M. A. (REST.) NO. 02/KB OF 2000-2001 VS M. A. (REST.) NO. 02/KB OF 2000-2001
2001 P T D (Trib.) 2946
[Income-tax Appellate Tribunal Pakistan]
Before Muhammad Mujibullah Siddiqui, Chairman,
S. Hasan Imam, Judicial Member and Shahid Jamal, Accountant Member
M.A. (Rect) No.02/KB of 2000-2001, decided on 11/09/2000.
(a) Income Tax Ordinance (XXXI of 1979)---
----Ss. 59(1), 80-B, 80-C & 80-CC---Self-Assessment Scheme---Presumptive income for purpose of comparison---Assessment year 1997-98---When Self -Assessment Scheme was introduced, it contained the provisions relating to the presumptive income to be included for purpose of comparison of income whereas Self-Assessment Scheme for the assessment year 1997-98 did not carry any such provision, excluding presumptive income, as such there was no bar to consider presumptive income for the purpose of comparison-- When no presumptive provision was given in the original Self-Assessment Scheme, any subsequent clarification of the Central Board of Revenue might not be taken into consideration being extraneous---Clarification or interpretation issued by the Central Board of Revenue being expressly contrary to the Self-Assessment Scheme could not override the Scheme itself.
(b) Income Tax Ordinance (XXXI of 1979)---
----Ss. 156 & 59(1)---Rectification of mistake---Self-Assessment Scheme 1997-98--- Application for rectification of Tribunal's judgment in I.T.A. No.683/KB of 1998-99, dated 25-3-1999 in which Tribunal held that presumptive tax under S.80-C will be taken for the purpose of comparison in respect of Self-Assessment Scheme for the year 1997-98, on the basis of another Tribunal's judgment in I.T.A. No.257/KB of 1998-99 in which the same issue was decided contradictory to its own earlier decision ---Validity-- Assessee's case qualified under Self-Assessment Scheme---Judgment in I.T.A. No.683/KB of 1998-99, dated 25-3-1999 contained correct exposition of law as compared to the order, dated 31-3-1999 in I.T.A. No.257/KB of 1998-99---No room was left for rectification---Judgment referred for rectification having not been overruled by any subsequent Larger Bench of the Tribunal or superior Court, the same was a binding judgment---Issue involved had rightly been decided in I.T.A. No. 683 of 1998-99, dated 25-3-1999--Judgment bearing I.T.A. No.257/KB of 1998-99 was overruled- [Messrs A.G. Meraj & Co.'s case I.T.A. No.257/KB of 1998-99 overruled].
I.T.A. No.683/KB of 1998-99 confirmed.
Messrs A.G. Meraj & Co.'s case I.T.A. No.257/KB of 1998-99 overruled.
1993 PTD (Trib.) 1196 rel.
Javed Zakaria for Appellant.
Khalid Siddiqui, D.R. for Respondent.
Date of hearing: 26th August, 2000.
ORDER
S. HASAN IMAM (JUDICIAL MEMBER).---By this order we intend to dispose of application under section 156 of the Income Tax Ordinance, 1979 filed by the Deputy Commissioner of Income Tax, Circle-19, Zone 'B'.. Karachi, praying therein that this Tribunal may rectify its order in its No.683/KB of 1998-99 for the assessment year 1997-98 disposed of on 25-3-1999 or in the alternate a Larger Bench may be constituted in order to settle the issue involved.
2. The facts leading to application under section 156 are that vide order, dated 25-3-1999 passed in ITA No.683/KB of 1998-99 for the assessment year 1997-98, a Division Bench of this Tribunal held that presumptive tax under section 80-C will be taken for the purpose of comparison in respect of Self-Assessment Scheme for the year 1997-98. However, in appeal bearing No. 257/KB of 1998-99 vide order, dated 31-3-1999 in case of M/s. A.G. Meraj & Company on the similar issue, the same Bench gave decision contradictory toy its own earlier decision.
3. The department in view of contradictory judgments and on the basis of judgment in ITA No.257/KB of 1998-99 decided in favour of the department, prayed for rectification of the earlier order and further requested that in the alternate, a larger Bench may be constituted to decide the controversy.
4. We have heard the learned D.R. and learned counsel appearing on behalf of the assessee/respondent.
5. The learned D.R. argued that Self-Assessment Scheme extends to return filed under section 55 of the Income Tax Ordinance and presumptive income under sections 80-C and 80CC is not to be returned in return of income under section 55, rather it is to be returned in statement under section 143-B of the Income Tax Ordinance, 1979. It is added that the presumptive income is totally excluded from the purview of Self-Assessment, hence taxes deducted at source under section 50(4) pertaining to section 80C should not be included for the purpose of comparison. The learned D.R. stressed that presumptive income is at par with other deemed income under various deeming sections of the Income Tax Ordinance, as such the presumptive income wherein total receipts are deemed as income is totally different from other deeming income, such as income under section 13 or 12. It is further argued that being separate mechanism for reporting and acceptance of presumptive income and for the reason that this income is not liable to be assessed by Assessing Officer, it would be improper to consider the tax paid under presumptive tax regime for the purpose of comparison under simplified Self-Assessment Scheme.
6. The learned counsel representing the assessee on the other hand argued that application under section 156 is not attracted as there appears no mistake floating on the surface of record which may come within the ambit of rectification and a different legal interpretation cannot be called a mistake floating on surface of record. On facts, ' he referred the Self-Assessment Scheme pertaining to assessment years 1996-97 and 1997-98 and while referring clause (g) of para 7 of Circular No.4 of 1996, relevant to assessment year 1996-97, he argued that under the said Scheme, it was clearly provided that income Under section 80-B of the Income Tax Ordinance shall not be considered for the purposes of comparison of Income but this provision of law, was omitted from the Self-Assessment Scheme vide Circular No.5 of 1997 which reads as wider:---
"For the purposes of comparison, the income to which section 80-D of the Income Tax Ordinance, 1979 applies, shall not be taken into account".
In the circumstances, it is stressed that since the relevant clause has been omitted from the Self-Assessment Scheme of 1997-98, hence such income is liable to be considered while making the comparison of incomes and because of same analogy the income under sections 80-C & 80-B was not to be considered during the assessment year 1996-97 and is liable to be considered for the assessment year 1997-98.
7. The learned counsel referring to the history of relevant provision in respect of presumptive income for the purpose of Self-Assessment referred to the Self-Assessment Scheme of assessment year 1994-95 issued vide Circular No.9 of 1994 where E(ii) of para 1 of the said Circular provides:--
"Where the total income of a taxpayer includes income which is subject to presumptive tax, such income and in case of deemed income under sections 80-C and 80-CC, imputable income worked out in accordance with the said Sections shall be taken into account for all purposes of the Self-Assessment Scheme, including comparison of the income declared or assessed:
Provided that for purposes of sub-paragraph (b) of this paragraph such income shall not be included."
8. More or less similar, but less specific provision was contained in Clause (g) of para 10 of Circular No.5 of 1995 relevant to assessment year 1995-96:--
"Clause (g)
For purposes of comparison, the income to which section 80-B of the Income-tax Ordinance, 1979, applies, shall not be taken into account. " Perusal of the above referred provision of law and Circular No.4 of 1996 relevant to assessment year 1996-97, reveals that for the assessment year 1997-98, omission of above referred provision amounts to include presumptive income for the purpose of comparison of the income and due to omission of the provision in the original Scheme subsequent interpretation by C.B.R. has also no legal effect. Mr. Javed Zakariya also referred to a decision of this Tribunal reported as (1993) 67 Tax P. 199 (Trib.) wherein it was observed by this Tribunal that since no provision was contained in the original Self-Assessment Scheme, any subsequent clarification issued by the C.B.R. was extraneous and was incomputable with the said Scheme.
9. We have considered the arguments of learned representatives of the two parties. We find that since very start when Self-Assessment Scheme was introduced by the C.B.R., it was containing the provisions relating to presumptive income to be included for the purposes of comparison of income, such provision was contained in Circular No. 24 of 1991 vide para. 3(A) & (B). In para 4 of the Circular issued during the year 1994-95, it remained as it is during the assessment years 1995-96 and 1996-97 whereas Circular No.5 of 1997 for the assessment year 1997-98 does not carry any such provision, excluding presumptive income, as such there is no bar to' consider presumptive income for the purpose of comparison. Besides when no such provision was contained in the original Self-Assessment Scheme, any subsequent clarification of the C.B.R. may also not be taken into consideration being extraneous and a letter, addressed to any private party cannot be given treatment of a Circular, instruction or order. It cannot override the provision of law and shall not be applicable to the parties not concerned with the matter. We, therefore, find that the clarification or interpretation issued by the C.B.R. is expressly contrary to the Self -Assessment Scheme and cannot override the Scheme itself.
10. In the circumstances supra, we hold that not only assessee's case qualifies under Self-Assessment Scheme, but judgment in ITA No.683/KB of 1998-99, dated 25-3-1999 contains correct exposition of law as compared to the order, dated, 31-3-1999, m ITA No.257/KB of 1998-99. Thus, there is no room for rectification. Besides the judgment referred for rectification is earlier one and has not been overruled by any subsequent larger Bench of this Tribunal or Superior Court, hence same may be taken up as binding judgment.
In the circumstances, we find that the issue involved has rightly been decided in ITA No.683/KB of 1998-99, dated 25-3-1999. The ratio of judgment in appeal bearing ITA No.257/KB of 1998-99, dated 31-3-1999 stands overruled.
C.M.A./M.A.K./113/Tax(Trib.)Application disposed of accordingly.