Income Tax Ordinance (XXXI of 1979)---

----S.85(2), proviso [as originally incorporated]---Constitution of Pakistan (1973), Art.199---Constitutional petition---Appeal against assessment filed before amendment was incorporated in S.85(2), Income Tax Ordinance, 1979, which provided that on filing of appeal, amount payable as specified in notice would be deemed to have been stayed till decision of appeal-- Authority did not proceed against petitioner nor demanded payment of specified amount---Authority; however, demanded payment of specified amount in its notice of subsequent date, for which there was no legal justification---Subsequent amendment in S.85(2), Income Tax Ordinance, 1979 requiring payment of specified per cent of amount payable was not attracted to facts of case for said amendment was not given retrospective effect---Petitioner was entitled to benefit of S.85(2), Income Tax Ordinance, 1979 as originally inserted which did not require deposit of any part of amount in issue and provided for automatic stay of recovery of such amount during pendency of appeal---Notice as also subsequent order of attachment and appointment of Receiver being unwarranted, untenable and unlawful, could not sustain---Impugned notice, order of attachment and appointment of Receiver were, thus, declared to be without lawful authority and were set aside---Authority was, however, directed to finally dispose of pending appeals of petitioner within one month in accordance with law

Sajid Mehmood Sheikh vice Syed Mansoor Ali Shah for Petitioner.

Muhammad Ilyas Khan for Respondent No. 1.

Date of hearing: 28th April, 1998.

JUDGMENT

The petitioner in this constitutional petition, has challenged the demand notice, dated 29-12-1997, as well as orders of attachment and appointment of receiver, dated 16-4-1998, issued by respondent No. 1.

2. The petitioner, being aggrieved by assessment order, dated 22-6-1993, has filed an appeal before the Income Tax Commissioner, which is pending. Another order under section 111 of the Income Tax Ordinance was passed on 12-10-1993, which has also been challenged in appeal and the said appeal is admittedly pending. Previously, the appeals were filed before the Commissioner Income Tax (Appeals) Karachi, which are presently, stated to have been transferred to Lahore and are being heard by Mr. Mukhtar Gondal Commissioner (Appeals) Lahore.

3. Notwithstanding the pendency of the appeal, respondent No. 1 issued notice of demand under section 93(2) of the Ordinance for the assessment year 1990-91, demanding deposit of 15% of the penalty imposed. The petitioner, apprised respondent No.l, vide its reply, dated 3-1-1998, that the appeal being pending, and under the law, applicable to the appeals of the petitioner, the amount would not be payable and would be deemed to have been stayed.

4. The grievance of the petitioner is, that respondent No. 1, instead of appreciating the legal objection raised by the petitioner proceeded to issue order of attachment, dated 16-4-1998 and appointed respondent No.2 as receiver of the company for which he had no authority in law.

5. Admittedly, the impugned order was passed on 22-6-1993 and 12-10-1993 and appeals of the petitioner are pending since October, 1993. At the time of filing of the appeal, the proviso to section 85(2) provided as follows:---

"Provided that, where the assessee files an appeal under section 129 after the thirtieth day of June, 1991, in respect of an order relating to the sum payable as specified in the notice under subsection (1) the payment of the said sum shall be deemed to have been stayed till the decision in appeal under the said section."

This proviso was added by Finance Act, 1991.

6. Later amendment was made by Finance Act, 1994, in the proviso to section 85 subsection (2), whereby, 85 % of the amount payable was deemed to have been stayed while the assessee was liable to pay 15 % of the amount. Another amendment was made by Finance Act of 1996 whereby proviso to section 85 was omitted.

7. Admittedly, the appeal was filed, at the time when proviso to section 85(2) of the Ordinance as originally incorporated was in vogue, which provided, that on filing of appeal, the sum payable, as specified in notice would be deemed to have been stayed till the decision of appeal. It was for this reason, that respondent No. 1 did not earlier proceed against the petitioner nor demanded payment of 15 %. Amazingly, the respondent raised this demand of 15% payment, in his notice, dated 29-12-1997, for which, there was no legal justification. The amendment, requiring 15 % payment was not attracted to the facts of the case as the said amendment was not given retrospective effect. The petitioner was entitled to the benefit of the proviso as originally inserted which did not require deposit of any part of the amount in issue and provided for the automatic stay of recovery of the amount in issue during the pendency in appeal. In view of the matter, the notice as well as the subsequent order of attachment and appointment of receiver being unwarranted, untenable and unlawful, cannot sustain.

8. The learned Legal Advisor of the respondent submitted, that some direction should be issued for early disposal of the appeal, so that, the issue be resolved during current financial year. The request appears to be reasonable.

9. Accordingly, this petition is allowed, the impugned notice and the order of attachment and appointment of receiver are declared to be without lawful authority and are accordingly set aside.

10. It is, however, directed, that Mr. Mukhtar Gondal, Commissioner Income Tax (Appeals), who is stated to be seized of the appeals, shall finally disposed of the pending appeals of the petitioner within one month, in accordance with law and after hearing the parties.

A.A./A-312/L Order accordingly