MESSRS NATIONAL ELECTRIC COMPANY (PVT.) LTD., GUJRANWALA VS THE COMMISSIONER OF INCOME-TAX, GUJRANWALA ZONE,
GUJRANWALA
1996 P T D 901
[Lahore High Court]
Before Malik Muhammad Qayyum and Ahmad Saeed Awan, JJ
Messrs NATIONAL ELECTRIC COMPANY (PVT.) LTD., GUJRANWALA
Versus
THE COMMISSIONER OF INCOME-TAX, GUJRANWALA ZONE,
GUJRANWALA
Civil Tax References Nos. 2 to 5 of 1991, heard on 12/03/1996.
(a) Income Tax Ordinance (XXXI of 1979)---
---S. 8---Transfer of case---Central Board of Revenue can transfer a case or class of cases from one authority to another.
Apportionment or distribution of work among the various officers of the Income Tax Department is essentially an administrative matter and is to be regulated by considerations mainly of convenience. The Central Board of Revenue stands at the apex in the hierarchy of-Income Tax Authorities. Under section 8 of the Income Tax Ordinance it can give binding directions to all other Income Tax Authorities. It is, therefore, difficult to accept the contention that in exercise of its powers under section 8, it cannot transfer a case or a class of cases from one authority to another.
Writ Petition No. 1168 of 1982 ref.
(b) Civil Procedure Code (V of 1908)---
----O. XXXIX---Stay---Order of status quo takes effect from the time it is passed irrespective of the fact whether or not it has been served on person concerned-- Proceedings taken by any forum subsequent to the issuance of stay, stand vitiated.
In law stay order, unlike an injunction, operates the moment it is passed and its effectiveness is not dependent upon its communication. Consequently ignorance of the Income Tax Officer about the stay order issued by the Supreme Court does not in any manner validate the proceedings taken by him subsequent to the issuance of stay.
All proceedings taken by a lower forum after a stay order has been issued by a superior Court are nullity notwithstanding that the stay order issued way not in the knowledge of the Court.
The date of communication has hardly 'any relevance to the controversy as stay order operates from the time when it is issued and all proceedings taken subsequent thereto stand vitiated.
Karam Ali and others v. Raja and others PLD 1949 Lah. 100 and Haji Abdul Jalal v. Javed Ahmad 1983 SCMR 869 fol.
M.S. Baqar and Dr. Ilyas Zafar for Appellant.
Akhtar Hussain Awan for Respondent.
Date of hearing: 12th March, 1996.
JUDGMENT
MALIK MUHAMMAD QAYYUM, J.--This judgment shall dispose of P.T.R s. Nos.2/91, 3/91, 4/91 and 5/91 in which the controversy involved is the same.
2. The petitioner is a Company incorporated under the Companies Ordinance, 1984 and derives income from manufacture and sale of electric transformers. The assessment of the petitioner for the years 1977-78 to 1980-81 were reopened under section 65 of the Income Tax Ordinance, 1979. During the course of those proceedings a dispute arose as to the territorial jurisdiction of the officer making assessment. The petitioner had challenged the assumption of jurisdiction by filing Writ Petition No. 1168 of 1982 in this Court which was dismissed. Having failed in Intra Court Appeal the petitioner went to the Supreme Court of Pakistan by filing a petition for special leave to appeal along with which an application for interim relief was also made. On 28-6 1983 the Supreme Court of Pakistan was pleased to direct that the status quo be maintained till 3-7-1983. However, on 30-6-1983 the reassessment was completed by the Income Tax Officer. Subsequently the petition for leave to appeal was dismissed on 3-7-1983.
3. The order of the Income Tax Officer was challenged in appeal by the petitioner on various grounds before the Commissioner of Income Tax Appeals which was partly allowed by the Commissioner vide his order, dated 27-2-1986. Both the parties felt aggrieved and went to the Income Tax Appellate Tribunal by filing cross-appeals which were disposed of by the Tribunal on 11-10-1988. The appeal filed by the petitioner/assessee was dismissed while that of the Department accepted. The petitioner thereupon applied to the Income Tax Appellate Tribunal for referring certain questions said to be of law and arising out of the order of the Income Tax Tribunal to this Court. That prayer was however, refused by the Tribunal on 20-11-1990. The present applications for reference have consequently been moved by the petitioner.
4. On 26-3-1991 on en application moved by the petitioner (C.M. No.316-L-91) the petitioner was allowed to recast the questions which he wishes this Court to answer. These questions now read as under:---
(a) Whether under the facts and circumstances of the case the Hon'ble Tribunal was justified to hold that the C.B.R. had exercised its authority in accordance with law while assigning the cases to an I.A.C., Central Zone Lahore, suo motu?
(b) Whether under the facts and circumstances of the case the Hon'ble Tribunal was justified to hold that the Income Tax Officer could make the order on 30-6-1983 despite the fact that the Supreme Court of Pakistan had ordered for the status quo till 3rd day of July, 1983, on the ground that the stay order was not communicated to the respective Income Tax officer by this Court?
5.On the first question, learned counsel for the petitioner has argued that the Tribunal was not justified in holding that the Central Board of Revenue had exercised its authority with law by assigning the cases t0 the Inspecting Assistant Commissioner of Central 'Lone, Lahore. This argument need not be adverted to as almost on the similar ground the petitioner had challenged the order of the Central Board of Revenue by filing Writ Petition No.1168/82 which was dismissed on 15-5-1982 with the following observations:
"I do not think I can accept the contention of the learned counsel. Apportionment or distribution of work among the various' officers of the Income Tax Department is essentially' an administrative matter and is to be regulated by considerations mainly of convenience. The Central Board of Revenue stands at the apex in the hierarchy of Income Tax Authorities. Under section 8 of the Income Tax Ordinance it can give binding directions to all other Income Tax Authorities. It is, therefore, difficult to accept the contention of the learned counsel that in exercise of its powers under section 8, it cannot transfer a case or a class of cases from one authority to another. The cases cited by the learned counsel are easily distinguishable for these deal with matters which are not entirely of administrative nature, but on the other adversely affected the rights of interests of citizens. The learned counsel has not been able to point out how the petitioner would stand to suffer in case the proceedings are conducted by respondent No. l, instead of by the Income Tax Officer who originally dealt with this matter."
The order passed by this Court was upheld by the Supreme Court. The petitioner cannot, therefore, be allowed to reagitate the same matter again.
6. Coming now to the second question, it has been contended by the petitioner's learned counsel that on 28-6-1983 the Supreme Court of Pakistan had directed maintenance of status quo, and as such assessment carried out and completed on 30-6-1983 is wholly without jurisdiction and nullity in the eyes of law being violative of the stay granted by the Supreme. Court of Pakistan.
7. This plea was also raised before the Income Tax Appellate Tribunal but was repelled on the ground that neither a copy of the stay order granted by the Supreme Court was supplied to the Income Tax Officer by the assessee nor was this fact brought to his notice on 29-6-1983 when the assessee had appeared before the Income Tax Officer who was as such justified in proceeding with the assessment and completing -on 30-6-1983. The Tribunal further observed that it was only on 18-8-1983 that the Income Tax Officer learnt of the stay granted by the Supreme Court when the copy of the order was received by him from the Supreme Court. Mr. Akhtar Hussain Awan, learned counsel for the respondent has reiterated the same plea.
8. It is an undisputed fact that on 20-6-1983 the Supreme Court while hearing an application for stay has directed maintenance of status quo till 3-7-1983. In law stay order, unlike an injunction, operates the moment it is passed and its effectiveness is not dependent upon its communication. Consequently ignorance of the Income Tax Officer about the stay order issued I by the Supreme Court does not in any manner validate the proceedings taken by him subsequent to the issuance of stay. A Full Bench of this Court in Karam Ali and others v. Raja and others PLD 1949'Lahore 100 held that all proceedings taken by a lower forum after a stay order has been issued by a superior Court are nullity notwithstanding that the stay order issued was not in the knowledge of the Court. This principle was affirmed by the Supreme Court m Haji Abdul Jalil v. Javed Ahmad 1983 SCMR 869.
9. Even otherwise on facts we are not satisfied that the Income Tax Officer was not aware of the stay order issued by the Supreme. Court of Pakistan. Admittedly the assessee had appeared before the Income Tax Officer concerned. It is difficult to accept that a person who had gone to the Supreme Court and obtained a stay order would -not try to take benefit of it by informing the officer concerned. Be that and it may, the date of communication has hardly any relevance to the controversy as stay order operates from the time when it is issued and all proceedings taken subsequent thereto stand vitiated.
10. The answer of the above question, therefore, has to be in the negative and the Tribunal was not justified in holding that the Income Tax Officer was competent to make an order of assessment on 30-6-1983 when the stay order had been issued by the Supreme Court on 28-6-1983. The proceedings taken on 30-6-1983 were nullity in the eyes of law and Income Tax Officer will have to decide the matter afresh.
These petitions stand disposed of in the above terms.
M.B.A./N-12/LOrder accordingly.