and Accountant Members, or so that the number of members of one class does not exceed the number of members of the other class by more than one:
Provided that the Federal Government may direct that all or any of the powers of the Appellate Tribunal shall be exercised (a) by any one member, or (b) by more members than one, severally."
It is trite law that a proviso cannot override the main section (A) Bench as duly constituted in accordance with section 133(6) derives its power from the statute. The statute does not place any bar on the power of a Bench except those contained in section 129 read with section 132 which is a charter of powers of the Income-tax Appellate Tribunal and section 133 deals with the constitution of a Bench of the Tribunal.
The concept of a Bench according to section 133 (6) is that it is not to consist of less than two members. Whenever, a larger Bench is to be constituted accountant members and judicial members are not to exceed each other by more than one.
The proviso deals with the situation where Government may direct that all or an of the powers of the Appellate Tribunal are to be exercised by one member or members sitting severally and singly. The direction of the Federal Government has been expressed in terms of Notification No.F.31(2)/80-All dated July 28, 1980. The language of the notification is as follows:
"In exercise of the powers conferred by the proviso to subsection (6) of section 133 of the income tax Ordinance, 1979 (XXXI of 1979), and in supersession of the Ministry of Law Notification No.F.35(4)/53-E, dated the 30th September, 1953, the Federal Government is pleased to direct that all the powers and functions of the Appellate Tribunal shall be exercised, the severally and singly, by the President-cum-Judicial Members, a Judicial Member and an Accountant Member of the said Tribunal in respect of appeals against orders passed by the Appellate Assistant Commissioner under section III,. section 132, subsection (2) of section 1.48 or section 156 of the said Ordinance where such appeals pertain to assessee (including unregistered firms) whose total income as computed by the Income-tax Officer does not exceed one hundred thousand rupees."
From the above it is very clear that a Bench of the Tribunal consists of not less than two Members, but in situations enumerated in the Notification cases can be disposed of by Members sitting severally and singly. The proviso is in the nature of enabling provision and lays down the extent to which exception can be made to the rule that a Bench cannot consist of less than two Members. It would be appropriate if the expression severally is examined with reference to such expressions occurring elsewhere in the Income-tax Ordinance. Two examples which come readily in the mind are contained in sections 71 and 77. Under provisions of these sections recovery can be made from members of firms, ACPs and directors of a private limited company in specified circumstances jointly and severally. It is quite clear that severally has been used in contradistinction to jointly.
A question may arise as to why the expression and singly occurs in the proviso. The expression lays down two conditions which have to be met simultaneously. The expression severally is liable to be interpreted so as to split a Bench consisting of three Members in two against one Members. In order to exclude such an interpretation it has .been laid down that where a Bench consisting of any number of members performs its duties under the proviso, the Constitution has to be so that all the members sit separately.
In view of the foregoing I am unable to agree with the views of the learned Judicial Member and propose to deal with appeal on its merits. The history of the case shows that estimate of sales was not made in the immediately preceding years but assessment was made by estimating not income. The sales estimate taken at Rs.2,00,000 is somewhat excessive, keeping in view the facts of the case. Under these circumstances it would be fair if the sales are reduced to Rs. 1,50,000. Since application of G.P. rate has not been contested, the rate applied is maintained.
(Sd.)
(Abdul Malik),
Accountant Member.
As we have expressed different opinion regarding the authority of the Tribunal keeping in view the proviso to section 133(6) of the Income Tax Ordinance, 1979, the case is referred to the learned Chairman under sub section (7) of section 133 of the Income Tax Ordinance for hearing by one or more members of this Tribunal on the following questions:
Question.
"Whether proviso to section 133(6) of the Income Tax Ordinance, 1979, and Notification, dated July 28, 1980 restrains a Bench from hearing appeals in cases where income has been computed by I.T.O. in excess of Rs.1,00,000.
(Sd.)
(Abdul Malik),
Accountant Member.
M/s. Arco Printers. Karachi.
I have had the advantage of reading the dissenting order passed by my learned brother, the Accountant Member. Since the question framed by my learned brother, the Accountant Member, does not resolve the controversy, I propose to add the following four questions which may also be considered by one or more Members of the Tribunal, as the case may be:
(1) Whether the Appellate Tribunal was and is justified in disposing of appeals against orders passed by any functionary of the Income-tax Department?
(2) Whether in the subsistence of the Notification No.F.35(4)/53-E, dated 28th July, 1980 followed by Notification of even number, dated 3rd June, 1987, the Tribunal can severally and singly dispose of only those appeals where orders were/are passed by the Appellate Assistant Commissioner under section III, 132, subsection (2) of section 148, section 156 and order passed under section 66-A by Inspecting Assistant Commissioner under the Ordinance, 1979, in cases where total income as computed by the Income Tax Officer does not exceed Rs.75,000 and Rs.1,00,000 respectively?
(3) If it is so found out that the answer to the question raised at para.2 is in the affirmative then what would be the effect of appeals that were decided between 28th July, 1980 to 3rd June, 1987 and from 3rd June, 1987 onward?
(4) What is the effect of subsection (1) of section 134 of the Income Tax Ordinance, 1979?
(Muhammad Amjad Malik),
Judicial Member.
(Abdul Malik),
Accountant Member.
MUHAMMAD MUJIBULLAH SIDDIQUI (CHAIRMAN).--This matter has come up before me as a result of difference of opinion between the learned Judicial Member and the Accountant Member. The learned Members have referred following questions in consequence of difference of opinion between them:
(i) Whether proviso to section 133(6) of the Income Tax Ordinance, 1979 and notification, dated July 28, 1980 restrained Bench from hearing appeal in cases where income has been computed by I.T.O. in excess of Rs, 1,00,000?
Additional Questions:
(ii) Whether the Appellate Tribunal was and is justified in disposing of appeals against orders passed by any functionary of the Income-tax Department?
(iii) Whether in the subsistence of the Notification No.F.35(4)/53-E, dated 28th July, 1980 followed by notification of even number, dated 3rd June, 1987, the Tribunal can severally and singly dispose of only those appeals where orders were are passed by the Appellate Assistant Commissioners under section 111, 132, subsection (2) of section 148, section 156 and order passed under section 66-A by Inspecting Assistant Commissioner under the Ordinance 1979, in cases where total income as computed by the Income-tax Officer does not exceed Rs.75,000 and Rs.1,00,000 respectively?
(iv) If it is found out that the answer to the question raised at para. 2 is in the affirmative, then what would be the effect of appeals that were decided between 28th July, 1980 to 3rd June, 1987 and from 3rd June, 1987 onward?
(v) What is the effect of subsection (1) of section 134 of the Income Tax Ordinance; 1979?
Heard Mr. Saeed Ahmed Farooqui, learned counsel for the appellant and M/s. Muhammad Yousaf Butt and Basharatullah Khan, learned representatives for the Department. The learned representatives for parties have stated that the question No.l and additional question are same in substance and contain the main point in controversy. All the learned representatives for the parties have supported the view held by the learned Accountant Member. All the learned representatives have stated that the finding of learned Judicial Member is not sustainable in facts and on law both. The learned representatives for the parties have pointed out that the learned Judicial Member has made an observation that, "the Appellate Tribunal can exercise powers and functions to the extent of a total income as computed by the I.T.O. which does not exceed Rs.75,000, therefore, from July, 1980 up to June, 1987 all cases including the present case where the total income as computed by the I.T.O. exceeds Rs.75,000 are dismissed for the reasons mentioned supra. The observation is factually incorrect so far the appeals under consideration are concerned because in the assessment year 1984-85 the total income of the appellant has been assessed at Rs. 28,830 and in the assessment year 1985-86 at Rs.33,000. The next contention of the learned representatives for the parties is that no issue of jurisdiction was raised by any party during the course of hearing of the arguments and the learned Bench hearing the appeal did not hear the parties on the point of jurisdiction therefore, the appeals could not be dismissed without hearing the parties as provided in Rule 14 of the Income Tax Appellate Tribunal Rules, 1981. The third contention of the learned representatives for the parties is that under section 133(6) of the Income Tax Ordinance, 1979 the legislature has authorized a Bench consisting of not less than two Members of the Tribunal to exercise the powers and functions of the Appellate Tribunal, and, the proviso to subsection (6) of section 133 is an exception which authorises the Federal Government to direct that all or any of the powers of the Appellate Tribunal shall be exercised by any one Member or by more Members or more Members than one severally and singly and this power being in the nature of exception shall not override the rule. They have contended that the powers conferred by the Federal Government on any one Member or more Members than one severally and singly is concurrent with the powers of Benches constituted by the Chairman of the Tribunal under subsection (5) of section 133. They have further argued that by virtue of the proviso to subsection (6) of section 133 the legislature has delegated the powers to Federal Government to direct that all or any of the powers of the Appellate Tribunal shall be exercised by one Member or more Members than one and in pursuance thereof the Federal Government has issued Notification which has been referred to by the learned Judicial Member. The notification issued by the Federal Government is an executive order which cannot override the provisions of statute enacted by the legislature and contained in subsections (5) and (6) of section 133 of the Income Tax Ordinance, 1979.
I have carefully considered the contentions raised by the learned representatives for the parties and the findings of the learned Judicial Member and Accountant Member.
It would be appropriate to trace the history of legislation in this behalf. In the Indian Income-tax Act, 1922, section 5-A was inserted for the first time by Act VII of 1939 whereby a provision was made to the effect that Central Government shall appoint an Appellate Tribunal to exercise the functions conferred on the Appellate Tribunal by the Income-tax Act. Subsections (5) and (6) of section 5-A of the Income-tax Act, 1922 originally read as follows:
"5A(5). The powers and functions of the Appellate Tribunal may be exercised and discharged by Benchers constituted from Member of the Tribunal by the President of the Tribunal.
5A(6). A Bench shall consist of not less than two Members of the Tribunal and shall be constituted so as to contain an equal number of Judicial Members and Accountant Members or so that number of the Members of one class does not exceed number of Members of the other class by more than one."
Thus, it will be seen that when the provision was made for the first time for the appointment of Appellate Tribunal it was provided that the powers and functions of the Appellate Tribunal may be exercised and discharged by the Benches constituted from Members of the Tribunal by President of the Tribunal and Bench shall consist of not less than two Members of the Tribunal. Originally there vas no provision for hearing of appeals by one Member. Subsequently a proviso was added to subsection, (6) of section 5-A of the repealed Income-tax Act, 1922 by Act IV of 1948 which read as follows:---
"Provided that the Central Government may direct that all or any of the powers and functions of the Appellate Tribunal shall be exercised by any one Member:"
Thereafter, an amendment was introduced in the above proviso and the words, "any one Member" were substituted by the following words:
"(a) by any one Member or (b) by more Members than one severally and singly."
In exercise of the powers conferred by the above proviso the Central Government issued a Notification, dated 30th of September, 1953 directing that all the powers and functions of the Appellate Tribunal shall be exercised severally and singly by the President-cum-Judicial Member, a Judicial Member and an Accountant Member of the Tribunal in respect of appeals against orders passed by the AA.Cs. where such appeals pertain to assessee whose total income as computed by the I.T.O. does not exceed Rs.30,000 prior to the issuance of above Notification all the appeals irrespective of the quantum of total income were being heard by the Benches consisting of not less then two Members. After the issuance of notification the cases having income up to Rs.30,000 were usually heard by a Single Member unless an important question of law was involved which was either heard by a Division or Full Bench. Thus, in the cases having income up to Rs.30,000 concurrent jurisdiction was being exercised by the Single Bench constituted by the President of the Tribunal and the Division Bench or Full Bench constituted by the President of the Tribunal. In the cases having an income exceeding Rs.30,000 the powers and functions of Appellate Tribunal were being exercised and discharged by the Benches constituted by the President of the Tribunal which consisted of not less than two Members of the Tribunal. This practice continued till the repeal of Income-tax Act, 1922 and promulgation of Income-tax Ordinance, 1979. Similar provisions were retained by the legislature in the Income Tax Ordinance, 1979 in subsections (5) and (6) of section 133 of the Income Tax Ordinance, 1979 which read as follows:--
"133(3). The powers and functions of the Appellate Tribunal may be exercised and discharged by Benches constituted from Members of the Tribunal by the Chairman of the Tribunal.
133(6). A Bench shall consist of not less than two Members of the Tribunal and shall be constituted so as to contain an equal number of Judicial Members and Accountant Members, or so that the number of members of one class does not exceed the number of members of the other class by more than one:
Provided that the Federal Government may direct that all or any of the powers of the Appellate Tribunal shall be exercised:--
(a) by any one member, or
(b) by more members than one, severally and singly.
The notification issued on 30th of September, 1953 remained in effect up to July, 28, 1980 when a new notification was issued in exercise of powers conferred by section 136 of the Income Tax Ordinance, 1979 by the Federal Government directing that all the powers and functions of the Appellate Tribunal shall be exercised severally and singly by the President-cum-Judicial Member, a Judicial Member and an Accountant Member of the Tribunal in respect of appeal against orders passed by the Appellate Assistant Commissioners under section 111, section 132, subsection (2) of section 148 or section 156 of the Income Tax Ordinance, 1979 where such appeals pertain to assessee including unregistered firm whose total income as computed by the I.T.O. does not exceed seventy-five thousand rupees. Subsequently the notification was further amended on June 3, 1987 and the words "one hundred thousands" were substituted for Rs.75,000. From July, 1980 up to June, 1987 the Single Benches and the Division Benches/Full Benches continued to exercise concurrent jurisdiction in respect of the appeals arising out of the cases where -total income did not exceed Rs.75,000 and from June, 1987 onward the similar position continued up to now in respect of the appeals arising out of the cases in which total income does not exceed one hundred thousand rupees. A resume of the above history shows that from the years 1953 to 1994 no controversy ever took place in respect of the jurisdiction exercised by Single Benches, Division Bench and Full Benches with reference to the total income computed by the I.T.O. For the first time in the history of Tribunal the learned Judicial Member, Mr. Muhammad Amjad Malik, came to the conclusion that, the Appellate Tribunal can exercise powers and functions to the extent at a total income as computed by the I.T.O. which does not exceed Rs.75,000." In pursuance of his above conclusion he dismissed all the appeals from July, 1980 up to June 2, 1987 including the present appeals where the total income as computed by the I.T.O: exceeded Rs.75,000. He further ordered that, "all the cases which were decided by the Appellate Tribunal touching upon the merits of the case where total income of an assessee as computed by the I.T.O. exceeded Rs.75,000 shall stand as recalled and shall have no legal binding effect in view of the notification mentioned (supra). As far as the appeals which were filed after June 3,1987, since the ceiling of the powers and functions of the Appellate Tribunal was increased to Rs.1,00,000 by a notification of even number dated 3-6-1987 by virtue of this Notification all appeals pending or decided and coming within the ambit of notification of 3-6-1987 shall stand as dismissed and as a consequence will have no binding legal effect at all".
On perusal of record I find that the learned representatives for the parties have rightly argued before me that even if the line of reasoning adopted by the learned Judicial Member with which the learned Accountant Member has disagreed is accepted for the sake of arguments, the present appeals could not be dismissed because the total income in these two appeals has been assessed by the Income Tax Officer at Rs.28,830 and Rs.33,000 in the assessment years 1984-85 and 1985-86 respectively. I further find force in the submission of learned representatives for the parties and I am persuaded to agree with the finding of learned Accountant Member that the appeals could not be dismissed because of the provisions contained in Rule 14 of the Income Tax Appellate Tribunal Rules, 1981 which reads as follows:
"14. Grounds which may be taken in appeal---The appellant shall not, except by leave of the Tribunal, urge or be heard in support of any ground not set forth in the memorandum of appeal; but the Tribunal in deciding the appeal shall not be confined to the grounds set forth in the memorandum of appeal or taken by leave of the Tribunal under this rule:
Provided that the Tribunal shall not rest its decision on any other ground unless the party who may be affected thereby had a sufficient opportunity of being heard on that ground."
It is admitted position that the point of jurisdiction on -which the learned Judicial Member has dismissed the appeal was never urged before the Tribunal at the time of hearing of appeal. The Tribunal was, however, not bound to confine itself to the grounds urged on behalf of the parties but by virtue of the proviso to Rule 14 the Tribunal could not rest its decision on the ground of lack of jurisdiction unless the party affected by such decision had sufficient opportunity of being heard. In the present case the appeals of the appellant were directed to be dismissed by the learned Judicial Member and' alongwith the present appeals all the appeals where total income exceeded Rs.75,000 were dismissed from July, 1980 to June 2, 1987 and from June 3, 1987 onward where the total income increased to Rs.1,00,000. Thus, the appeals filed by the department as well as thousands of assessee were dismissed and all of them were condemned unheard by the learned Judicial Member. This course is violative of the proviso to rule 14 of the Income Tax Appellate Tribunal Rules and therefore it is held that the appeals could not be dismissed for the lack of jurisdiction without hearing the parties. I, therefore, agree with the view of learned Accountant Member on this point.
The next point which has been dealt with by the learned Accountant Member and Officer to have escaped attention of learned Judicial Member is pertaining to the scope of proviso. The learned Accountant Member has held that a proviso cannot override the main section and, therefore, a Bench duly constituted in accordance with section 133(6) derives its powers from the statute. He has further observed that the proviso deals with the situation where the Federal Government may direct that all or any of the powers of the Appellate Tribunal are to be exercised by one member or more than one members sitting severally and singly. According to learned Accountant Member the proviso is in the nature of enabling provision and lays down the extent to which exception can be made to the rule that a Bench cannot consist of less than two members. The learned representatives for the parties have fully supported the view held by the learned Accountant Member.
I have given my anxious consideration to the point in issue. I am persuaded to agree with the finding of learned Accountant Member. As I have shown by tracing history of legislation that from 1939 to 1953 the powers and functions of the Appellate Tribunal could be exercised and discharged by the Benches which consisted of not less than two members of the Tribunal. In 1953 a proviso was added thereby creating an exception to the Rule. By virtue of the amendment the Federal Government was empowered to direct any one Member of the Tribunal to exercise the powers and functions of the Tribunal and subsequently by further amendment the Federal Government was empowered to confer this jurisdiction on any one member or more members than one severally and singly. The same state of law is continuing up to date bear perusal of subsections (5) and (6) of section 5-A of the repealed Income tax Act, 1922 and subsections (5) and (6) of section 133 of the Income Tax Ordinance, 1979 shows that the rule is that the powers and functions of the Appellate Tribunal are to be exercised and discharged by the Benches constituted from Members of the Tribunal by the President/Chairman of the Tribunal and the Bench shall consist of not less than two Members of the Tribunal. The intention of the legislature is so clear on this that it should not detain me any more and it can be held that there can be no cavil to the proposition that the rule is that the powers and functions of the Appellate Tribunal shall be exercised and discharged by a Bench which shall consist of not less than two members and by virtue of proviso to subsection (6) of section 5-A of the repealed Act and subsection (6) of section 133 of the Income Tax Ordinance, 1979 an exception to the rule was made empowering the Federal Government to direct that all or any of the powers and functions of Appellate Tribunal shall be exercised by any one Member or more Members than one severally and singly. The learned Accountant Member has rightly observed that, "it is trite law that a proviso cannot override the main section". I am of the view that although a proviso has influence upon the main section or provision of law but it is not necessarily of controlling nature. Although from the proviso under consideration no such inference can be drawn that it overrides or supersedes the main section or the intention of the legislature but even if such inference is drawn from any proviso it has to be ignored because the proviso cannot supersede the obvious intention of the legislature and the expressed provision of law relating to the subject-matter involved. Where the enacting clause is general in language and purpose a proviso subsequently following should be construed strictly. I am fortified in my views with the following passage appearing on page 608 of the Statutory Construction I Crawford, 1940, Edition:
"The reason why a proviso should be construed strictly generally and as a qualification to the main provision of the enactment is obvious. In the first place, as recognized by the Court in Board of Commissioners v. Millikhan (207 Ind. 142, 190 NE 185), its true office is not to enlarge or extend but rather to limit or modify. Or, in the language from Mobile Liners v. Mcconnel (220 Ala. 562, 126 So. 626):
If there is any doubt about an exception or proviso in that statute that must be judged on the assumption that the rule is broader than the exception. All doubts and implications should be resolved in favour of the rule.
And the possible effect of extending the scope of a proviso is pointed out in Dunn v. Bryan (77 Utah. 604, 299 Pac. 253):
Since the office of a proviso is not to repeal the main provisions of the act but to limit their application, no proviso should be so construed as to destroy those provisions."
I am further fortified in my views with the observation of Mr. Justice Waheeduddin in the case of Life Insurance Corporation of India v. United Commercial Bank (PLD 1962 Karachi 837) that, "it is a well-established principle of interpretation of statutes that a proviso should not be interpreted so as to have greater effect than strict construction of the proviso render it necessary. Ordinarily the proviso is something subordinate to the main clause, and generally what is contained in the proviso is not to be imported by implication into the clause".
I may cite with benefit another observation of Mr. Justice Sajjad Ahmed Jan in the case of Abdul Rauf v. Abdul Aziz (PLD 1963 Journal 20) as under:--
"It is well-settled that a proviso, although it is enacted to qualify or create an exception to a general rule or statement is not to be construed anymore which would nullify the effect of the main section to which it is merely a proviso. A proviso simply cares out something from the section itself without destroying that section. It would be absurd to hold that the legislature was taking away with one hand what it was giving with other:"
The Dacca High Court held in the case of Altafuddin Kazim v. Province of West Pakistan (PLD 1963 Dacca 472) that, "the House of Lords decided that this could not be done as the effect of what would be to allow the exception swallow up the general rule. There can be no dispute that, in exercise of a power provided by way of exception, the general provision in statute cannot be done away with or completely given a go by".
In another case the Hon'ble Judges of Peshawar High Court reported as PLD 1967 Peshawar 99, Muhammad Nawaz Khan v. Salahuddin held as follow:
"The language of Rule 4(3) and the provisos is clear and nothing can be subtracted or added and the provisos shall be read as they are. In support of his contention the learned counsel for the respondent relied upon Pramatha Nath Chowdhury and 17 others v. Kamir Mondal and 3 others PLD 1975 SC 434. At page 446 it was observed: A proviso, as is generally accepted, is in the nature of an exception to the substantive provision to which it has been appended. In Abdul Jabar Butt and another v. The State of Jammu and Kashmir AIR 1957 SC 281. It was held:
It is a fundamental rule of construction that a proviso must be considered with relation to the principal matter to which it stands as a proviso. Therefore, the proviso to section 8(1) has to be construed harmoniously with the provisions of subsection (1) to which it is a proviso."
In another case Shankar Irrana Gumdel v. Commissioner of Income tax, Bombay AIR 1956 Bom. 280. It was held that:
"One does not construe a section in the light of a proviso. If anything, one may construe a proviso in the light of a section."
The language of Rule 4(3) and the two provisos is clear and a proviso must be considered with relation to the principal matter to which it stands as a proviso."
The last ruling (supra) is very clear on the point that a proviso is to be construed harmoniously with the provisions of section to which it is a proviso and the section is not to be construed in the light of proviso. In the light of above rulings it can be said that a proviso is generally in the nature of exception to the substantive provision and it has to be construed harmoniously with the main provision. It cannot be construed in a manner which may destroy the main enactment or provision of law to which it stands as proviso. The rule relating to interpretation of statute has been explained by Mr. Justice Inamullah in the case of Hashim v. Saeeda Begum (PLD 1963 Karachi 21) as follows:--
"It is well-recognized principle of interpretation of statute that it would be so construed as shall suppress the mischief and advance the remedy. It is said to be the duty of the Judge to make such construction of statute as shall suppress the mischief and advance the remedy. Even where the usual meaning of the language falls short of the whole object of the legislature a more extended meaning may be attributed to the words, if they are fairly susceptible of it." (Maxwell on the Interpretation of Statutes, 10th Edn., p.68).
From the principle enunciated in the above rulings it can be deduced that first, the proviso is subordinate to the main enactment to which it stands and cannot override the main provisions of law. Secondly, the provisions contained in the main enactment and the proviso thereto is to be construed harmoniously in such a manner that the main purpose and intention of the legislature is not destroyed. Thirdly the proviso is to be construed strictly and it is not permissible to construe the proviso in such a manner that the main provision and the statute is given a complete good-bye and fourthly, the main enactment and the proviso are to be construed as a whole and interpreted in manner which advances the remedy and suppresses the mischief.
Now if in the light of above principles we examine the view held by the learned Judicial Member we find that the proviso to subsection (6) of section 133 has been considered in isolation without taking into consideration that it merely provides an exception to the rule contained in subsections (5) and (6) of section 133 of the Income Tax Ordinance, 1979. The main rule and the intention of the legislature have been completely ignored with the result that such interpretation is neither harmonious with the main enactment nor it stands to the test of the principle that the laws are to be interpreted in such a manner that mischief is suppressed and the remedy is advanced. In fact, the learned Judicial Member has taken the exception as a rule thereby making the provisions contained in subsections (5) and (6) as nugatory and redundant on the one hand and taking away the remedy from assessee and department both on the other hand in respect of the cases where total income has been assessed exceeding Rs.75,000 in between the years 1980 to 1987 and in the cases exceeding Rs.1,00,000 after June, 1987. This would result in complete chaos and legal anarchy so far the administration of justice in income-tax cases is concerned. This can never be the intention of legislature and the result is so manifestly against the spirit and intention of the legislature that it cannot be accepted by any principle of the interpretation of the statutes. For the foregoing reasons I entirely agree with the finding of learned Accountant Member that the proviso is in the nature of enabling provision only and it cannot override the main enactment.
The learned representatives for the parties have further urged that the Notification issued by the Federal Government in exercise of the powers conferred by proviso to subsection (6) of section 133 of the Income Tax Ordinance, 1979, is an executive order. The Government has issued Notification by virtue of the power delegated to it by the legislature and, therefore, a notification issued in pursuance of a delegated order cannot be inconsistent with the statutory provisions. Such notification cannot override the law enacted by the legislature and, therefore, it is not proper to say that the notification issued by the Federal Government in pursuance of the authority vested under the proviso has the effect of nullifying the main enactment which confers authority on a Bench constituted by the Chairman of the Tribunal consisting of not less than two members to exercise the powers and functions of the Appellate Tribunal. I am persuaded to agree with the contention of learned representatives for the parties. Although there is no inconsistency between the notification issued by the Federal Government in exercise of the powers conferred on it by proviso to subsection (6) of section 133 of the Income Tax Ordinance, 1979 and the provisions contained in subsections (5) and (6) of section 133 of the Income Tax Ordinance, 1979 but the established principle of the interpretation of the statutes is that if there is any inconsistency between the statute and any order, direction, notification, circular etc. issued in exercise of delegated authority the provision contained in the statute shall prevail to the extent of inconsistency.
Before concluding my findings on the issue under consideration would like to dilate on another aspect as well which has been dealt with by the learned Accountant Member. The learned Judicial Member has not dilated on this aspect of the issue but it appears that he was influenced with the aspect of the issue which I will presently discuss. As I have already stated in the earlier part of this order that originally all the functions and powers of the Appellate Tribunal were exercised by a Bench consisting of not less than two members and subsequently an amendment was made whereby a proviso was added to subsection (6) of section 5-A of the repealed Income Tax Act, empowering the Central Government to direct that all or any of the powers and functions of the Appellate Tribunal shall be exercised by any no member. By this amendment an exception was made and a provision for constitution of Single Benches was made. However, it appears that subsequently it was felt that such provision providing for empowering any one member only may create confusion as it may not be taken that in respect of the appeals which were directed to be within the jurisdiction of the Single Bench may not be taken to the exclusion of other Benches and secondly the Federal Government was empowered to confer the exceptional jurisdiction on one member only. The jurisdiction could not be 'conferred on a Bench consisting of more than one members and, therefore, in order to remove this lacuna further amendment was made and it was provided that the Federal Government may direct that all or any of the powers and functions of the Appellate Tribunal shall be exercised (a) by any one member and (b) more members than one severally and singly. This amendment paved way for exercise of authority by the Federal Government conferring jurisdiction in respect of any case or cases on Single Bench, Division Bench or Full Bench. After this amendment the Notification was issued by the Federal Government that all the powers and functions of the Appellate Tribunal shall be exercised severally and singly by the President-cum-Judicial Member, Judicial Member and an Accountant Member of the Tribunal in respect of such appeals pertaining to the assessee- whose total income as computed by the I.T.O. does not exceed Rs.30;000. The amount of total income was enhanced to Rs.75,000 in the year 1980 and to Rs.1,00,000 in the year 1987. By virtue of such notification the Federal Government conferred power on a Single Bench in which a member was required to sit singly and a Division Bench as well as Full Bench in which more than one members were required to sit severally. Thus, to the extent of pecuniary jurisdiction notified by the Federal Government Single Benches and Division Benches/Full Benches were conferred concurrent jurisdiction. This concurrent jurisdiction exercised by the Single Benches as well as the Division Benches/Full Benches were derived by virtue of the Notification issued by the Federal Government in exercise of the proviso to subsection (6) of section 133 of the Income Tax Ordinance, 1979 and the analogous provisions contained in the repealed Income-tax Act, 1922. In excess of the notified pecuniary jurisdiction the Division Benches and the Full Benches derived their authority by virtue of the provisions contained in subsections (5) and (6) of section 133 of the Income Tax Ordinance, 1979 and the analogous provision contained in the repealed Income-tax Act, 7922 independent of any Notification by the Federal Government. In the Shorter Oxford English Dictionary the meaning of word `several' is given as more than one, being one of a number of individuals of the same class, more than two or three but not many from among and as vague numeral. From the above meanings of the word `several' it is evident that the legislature delegated authority to the federal Government to direct that all or any of the powers and functions of the Tribunal shall be exercised by any one member or by more members than one severally and singly. It means that the Federal Government is empowered to confer jurisdiction for exercising all or any of the powers of the Tribunal of one member only or more members than one either sitting together meaning thereby sitting in a Division Bench or Full Bench or sitting singly meaning thereby sitting in a Single Bench. The Federal Government has issued notification exactly in terms of the proviso conferring jurisdiction for exercising all the powers and functions of the Appellate Tribunal severally and singly by the President-cum-Judicial Member, a Judicial Member and an Accountant Member: Thus, the power to the extent of pecuniary jurisdiction notified by the Federal Government is conferred on the President/Chairman, a Judicial Member and an Accountant Member whether sitting in Single Bench or sitting in Division Bench or in Full Bench. The expression "severally" used does not convey meaning as the learned Judicial Member has taken impression that the notification has effect of limiting the jurisdiction of all the Division and Full Benches to the extent of pecuniary jurisdiction notified from time and taking away the jurisdiction conferred on the Division Benches and Full Benches under subsections (5) and (6) of section 133 of the Income Tax Ordinance, 1979. The only conclusion which can be drawn from examination of all the aspects discussed above is that the effect of proviso and the notification issued thereunder by the Federal Government is that to the extent of notified pecuniary jurisdiction the Single Benches, Division Benches and Full Benches have the concurrent jurisdiction which is being practised in the Tribunal right from the year 1953 and in excess of the notified pecuniary jurisdiction the powers of the Division Benches and Full Benches remain intact which is derived by virtue of the provisions contained in subsections (5) and (6) of section 133 of the Income Tax Ordinance, 1979 which has been conferred by the legislature and cannot be taken away by any notification as held by the learned Judicial Member.
As a result of above discussion hold that the proviso to section 133(6) of the Income Tax Ordinance, 1979 and the notification issued thereunder does not restrain a Division Bench/Full Bench from hearing appeals in cases where income has been computed by the Income-tax Officer in excess of notified pecuniary jurisdiction.
So far second part of additional question No.2 is concerned I am of the opinion that it is result of some misunderstanding because the learned Judicial Member appears to have entertained impression that the appeals under consideration fell outside the purview of section 66-A, section 111, section 132, subsections (2) of sections 148 and section 156 of the Income Tax Ordinance, 1979. The Income-tax Appellate Tribunal is empowered to hear appeals under section 134(1) in respect of the orders passed by an Appellate Additional Commissioner under section 111 or 132 or subsection (2) of section 148 or an order made by the Appellate Additional Commissioner under section 156 or made by an Inspecting Additional Commissioner under section 66-A. The same sections have been referred in the notification issued by the Federal Government in exercise of the powers conferred by the proviso to subsections (6) of section 133 and, therefore, there is no question of curtailing of jurisdiction as observed on page 2 of the order. The order appealed against in the appeals under consideration arise out of an order under section 132 by the learned C.I.T.(A) and, therefore, the question of any curtailment of the power does not arise.
Likewise I am of the opinion that the additional question No.l is vague and requires no consideration. There is no finding by any one of the members that the Appellate Tribunal was and is justified in disposing of appeals against orders passed by any functionary of the Income-tax Department. The Income-tax Appellate Tribunal was and is entertaining appeal against the orders enumerated in section 134 of the Income Tax Ordinance, 1979 and the same sections are referred in the notification issued by the Government. Since the Tribunal is not entertaining any appeals against the orders other than those referred to in section 134, therefore, no finding is required on additional question No.l.
In view of my findings above no findings are required on additional question No.3 as I have held that the jurisdiction conferred on Division and Full Benches under subsections (5) and (6) of section 133 of the Income Tax Ordinance, 1979 are intact and have not been, affected by the notification issued by the Federal Government in exercise of the proviso to subsection (6) of section 133.
All the appeals decided between 28th of July, 1980 to 3rd June, 1987 and 3rd June, 1987 onwards were valid and within jurisdiction. However, I would like to observe that even if the finding of the learned Judicial Member would have been correct (which it is not) he had no jurisdiction to dismiss the appeals decided by the Tribunal from July, 1980 up to June 2, 1987 and the appeals filed after June 3, 1987 in respect of the cases where total income exceeded Rs.75,000 and Rs.1,00,000 respectively. The reason being that the Income Tax Appellate Tribunal is empowered to dispose of the appeals under section 135 of the Income Tax Ordinance, 1979 which are the subject of appeal heard by the bench exercising the powers of the Tribunal. The Division Bench which originally heard appeals was seized of the two appeals under consideration only and all the appeals preferred from July, 1980 till 2-10-1994 when the learned Judicial Member passed the order were not the subject matter of appeal before him and, therefore, he had no jurisdiction to dispose them of in any manner whatsoever. I am of the opinion that such wide and unrestricted jurisdiction cannot be exercised by any Court anywhere acting judicially.
The additional question No.4 also does not contain any point of difference of opinion and, therefore, requires no finding.
As a result of my findings above I agree with the conclusion of learned Accountant Member on the point of law that the Division Bench had the jurisdiction to hear the appeals and I hold accordingly.
Consequent to this finding both the appeals are to be decided on merits. A perusal of the order shows that as a result of his view that the Division Bench had no jurisdiction to hear the appeals because it arose out of an order in which income exceeded Rs.75,000 (although it is not a fact as the income in both the appeals was assessed at less than Rs.75,000) the learned Judicial Member has not given any findings on merits. The learned Accountant Member has discussed the merits of the appeal for assessment year 1984-85 and probably due to oversight no finding has been given in respect of the assessment year 1985-86. Thus, there is no finding on merits by any one of the learned members in respect of the merits of the case for the assessment year 1985-86 and there is finding of Accountant Member in respect of the assessment year 1984-85 and I am of the opinion that while sitting in Division Bench the order of one Member only does not constitute order of a Division Bench, therefore, it would be appropriate if the appeals are sent back to the same Division Bench for deciding both the appeals on merits.
The difference of opinion is re-loved as above. Before parting with this order I would like to record my appreciation for the assistance provided to me by the learned Departmental Representatives and particularly Mr. Muhammad Yousaf Butt whose clarity of thought and knowledge of the tax law as well as keen interest in assisting the Court has always impressed me.
M.B.A./72/T.T. Order accordingly.