M. A. NASEER VS MEMBER (JUDICIAL INCOME-TAX), CENTRAL BOARD OF REVENUE, ISLAMABAD, 2000 PTD-LAHORE-HIGH-COURT-LAHORE 860 (1999)

Income Tax Ordinance (XXXI of 1979)---

----Ss.156 & 136---Constitution of Pakistan (1973), Art. 199---Constitutional petition---Rectification of mistake---Application under S.156, Income Tax Ordinance, 1979 for rectification of mistakes in order passed by the Member (Judicial Income-tax), Central Board of Revenue in a revision petition was dismissed ---Assessee/petitioner challenged such dismissal in Constitutional petition on the ground that said order was not a speaking order as it did not contain any reason for dismissal and opportunity of hearing was also not provided---Department contended that Constitutional petition was not maintainable as the petitioner/assessee was required to file a Reference under S.136 of Income Tax Ordinance, 1979 against the order or in the alternative he could file an appeal under S. 129 of Income Tax Ordinance , 1979 and since the order passed by the Member (Judicial Income-tax) was maintained, there was no need of affording an opportunity of being heard-- Validity---Section 156 of Income Tax Ordinance, 1979 did not lay down that if the assessment was to be maintained then it was not incumbent upon the Authorities to provide an opportunity of being heard ---Assessee/petitioner had to be given an opportunity of being heard---Contention of department that reference under S.136 of Income Tax. Ordinance, 1979 should have been filed or an appeal under S.129 of Income Tax Ordinance, 1979 could be filed, had no force as Reference under 5.136 could only be filed against order under S.135 and appeal under 5.129 could be filed if the impugned order had been passed by the Assessing Officer---Order passed under S.156 of Income Tax Ordinance, 1979 by the Member (Judicial Income-tax) was set aside and matter was remanded by the High Court with the direction to afford an opportunity of hearing to the assessee/petitioner and then dispose of application made under S.156 of Income Tax Ordinance, 1979.

Muhammad Ali Hasnain for Petitioner.

Khalil ur Rehman Abbasi on behalf of Mansoor Ahmad, Dy. A.-G. for Respondent.

Date of hearing: 29th September, 1999.

JUDGMENT

Instant writ petition under Article 199 of the Constitution of Islamic Republic of Pakistan, 1973 has been filed for seeking declaration to the effect that orders dated 31-8-1998 and 2-1-1999 are null and void.

2 Briefly stated the facts are that the petitioner is General Medical Practitioner and derives income from property. He filed his Income Tax Return for Assessment Year 1993-94 under Self-Assessment Scheme showing his net income at Rs.28,316 which was not accepted and he was assessed at Rs.1,63,425 vide order, dated 23-5-1996 passed by' Special Officer Income/Wealth Tax. He filed an appeal and the Appellate Commissioner reduced the said amount of Rs.1,63,425 to Rs.1,38,423 vide order, dated 12-3-1997. He felt aggrieved and filed a Revision Petition before Judicial Member, Board of Revenue/respondent who decided the same vide order, dated 18-1-1997 and assessed him at Rs.68,420. Similarly, the petitioner also filed three consecutive Income Tax Returns for the Assessment years 1994-95, 1995-96 declaring his income at Rs.30,840, 4,031 and 36,300. The said Returns were not accepted by Assistant Commissioner Income Tax vide order, dated 27-2-1997 and 12-1-1998. He then filed appeals against the said orders before the Appellate Commissioner who partially accepted his appeal vide order, dated 9-6-1998. Having dissatisfied with the said order dated 9-6-1998, he filed a Revision Petition before the Member (Judicial Income Tax), Central Board of Revenue who disposed of the same vide order dated 31-8-1998 and maintained the assessment to the extent of 1994-95 but reduced the same to the extent of 1995-96 and 1996-97. The petitioner then again challenged the order, dated 31-8-1998 before Member (Judicial Income Tax), Central Board of Revenue, Islamabad under section 156 of the Income Tax Ordinance and the same was dismissed vide order, dated 2-1-1999. Hence the instant writ petition.

3. Arguments have been heard and record perused.

4. Contention of learned counsel for the petitioner is that order, dated 2-1-1999 passed under section 156 of the Income Tax Ordinance, 1979 has not been passed keeping in view the dictum laid down by the Superior Court whereby it has been specifically laid down that every order should be a speaking order containing reasons in favour or against thereof. His contention is that order, dated 2-1-1999 whereby the rectification application has been dismissed is a non-speaking order as it does not contain any reason of rejection of his petition. He submitted that the said order be set aside and the matter be .remanded with a direction to dispose of his application under section 156 of the Income Tax Ordinance, 1979 after affording him an opportunity of being heard.

5. Conversely, learned counsel for the respondent contends that the instant writ petition is not maintainable and the only remedy available to the petitioner was to file a Reference under section 136 of the Income Tax Ordinance, 1979 or in the alternative he could file an appeal under section 129 of the Income Tax Ordinance, 1979. He further contends that as the order, dated 31-8-1998 has been maintained by the respondent, so there was no need of affording an opportunity of being heard to the petitioner, as provided by section 156(2) of the Income Tax Ordinance, 1979. He, thus, submitted that writ petition is devoid of any force and the same be dismissed.

6. The grievance of the petitioner is that respondent has disposed of his Rectification Application moved under section 156 of the Income Tax Ordinance, 1979 without affording him an opportunity of being heard. His contention is that had he been heard, he might have convinced the respondent to reduce the assessment pertaining to the years 1994-95, 1995-96 and 1996-97. The stand of the petitioner is not devoid of force. A perusal of record reveals that petitioner declared his income for the years 1993-94 al Rs.28,316 which was increased by the Special Officer to Rs.1,63,425. On appeal the same was reduced to Rs.1,38,423. That, by filing revision, the same was reduced to Rs.68,420 vide order, dated 18-1-1997. However, the assessment made for the years 1994-95, 1995-96 and 1996-97 reveals that his stand taken up before the Member (Judicial Income Tax) of the Central Board of Revenue and accepted by him vide order, dated 18-1-1997 was not taken into consideration/accepted while passing orders, dated 31-8-1998 and 2-1-1999. Had the petitioner been given an opportunity of being heard by the respondent, he could bring `all these facts to his notice. Admittedly, Rectification Petition is moved under section 156 of the Income Tax Ordinance, 1979, which reads as follows:

"Rectification of -mistakes.-(1) Any Income-tax Authority or the Appellate Tribunal may amend any order passed by it to rectify any mistake apparent from the record on its own motion or on such mistake being brought to its notice by any other Income-tax Authority or by the assessee.

(2) No order under subsection (1), which has the effect of enhancing an assessment or reducing a refund or otherwise increasing the liability of the assessee, shall be made unless the parties affected thereby have been given a reasonable opportunity of being heard.

(3) Where any such mistake is brought to the notice of any Income-tax Authority by the assessee and no order under subsection (1) is made by such Authority before the expiration of the financial year next following the date in which it was so brought to its notice, the mistake shall be deemed to have been rectified and all the provisions of this Ordinance shall have effect accordingly.

(4) No order under subsection (1) shall be trade after the expiration offour years from the date of order sought to be amended."

7. A perusal of subsection (2) of section 156 (ibid) reveals that no order under section 156(1) which has the effect of increasing or reducing or otherwise increasing the liability of the assessee can be passed unless the parties affected thereby have been given a reasonable opportunity of being heard. It does not mean that if the assessment is to be maintained then it was not incumbent upon the respondent to provide an opportunity of being heard. What section 156(2) (ibid) lays down is that in case assessment is to be varied, then the affected party shall be given an opportunity. However, it does not preclude the concerned authority to afford an opportunity of being heard, if the facts of a case so require. In the instant case, had the respondent been afforded an opportunity, he could explain to the respondent that he had been assessed considering his fee per patient at Rs.20 and similarly number of patients has been fixed at 20 per day. The stand of learned counsel for the respondent that Reference under section 136 of the Income Tax Ordinance should have been filed or an appeal under section 129 of the Ordinance could be filed, has no force as Reference under section 136(ibid) can only be filed against order under section 135 of the Ordinance. In the instant case, order passed under section 138 of the Ordinance has been challenged. Similarly appeal under section 129 of the Ordinance could be filed if the, impugned order had been passed by the Income Tax Officer.

8. In the light of facts stated above, it is in the interest of justice that order, dated 2-1-1999 be set aside and the matter be remanded to the Member (Judicial Income Tax) of the Central Board of Revenue, Islamabad. Accordingly, writ petition is accepted and the impugned order, dated 2-1-1999 is set aside. The matter is remanded to the respondent/Member (Judicial Income Tax) of the Central Board of Revenue, Islamabad with a direction to afford an. opportunity of hearing to the assessee/petitioner and then to dispose of petition made under section 156 of the Income Tax Ordinance, 1979.

C.M.A./M.A.K./M-6/LOrder accordingly.