COMMISSIONER OF INCOME-TAX VS KAMRUDDIN FAKHRUDDIN
2001 P T D 623
[Karachi High Court]
Before Saiyed Saeed Ashhad and Raja Qureshi, JJ
COMMISSIONER OF INCOME TAX
versus
KAMRUDDIN FAKHRUDDIN
I.T.C. No.347 of 1990, decided on 23/07/1990.
(a) Income Tax Ordinance (XXXI of 1979)‑‑‑
‑‑‑‑Ss.55 & 57‑‑‑Revised return‑‑‑Failure to reflect/mention figure of capital gains in the relevant column of the return‑‑‑Revised return whether to be treated as one under S.57 of Income Tax Ordinance, 1979‑‑‑Return was initially submitted by the assessee under S.55 of Income Tax Ordinance, 1979, but as there was some mistake/discrepancy in not reflecting/mentioning figure of capital gains in respect of which the assessee claimed exemption, in the relevant column of return, revised return was filed under S.57 of Income Tax Ordinance, 1979‑‑‑Effect‑‑‑Such return of income tax could not be construed or deemed to be a return under S.57 of Income Tax Ordinance, 1979.
(b) Income Tax Ordinance (XXXI of 1979)‑‑‑
‑‑‑‑Ss.55 & 57‑‑‑Penalty‑‑‑Punitive action, taking of‑‑‑Withdrawal of immunity from self‑assessment scheme ‑‑‑Assessee filed revised return under S.57 of Income Tax Ordinance, 1979, as he failed to reflect/mention figure of capital gains in the relevant column of the return ‑‑‑Assessee was subjected to penalty or liability by way of withdrawal of the immunity from self assessment scheme and subjecting the return to detailed assessment without order containing valid and plausible reasons ‑‑‑Validity‑‑‑Provisions of S.57 of Income Tax Ordinance, 1979, had provided punishment and made the assessee revise a return under S.57 of Income Tax Ordinance, 1979, initially filed under S.55 of the Ordinance to punitive action‑‑‑Such an assessee could not be subjected to any further penalty or liability‑‑‑Income Tax Appellate Tribunal had not committed any illegality in allowing the issue relating to the authority/power of the Income Tax Authorities to finalize the assessment by way of detailed scrutiny‑‑‑Income Tax Appellate Tribunal had rightly found that return filed .by the assessee qualified to be assessed under the self‑assessment scheme formulated for that assessment year.
Rashid Ahmad v. The State PLD 1972 SC 271; Metro Cooperating Housing Society Ltd. v. Bonanza Garments Industries Ltd. 1996 MLD 593; Shagufta Begum v. The Income Tax Officer, Circle XI, Zone B, Lahore PLD 1989 SC 360; Sh. Muhammad Anwar v. Ch. Sultan Muhammad Khan ,and another 1974 SCMR 371 and Nasreen Iqbal v. Shaffat Ali 1990 CLC 1974 ref.
Nasarullah Awan for Applicant.
Khalifa Salahuddin Ahmed for Respondent.
Date of hearing: 9th July, 1998.
JUDGMENT
SAIYED SAEED ASHHAD, J.‑‑‑The department had framed a question of law and had applied to the Income‑tax Appellate Tribunal for referring the same to the High Court, under section 136(1) of the Income Tax Ordinance. The Income‑tax Appellate Tribunal dismissed the application of the department. Hence the department in view of the provisions of section 136(2) of the Income Tax Ordinance approached this Court directly for seeking opinion on the following questions:‑‑
"(1) Whether on the facts and in the circumstances of the case, the learned Income‑tax Appellate Tribunal was justified in his directions to accept a return under section 59(1) which was received under section 57 or not?
(2) Whether on the facts and in the circumstances of the case, the learned Income‑tax Appellate Tribunal was justified in accepting different ground of appeal which was not raised by the assessee ever before the learned Commissioner of Income‑tax (Appeals) or not because the appeal to the learned Income‑tax Appellate Tribunal lies under section 134 against the order of the learned Commissioner of Income‑tax (Appeals)?"
The brief facts leading to the filing of the above application are that the respondents in his capacity as a Director of M/s. Valika Woollen Mills Limited had filed return of Income‑tax for the year 1979‑80 declaring an income of Rs.71,366. The respondent had claimed exemption in respect of capital gains. A revised return was filed by respondent on 13‑4‑1980, wherein the same income of Rs.71,366 was declared. The reason for filing the revised return was that figure of capital gains was to be reflected/mentioned in the column of return for claiming exemption. The case of the respondent is that the return was submitted under self‑assessment scheme and the same should have been assessed under section 59 of the Income Tax Ordinance, but the Income‑tax Officer processed the same and completed the assessment under section 62 of the Income Tax Ordinance. It was further submitted on behalf of the respondent that the aforesaid procedure could have been followed by the Income‑tax Officer only after he had assigned plausible reasons for excluding the return from self‑assessment scheme and subjected the same to detailed scrutiny in view of the provisions of sections 55(1)(a) and 59(1) of the Income Tax Ordinance. The assessment finalized by the Income‑tax Officer was upheld by the Commissioner of Income‑tax of Appeals, but on being challenged by the respondent by way of second appeal before the Income‑tax Appellate Tribunal, the Tribunal decided the same in favour of the respondent on the ground that the return filed by the respondent qualified to be assessed under the self‑assessment scheme formulated for the assessment year 1979‑80 and the immunity from self‑assessment and detailed exanunation for the return could have been undertaken by the Income‑tax Officer only after stating satisfactory and plausible reasons for taking it out of the self‑assessment scheme. The department feeling aggrieved and dissatisfied with the order of the Income tax, Appellate Tribunal submitted an application under section 136(1) of the Income Tax Ordinance to the Income‑tax Appellate Tribunal framing a question of law and praying that the same be referred to the High Court for its opinion. The Income‑tax Appellate Tribunal, however, rejected the said application and refused to refer the question to this Court. Hence the department approached this Court under section 136(2) of the Income Tax Ordinance for seeking its opinion on the aforementioned two questions of law.
We have heard, the arguments of Mr. Nasarullah Awan, learned Advocate for the applicant/department and Mr. Khalifa Salahuddin, learned Advocate for the respondent and have also perused the relevant provisions of the Income Tax Ordinance and the facts and circumstances of the case.
With regard to question No. 1, Mr. Nasarullah, learned Advocate for the Department vehemently attacked the finding of the Income‑tax Appellate Tribunal relating to this question on the ground that the return of income tax for the assessment year 1979‑80 filed by the respondent did not qualify for the self‑assessment scheme as the same was a return filed under section 57 of the Income Tax Ordinance and in view of the explanation to section 59 of the Income Tax Ordinance, a return filed under section 57 did not qualify for assessment under the self‑assessment scheme. The above contention was vehemently refuted and in our view rightly so by Mr. Khalifa Salahuddin, learned Advocate for the respondent on the ground that the return of income submitted by the respondent could not be considered to be a return under section 57 of the Income Tax Ordinance inasmuch as initially the same was filed under section 55 of the Income‑tax Ordinance and on account of a trivial and minor mistake the respondent/assessee had to revise the return. We have minutely examined the provisions of sections 55, 57 and 59 of the Income Tax Ordinance as well as the explanation to section 59 of the Income Tax Ordinance, and we find ourselves inclined to accept the arguments advanced by Mr. Khalifa Salahuddin. It is an admitted fact that the return was initially submitted by the respondent/assessee under section 55 of the Income Tax Ordinance, but as there was some mistake/discrepency in not reflecting/mentioning figure of capital gains, in respect of which he claimed exemption, in the relevant column of return a revised return was filed, under section 57 of the Income Tax Ordinance. Such return of income could not he construed or deemed to be a return under section 57 of the Income Tax Ordinance in view of the provisions of sections 55 and 57 of the Income Tax Ordinance. It is also pertinent to note that section 57 in itself provides that the furnishing of a revised return at any time before the assessment is made under section 59 of the Income Tax Ordinance is without prejudice to any liability to which he may be subjected to under the provisions of the Income Tax Ordinance. Thus, the provisions of section 57 of the Income‑tax Ordinance provide a punishment and make an assessee revise a return under section 57 of the Income Tax Ordinance initially filed under section 55 of the Income Tax Ordinance to punitive action. Such an assessee, in our view could not be subjected to any further penalty or liability by way, of withdrawal of the immunity from self‑assessment scheme and subjecting the return to detail assessment without an order containing valid and plausible reasons. In the circumstances, the Income‑tax Appellate Tribunal had rightly come to the conclusion that the order of the Income‑tax Officer immunity the return of the respondent from self‑assessment scheme year 1979‑80 was arbitrary and not valid as no valid and plausible reasons in writing were given by him. Accordingly, our answer to this question is in the affirmative.
With regard to the second Question, Mr. Nasarullah Awan, learned Advocate for the Department vehemently attacked the order of the Income tax Appellate Tribunal, dated 26‑3‑1990, whereby it allowed the respondent to raise a fresh point in support of his case, which he had not raised earlier either before the Income Tax Officer or the Commissioner of Income‑tax (Appeals) in view of the settled principle that a party could not be allowed to raise a new point or issue at the appellate stage which he had not raised and relied upon before the lower forum/authorities. Mr. Khalifa Salahuddin, learned Advocate for the respondent assessee strongly refuted the arguments advanced by Mr. Nasarullah Awan and submitted that the respondent had raised an issue challenging the jurisdiction or the authority of the Income‑tax Officer to take the case of the respondent out of the self‑assessment scheme and subjecting the same to detail scrutiny on his failure to act in accordance with the requirement of the policy relative to self‑assessment scheme framed by he Central Board of Revenue for the assessment year 1979‑80. He further elabor1ted Plat according to the requirement of the said policy the Income‑tax Officer was required to specify the reasons for excluding the return of the respondent/assessee from self‑assessment scheme and taking it out for the detailed scrutiny, which he failed to do. He further submitted that in the circumstances the order of the Income‑tax Officer was without any jurisdiction and the consequent order of the Commissioner of Income‑tax (Appeals) was also without jurisdiction and illegal on the basis of the principle that where the law provides the performance or doing of an act so as to clothe a Court/forum or authority to exercise its jurisdiction or power then unless such act is performed by the Court/forum/authority, assumption of power or jurisdiction by such Court/forum/authority would be illegal and any order passed in exercise of such power or jurisdiction would be illegal and of no consequence. In support of his above contention Mr. Khalifa Salahuddin has relied on the following cases:‑‑‑
(1) PLD 1972 SC 271 (Rashid Ahmad v. The State) and
(2) 1996 MLD 593 (Metro Cooperating Housing Society Ltd. v. Bonanza Garments Industries Ltd).
He further submitted that the aforesaid issue being an issue with regard to the jurisdiction or authority of the Income‑tax Officer to process the return in detail scrutiny, it could be raised at any stage and in support of his above contention he has placed reliance on the following cases:‑‑
(1) PLD 1989 SC 360 (Shagufta Begum v. The Income Tax Officer, Circle‑XI, Zone‑B, Lahore).
(2) 1974 SCMR 371 (Sh. Muhammad Anwar v. Ch. Sultan Muhammad Khan and another)
(3) PLD 1972 SC 271 (Rashid Ahmed v. The State); and
(4)1990 CLC 1974 (Nasreen Iqbal v. Shaffat Ali).
Mr. Nasarullah did not deny either the legal requirement of an order in writing for excluding a return which was to be assessed under the self assessment scheme or the act that the Income‑tax Officer did not assign any reason in 'writing for taking it out of the self‑assessment scheme and subjecting it to detail scrutiny, but submitted that the facts and circumstances of the case were such that the return filed by the respondent/assessee did not qualify to be assessed under the self‑assessment scheme as the same was not a return under section 55 of the Income Tax Ordinance, but was filed under section 57 of the Income Tax Ordinance, which was specifically excluded from self‑assessment scheme framed under section 59 of the Income Tax Ordinance in view of the explanation to section 59 of the Income Tax Ordinance. The arguments advanced by Mr. Nasarullah Awan have already been examined and considered by us in detail in deciding Question No. 1 and we have concluded that the return tiled by the respondent/assessee could not be construed to be a return under section 57 of the Income Tax Ordinance as was being claimed by the Department/applicant and the same was entitled to be assessed under the self‑assessment scheme. There can be no denial of the fact that the Income‑tax Officer was under a legal obligation to pass an order in writing giving specific and plausible reasons for excluding the return of, the respondent/assessee from self‑assessment scheme and examining the same in detail scrutiny and his assumption of jurisdiction/power to exclude the return from self‑assessment scheme and subjected to detail scrutiny was contrary and violative of the provisions/instructions issued by the Central Board of Revenue relating to the self‑assessment scheme. As such the order of the Income Tax Ordinance was illegal being without jurisdiction and relying on the case law cited by Mr. Khalifa Salahuddin, the question of jurisdiction of a Court/forum to proceed with a case or matter in particular manner could be raised at any stage.
Upon the above discussions we are satisfied that the Appellate Tribunal did not commit any illegality in allowing the issue relating to the' authority/power of the Income‑tax Officer to finalize the assessment by way of detailed scrutiny to be raised before it and considering the same. We, accordingly answer this question in the affirmative.
Both the questions raised by the Department/Applicant having been answered in the affirmative, we dismiss this application and uphold the order of Appellate Tribunal, dated 22‑11‑1988.
By a short order, dated 9‑7‑1998 we had announced the judgment for the reasons to be recorded later. These are the reasons for our said judgment.
Q.M.H./M.A.K./C‑14/KReference answered.