(a) Income‑tax Ordinance (XXXI of 1979)‑‑‑

‑‑‑‑Ss.66(1)(c), 134 & 136‑‑‑Limitation for assessment in certain cases‑‑ Time consumed in appeal before High Court‑‑‑Consideration of determined limitation‑‑Assessee contended that time consumed in appeal to High Court, could not be taken into consideration‑‑‑Validity‑‑‑Section 66(1)(c) of the Income Tax Ordinance, 1979 shall be applicable in cases where no remedy was exhausted either under S.134 or under S.136 of the Income Tax Ordinance, 1979‑‑‑Facts of the present case did not support the contention of the assessee as mere filing of appeal before the High Court was sufficient for determination of the limitation period, besides S.66 of the Income Tax Ordinance, 1979 had nothing to do with the result of the appeal or reference and grounds of dismissal, the only requirement of law was to see whether appeal or reference had been filed in the High Court‑ ‑‑Assessing Officer of his own accord could not presume the result of the appeal or reference pending before the High Court so as to conclude the assessment‑‑‑No question of any earlier time frame limitation arose as argued by the assessee‑‑‑Time limit for finalization of assessment was to come to an end en 30‑6‑2000 as order was received on 17‑5‑1999, therefore, assessments made on 29‑6‑2000 and 28‑6‑2000, respectively were within time‑‑‑Contention that assessments had been made in violation of law of limitation had no merit.

1998 PTD 3835; 1999 PTD 4158 (SC) and 2000 PTD 306 distinguished.

1998 PTD (Trib) 1238; 1993 PTD 332 and 1997 PTD 851 irrelevant.

(b) Income‑tax‑‑‑

‑‑‑‑Statement/document‑‑‑No cross‑examination‑‑‑Admissibility as evidence‑‑‑Any statement wherein opportunity of cross‑examination had not been provided was an inadmissible document and could not be relied for determination of any fact.

(c) Income‑tax‑‑‑

------Service of notice‑‑‑Regular attendance of proceedings by assessee‑‑substituted mode of service against ordinary course‑‑‑Validity‑‑‑Without making service through ordinary course, the Assessing Officer tried to serve through substituted mode of service which was declared improper by the Tribunal as the assessee had regularly attended the proceedings for about 2 years.

(d) Income‑tax‑‑‑

‑‑‑‑Setting aside of order‑‑‑Opportunity of cross‑examination‑‑‑Order set aside by the First Appellate Authority was confirmed by the Tribunal as the same was set aside with the specific directions to comply with the orders given by the Tribunal to provide an opportunity of cross examination to the assessee.

(1999) 80 Tax 204 (Trib.) rel.

Aminuddin Ansari for Appellant.

Nemo for Respondent.

Date of hearing: 2nd March, 2002.

ORDER

S. HASAN IMAM (JUDICIAL MEMBER).‑‑‑By this order we intend to decide above captioned appeals preferred by the assessee, being aggrieved from the common impugned order, dated 30‑9‑2000 passed by the learned CIT(A) wherein common objections have been taken to the impugned order that the learned CIT(A) has erred in law to hold that the limitation under section 66(1)(c) of the Income Tax Ordinance, 1979 expired on 30‑6‑2000 and not on 30‑6‑1999 and that learned CIT(A) erred in law in setting aside the assessment with directions to comply with the specific directions laid down by the Tribunal and to afford ample opportunity of hearing to the assessee.

2. That initial assessments for the two years were set aside by the ITAT vide order, dated 19‑7‑1997 with specific directives hereunder:‑‑

"The Assessing Officer is directed to recall witnesses whose cross‑examination has been denied to the appellant. The Assessing Officer should pass a fresh order on the point of addition under section 13 after affording opportunity of cross -examination to the appellant of all the witnesses, on which evidence reliance is sought to be placed."

3. The brief facts derived from the case file are that original orders were framed under section 62 of the Income Tax Ordinance, 1979, and thereafter orders were passed on 31‑5‑1993 under section 65 by making addition under section 13 on the basis of information. The assessee being aggrieved preferred appeals before the learned CIT(A) which were dismissed vide order, dated 28‑12‑1996. The assessee being still aggrieved preferred appeals before the ITAT. Orders were set aside vide order, dated 19‑7‑1997. The department against the said orders, dated 19‑7‑1997 moved Income Tax Appeals Nos. 314 and 315 of 1997 before the Hon'ble High Court of Sindh which were dismissed by the Division Bench observing hereunder:‑‑‑

"In view of the law laid down in the Commissioner of Income Tax, Central Zone 'B', Karachi v. Messrs Electronic Industries Ltd. 1988 PTD 111, this appeal is not maintainable. Accordingly it is dismissed."

4. Under these circumstances, the Assessing Officer issued fresh notices under section 61 of the Income Tax Ordinance, 1979 in compliance to orders passed by the ITAT whereby the issue of addition under section 13 was set aside.

5. The assessee filed C.P. No.1760 of 1999 in the Hon'ble High Court of Sindh against the issuance of notices under section 61 praying therein that "limitation for completion of assessment for the years 1989‑90 & 1990‑91 expired on 30‑6‑1999 as per directions contained in learned ITAT order, dated 19‑7‑1997. read .with provisions of sub section (c) of section 66(1) of the Income Tax Ordinance, 1979". This petition was dismissed vide orders, dated 8‑2‑2001.

6. The assessee also preferred 1st appeal before the learned CIT(A) against the order of the DCIT on 30‑6‑2000. The learned CIT(A) decided the 1st appeal vide impugned order, dated 30‑9‑2000 whereby set aside the assessment observing hereunder:‑‑

"The proceedings conducted by the Assessing Officer regarding cross‑examination plea of the appellant with its subsequent conclusions of service of notices under sections 148 and 13 and their alleged non‑compliance default makes a sorry reading of the Assessing Officer's high‑handedness and mockery of the requirements of law. These were no normal routine assessment in which for a non‑compliance of a dubious service, which by itself was also not valid, the Assessing Officer could jump to the finality of assessment."

7. The learned counsel for the assessee in the first instance argued that the fresh assessments are time‑barred and time taken in litigation before the High Court would not be counted for the purpose of section 66(1)(c) of the Income Tax Ordinance, 1979 as appeals were dismissed by the Hon'ble High Court being not maintainable. He further added that setting aside orders were passed on 19‑7‑1997 and being aggrieved and dissatisfied from the setting aside order the department preferred appeals before the Hon'ble High Court bearing Nos.314 and 315 of 1997, which were decided on 30‑4‑1999 and copy of order was served in the CIT Office on 17‑5‑1999. For determination of the time limit in view of the arguments of the learned counsel for the assessee, we would like to refer section 66(1) of the Income Tax Ordinance, 1979:‑‑

"Section 66: (1) Notwithstanding anything contained in section 64 and subsection (3) of section 65 wherein in consequence of or to give effect to, arty finding or direction contained in any order made under this Chapter or Chapters VIII, XIII or XIV or any order made by any High Court or the Supreme Court of Pakistan in exercise of its original or appellate jurisdiction:

(a)an assessment is to be made on any firm or a partner of any firm; on

(b)an assessment is to be made on the assessee or any, other person; or

(c)an assessment has been set aside, in full or in part by an order under section 132 or section 135 and no appeal is filed under section 134 against such order or no appeal filed under section 136 in respect thereof, as the case may be,

such assessment may be made at any time within two years in any case to which clause (a) or clause (b) applies, and within one year in any case to which clause (c) applies, from the end of the financial year in which such order is received by the Deputy Commissioner.

8. Simple reading of section 66(1) and subsections (a), (b) and (c) reveals that clause (c) of section 66(1) of the Income Tax Ordinance, 1979 shall be applicable where an assessment has been set aside in full or in part by an order under section 132 or section 135 and no appeal is preferred under section 134 against such order or no appeal filed under section 136 in, respect whereof, hence time limit of one year from the end of the financial year in which such order is received by the Deputy Commissioner shall be for those cases where no remedy is exhausted either under section 134 or under section 136 of the Income Tax Ordinance, 1979. In the alternate the time limit would be two years and not one year. The result, of the litigation under section 134 or under section 136 of the Income Tax Ordinance, 1979 will have no effect on the time limit, thus time cannot be curtailed or extended keeping in view the result of the litigation under section 134 and under section 136 of the Income Tax Ordinance, 1979. Mere condition that no appeal has been preferred would be sufficient to determine the time limit. The learned counsel for he assessee contrary to this contended that there was no impugned order in the field as per order of the learned ITAT, as such no appeal or reference arose out of the order of the learned ITAT, dated 19‑7‑1997, hence the time consumed in appeal before the Hon'ble High Court, cannot be taken into consideration and time for completion of assessment as per section 66(1)(c) of the Income Tax Ordinance, 1979 will expire on 30‑6‑1999, therefore, the assessment after 30‑6‑1999 is barred by limitation. The learned counsel further contended that the appeals were found by the High Court to be not maintainable, hence due to the dismissal of the departmental appeals, the limitation for completion of assessment expired on 30‑6‑1999. The learned counsel further stressed that in the circumstances one year limitation period provided in section 66(1)(c) of the Income Tax Ordinance, 1979 shall expire on 30‑6‑1999 and not on 30‑6‑2000.

9. We are, however, in agreement with the learned counsel for the assessee and find that clause (c) of subsection (1) of section 66 of the Income Tax Ordinance, 1979 shall be applicable in cases where no remedy is exhausted either under section 134 or under section 136 of the Income Tax Ordinance, 1979. However, facts do not support the contention of the assessee as mere filing of appeals before the Hon'ble, High Court is sufficient for determination of the limitation period,, besides section 66 is nothing to do with result of the appeal or reference and grounds of dismissal, the only requirement of law is to see whether appeal ;or reference has been filed in the Hon'ble High Court. Even otherwise, the Assessing Officer on his own accord cannot presume the A result of the appeal or reference pending before the Hon'ble High Court so as to conclude the assessment. We, in the circumstances, find no reason to disagree with the findings of the learned CIT(A) that action under section 136 was taken, hence there is no question of any earlier time frame limitation as argued by the learned counsel for the assessee. As a result of above discussion and our finding thereof, the time limit for finalization of assessment would come to an end on 30‑6‑2000. The order received on 17‑5‑1999, therefore, assessments made on 29‑6‑2000 and 28‑6‑2000 respectively are within time. The contention of the learned counsel for the assessee that the assessments have been made in violation of law of limitation has no merit.

10. Before parting with the appeals, we would prefer to refer the case law cited by the learned counsel for the assessee. The cases cited as 1998 PTD 3835 (Lahore), 1999 PTD 4158 (SC) as well as 2000 PTD 306, are quite distinguishable, besides nothing to do with the controversy involved in the present appeals as the above case law deals with the issues relating to fundamentals and jurisdiction in reference and appeal, opportunity to the assessee and filing of Constitutional petition instead of appeal and reference.

11. We have also gone through the ratio of judgments cited as 1998 PTD (Trib.) 1238, 1993 PTD 332, 1997 PTD 851 and are of the considered opinion that the case law cited are apparently irrelevant being in respect of stay issued by the High Court and finalization of the assessment after the grant of stay.

12. The case law cited as 1997 PTD 851, reveals that no appeal was preferred by any of the party and assessment was completed after the lapse of one year from the communication of the order, hence it is not relevant as in the present case the appeals were preferred thus the case of the appellant falls within the ambit of section 66(1)(a) and (b).

13. So far as next issue is concerned, the learned counsel argued that Advocate/A.R. of the assessee attended the case before the Assessing Officer and showed his intention willingness to cross‑examine departmental witnesses, either if, Bank Manager as directed by the Hon'ble Court as on 19‑7‑1997. The learned DCIT in his assessment order claimed to have served notice under section 148 to the concerned Bank Manager and the assessee, and the service of the said notice has allegedly been made on the A.R namely Mr. Aminuddin Ansari, Advocate. However, record reveals that no notice under section 148 of the Income Tax Ordinance, 1979 was ever served on the A.R. of the assessee, as there is no signature on the notice under section 148 of the Income Tax Ordinance 1979. The signature of the A.R. or the assessee is missing on the notice under section 148 of the Income. Tax Ordinance, 1979, therefore, any evidence recorded without due service of notice or .m the absence of the assessee, has no legal value. 1n the circumstances, the Tribunal's direction which is mandatory has not been complied with, as the assessee has not been provided a chance to cross‑examine the witness, even otherwise, any statement wherein opportunity of cross‑examination has not been provided, is an inadmissible document and cannot be relied for the determination of any fact.

14. The learned CIT(A) has also observed that notice under section 13, said to be served by fixture/pasting is not valid as provisions of section 154 of the Income Tax Ordinance, in this context, have not been followed. Substituted service is effected where service of notice is, not possible through ordinary course of service. The diary is silent in respect of the fact that efforts were in fact taken to effect the service through ordinary course but service was not possible. Besides A.R. of the assessee has regularly attended the proceedings for about 2 years, hence it appears that without making service through ordinary course, tried to serve through substitute mode of service

15. The diary sheet/order sheet for the two years under appeal, is silent regarding measures taken for service through ordinary course., we, therefore, find that there is no legal or valid service, under section 13. In this respect, reliance is placed on a case law cited as (1999) 80 Tax 204 (Trib.) We, in the circumstances, find that the learned CIT(A) has D rightly set aside the order for the assessment years 1989‑90 and 1990‑91 with the specific directions to comply with the directions given by the Tribunal to provide an opportunity of cross‑examination two the assessee.

16. In the circumstances (supra), and in view of our findings made above, the appeals stand dismissed.

C.M.A./M.A.K./360/Tax (Trib.) Appeal dismissed.