I.T.AS. NOS.1482/KB, 1483/KB, 1484/KB OF 1997-98, DECIDED ON 17TH MARCH, 1998. VS I.T.AS. NOS.1482/KB, 1483/KB, 1484/KB OF 1997-98, DECIDED ON 17TH MARCH, 1998.
1998 P T D (Trib) 2078
[Income-tax Appellate Tribunal Pakistan]
Before Muhammad Mujibullah Siddiqui, Chairman
I.T.As. Nos.1482/KB, 1483/KB, 1484/KB of 1997-98, decided on 17/03/1998.
Per Muhammad Mahboob Alam, Accountant Member; Muhammad Mujibullah Siddiqui, Chairman agreeing--
(a) Income Tax Ordinance (XXXI of 1979)---
----Second Sched., C1.125-B & S.66-A---Exemption, grant of---Industrial undertaking had neither been set up nor same had commenced its commercial production---No positive evidence was produced rebutting the finding of IAC to that effect---Condition with regard to the setting up and commencement of commercial production having not been fulfilled by the assessee, exemption under cl.125-B of Second Sched. of the Income Tax Ordinance, 1979 to assessee was granted erroneously which was prejudicial to revenue also-- Erroneous grant of exemption had precluded the disallowance of inadmissible expenses and estimation of proper income---Plea of assessee that position of S.66-A, Income Tax Ordinance, 1979 was not invokable was repelled in circumstances.
(b) Income-tax---
----Exemption---Assessment---Each assessment year has to be considered as an independent year and position of account has to be evaluated on the basis of facts obtaining in that year---If certain concession is granted to an assessee in the form of acceptance of a claim of exemption on fulfilment of the prescribed condition in that year, such concession can be withdrawn if in subsequent years the conditions are not found to be fulfilled---Principles.
The very basis of the tax assessment where each year is considered as an independent year and the position of account has to be evaluated on the basis of facts obtaining in that year. Even if certain concession is granted to an assessee in the form of acceptance of a claim of exemption on fulfilment of the prescribed condition in that year, such concession can be withdrawn if in the subsequent years the conditions are not found to be fulfilled. An assessment order refers to a finding of an assessing officer for a particular year about the income statement of an assessee revealed through the account submitted and the facts placed in regard thereof before the Assessing Officer. It is not a certificate issued to an assessee about the character of its events in the coming year. It is also not a licence for conducting the business in any particular manner. Viewed this way the appreciation of facts relating to determination of income has to be established independently for each year. Incorrect appreciation of facts in the preceding year was, thus, no bar to the reopening of the case in the subsequent assessment year not so hit by any other limitation.
PLD 1990 SC 1156 = 1990 PTD 768 ref.
PLD 1990 SC 1156 = 1990 PTD 768 distinguished.
Per Muhammad Mujibullah Siddiqui, Chairman---
(c) Income Tax Ordinance (XXXI of 1979)---
----S.66-A---Powers of IAC---Extent---Powers vested in IAC under S.66-A, Income Tax Ordinance, 1979 are sufficiently wide, so as to empower him to modify, enhance or cancel the assessment and direct fresh assessment to be made.
PLD 1990 SC 1156 = 1990 PTD 768 distinguished.
Muhammad Ather Saeed for Appellant
Ladhani, D.R. for Respondent.
Date of hearing: 10th March, 1998.
ORDER
These appeals arise out of the order of the IAC Range-I, Hyderabad passed by him under section 66-A of the Income Tax Ordinance,. 1979. The action for all the three years have been initiated by the IAC on the common ground that exemption under clause 125(B) of the Second Schedule had been erroneously granted to the appellant causing prejudicial loss of revenue attracting the provisions of section 66-A. It was observed by the IAC that "on perusal of record it was observed that exemption allowed to assessee's income from industrial undertaking from 2nd May, 1990 uptil 1st May, 1995 under clause 125(B) was erroneous in so far as prejudicial to the interest of revenue as the twin conditions mandatory for the grant of exemption for five years i.e., either the industrial undertaking was set up or commercial production has commenced between 30-6-1987 to 30-9-1988 whichever is later were not satisfied. Return filed by the assessee for assessment year 1990-91 clearly mentioned that commercial production started with effect from 2-5-1990 i.e. after 30-6-1989 (cut-off date). As far as setting up was concerned, depreciation schedule for the year unveils erection of building and installation of machinery after 1-7-1989 i.e. expiry of cut-off date. The notice under section 66-A in this regard was consequently issued by the IAC and the reply submitted by the appellant have been discussed as under in the order:
"....Notice under section 66-A was therefore, issued after first allowing assessee opportunity for preliminary objection. In the preliminary objection as well as subsequent assertions assessee has refrained for contesting the merit that exemption was erroneously allowed as two conditions under clause 125(B) were not satisfied. Mr. Amanullah Sattar, Accountant who attended alongwith Mr. Athar Jaffri, Advocate limited his argument to assertion that land was purchased prior to 30-6-1989 and as such the setting up was completed although no machinery was installed and no construction was done. The assertion of the assessee on the merit is superficial and devoid of merit as obviously setting up industrial unit cannot be completed without construction and installation of plant and machinery which took effect after 30-6-1989. It has for this reason that advocate thought it wise to keep silent on the subject. The assessee's letters are also silent only because of obvious demerit on the exemption allowed under clause 125(B). The exemption under clause 125(B) is liable to be withdrawn."
2. The appellant also took the following three objections to the initiation of proceeding under section 66-A:---
(i) That income had already been assessed in the order for 1993-94 and loss for 1994-95 and 1995-96 which was therefore, not prejudicial to the interest of revenue.
(ii) That specifically for assessment year 1993-94 the matter of exemption had already been settled by the I.T.A.T.
(iii) Exemption was finally settled in assessment year 1990-91 when such order was made for the first year and now cannot be looked into due to limitation.
3. As the learned A.R. has raised there very three objections before us it will be relevant to consider the finding of the Additional Commissioner on these issues as mentioned in his order.
4. For assessment year 1993-94, it has been stated by him "that income was determined for the purpose of allowing statutory depreciation allowance instead of depreciation in audited accounts. The order further goes to determine tax liability under section 80-D and taxing other income. Summarily the order can be summed up as order determining tax liability under section 80-D, determining other taxable income of Rs.40,712 and declaring the depreciation wise adjusted exempt income under clause 125(B) at Rs.83,28,623. The exemption allowed under clause 125(B) as discussed earlier is without merit and examination of the income in the back drop of exemption under clause 125(B) is fundamentally erroneous. The assessing officer was restrained from determining exempt income. (Such as tax holiday undertaking) as such asset could not result in tax liability. Determination of income in this context becomes irrelevant from tax point of view. Assessing Officers have vide Circular 21 of 1988 been asked not to dilate on income which is exempt. The Assessing Officer thus did not go in sufficient detail as is apparent from the assessment order. Assessment thus framed is erroneous in so far as prejudicial to the interest of revenue".
5. For 1994-95, it was stated that "the assertion that as loss had already been assessed, the assessment is not prejudicial to revenue is incorrect for the reason that only adjusted depreciation was determined as loss (after taking into account the declared profit). Even P & L adjustments were not made. This underscores that Assessing Officer found himself restricted in view of Circular 21 of 1988 which shows Assessing Officer to assess exempt income. As income was assessed in the back drop of erroneous exemption under clause 125(B) the assessment was prejudicial to revenue".
6. For 1995-96, it was stated that "the assertion that as loss has already been assessed, the assessment is not prejudicial to revenue is incorrect for the reason that only adjusted depreciation was determined as loss (after taking into account the declared profit). Even P & L adjustment was limited to Rs.1,000 only as during the year assessee enjoyed erroneous exemption for 10 months. In this backdrop the Assessing Officer did not examine the case fully by stating that :
"In response the assessee explains the reduction in gross profit for whole year on the ground higher depreciation claimed during the year due to addition and assets. The explanation is placed on record and is not commented upon, for the reason that major portion of the accounting period is covered under tax holidays."
As the assessing officer found himself restricted in assessment due to erroneous exemption read with Circular 21 of 1988 the assessment is prejudicial to revenue.
7. In respect of the second assertion that for 1993-94 income had already been assessed in the order which was therefore not prejudicial to the interest of revenue and that the matter had been finally settled at the level of the learned ITAT, the following observations have been made by the IAC:---
.....The assessee referred to order of the Tribunal for assessment year 1993-94 to indicate that issue of exemption had already been settled and thus action under section 66-A is not feasible. Before discussion the words of honourable Tribunal are reproduced.
At the time of hearing of stay application an issue dropped up regarding action of the I.T.O. in allowing tax holiday to the company under clause 125(B). The learned D.R. was given time to produce record but he could not bring original order granting tax holiday. Assessment order for 1991-92 makes reference to the earlier order and grounds for allowing tax holiday have not been discussed. However, since it is an admitted position by the ITO that the assessee is entitled to holiday we need not go further into this issue. At the present point of time only order under section 156 is in dispute.
It would be observed that learned ITAT did not go further into this issue as the record for assessment year 1990-91 which allowed exemption was not available. "
8. In respect of the next plea of the appellant/assessee that the issue of exemption had already been settled in 1990-91 when this was granted by the ITO and which therefore could not be looked into as being time-barred, the IAC made the following observation:
....The argument of the assessee that exemption was allowed for the first time in 1990-91 which is now time-barred and cannot be adjudicated afresh in assessment year is separate entity. Each year the income has been distinctly treated exempt and each year distinctly comes in the purview of section 66-A."
9. Having rebutted all the three arguments taken by the appellant before him the learned IAC finally held that the "both the findings of exemption under clause 125(B) as well as determination of income under consideration of exemption were both erroneous in so far as prejudicial to the interest of revenue". He accordingly declared the exemption granted under section 125(B) as withdrawn and cancelled the assessment order for all the three years for de novo assessment.
10. Before us the learned counsel for the appellant has raised the same three objections as taken by him before the learned IAC. According to him the IAC has not been able to prove that there did exist any erroneous order prejudicial to the interest of revenue. It has also been submitted that the matter of tax holiday having been initially considered in 1990-91 had become final and could not be re-considered for the subsequently assessment years 1993-94, 1994-95 and 1995-96. Further it has been submitted that for 1993-94 the assessment order having merged with the order of the ITAT, no re-assessment could be initiated in terms of section 65 and section 66-A of the Income Tax Ordinance, 1979. For this propose the learned counsel has mainly relied on the case reported as PLD 1990 SC 1156=1990 PTD 768 .(Supreme Court of Pakistan). We have also heard the learned D.R. who has supported the order of the IAC.
11. The matter has been considered by us. As the matter involved the grant of exemption under clause 125(B) of the Second Schedule it will be pertinent to examine the same first. The said clause is reproduced as under:
"Clause (125-B).
Profits and gains derived by an assessee from an industrial undertaking set up between the first day of July, 1986, and the thirtieth day of June, 1989, both days inclusive, for a period of five years beginning with the month in which the undertaking is set-up or the commercial production is commenced, whichever is the later.
The exemption under this clause shall apply to an industrial undertaking which is---
(a) engaged in the manufacture of such engineering goods as are specified by the Central Board of Revenue by notification in the official Gazette; and
(b) owned and managed by a company formed and registered under the Companies Ordinance, 1984 (XLVII of 1984), having its registered office in Pakistan."
12. The case of the Department is that the industrial undertaking was neither set up nor commenced its commercial production within the period 1-7-1986 to 30-6-1989, and as such did not fulfil the initial condition required for grant of exemption under the said clause 125(B). No positive evidence was produced before the IAC, when he confronted the assessee on this issue. Before us also the learned counsel has not been able to produce any evidence rebutting the finding of the IAC as reproduced by us at paras. 1 to 9 above. It is thus established that the condition with regard to the setting up and commencement of commercial production was not fulfilled by the appellant/assessee. The IAC was therefore, right in holding that the exemption was granted erroneously. The erroneous grant of exemption is also found to be prejudicial to revenue. Proceeding year wise, for 1993-94 the order of the IAC shows that even the admitted liability payable on the returned income will be Rs.78,12,134. For 1994-95 the assessee had declared a loss of Rs.2,19,81,540 which was not examined by the ITO after accepting the plea of the appellant that it was enjoying tax holiday. Same way the position in 1995-96 when loss of Rs.44,18,236 remained uncommented by the assessing officer on the same plea of exemption under tax holiday scheme. For both these years 1994-95 and 1995-96 the erroneous grant of exemption had precluded the disallowance of inadmissible expenses and estimation of proper income. The plea of the appellant that the provisions of section 66-A were not invokable in case of the appellant as the orders passed under section 62 were not erroneous and not pre judicial to revenue is therefore, not found to be acceptable by us.
13. The next ground taken by the learned counsel is that the issue of exemption having been considered in the assessment year 1990-91 could not be re-examined as the assessment for 1990-91 had become time-barred at the time of issue of notice under section 66-A. In other words the learned counsel wanted to plead that the finding of the facts even though proved to have wrongly given in any year have to be so accepted in the succeeding years. This plea of the appellant goes against the very basis of tax assessment where each year is considered as an independent year and the position of account has to be evaluated on the basis of facts obtaining in that year. Elaborating further it can be said that even if certain concession is granted to an assessee in the form of acceptance of a claim of exemption on fulfilment of the prescribed condition in that year, such concession can be withdrawn if in the subsequent years the conditions are not found to be fulfilled. An assessment order refers to a finding of an assessing officer for a particular year about the income statement of an assessee revealed through the account submitted and the facts placed in regard thereof before the assessing officer. It is not a certificate issued to an assessee about the character of its events in the coming year. It is also not a licence for conducting the business in any particular manner. Viewed this way the appreciation of facts relating to determination of income has to be established independently for each year and we therefore hold that the incorrect appreciation of facts in the preceding year 1990-91 was no bar to the reopening of the case in the subsequent assessment year not so hit by any other limitation and we accordingly reject the plea of the learned A.R. on this ground.
14. The last plea of the learned A. R. is that for assessment year 1993-94, the order of the assessing officer had merged with the order of the Tribunal and thus fell outside the provision of section 66-A in view of the decision of the Supreme Court of Pakistan in the case reported as PLD 1990 SC 1156 = 1990 PTD 768. The relevant finding of the Tribunal as quoted by the learned IAC have already been reproduced at para. 7 ante. It is clearly seen that the Tribunal has not gone into this issue. Accordingly in terms of subsection (1-A) (b) of section 66-A, the provisions of subsection (1) of the said section remain applicable and are found to have been properly invoked by the IAC. The reference to the reported case PLD 1992 SC 549 is found to be out of context as the situation dealt there was before the induction of subsection (1-A) in the statute. In the concluding lines of the judgment it was observed by the Hon'ble Court that "the fact that in 1991 subsection (1-A) was added authorising IAC to initiation under section 66-A even if appellate and revisional order has been passed, supports the contention that such a power did not exist earlier. The question whether it is applicable to the present case is kept open and we refrain from expressing any opinion at this stage. We, therefore, allow the appeal and set aside the impugned judgment and consequently notice issued under section 66-A of the Income Tax Ordinance is declared as without jurisdiction and of no legal effect". The situation in the case under our consideration being different and the matter re-opened falling in the exception provided under subsection (1-A) of section 66-A, we do not find ourselves in agreement with the plea of the learned counsel of the appellant regarding the merger of the assessment with the order of the Tribunal and uphold the action of the IAC. The provisions of section 66-A are held to have been properly invoked for all the three years under appeal; and in consequence the appeals for all the three years fail.
(Sd.)
Muhammad Mahboob Alam,
Accountant Member.
MUHAMMAD MUJIBULLAH SIDDIQUI (CHAIRMAN).---I agree with the order proposed to be delivered by my learned brother, the Accountant Member. However, I would like to add few words of my own in support of the findings by the learned Accountant Member. As already observed in para. 12 of the order it is admitted position that the Assessing Officer wrongly allowed exemption to the appellant in the assessment year 1990-91 as the conditions required for grant of exemption under clause 125(B) of the Second Schedule to the Income Tax Ordinance were not fulfilled, it is a clear case of erroneous order which is prejudicial to the interest of revenue for the reason that the assessment orders have not been completed on merits and after due verification of the accounts. Mr. Athar Saeed, learned counsel for the appellant stated during the course of his arguments that his main reliance is on the judgment of Hon'ble Supreme Court of Pakistan in the case of Glaxo Laboratories reported as PLD 1990 SC 1156 = 1990 PTD 768. A perusal of the above judgment shows that the technical objections sought to be canvassed in the light of above judgment are not available to the assessee The reason being that in the case of Glaxo Laboratories a notice under section 66-A was issued in respect of assessment for the year 1987-88, pertaining to an issue which was previously subject -matter of appeal before the Tribunal in the proceedings arising out of order under section 65. In this background the Hon'ble Supreme Court of Pakistan held as follows:
"The first question which attracts our attention is whether the Appellate Authority at any stage had applied his mind to the question of taxability of Rs.130 millions. The appellant's contention is that it was not an ordinary case in which assessment order was passed under the Self-Assessment Scheme in a routine manner but it was a case which was chosen for total audit. This term denotes that the return filed by the appellant was taken out for consideration and assessment order was to be passed after due consideration and deliberation. Mr. Shaikh Haider has emphatically contended that in the return the columns relating t9 income not subject to tax of exemption claimed by the assessee have been left blank. He further contended that no other document was produced in which any reference was made to Rs.130 million. This factual aspect was vehemently denied by Mr. Vellani. According to him the entire balance-sheet and profit and loss account was submitted alongwith the income-tax return and it mentioned the sum of Rs.130 million which was considered by the Income Tax Officer. The allegation that the profits and loss account, balance-sheet and report of the directors were not produced at any stage, does not seem to be correct. If the documents would not have been filed in the normal course, the assessment could not have been completed and the appellant could have been required to produce them. Mr. Sheikh Haider has filed a supplementary paper book containing the return and orders. Strangely enough in this paper book the disputed documents namely profit and loss account and the directors' report are available and the learned counsel has not been able to explain how and from where the respondents obtained them. From the order of the Tribunal it seems that these documents were available on record while the case was heard and judgment was pronounced. While cancelling the assessment framed in pursuance of notice under section 65 the Tribunal pointed out that at four places the amount of Rs.130 million was mentioned. The Tribunal had taken pains to quote all those entries and statement and observed as follows:
The above quotations leave no doubt in our mind that the extraordinary receipt was not only disclosed in the profit and loss account it was rather displayed very pre-eminently in the Reports of Directors and Managing Directors.
The Tribunal then noticed that it was a case of total audit because the return was not accepted under Self-Assessment Scheme and the name of appellant was picked up for detailed scrutiny through random ballot for total aduit as contained in Circular No.9 of 1987 issued by the Central Board of Revenue, dated 26th October, 1987, which provides a procedure for total aduit. Finally the Tribunal observed as follows:---
We have mentioned above that receipt of Rs.13,00,00,000 was disclosed to the ITO in very clear manner and at more than one places. In other words it had not hidden under any cover or jumbled up with other pieces of information. As a matter of fact this receipt has been highlighted in the review of annual operations made by the Managing Directors which was printed on pages 4 and 5 of the accounts and also forms a significant part of the one-page report of the Directors which is printed on page 6. Study and analysis of Profit and Loss Account and balance-sheet forms the foundation stone of any assessment proceedings. Without examining these financial statements income from business cannot be determined. In the case under our consideration the ITO who completed assessment under section 62, computed taxable income with the help of Accounting Profit disclosed by the Profit and Loss Account, which lists this receipt of Rs.13 crores. It may also be noticed that the cases selected for total audit are subjected to scrutiny, which is more in depth as compared with other assessments. As a matter of fact the words "Total Audit" which are used for such assessment, also indicate that such assessments are to be made with special care and attention. When we keep both these sets of facts in view (namely the clear manner of presenting the information to the ITO and special nature of assessment proceedings) we cannot agree with Mr. Shahid Jamal that this item was not considered by the ITO at the time of making assessment under section 62. We have taken . into consideration arguments of Mr. Shahid Jamal, if the issue has not been discussed in the original order it does not necessarily prove that was not considered because in this case there are innumerable items of receipts and expenses, which have been accepted by the ITO but have not been discussed in the assessment order. Similarly, if there was no inquiry, in writing, on the subject this does not necessarily prove that the nature of this receipt was not examined by the ITO. We are unable to agree with the contention of Mr. Shahid Jamal for the following reasons:
(a) The information about extraordinary receipt of Rs.13 crores was displayed very prominently in the Accounts submitted before the ITO.
(b) The amount of receipt is so big that it could not possibly escape attention of the ITO.
(c) The assessment was completed under the 'total audit' manner which, as the name suggests, is more intensive than a normal assessment.'
These observations of the Tribunal leave no doubt that the figure of Rs.130 million was disclosed and that the case was scrutinised under total audit, the department did not challenge this judgment of the Tribunal in the High Court and has, thus, accepted it. In this background the respondent initiated action under section 66-A by issuing the notice reproduce above. It was contended that the Tribunal did not go into the merits of the case or the nature of receipt of Rs.130 trillion whether it was revenue income or capital gains. It was also contended that the assessment framed by the ITO was erroneous in law in so far it is prejudicial to the interest of revenue and the ITO had failed to tax receipt of Rs.130 million which is the income of the assessee company chargeable to tax. It is true that the Tribunal did not enter into the merits as to whether Rs.130 million is taxable income, it however, considered in detail that this amount was disclosed and must have been considered by the Income Tax Officer in the normal course of assessment.
6. Section 66-A authorises IAC to examine and initiate action if the order passed by the ITO is erroneous in so far as it is prejudicial to the revenue. The IAC did not have the jurisdiction or power to initiate same action in respect of the orders passed by the Appellate Authorities or the Tribunal, However, as observed above such power had now been vested in IAC from the year 1991. The controversy is whether after the Appellate Authority has passed the order, if the order of ITO merges in it and IAC cannot reopen it under section 66-A."
In the above circumstances the Hon'ble Supreme Court of Pakistan held that, "here the assessment order made by the I.T.O. was reopened under section 65 and revised assessment order was framed which has been set aside by the Tribunal. Thus, the order of the LT.O. has merged in the order of the Tribunal which holds the field".
In the present case it is admitted position that the question relating to exemption to the appellant never came for consideration before any Appellate Court and consequently question of merger of the assessment order does not arise at all. So far the insertion of subsection (1-A) in section 66-A by Finance Act, 1991 is concerned it has already been discussed by the learned Accountant Member.
Another point on which I would like to add few words is the plea of Mr. Athar Saeed that the exemption though erroneously granted was allowed for the first time in the assessment year 1990-91 which assessment could not be reopened/revised having been attained finality with the efflux of time, therefore, subsequent assessments cannot be revised under section 66-A. A similar question came for consideration before Supreme Court of India. Following question was referred before Calcutta High Court:
"Whether on the facts and in the circumstances of the case in taking action under section 33-B(1) of the Indian Income-tax Act, 1922, for the assessment year 1960-61 the C.I.T. was entitled to take into consideration the records of the proceedings relating to the assessment of the assessee for the assessment years 1955-56 and 1959-60?"
The relevant facts were that the I.T.O. accepted the returns filed by the assessee for the assessment years 1955-56 to 1959-60 in which the declared initial capital was accepted without any enquiry. A similar assessment was trade on the basis of return for the assessment year 1960-61. The C.I.T. issued notice under section 33-B of the Indian Act requiring the assessee to show cause as to why the appropriate order should not be passed in respect of assessment year 1960-61 as the enquiries revealed that the assessing officer was not justified in accepting the initial capital. The Commissioner ultimately cancelled the assessment order for the assessment year 1960-61 directing the I.T.O. to make a fresh assessment according to law after making enquiries. The assessment for the assessment years 1955-56 to 1959-60 were already beyond time for taking action and, therefore, the earlier assessment orders were left intact. The assessee preferred appeal before the Tribunal on the ground that the assessment orders for the years 1955-56 to 1959-60 could not be interfered with by the Commissioner, because of the period of limitation and, therefore, the relevant facts in those years could not be considered for coming to conclusion that the assessment order for 1960-61 was erroneous and prejudicial to the interest of revenue. It was held by the Indian Tribunal that if the orders for 1955-56 to 1959-60 were left out of consideration and the assessment order for 1960-61 was considered by itself, it could not be said that the assessment order was prejudicial to the interest of revenue. The Calcutta High Court did not reply the question proposed for the reason that it was merely academic in nature. However, the Calcutta High Court held that the C.I.T. had rightly cancelled the assessment and Supreme Court of India dismissed the appeal at the instance of assessee and maintained the order of Calcutta High Court. Thus, a similar objection taken before the Supreme Court of India was not entertained and notwithstanding the fact that the assessments which were barred by time were left intact, the assessment for the subsequent assessment year was held to be rightly cancelled by the Commissioner, being erroneous and prejudicial to the interest of revenue. Thus, I am of the opinion that the objection raised by the learned counsel for the appellant to the effect that since the assessment order for the assessment year 1990-91 has attained finality because of efflux of time, therefore, subsequent assessments cannot be revised, is without substance.
Another objection was raised by Mr. Akhtar Saeed to the effect that under section 66-A the learned I.A.C. could either cancel the assessment or direct for fresh assessment but he could not modify as well as cancel the assessment with direction for fresh assessment. Mr. Akhtar Saeed has assailed the operative part of the order under section 66-A which reads as follows:
"In this view of the matter I hold that both the findings of exemption under clause 125(B) as well as determination of income under consideration of exemption were both erroneous in so far as prejudicial to the interest of revenue.
Under the circumstances 'the exemption under section 125(B) is withdrawn and the assessment of income is cancelled for de novo proceedings. As a consequence demand under section 54 at Rs.40,62,310 on declared income of Rs.78,12,184 will become collectable forthwith. "
We are not impressed with the contention, because the powers vested in I.A.C. under section 66-A are sufficiently wide, so as to empower him to modify, enhance or cancel the assessment and direct fresh assessment to be made. Subsection (1) of section 66-A reads as follows:
"66-A. Powers of Inspecting Additional Commissioner to revise Deputy Commissioner's order.---(1) The Inspecting Additional Commissioner may call for and examine the record of any proceedings under this Ordinance, and if he considers that any order passed therein by the Deputy Commissioner is erroneous in so far as it is prejudicial to the interests of revenue, he may, after giving the assessee an opportunity of being heard and after making, or causing to be made, such enquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment to be made."
A perusal of the above subsection shows that the Legislature has conferred powers on I.A.C. to modify as well as cancel the assessment order with a direction for fresh assessment. When we examine the impugned direction of learned I.A.C. we find that he has modified the finding of Assessing Officer whereby exemption was allowed under clause 125(B) of the Second Schedule to the Income Tax Ordinance, 1979 and as a result of modification the assessment order was required to be cancelled for the reason that a regular assessment was to be necessarily made after proper security and as such fresh assessment order was incumbent. In the facts and circumstances of the call the impugned direction of learned I.A.C. does not contravene any provision of law and is not beyond the jurisdiction vested in him under section 66-A.
The appeals stand dismissed accordingly.
M.B:A./525/Trib.Appeals dismissed.