I. T. A. No. 1181/LB of 2002, decided on 31st October, 2002. VS I. T. A. No. 1181/LB of 2002, decided on 31st October, 2002., 2003 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 1383 (2002)

Income Tax Ordinance (XXXI of 1979)---

----Ss. 66-A, 59(1), 80-D & First Sched., Para IV, Cl.2(b)---C.B.R. Circular No.16 of 1999, dated 11-9-1999, Para 2(b)(iv)---Self- assessment---Powers of Inspecting Additional Commissioner to revise Deputy Commissioner's order---Super tax---Registered firm of professional/medical practitioners---Non-payment of super tax-- Cancellation of assessment finalized under S.59(1) of the Income Tax Ordinance, 1979---Validity---Deletion of super tax by the First Appellate Authority was upheld holding that being a registered firm of professional/medical practitioners it fulfilled the condition of para. 2(B) of Part IV of the First Schedule to the Income Tax Ordinance, 1979-- Basis indicated by the revisional authority did not hold the field and, jurisdiction under S.66-A of the Income Tax Ordinance, 1979 was not lawfully assumed---Order passed by the Inspecting Additional Commissioner was vacated and original assessment order was restored by the Appellate Tribunal.

The Law Lexicon with Legal Maxims and Words and Phrases ref.

Sirajud Din Khalid for Appellant.

Mrs. Sabiha Mujahid, D.R. for Respondent.

Date of hearing: 26th September, 2002.

ORDER

This appeal by appellant registered firm deriving income from running a hospital is directed against order, dated 19-2-2000 passed under section 66A by IAC Income-tax/Wealth Tax, Range-IV; Multan on the grounds that inferences drawn and conclusions arrived at are against the facts of the case inasmuch as that JAC was not justified in holding that a firm which consisted of medical professionals/practitioners (doctors) is liable to super tax.

2. Relevant facts briefly are that return was filed declaring income of Rs.214771 under SAS. Tax was paid under section 80D. Assessment was finalized under section 59(1) of the Income Tax Ordinance, 1979 (hereinafter mentioned the Ordinance). Later on, on inspection of the file IAC found the completed assessment under section 59(1) without satisfying/justifying mandatory provisions of law as well as Self- Assessment Scheme erroneous in so far it was prejudicial to the interest of Revenue. A show-cause notice, dated 18-1-2002 was issued confronting the appellant that on declared income instead of paying super tax minimum tax liability was made under section 80D as per provisions of clause 2B of Part IV of the First Schedule to the Ordinance. As a result assessment under section 59(1) was wrongly made. The learned IAC found reply to-notice mentioned above "unsatisfactory". Another show-cause notice was issued pointing out the disqualification under para. 2(b)(iv) of C.B.R. Circular No.16 of 1999, dated 11-9-1999 for the reason that appeals for earlier years were pending before ITA on the same issue. In reply it was stated that return qualified to be accepted under SAS as the appeals stood decided before the assessment under section 59(1), dated 31-10-1999. IAC, however was of the view that as ITAT vide order, dated 31-7-1999 has set aside the assessment for the earlier years and against that miscellaneous application moved on behalf of the appellant was pending the matter was sub judice at the time of filing of the return. In view of the facts and factors mentioned above as appreciated by the IAC assessment completed under section 59(1) was found erroneous as well as prejudicial to the interest of Revenue which was cancelled by invoking provisions of section 66A. The Assessing Officer was directed to frame fresh assessment under section 62 after obtaining the relevant details.

3. Learned A.R. of the appellant has argued that IAC issued first show-cause notice on 18-1-2002 confronting the appellant that as a registered firm they did not fulfil the requirements of clause 2(b) para IV of the First Schedule to the Ordinance. A reply made has not been discussed having been brushed aside with remarks "unsatisfactory" which is against the principles of justice and fair play IAC instead of dropping the proceedings issued another show-cause notice on 1-2-2002 on altogether a different ground that return filed under SAS did not fulfil the conditions as' laid down under para 2(b)(iv) of C. B. R. Circular No. 16 of 1999, dated 11-9-1999. Although reply, dated 9-2-2002 has been partially discussed the IAC misconceived the facts of appeals pending or decided by ITAT by the date of filing of return on 31-10-1999. The A.R. has explained the position in chronological order in the following manner. Appeals for the assessment years 1996-97 and 1997-98 were decided vide ITA No. 4032 & 4033/LB/1998, dated 31-7-1999 whereby departmental appeals were set aside. Appellant filed M.A. for recalling of ITAT orders referred to above. M.A. was disposed of by ITAT. vide order, dated 10-12-1999 whereby orders, dated 31-7-1999 were recalled and in the light of the arguments advanced findings by the learned CIT(A) upheld instead of set aside as per original judgment. A.R. has vehemently urged that on filing of miscellaneous application for recalling the ITAT orders the appeals cannot be considered pending before ITAT. In" support of this contention learned A.R. has relied upon the meaning of word "pending" as per the Law Lexicon with legal maxims and words and phrases complied by P. Ramanatha Aiyar reprint edition 1996 highlighting as under:--

Pending The term pending means nothing more than un decided.

`Pending' is defined to mean depending remaining undecided; not terminated.

Pending proceeding. A legal proceeding is said to be pending as soon as it is commenced and until it is concluded. 12 SLR 20 = 47 I.C. 771."

Relying upon the above definition the learned A.R. has emphatically urged that appeals were not pending having been against the appellant by virtue of set aside by the date of filing of return i.e. 31-10-1999.

4. On merits the learned A.R. has argued that in this case ITAT vide order, dated 10-12-1999 in miscellaneous application upheld the decisions of the CIT(A) inasmuch as that the issue that appellant was registered firm of professionals and not liable to super tax stood settled. A.R. has further stated that in this case for the assessment year 1996-97, 1997-98 and 1998-99 these issues after having been discussed in detail super tax charged was deleted. A.R. has vehemently urged that the registered firm having been declared not liable to super tax by ITAT vide judgment, dated 10-12-1999 jurisdiction under section 66A was assumed without lawful authority.

5. D.R. on her part has argued that as at the time of filing of return for the impugned year of 1999-2000 miscellaneous application had not been disposed of, IAC was fully justified to consider the appeals pending and as a consequence justified to declare that return filed not eligible for USAS in view of para.2 (b)(iv) of C.B.R. Circular No. 16 of 1999, dated 11-9-1999.

6. Both the parties have been heard and the relevant orders carefully perused. We have observed that IAC disclosed the intention to revise the completed assessment for the impugned year as clause 2(b) Part IV of the First Schedule of the Ordinance was not applicable in this case. Appellant was accordingly confronted. It has been observed that not only that reply made has not been discussed at all but thereafter on issuance of 2nd show-cause notice, dated 1-2-2002 this issue has not been mentioned/discussed as if proceedings initiated on this ground were dropped at this point of time that provisions of section 66A were invoked with regard to the eligibility of the return for acceptance under USAS in terms of para 2(b)(iv) C.B.R. Circular No. 16 of 1999, dated 11-9-1999. As against that it is a matter of fact that being a 'firm, of professionals it has been declared to be covered under para 2(B) Part-IV of the. First Schedule proposed to be revised by the IAC has been throughout allowed by the First Appellate Authorities and finally by ITAT vide their judgment M.A. No.373, 372/LB/1999, dated 10-12-1999. Obviously initial basis for invoking of the provisions under section 66A was discarded by the IAC on his own while dislodged by Appellate Authorities. As far a the matter of pendency of appeals before ITAT is concerned the admitted facts are that appeals for the earlier years of 1996-97 and 1997-98 decided by ITA Nos.4032, 4033/LB/1999 through judgment, dated 31-7-1999. It is also admitted fact that M.A. was moved on 21-8-1999 which was also decided by M.A. Nos.372, 373/LB/1999, dated 10-12-1999 whereby deletion of super tax was held holding that being a registered firm of professionals/medical practitioners it fulfilled the condition of para. 2(B) of Part-IV of the First Schedule to the, Ordinance.

7. Viewed in this perspective it becomes absolutely clear that the basis indicated by the revisional authority under the provisions of section 66A do not hold the field. The issue of pendency of appeals is more of technical or academic interest rather than anything substantial in order to deny the legal right available to the appellant. In the facts and circumstances discussed above we are of the view that jurisdiction under section 66A was not lawfully assumed. As a consequence order passed under section 66A, dated 19-2-2002 is vacated and original assessment order restored. Appeal of the appellant is allowed.

C.M.A./671/Tax (Trib.)Appeal allowed.