COMMISSIONER OF INCOME-TAX VS DURATHENE MANUFACTURERS
2001 P T D 1002
[Karachi High Court]
Before S. Ahmed Sarwana and Muhammad Mujeebullah Siddiqui, JJ
THE COMMISSIONER OF INCOME‑TAX
Versus
Messrs DURATHENE MANUFACTURERS
LT.A. No. 244 of 1997, decided on 01/02/2001.
(a) Income Tax Ordinance (XXXI of 1979)‑‑‑
Ss. 131, 148 & 158‑‑Qanun‑e‑Shahadat (10 of 1984), Arts. 129, illus. (e) & 1(2)‑‑‑Appeal to Appellate Additional Commissioner‑‑‑Affidavit filed by the assessee assailing the consent assessment‑‑‑Procedure to be followed by Appellate Additional Commissioner‑‑‑‑Provision of S.131, Income Tax Ordinance, 1979 being mandatory in nature, A'.A'.C. by placing reliance on an affidavit filed by assessee assailing the correctness of , the consent assessment order, without seeking comments from the Assessing Officer fell in serious error and committed an illegality patent on the face of it‑‑ Principles.
The A.A.C. in the present case should have issued notice to the Assessing Officer under section 131 of the Income ‑Tax Ordinance. The provision contained in section 131 is mandatory in nature. It is provided that the Appellate Additional Commissioner shall give notice of the day fixed for the hearing of the appeal to the appellant and to the Deputy Commissioner against whose order the appeal is preferred. It is provided in section 131(3) of Income Tax Ordinance that the Appellate Additional Commissioner may, before disposing of any appeal, call for such particulars as he may require respecting the matters arising in .the appeal or cause further inquiry to be made by the Deputy Commissioner. Thus, when an affidavit was filed by the assessee, assailing the consent assessment order, the A.A.C. ought to have called for at least the comments of the Assessing Officer, which was not done. If the A.A.C. intended to place reliance on the affidavit of assessee assailing the consent order, a copy of the affidavit was required to be sent to the Assessing Officer even if there is no specific provision in this behalf in the law, by adhering to the general principle of law that nobody is to be condemned unheard. Copy of the affidavit filed by the assessee before the A.A.C. in the present case was never sent to the Assessing Officer and therefore, without affording opportunity to the Assessing Officer, no reliance could be placed on the affidavit, particularly when‑ a quasi judicial order was assailed to which presumption of correctness is attached under Article 129, illustration (e) of the Qanun‑e‑Shahadat Order 1984, which provides that judicial and official acts shall be presumed to have been regularly performed. The Evidence Act, 1872 was not applicable to the income‑tax proceedings; however, the Qanun‑e‑Shahadat Order, 1984 is applicable to the income‑tax proceedings. It is provided in Article 1(2) of the Qanun‑e‑Shahadat Order, 1984 that it applies to all judicial proceedings in or before any Court, including a Court Martial, a Tribunal or other authority exercising judicial or quasi‑judicial powers or jurisdiction, but does not apply to proceedings before an arbitrator. The proceedings under the Income Tax Ordinance are quasi‑judicial in nature. Under section 148 of the Income Tax Ordinance, 1979, "the Deputy Commissioner, the Inspecting Additional Commissioner, the Appellate Additional Commissioner, the Commissioner and any other officer under the administrative control of the Central Board of Revenue authorised by it in this behalf, and the Appellate Tribunal, for the purposes of the Ordinance, have the same powers as are vested in a Court under the Code of Civil Procedure, 1908 when trying a suit for the following matters namely‑‑‑
(a) enforcing the attendance of any person and examining him on oath or affirmation;
(b) compelling the production of any accounts or documents;
(c) receiving evidence on affidavit; and
(d) issuing commissions for the examination of witnesses.
It is provided in section 158 of the Income Tax Ordinance that any proceeding under the Income Tax Ordinance before Deputy Commissioner, Commissioner or the Appellate Tribunal shall be deemed to be judicial proceedings within the meaning of sections 193 and 228 and for the purposes of section 196 of the Pakistan Penal Code.
Thus, the A.A.C. by placing reliance on an affidavit filed by the assessee at the first appellate stage assailing the correctness of the consent assessment order, without seeking comments from the Assessing Officer fell in serious error and committed an illegality patent on the face of it.
(b) Income Tax Ordinance (XXXI of 1979)‑‑‑
‑‑‑‑S.131‑‑‑Provisions of 5.131, Income Tax Ordinance, 1979 are mandatory in nature.
(c) Income Tax Ordinance (XXXI of 1979)
‑‑‑‑S.158‑‑‑Proceedings under Income Tax Ordinance, 1979 to be judicial proceedings‑‑-Principles.
(d) Income Tax Ordinance (XXXI of 1979)‑‑‑
‑‑‑‑S.131‑‑‑Qanun‑e‑Shahadat (10 of 1984), Arts. 129, illus. (e) & 1(2)‑‑ Appeal to Appellate Additional Commissioner‑‑‑Affidavit filed by the assessee assailing the consent assessment‑‑‑Procedure‑‑‑Quasi‑judicial order by the Deputy Commissioner of Income‑tax having been assailed, presumption of correctness was attached to it under Art. 129, illus. (e) of Qanun‑e‑Shahadat, 1984.
(e) Income Tax Ordinance (XXXI of 1979)‑‑‑
‑‑‑‑Preamble‑‑‑Proceedings under the Income Tax Ordinance, 1979‑‑Nature‑ Proceedings under the Ordinance arc quasi‑judicial in nature but they are not adversarial in character.
(f) Income Tax Ordinance (XXXI of 1979)‑‑‑
‑‑‑‑S.131‑‑‑Appeal to Appellate Additional Commissioner‑‑‑Allegation by assessee that there had been an interpolation after the conclusion of consent assessment proceedings at the departmental level‑‑‑Statement tiled by the Assessing Officer on solemn affirmation but not attested by an Oath Commissioner or any other authority competent to administer oath was to be treated as comments and had to be considered for the purpose of deciding the plea taken by the assessee at the first appellate stage that there was some interpolation after the conclusion of agreement between the assessee and the Assessing Officer‑‑‑Principles‑‑‑Order sheet on which the agreement of the assessee had been recorded and which bore the signature of the Assessing Officer and the assessee and which was not denied by the assessee in the affidavit filed before the A.A.C. and contained the approval and signature of the I.A.C. as well, showed that there was no interpolation or insertion of anything subsequent to the agreement‑‑‑Income‑tax Appellate Tribunal, held, was not justified in not examining the facts available on record and dismissing the appeal at the instance of department without any justification in law.
In the present, case the affidavit filed by the assessee at the first appellate stage was never supplied to the Assessing Officer, for filing a counter‑affidavit, and even if the affidavit filed by the Assessing Officer was not attested, the plea of the department contained in the grounds Oil' appeal that the assessment was framed in agreement with the assessee in presence of IAC and that the assessee had himself put his assent and signature on the order, could not be ignored and brushed aside. The proceedings under the Income Tax Ordinance, 1979 before the Assessing Officer are quasi‑judicial in nature and the Assessing Officer while conducting the assessment proceedings perform a quasi‑judicial function, therefore, there was no question of tiling any counter‑affidavit by the Assessing Officer. If anything is alleged by any person in respect of any act done in performance of the judicial or quasi‑judicial function, the judicial or quasi‑judicial officer is not required to swear an affidavit but the comments filed by the said judicial or quasi judicial officer are sufficient. The Assessing Officer cannot be equated with a party to the proceedings in adversarial system of adjudication. The proceedings under the Income Tax Ordinance are undoubtedly quasi judicial in nature but at the same time they are not adversarial in nature. They are inquisitorial in nature. The. Assessing Officer acts in dual capacity i.e., investigating the truth or falsehood of the version of an assessee and in doing so confronts the assessee with the material available with him having the effect of creating new demands or enhancing the liability of an assessee. In doing so the burden lies on him to establish the facts resulting in enhancement of liability of an assessee. During the proceedings he records evidence and performs other functions as a quasi‑judicial officer. On conclusion of the proceedings he records an assessment order which is purely a quasi judicial function. Thus, an Assessing Officer while acting in performance of his functions under the Income Tax Ordinance, acts in different capacities and combining of different capacities in the Assessing Officer is an attribute of inquisitorial system of the administration of justice. The result is that the statement filed by the Assessing Officer which is on solemn affirmation but is not attested by an Oath Commissioner or any other authority competent to administer oath is to be treated as comments and has to be considered for the purpose of deciding the plea taken by the assessee at the first appellate stage that there was some interpolation after the conclusion of agreement between the assessee and the Assessing Officer. Perusal of the order‑sheet on which the agreement of the assessee has been recorded and which bears the signature of the Assessing Officer and the assessee, which is not denied in the affidavit of the assessee, filed before the AAC and contains the approval and signature of IAC as well, shows that there is no question of any interpolation or insertion of anything subsequent to the agreement. Thus, the Tribunal was not justified in not examining the facts available on record and dismissing the appeal at the instance of department without any justification in law. .
The A.A. C. and the ITAT acted in flagrant violation of the law and fell in serious error. The findings were held to be perverse, illegal and not sustainable in law which were vacated and consent order made by the Assessing Officer was held to be binding on the assessee, as no material had been brought on record to controvert or dislodge the presumption of truth attached to the official act. The assessment order stood restored accordingly.
(1974) 94 ITR 1; (1978) 114 ITR 19; 1988 PCr.LJ 2347; AIR 1952 Cal. 255 and 1981 SCMR 364 ref.
(g) Income Tax Ordinance (XXXI of 1979)‑‑‑
‑‑‑‑Ss. 2(17A) & 4‑‑‑Assessing Officer‑‑‑Nature of functions stated.
The Assessing Officer cannot be equated with a party to, the proceedings in adversarial system of adjudication. The proceedings under the Income Tax Ordinance are undoubtedly quasi‑judicial in nature but at the same time they are not adversarial in nature. They are inquisitorial in nature. The Assessing Officer acts in dual capacity i.e., investigating the truth or falsehood of the version of an assessee and in doing so confronts the assessee with the material available with him having the effect of creating new demands or enhancing the liability of an assessee. In doing so the burden lies on him to establish the facts resulting in enhancement of liability of an assessee. During the proceedings he records evidence and performs other functions as a quasi‑judicial officer. On conclusion of the proceedings he records an assessment order which is purely a quasi judicial function. Thus, an Assessing Officer while acting in performance of his functions under the Income Tax Ordinance, acts in different capacities and combining of different capacities in the Assessing Officer is an attribute of inquisitorial system of the administration of justice.
Nasrullah Awan for Appellant.
Muhammad Farogh Naseem for Respondent.
Date of hearing: 6th December, 2000.
JUDGMENT
MUHAMMAD MUJEEBULLAH SIDDIQUI, J.‑‑‑This Appeal under section 136(1) of the Income Tax Ordinance, 1979 is directed against the order, dated 27‑10‑1996 passed by the Income‑tax Appellate Tribunal (headquarters) Karachi in I.T.A. No. 276/HQ of 1987‑88 (Assessment Year 1981‑82).
2. The relevant facts are that the respondent filed Return of Total income for assessment year 1981‑82 declaring income at Rs. 29,145. The assessment was finalised under section 62 of the Income Tax Ordinance, 1979 on 26‑6‑1984 at Rs. 1,97,817 by making add backs of Rs. 1,24,948 out of the Profit and Loss expenses in agreement with the respondent/assessee vide order sheet entry dated 19‑6‑1984, which reads as under:‑‑‑
"19‑6‑1984 Commodore (Rtd.)‑Jamil, P.N., appears alongwith his accountant Mr. Abbas. He agrees to the following additions:‑‑‑
| (1)Interest of I.D.B.P. not paid96.222 (2)Interest under section 12(7)12.041 (3)Manufacturing expenses43,726 (4)Bank interest on SBA/C1,722 (5)Telephone expenses8,907 (6)Entertainment1,586 (7) Petrol expenses (8) Conveyance2,970 Total1,68,674 29,143 1,68,674 Total income1,97,817 |
I.T.O.
(Sd.)
Nadeem agreed.
(Sd.)
Assessee
Approved
I. A. C.
19‑6‑1984
3. Respondent preferred 1st Appeal before the learned AAC of Income‑tax 'E' Range Karachi, contending that there was no agreement between the respondent and the Income‑tax Officer by. which the respondent/assessee had agreed to be assessed at Rs. 1,97,870. It was further alleged that there was a calculation mistake in the order sheet entry, dated 19‑6‑1984 and the total of add backs amounted to Rs. 1,54,91 and not Rs. 1,68,674. An affidavit was also filed by the respondent, which reads as follows:
"I,. Khalid Jamil, S/o Late Mohammad Jamiluddin, Muslim Adult, retired Commodore Pakistan Navy, do hereby solemnly affirm as under:‑‑‑
(1) That I am the proprietor of M/s. Durathene Manufacturer 603, Muhammadi House, 11. Chundrigar Road,‑Karachi and am fully conversant with the facts of my case before the I.T.O.
(2) That I am assessed to Income‑tax by Income‑tax Officer, Special Circle, East Zone, Karachi.
(3) That the Income‑tax Officer while framing the assessment, has recorded a finding that I had agreed to be assessed at a total income of Rs. 1,97,870 which is not correct.
(4) That during the course of the hearing the Income‑tax Officer had said to me that he was accepting the trading version and adding only a few inadmissible expenses, I recorded no such addition to my declared return.
(5) That I also explained to him that in case there was small dispute on admissible expenses, the same could be added to my income.
(6) 'that I do not know how after the recording of the order sheet the I.T.O. has put in figure to the aforesaid agreement as stated in the assessment order. This probably is by way of interpolation or by subsequent insertion.
(7) I, therefore, dispute the addition on bank interest, huge telephone expenses, interest under section 12(7) and addition on account of manufacturing expenses repairs, arbitrary expenses on conveyance and petrol expenses:
(8) The I.T.O. could not have added also this huge income without the prior approval of the Inspecting Assistant Commissioner of Income tax. This was contrary to para 8(ii) of Board's Circular No.11 of 1981 and hence the agreement/ assessment is invalid.
(9) I also say that the demand notice was initially served on my Manager who had no authority to receive the demand notice and the same was delivered to me after two days hence I also claim that the Notice was served on me on 18‑7‑1984. Mr. Ghulam Abbas was not in my contract between 15‑7‑1984 to 18‑7‑1984 and he would be present at the time of hearing to vouchsafe the above facts.
(10) That he had delivered to me the notice of demand on or after 18‑7‑1984, the limitation therefore is to start with effect from the date on which I have been delivered the notice of demand and the information called about the arbitrary assessment order.
(11) That whatever has been stated is true and correct to the best of my knowledge and belief."
4. The learned A.A.C. accepted the contentions and observed that I. T. O. was not justified in stating that the assessment was made in agreement. The learned A.A. C. further observed as follows:
"The appellant is directly incapable to see anything due to blindness. I have obtained his handwriting and it is clearly different from the word 'agreed' written on the order sheet of the I.T.O. The I.T.O. clearly deserves explanation on this account. The gentleman is highly respectable and educated person and there is no reason if he had agreed then he should go in appeal and I hold that there was no agreement with the parties."
5. After holding as above the learned A.A.C. allowed relief to the respondent under various heads.
6.It is pertinent to note that in his grounds of appeal before the learned A.A.C., the respondent had not denied the signing of agreement on the order sheet. It was stated in grounds of Appeals Nos. 10 and 12 before the learned A. A. C., that "the Income‑tax Officer has erred in stating that the assessee had agreed to the various additions mentioned. In fact, he did not agree." h was submitted that "the liability under Income Tax Ordinance is based and is determined on the provisions of the Ordinance and not on concessions or agreements of the assessee. An agreement to an unreasonable fact or inference, in fact, is outside the scope of the Income Tax Ordinance and is a nullity in law".
7. Being aggrieved with the findings of the learned AAC, the department preferred‑ second appeal before the Income‑tax Appellate Tribunal. The following grounds were raised before the Income Tax Appellate Tribunal:
(1) That the assessment for the assessment year 1981‑82 was framed in agreement with the Assessee in the presence of the I.A.C. East Zone, Karachi, and the Assessee had himself put his assent and signature on the order sheet, dated 19‑6‑1984.
(2) That it is wrong to say that the assessee is totally blind. He has come to my office number of times and I am witness to the fact that he read the appeal‑effect order for the assessment year 1981‑82 in my presence.
(3) That it is humbly prayed that the orders of my predecessor for the aforesaid assessment year may be restored and that of the ACC, Range ' E' , Karachi, quashed.
8. The second appeal before ‑Income‑tax Appellate Tribunal being I.T.A. No. 796/HQ of 1987‑88 was heard on 23rd of October 1996 and was decided on 27‑10‑1996. A perusal of record shows that before hearing of appeal, the learned Division Bench of ITAT directed the department to file an affidavit in respect of the version of respondent pertaining to the agreement forming basis of the assessment order. The then Assessing Officer Mr. Nadeem Farooqi filed affidavit in Tribunal which reads as follows:
"I, Nadeem Ahmad Farooqi, S/o Waseem Ahmad Farooqi, presently as Inspecting Additional Commissioner of Income‑tax, Range I, Zone D, do hereby solemnly affirm as under:‑‑‑‑
(1)No comments as it is a matter of record.
(2)No comments as it is a matter of record.
(3)That the contents of paragraph 3 are vehemently denied. This fact is duly recorded in the order sheet entry, dated 19‑6‑1984.
(4)That the contents of paragraph 4 are denied. No such assurance was given by me to the assessee.
(5)That the contents of paragraph 5 need no comments.
(6)That the assessee has made wild allegation in para. 6 of the affidavit. No such entry was made in the order sheet except such entries as agreed to by the assessee himself. The order sheet entry may please be closely examined for any such possibility as has been contended by the assessee.
(7).Contents of paragraph 7 are no more relevant as the assessee himself had agreed to be assessed at a total income of Rs. 1,97,817 as is evident from the order sheet entry, dated 19‑6‑1984.
(8)That the contents of paragraph 8 are denied to the extent that the approval of the IAC was duly obtained before finalizing the assessment. This fact may please be got verified from the record.
(9)That the contents of paragraph 9 are accepted to the extent that the service on, the Manager of the assessee was a valid service in the light of the relevant provision of law as contained in section 154 of the Income Tax Ordinance 1979. That it is not the headache of the department as to when the information regarding the service of the demand notice‑was communicated by the Manager to the proprietor.
(10) That the contents of para. 10 are not relevant in the light of my deposition in para. 9 above. The demand notice was validly served upon the assessee on 15‑7‑1984 and the period of limitation i.e. 30 days for filing the appeal commenced on 16‑7‑1984, meaning thereby the assessee could file the appeal by 14‑8‑1984 before the learned A.A.C. Whereas the appeal has been filed on 16‑8‑1984 before the learned A.A.C. As such the appeal of the assessee before the learned A.A.C. was barred by time.
(11) That whatever stated above is true and correct
(Sd.)
(Nadeem Ahmad Farooqi)
Inspecting Additional Commissioner of Income‑tax."
Dated 18‑2‑1996
9. It was contended before the learned D.B. of ITAT on behalf of Revenue that the learned AAC was not justified in concluding that the agreement between the assessee and ITO was fake and bogus. It was argued that the affidavit of Assessing Officer Mr. Nadeem Ahmad Farooqi has been filed and he has confirmed making an agreement with the assessee himself. On behalf of the assessee a plea was taken that the affidavit filed by Assessing Officer is belated and has been filed apparently following a lead from the discussions held during the course of hearing of appeal. It was further contended that the affidavit has not been sworn and signed before a Court or a person authorised to take oath, therefore, the affidavit requires no consideration. Another plea was taken that the grounds of appeal agitated by the department were not in conformity with the requirement of rule 10 of Income‑tax Appellate Tribunal Rules, 1981.
10. The learned Division Bench of the Tribunal disposed of the appeal with a perfunctory and slip shod order. The findings and the operative part of the impugned order read as follows:
"We have considered the arguments of both the representatives. The learned A.R. has correctly stated that the affidavit filed by the Assessing Officer is not reliable and should not be accepted by the Court in view of the patent defects highlighted during the course of pleadings. The grounds of appeal, it has been correctly pointed out, are not concise and are very vague. In this view of the matter the departmental appeal is not maintainable and is, therefore, dismissed. "
11. Being aggrieved with the dismissal of appeal by the Tribunal, the department has preferred this third appeal under section 136(1) of Income Tax Ordinance, 1979.
12. We have heard Mr. Nasrullah Awan, learned counsel for the appellant and Mr. Mohammad Farrough Naseem, Advocate for the respondent.
13. Mr. Nasrullah Awan, learned counsel for the appellant has vehemently assailed the impugned findings. He has contended that the assessee entered into an agreement with the Assessing Officer out of his own consent and free will and without any coercion or misrepresentation on the part of Assessing Officer, therefore, the assessment order based on compromise is binding on the assessee. He has submitted that the learned AAC fell in serious error in observing that the ITO was not justified' in stating that assessment was made in agreement. He has further submitted that in the first instance the learned AAC should not have placed reliance on the affidavit of the assessee whereby a judicial order was challenged without strong reasons to do so. Mr. Awan has contended that the order sheet entry was not perused by the learned AAC before coming to the above conclusion which is duly signed by the assessee just beneath the calculation of the total add backs and figure of total income. The word 'agreed' is also written above the signature of assessee. He has further submitted that the Assessing Officer was not intimated about the filing of any affidavit by the assessee at the first appellate stage and therefore the Assessing Officer filed affidavit before the Income‑tax Appellate Tribunal, controverting the contents of the affidavit filed by the assessee before the AAC. Mr. Awan has further maintained that the affidavit filed by the Assessing Officer was not attested but the deficiency was curable. According to Mr. Awan the Income tax Appellate Tribunal should have allowed opportunity to the Assessing Officer to remove the deficiency instead of ruling it out of consideration. Mr. Awan has prayed that the impugned orders of learned AAC and ITAT, suffer from illegality on factual and legal plane, therefore, both the impugned orders may be vacated and the consent assessment order may be restored.
14. On the other hand Mr. Muhammed Farogh Naseem, learned counsel for the respondent, has conceded that so far the view taken by the ITAT, that grounds of appeal are vague and not in conformity with Rule 10 of the ITAT Rules 1981, is concerned, it is not sustainable, Mr. Farogh Naseem has further conceded that the judgments of the Income‑tax Appellate Tribunal reported as 1988 PTD (Trib) 218(a) and 1993 PTD (Trib) 1, on which the learned Division Bench of the Tribunal has placed reliance already stand overruled by a. larger Bench of the Tribunal, wherein it has been held that the provisions contained in Rule 10 of the ITAT Rules, 1981, are directory in nature and are not mandatory. It has been further held that merely on the score of non‑compliance of the provisions contained in Rule 10 of the ITAT Rules, the appeal cannot be dismissed and that the irregularity is curable. Thus, the sole point for consideration, is whether the learned AAC was justified in setting aside the assessment` order on the basis of the affidavit filed by the assessee at the first appellate stage and whether the ITAT was justified in dismissing the appeal at the instance of department merely for the reason that the affidavit filed by the Assessing Officer in second appeal could not be relied upon for want of attestation.
15. Mr. Farogh Naseem, learned counsel for the respondent has contended that the so‑called affidavit filed by Assessing Officer could not be construed as an affidavit since it was not sworn before the Oath Commissioner. He has further supported the finding of learned AAC who has placed reliance on the affidavit 6f assessee filed at the first appellate' stage. According to Mr. Farogh Naseem, in the income‑tax proceedings affidavits are important and Superior Courts recognize the same. In support of his contention he has placed reliance on two judgments from the Indian jurisdiction reported as (1974) 94 ITR 1 and (1978) 114 ITR 19. He has supported the view that an affidavit which does not bear attestation and which has not been sworn before a Court or Oath Commissioner/Notary Public cannot be relied upon. In support of this contention he has placed reliance on the following judgments.
(1) 1988 PCr.LJ 2347
(2) A I R 1952 Cal. 255.
He has further submitted that the affidavit filed by the Assessing Officer is belated and, therefore, is not worthy of reliance. Mr. Farogh Naseem has referred in this regard to the judgment reported as 1981 SCMR 364. So far the filing of affidavit by the assessee at the first appellate stage is concerned, Mr. Farogh Naseem has submitted that rule 13 of the Income‑tax Appellate Tribunal Rules, 1981 also recognizes the right to allege a question of fact on affidavit.
16. Mr. Farogh Naseem has further argued that the signature of assessee on the order sheet bears no similarity with other admitted signatures on record and, therefore, the only conclusion is that the signature in question has been forged by the Department and its concerned officer. He has further submitted that the Court has full power, authority and discretion to compare signatures. However, he has stated in his written arguments available on record that the question of signatures does not arise out of the order of the Tribunal, and under section 136 of the Income Tax Ordinance the High Court can only look into the question of law which arises out of the order of the Tribunal. It is further contained in the written arguments that there is nothing in the Memo of Appeal or tile statement of the case to allege that the learned AAC 2nd the Tribunal decided the fact pertaining to the signature of assessee, perversely, incorrectly, or in ignorance of the evidence on record. Mr. Farogh Naseem has fully supported the impugned orders of the learned AAC and the ITAT.
17. We have carefully considered the contentions raised before us and the material available on record. Woe are of the opinion that the impugned orders of learned A.A.C. and the ITAT are not sustainable for the reason that the impugned orders suffer from material irregularity as well as illegality. We are of the considered opinion that the learned AAC as well as the ITAT has ignored the established principles of the appreciation of facts and therefore the impugned findings are perverse, illegal and not sustainable in law. The reason being that first, the learned AAC should have issued notice to the Assessing Officer under section 131 of the Income Tax Ordinance. The' provision contained in section 131 is mandatory in nature. It is provided that the Appellate Additional Commissioner shall give notice of the day fixed for the hearing of the appeal to the appellant and to the Deputy Commissioner against whose order the appeal is preferred. There is nothing in. the first appellate order to show that any notice was issued to the Assessing Officer. Secondly, it is provided in section 131(3) of Income Tax Ordinance that the Appellate Additional Commissioner may, before disposing of any appeal, call for such particulars as he may require respecting the matters arising in the appeal or cause further inquiry to be made by the Deputy Commissioner. Thus when an affidavit was filed by the assessee; assailing the consent assessment order, the learned AAC ought to have called ‑for at least the comments of the Assessing Officer, which was not done. Thirdly, if the learned AAC intended to place reliance on the affidavit of assessee assailing the consent order, a copy of the affidavit was required to be sent to the Assessing Officer even if there is no specific provision in this behalf in the law, by adhering to the general principle of law that nobody is to be condemned unheard. Copy of the affidavit filed by the assessee before the learned AAC was never sent to the Assessing Officer and therefore without affording opportunity to the Assessing Officer, no reliance could be placed on the affidavit, particularly when a quasi judicial order was assailed to which presumption of correctness is attached under Article 129 illustration (e) of the Qanun‑e‑Shahadat Order, 1984, which provides that judicial and official acts shall be presumed to have been regularly performed. The Evidence Act, 18 72, was not applicable to the income tax proceedings; however, the Qanun‑e-Shahadat Order, 1984 is applicable to the income‑tax proceedings. It is provided in Article 1(2) of the Qanun‑e‑Shahadat Order, 1984 that it applies to all judicial proceedings in or before any Court, including a Court Martial, a Tribunal or other authority exercising judicial or I quasi judicial powers or jurisdiction, but does not apply to proceedings before an arbitrator. By now it stands established that the proceedings under the Income Tax Ordinance are quasi judicial in nature. Under section 148 of the Income Tax Ordinance, 1979, "the Deputy Commissioner, the Inspecting Additional Commissioner, the Appellate Additional Commissioner, the Commissioner and any other officer under the administrative control of the Central Board of Revenue authorised by it in this behalf, and the Appellate Tribunal, for the purposes of this Ordinance, have the same powers as are vested in a Court under the Code of Civil Procedure, 1908 when trying a suit for the following matters namely;
(a)enforcing the attendance of any person and examining him on oath or affirmation;
(b)compelling the production of any accounts or documents;
(c)receiving evidence on affidavit; and
(d)issuing commissions for the examination of witnesses."
It is further provided in section 158 of the Income Tax Ordinance as follows:
"Any proceeding under the Income Talc Ordinance before Deputy Commissioner, Commissioner or the Appellate tribunal shall be deemed to be judicial proceedings within the meaning of sections 193 and 228 and for the purposes, of section 196 of the Pakistan Penal Code."
Thus, the learned A.A.C. by placing reliance on an affidavit filed by the assessee at the first appellate stage assailing the correctness of the consent assessment order, without seeking comments from the Assessing‑Officer fell in serious error and committed an illegality patent on the face of it. The learned AAC it appears has acted in total ignorance of the relevant provision of law. Fourthly, the learned AAC has accepted the affidavit for the reason that, "the assessee is highly respectable and educated person and there is no reason if he had agreed then he should go in appeal," although no presumption of truth is attached to the affidavit filed by the assessee and is a matter of evidence and bringing of very strong reasons while the learned AAC has totally ignored or has acted out of ignorance in not presuming the correctness of an order made in performance of official Act. Fifthly, the learned AAC has observed that he obtained a specimen of the handwriting of the assessee which according to him is clearly different from the word 'agreed' written on the Order‑sheet of the I.T.O. and the I.T.O. deserves an explanation on this account. However, the learned A.A.C. failed to supply a copy of the assessee's affidavit to the Assessing Officer and obtain an explanation of the Assessing Officer. Sixthly, the learned A.A.C. has held that there is no agreement with the party, without going through the contents of the affidavit of the assessee. A perusal of the entire affidavit of the assessee shows that he has nowhere denied his signature on the order sheet. On the contrary he has stated that during the course of hearing the Income tax Officer had said to him that he was accepting the trading version and adding only a few inadmissible expenses and that he had explained to the Assessing Officer that in case there was any small dispute on admissible expense, the same could be added to his income. He has further stated in para 6 of the affidavit that he does not know how after the recording of the order sheet the I.T.O. has put in the figures in' the aforesaid agreement as stated in the assessment order. This probably is by way of interpolation or by subsequent insertion. From a bare perusal of assessee's affidavit, it is clear that the fact of agreement between the assessee and the Assessing Officer is not denied. The sole contention in the affidavit is that after agreement between the assessee and the Assessing Officer the figures of the add‑backs has been inserted by way of interpolation. Thus, the learned AAC entered into an exercise of ascertaining the hand‑writing of assessee on the order sheet which was never denied and was not in dispute at all. The learned AAC travelled beyond the plea taken by the assessee and therefore exceeded his jurisdiction. The finding that there was no agreement between the parties is against the material available on record and is contrary to the contents of the affidavit sworn by the assessee as discussed above.
18. Now coming to the impugned finding of the Tribunal, we, have already observed that the appear at the instance of the department was dismissed on two counts, to wit, the affidavit filed by the Assessing Officer is not reliable as it was not attested/sworn before a person competent to administer oath and the grounds of appeal were not concise and were vague. So far the second reason for dismissal of appeal is concerned Mr. Farogh Naseem has already conceded that it was improper and does not provide justification for dismissal of appeal. Thus, the sole reason for dismissal of department's appeal by the Tribunal remains the non‑attestation of the affidavit filed before the Tribunal in the second appeal. We are of the firm view that the learned Members of the Tribunal failed to appreciate the facts and circumstances in the rights perceptive. As already discussed, the affidavit filed by the assessee at the first appellate stage was never supplied to the Assessing Officer, for filing a counter‑affidavit, and even if the affidavit filed by the Assessing Officer was not attested, the plea of the department contained in the grounds of appeal that the assessment was framed in agreement with the assessee in presence of IAC Rang‑III, East Zone, Karachi and that the assessee had himself put his assets and signature on the order, dated 19‑6‑1984 could not be ignored and brushed aside. As already held, the proceedings under the Income Tax Ordinance, 1979 before the Assessing Officer are quasi‑judicial in nature and the Assessing Officer while conducting the assessment proceedings perform a quasi‑judicial function, therefore, there was no question of filing any counter‑affidavit by the Assessing Officer. If anything is alleged by any person in respect of any act done in performance of the judicial or quasi‑judicial function, the judicial or quasi‑judicial officer is not required to swear an affidavit but the comments filed by the said judicial or quasi‑judicial officer are sufficient. The Assessing Officer cannot be equated with a party to the proceedings in adversarial system of adjudication. The proceedings under the Income Tax Ordinance are undoubtedly quasi‑judicial in nature but at the same time they are not adversarial in nature. They are inquisitorial in nature. The Assessing Officer acts in dual capacity i.e., investigating the truth or falsehood of the version of an assessee and in doing so confronts the assessee with the material available with him having the effect of creating new demands or enhancing the liability of an assessee. In doing so the burden lies on him to establish the facts resulting in enhancement of liability of an assessee. During the proceedings he records evidence and performs other functions as a quasi -judicial officer on conclusion of the proceedings he records an assessment order which is purely a quasi‑judicial function. Thus, an Assessing Officer while acting in performance of his functions under the Income Tax Ordinance, acts in different capacities and combining of different capacities in the Assessing Officer is an attribute of inquisitorial system of the administration of justice. The result is that the statement filed by the Assessing Officer which is on solemn affirmation but is not attested by an Oath Commissioner or any other authority competent to administer with is to be treated as comments and has to be considered for the purpose of deciding interpolation after the conclusion of agreement between the assessee and the Assessing Officer. A bare perusal of the order sheet on which the agreement of the assessee has been recorded and which bears the signature of they Assessing Officer and the assessee, which is not denied in the affidavit of the assessee, filed before the AAC and contains the approval and signature of IAC as well, shows that there is no question of any interpolation or insertion of anything subsequent to the agreement. Thus, the learned Members of the ITAT were not justified in not examining the facts available on record and dismissing the appeal at the instance of department without any justification in law.
19. For the foregoing reasons, we are, of the considered opinion that the learned AAC and the learned Members of the ITAT acted in flagrant violation of the law and fell in serious error. The impugned findings are thus, held to be perverse, illegal and not sustainable in law which are hereby vacated and consent order made by the Assessing Officer is held to be binding on the assessee, as no material has been brought on record to controvert or dislodge the presumption of truth attached to the official act. The assessment order stands restored accordingly. The appeal at the instance of department is allowed as above with no order as to cost.
M.B.A./C/22/K Appeal allowed.