Income Tax Ordinance (XXXI of 1979)---

----S.66-A---Powers of Inspecting Additional Commissioner to revise Deputy Commissioner's Order---Scope---Assessment order was revised by Inspecting Additional Commissioner which merged, with the order of Inspecting Additional Commissioner---Successor of Inspecting Additional Commissioner found that there were more errors in the assessment order and directed for cancellation of the assessment---Validity---Order of the Assessing Officer was modified and re-assessment was made by Inspecting Additional Commissioner exercising jurisdiction under 5.66-A, Income Tax Ordinance, 1979.---Order of successor Inspecting Additional Commissioner being illegal and beyond jurisdiction, order of his predecessor was restored by the Tribunal.

Asif Aziz Banth for Appellant.

Mrs. Talat Altaf, D.R. for Respondent'.

Date of hearing: 30th April, 1999.

ORDER

KHAWAJA FAROOQ SAEED (JUDICIAL MEMBER).---In this assessee's appeal, cancellation of the assessment order by the IAC under section 66-A is challenged.

2. The brief facts in this case are that the assessee filed Income 'Tax Return declaring loss of Rs.65,66,978, which was assessed by the I.T.O. Range-III, Coys. Zone-2, Lahore. The I.A.C. mondified the same. He found that while making assessment the expenses attributable to the income under section 80 have not been properly proportioned. The same were calculated by him at Rs.2,38,505 and the loss was reduced to Rs.7,17,797.

3. The learned A.R. while explaining these facts remarked that the earlier order have fully merged with the I.A.C.'s order to which assessee had not objected. The learned IAC Range-II, Coys., Zone-2, Lahore again inspected the record of the assessee and alleged that there were some more errors in the order and directed for cancellation of the assessment which is now impugned before us.

4. The learned A.R. of the assessee after bringing the above facts before us argued that all the observations of learned IAC were factually incorrect as in subsequent years the assessment has been framed in the same manner on the basis of which the learned IAC has cancelled the assessment order. It was also argued that the assessment order having merged with the order with the order of IAC, the assessment order was not in existence and the learned revising authority had become functus officio. Section 66-A gives power to IAC to revise the order of his subordinate officer, the Deputy Commissioner, and not of an officer of equal jurisdiction. The language of section 66-A clearly speaks of modification, cancellation of an order of the D.C.I.T: only. In present case the predecessor of the learned IAC after full application of his mind had recalculated the income of the assessee and the order in picture being of his predecessor the exercise of revisional jurisdiction against him is illegal. He, therefore, urged cancellation of the order impugned before us.

5. The learned D.R supported the order of the I.A.C. with full vehemence. The order was also supported by the author of the order who was present to the Court to defend the same. He said that the order of the I.T.O. was modified only to the extent of error found by his predecessor. Rest of the order in his opinion was intact, hence he claimed to have exercised his ,jurisdiction properly.

6. We have given our earnest consideration to the argument of the rivals before us. The earlier order by the I.A.C. did not restrict itself up to cancellation of the I.T.O.'s order. The same was modified and reassessed by him exercising his jurisdiction under section 66-A. On one hand he cancelled the order of the I.T.O. by pointing out an error and on the other hand refrained formal order in which the income was revised. This is a full-fledged assessment order which the learned I.A.C. framed exercising his power of modification of the income. The result of the same was, that the order of the I.T.O. merged into the order of IAC as a whole. The argument of the IAC, author of the judgment could be valid only if his predecessor had opted to cancel the order to the extent of the error he found and sent the case back to I.T.O. for modification. In view, thereof, we consider the present order to be illegal beyond the jurisdiction of the I.A.C. The cancellation by the learned I.A.C. is hereby disapproved. As a result the earlier order of the learned I.A.C. shall hold the field. Order accordingly.

C.M.A./106/Tax(Trib.)???????????????????????????????????????????????????????????? Order accordingly.