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

---S. 10---Surcharge---Levy of---Income Tax Officer could not levy surcharge Particularly when he had not done so at the time of original assessment.

1988 PTD (Trib.) 155 fol.

1988 PTD 66 mentioned.

(b) Precedent---

----Decision of Income Tax Appellate Tribunal---Binding effect ---Extent--- Department on a particular issue already decided by Income Tax Appellate Tribunal had gone to the High Court---Effect---Held, in cases involving the said issue, it was advisable for the Assessing Officer to keep the matter pending till decision was obtained from the High Court---If the Assessing Officer was forced to proceed in the matter, he would have no other alternative but to follow the decision of Income-tax Appellate Tribunal.

1988 PTD (Trib.) 155 fol.

1988 PTD 66 mentioned.

Z.H. Jaffery for Appellant.

Humayun Aqeel, D.R. for Respondent.

Date of hearing 18th July, 1989.

ORDER

This appeal is directed against the order of learned CIT(A) recorded by him on 2nd June, 1987, relating to assessment year 1977-78.

It appears that during the relevant assessment year the ITO while framing original assessment failed to levy surcharge. Subsequently, when he discovered this omission, he issued notice under section 156 of the Income Tax Ordinance and then levied surcharge and the appellant, instead of going in appeal, filed a review application before the ITO with the contention that in view of a decision of this Tribunal reported as 1988 PTD (Trib.) 155, he had no power of levying surcharge. It was further contended that since it was a mistake apparent from the record, it should be rectified. The ITO, however, rejected this application. This time the appellant came up in appeal before the learned CIT(A) but it was dismissed for the reason that the issue regarding levy of surcharge was capable of two opinions, hence it could not be called an error apparent from record. .

Mr. Z.H. Jaffery, the learned counsel for the appellant, contended before me that the decision of this Tribunal mentioned above was binding on the ITO and he should not have levied surcharge particularly when he had not done so at the time of framing original assessment. He further argued that the question regarding levy of surcharge was not any issue capable of two opinions as was held by the learned CIT(A). According to him the decision of this Tribunal was binding on both the officers below and they should have ordered deletion of levy of surcharge. Mr. Humayun Aqeel, the learned DR, supported both the officers below.

I have heard both the learned counsel for the appellant as well as learned DR. I agree with Mr. Jaffery that the decision of this Tribunal reported as 1988 PTD (Trib.) 155 was binding on both the officers below and they should not have upheld the levy of surcharge. It is true that the department had taken the issue to the High Court but it did not mean that the ITO had obtained the power of flouting the decision of this Tribunal. If this practice is allowed, then the authority of the Tribunal would be reduced to nothing. In such cases, it is advisable for the assessing officers to keep such matters pending till decision is obtained from the High Court. However, if he is forced to proceed; he has no alternative but to follow the decision of this tribunal. Let me also point out that aforesaid decision of the Tribunal has also been confirmed by the High Court in the decision reported as 1988 PTD 66.

In view of discussion made above I am of the view that the error was apparent before the ITO and he should have deleted the surcharge levied by him as requested by appellant. The impugned order of the learned CIT(A) is, therefore, vacated and the surcharge levied by the ITO stands deleted.

M.B.A./172/T????????????????????????????????????????????????????????????????????????????????????? Order accordingly.