Income‑Tax Ordinance (XXXI of 1979)‑‑‑

‑‑‑Ss. 66‑A & 59(1)‑‑‑C.B.R. Circular No.18 of 1999, para. 12(a)‑‑ Powers of Inspecting Additional Commissioner' to revise Deputy Commissioner's order‑‑‑Assessment year 1999‑2000‑‑‑Copy of return was constituted as assessment order under S.59(1) of the Income Tax Ordinance, 1979‑‑‑Assumption of jurisdiction under S.66‑A of the Income Tax Ordinance, 1979 by the Inspecting Additional Commissioner‑‑‑Validity‑‑‑Order passed under S.66‑A of the Income Tax Ordinance, 1979 was without any legal basis since there was no formal order holding the‑ field‑‑‑Invocation of S.66‑A of the Income Tax Ordinance, 1979 was without jurisdiction and nullity in the eye of law and void( ab initio‑‑‑Order was annulled by the Tribunal.

(1990) 80 Tax 43 (Trib.) and 1993 SCMR 1232 rel.

Syed Abid Raza Kazmi for Appellant.

Ahmad Kamal, D.R. for Respondent.

Date of hearing: 13th March, 2001.

ORDER

SYED NADEEM SAQLAIN (JUDICIAL MEMBER).‑‑‑The present appeal has been filed at the instance of the assessee against the order, dated 12‑5‑2000 passed by the learned IAC, C...R....S.....

2. Briefly stated the facts of the case are that the return for the assessment year 1999‑2000 was filed and assessment was completed under section 59(1) under Universal Self‑Assessment Scheme. Later on the learned IAC found that income declared by the assessee was less than the income last assessed, hence he issued a show‑cause notice under section 66‑A of the Income Tax Ordinance requiring the assessee to show cause as to why the assessment already completed under section 59 may not be cancelled being erroneous as well as prejudicial to the interest of revenue. The reply submitted, in this regard; by the learned A.R. of the assessee was found unsatisfactory, hence the learned IAC proceeded to pass an order under section 66A and directed the Assessing Officer to make fresh assessment under normal law, Being aggrieved with the impugned order the assessee has filed appeal before us.

3. Both the parties have been heard and relevant order perused. The learned A.R. of the assessee contended that the learned IAC was not justified to pass an order under section 66A of the Ordinance as no formal order has been passed in this case. It has been submitted that in this case no IT‑30 Form, demand notice, or assessment order issued by the Assessing Officer, hence order passed under section 66‑A by the learned IAC has no legal value. The learned A.R. of the assessee further submitted that the IAC can pass an order under section 66‑A only when he is of the opinion ‑that the order passed by the Assessing Officer is erroneous and prejudicial to the interest of Revenue and no such order has been passed. He further argued that in many cases on the same issue the higher authorities did not appreciate the passing of order under section 66A. In this regard hoe referred to a case reported as (1990) 80 Tax 43 (Trib.) wherein after a detailed discussion, the Tribunal annulled 'the order passed under section 66‑A of the Ordinance. Following are the extracts from the relevant paragraphs:‑‑

"Objections are taken, in this appeal, to the share of the learned IAC, passed under section 66A on the ground firstly, that it is ab initio void in law for want of valid jurisdiction. Secondly, that the learned IAC has misconstrued that the Assessing Officer has passed an order under section 59(1) whereas, in fact, he has issued only a demand notice and IT‑30 Form.

"And income from local sales amounting to Rs.35,000 declared in the return of income filed under section 55. The return under section 55 has been accepted under S.A.S. and is assessed under section 59(1) in writing on IT‑30 assessment Form."

We, therefore, are persuaded to agree with the learned counsel of the appellant that on the facts and circumstances of the case, there is no basis for the learned IAC to consider the order passed by the learned DCIT under section 59(1) to be erroneous insofar 3s it is prejudicial to the interest of Revenue "

"Accordingly, we find that the assumption of jurisdiction under section 66‑A by the learned IAC is ab initio void in law. The impugned order passed in pursuance, thereof, therefore, is hereby annulled."

The A.R. of the assessee submitted that as in the above case no formal order was passed, the honourable Tribunal annulled the order passed under section 66‑A of the Ordinance and requested for similar order in this case.

4. The learned DR on the other hand contended that the IAC was justified to pass the order under section 66‑A by following para. 12(a) of C.B.R. Circular No. 18 of 1999 (USAS) where it has been mentioned that one copy of the return of income was to be retained by the Bank and other by the Department and third copy duly signed and stamped by the designated Income Tax Authority which in this case is Assessing Officer would constitute the assessment order under section 59(1) of Income Tax Ordinance, 1979. He further submitted that from the above it is clear that assessment under section 59(1) in this case stands completed and service of demand notice and IT‑30 was n required.

5. We have given our earnest consideration to the fats of the case. Perusal of the impugned order does show that the learned JAC passed order on the basis of C. B. R. Circular No. 18 of 1999 wherein one copy of the return was constituted as assessment order under section 59(1). This kind of assumption of jurisdiction under section 66‑A by the learned IAC was held to be ab initio void in law by the Honourable Supreme Court of Pakistan in a case reported as 1993 SCMR 123 The relevant paragraph is reproduced as under:‑‑‑

"It is evident from the above provisions at though the CR has administrative control over the functionaries discharging their functions under the Ordinance but it does not figure in the hierarchy of the, forums provided for adjudication of assessee liability as to the tax. In this view of the matter, any interpretation placed by the C.B.R. on a statutory provision cannot be treated as a pronouncement by a forum competent to adjudicate upon such an acquisition judicially or quasi‑judicially. We may, point out that the C.B.R. cannot issue any administrative direction of the nature which may interfere with judicial or quasi judicial functions entrusted to the various functionaries under statute the instructions and directions of the C.B.R. are binding on the functionaries discharging. Their functions under the Ordinance in view of section 8 so long as they are confined to the administrative matter. The interpretation of any provisions of the Ordinance can be rendered judicially by the hierarchy of the forum provided for under the above provisions of the Ordinance namely the ITO, AAC,' ITAT, the High Court and this Court and not by the C.B.R. In this view of the matter, the interpretation placed by the C.B.R. on the relevant provisions of the Ordinance in the circular, can be treated as administrative interpretation and not judicial interpretation. "

6. The nutshall of the case is that the order passed by the learned IAC under section 66‑A was without any legal basis since there was no formal order holding the field, invocation of section 66‑A was without jurisdiction and nullity in the eye of law and, void ab initio in law. Therefore, the impugned order passed in pursuance thereof is hereby annulled.

7. Appeal of the assessee succeeds accordingly.

C.M.A./M.A.K./268/Tax (Trib.)

Appeal accepted.