BEFORE SYED MASOOD UL HASSAN SHAH, JUDICIAL MEMBER AND SAEED AHMAD ZAIDI, ACCOUNTANT MEMBER VS BEFORE SYED MASOOD UL HASSAN SHAH, JUDICIAL MEMBER AND SAEED AHMAD ZAIDI, ACCOUNTANT MEMBER
2002 P T D (Trib.) 458
[Income-tax Appellate Tribunal Pakistan]
Before Rasheed Ahmad Sheikh, Judicial Member and Javed Tahir Butt, Accountant Member
M. A. Stay Nos.640/LB to 642/LB of 2001, decided on 03/11/2001.
(a) Income Tax Ordinance (XXXI of 1979)---
----S.134(6)---Civil Procedure Code (V of 1908): S.151---Appeal to the Appellate Tribunal---Re-assessment proceedings, stay of---Tribunal, according to S.134(6) of the Income Tax Ordinance, 1979 is empowered to stay recovery proceedings in a case where an appeal against the impugned order has been filed before it---Stay of recovery of outstanding tax demand cannot be granted beyond the period of six months in aggregate by the Tribunal---Yet the fact remains that in view of 5.151, C.P.C. the Court is vested with inherit powers to grant stay of ancillary proceedings in order to meet .the ends of justice or to prevent abuse of process of the Court---Where an Act confers jurisdiction, it impliedly also grants the powers of doing all such acts or employing such means as are essentially necessary, to its execution.
1985 PTD 375;1986 PTD 92; NTR 1991 HC 75; 1991 PTD 872; 1997 PTD (Trib.) 902; 98 ITR 39; 110 ITR 79; 194 ITR 507 and 1981 TR 623 rel.
(b) Income-tax----
---Interim order---Interim order is part of working of judicial system and for that purpose no separate or specific provision is necessary -to empower a Court to issue an interim order---Even in the absence of any such specific provision, a Court has power to grant an interim relief in the appropriate cases as the same is ancillary and incidental to the power to grant final relief---Where a Court has power to pass an order finally it will generally have the power to grant interim relief unless such power is either expressly or by necessary implication excluded.
1985 PTD 375; 1986 PTD 92; NTR 1991 HC 75; 1991 PTD 872; 1997 PTD (Trib.) 902; 98 1TR 39; 110 ITR 79; 194 ITR 507 and 198 ITR 623 rel.
(c) Income Tax Ordinance (XXXI of 1979)---
----S.134(6)---Appeal to Appellate Tribunal---Stay of re-assessment proceedings---Scope---Open to the Tribunal under the scope and ambit of the appellate jurisdiction conferred under S.134(6) of the Income Tax Ordinance, 1979 to stay operation of any proceedings initiated by the lower Authorities where the appeal against the impugned order or direction is pending for disposal before the Tribunal---If the Tribunal finally declares the order passed by the lower Authority ,as passed in flagrant violation of law, then the whole exercise made by the Assessing Officer in finalizing the re-assessment would be futile---Tribunal is empowered to pass an interim order restraining the lower Authority to implement the orders or directions made by their higher Authorities where the appeal in that case is pending for adjudication before the Tribunal.
(d) Income Tax Ordinance (XXXI of 1979)---
----Ss.134(6) & 66A---Appeal to Appellate Tribunal---Cancellation of original assessment---Re-assessment proceedings by the Assessing Officer---Validity---Order of the Inspecting Assistant Commissioner regarding cancellation of the original assessment order was the subject of appeal before the Tribunal on, legal as well as on factual grounds-- Tribunal directed the Assessing Officer to refrain from initiating reassessment proceedings till the final disposal of the assessee's appeal by the Tribunal.
1985 PTD 375; 1986 PTD 92; NTR 1991 HC 75; 1991 PTD 872; 1997 PTD (Trib.) 902; 98 ITR 39; 110 ITR 79; 194 ITR 507 and 198 ITR 623 rel.
Asif Bhatti, I.T.P. for Appellant.
Javed-ur-Rehman, D.R. for Respondent.
Date of hearing: 3rd November, 2001.
ORDER
1. In these three miscellaneous applications, a private limited company deriving income from a spinning unit prays for stay of reassessment proceedings before the Assessing Officer Circle-O1, Coys Zone-III, Lahore in respect of assessment years 1997-98 to 1999-2000. Also requested that permission may be granted for out of turn hearing of the appeals which are pending for adjudication before the Tribunal.
2. A precise question has arisen as to whether in the absence of an express provision in the Income Tax Ordinance, 1979 (hereinafter called the Ordinance), this Tribunal has the power to stay operation of reassessment proceedings before the Assessing Officer particularly when the appeal against the original assessment order is pending for adjudication before the Tribunal.
3. Briefly, the learned counsel for the applicant stated that the assessments originally made in the present case, under section 62 and thereafter rectified under section 156 of the Ordinance were subsequently cancelled by the I.A.C. by invoking section 66A of the Ordinance being those were not only erroneously made but were also prejudicial to the interest of Revenue. Mainly the following reasons were put forth by the I.A.C. for cancelling the already completed assessments:
(1)That in order to compute net taxable income on- account of local sales, the expenses were not properly prorated by the Assessing Officer between the local sales and the export sales under provision of rule 216 of Income Tax Rules, 1982 read with C.B.R. Circular No.5 of 2000, dated 6-3-2000;
(2)that depreciation allowance was wrongly claimed on higher book value of assets based on revalued figures;
(3)that likewise lease finance charges/lease rentals, provision for gratuity, charity and donation without making adjustments thereof;
(4)that accretion in creditors in the years under reference was accepted without verification thereof, thus possibility of addition to be made under section 13(1)(a) on account of unexplained creditors was ignored; and
(5)that no findings have been given with regard to discharging tax liability under section 50 of the Ordinance on account of different items.
Consequently, the D.C.I.T. was directed to make a fresh assessment in accordance with law and also in the light of observations given by the I.A.C. in his order. This has grieved the applicant and appeals against this order of the I.A.C. have been instituted before us on 5-9-2000 which are pending for adjudication.
4. Learned counsel for the assessee also pointed out that meanwhile the Assessing Officer has resorted to reassessment proceedings by issuing a statutory notice under section 61 of the Ordinance, alongwith a letter requiring the assessee to submit certain documents for compliance to be made on 29-10-2001. Copies of those notices are placed on record to support the contention. According to him there is a fair chance of success of the assessee's appeal. He, therefore, earnestly prayed that the reassessment proceedings for the years under appeal be ordered to be stayed till the disposal of the assessee's appeals pending for adjudication before the Tribunal.
5. On the contrary the learned D.R. urged that in view of subsection (6) of section 134 of the Ordinance, this Tribunal is only empowered to stay recovery of outstanding tax demand for a period of six months in aggregate but not the operation of reassessment proceedings. He, thus, resisted that present miscellaneous applications are not maintainable in view of the specific provision available in the statute book. He rather requested that the assessee's appeals be ordered be fixed on priority basis.
6. We have given anxious thought to the averments advanced by the two rival parties appearing at the bar. There is no cavil to this proposition that according to section 134(6) of the Income Tax Ordinance the Tribunal is empowered to stay recovery of proceedings in a case where an appeal against the impugned order has been filed before it. In any case, the stay of recovery of outstanding tax demand cannot be granted beyond the period of six months in aggregate by the Tribunal. Yet the fact remains that in view of section 151 of the Code of Civil Procedure (V of 1908) the Court is vested with inherited powers to grant stay of ancillary proceedings in order to meet the ends of justice or to prevent abuse of process of the Court. It is an established principle of law that where an Act confers a jurisdiction, it impliedly also grants the powers of doing all such acts or employing such means as are essentially necessary to its execution. This view is also fortified by the following case-law:
1985 PTD 375, 1986 PTD 92, NTR 1991 HC 75, 1991 PTD 872; 1997 PTD (Trib.) 902; ,98 ITR 39, 110 ITR 79, 194 ITR 507 and 198 ITR 623.
7. We are also quoting a paragraph from an order of the august Lahore High Court in a case reported as 1991 PTD 872 whereby it was observed in the following words:
"Although there is no specific provision in the Wealth Tax Act enabling the Appellate Commissioner to stay the operation of the order impugned before him but it is-now well-settled that the Appellate Authority has inherent power to grant interim relief. Reference may be made to judgment of the Supreme. Court in Sindh Employees' Social Security Institution and another v. Adam Jee Cotton Mills Ltd. PLD 1975 SC 32 and Molvi Muhammad Ayub v. Chairman, Election Tribunal PLD 1976 SC 625. This petition, at this stage, is premature. It is disposed of accordingly."
8. From foregoing discussion 'and the ratio decidendi in the case-law cited supra we have no ambiguity in our mind that making of an interim order is part of working of judicial system and for that purpose no separate or specific provision is necessary to empower a Court to issue an interim order. Even in the absence of any such specific provision, a Court has power to grant an interim relief in the appropriate cases as the same is ancillary and incidental to the power to grant final relief. Where a Court has power to pass an order finally it will' generally have the power to grant interim relief unless such power is either expressly or by necessary implication excluded.
9. We are persuaded to conclude that under the scope and ambit of the appellate jurisdiction conferred under section 134(6) of the Income Tax Ordinance, it is open to the Tribunal to stay operation of any proceedings initiated by the lower authorities where the appeal against the impugned order or direction is pending for disposal before the Tribunal. We have also looked into this issue from another angle that if the Tribunal finally declares the order passed by the lower C authority as to have been passed in flagrant violation of law, then the whole exercise made by the Assessing Officer in finalizing the reassessment would dash to the ground. We, therefore, hold that this Tribunal is empowered to pass an interim order restraining the lower authority to implement the orders or directions made by their higher authorities where the appeals in that case is pending for adjudication before the Tribunal.
10. Reverting to the facts of the present case since the order of the I.A.C. regarding cancellation of the original assessments order is the subject of appeal before us on legal as well as on factual grounds, therefore we direct the Assessing Officer that he shall refrain from ID initiating reassessment proceedings in the present case till final disposal of the assessee's appeals by the Tribunal. The Assistant Registrar shall enlist the applicant's appeals for final adjudication before any available Division Bench in the last week of November, 2001.
11. Hence the miscellaneous applications filed by the assessee applicant succeed.
C.M.A./M.A.K./172/Tax(Trib.) Applications accepted.