Income Tax Ordinance (XXXI of 1979)---

----S. 156---Rectification of mistake---Rectification sought by assessee from Assessing Officer on, the issues in respect of which the First Appellate Authority had already made his adjudication was not proper-- If there was any mistake of fact or law calling for rectification in the order of First Appellate Authority, the proper. course was to seek rectification from that authority---Original application filed by assessee being incompetent, appeal was also incompetent and the same was dismissed by the Appellate Tribunal.

Ellahi Cotton Mill's case (1983) 48 (Tax) 56; 1992 PTD 1681 and M.A. (Rect.) Nos. 450 to 454/KB, dated 30-3-2001 ref.

1992 PTD 1681 rel.

Muhammad Aleem for Appellant.

Muhammad Ali Indhar, D.R. for Respondent.

Date of hearing; 4th May, 2002.

ORDER

JAVAID IQBAL (JUDICIAL MEMBER).------Through this appeal assessee has challenged the finding of learned CIT(A) in Order No. 121, dated 30-4-2001. The following grounds of appeal have been taken by the assessee:--

That the learned CIT(A) was not justified to confirm the treatment of the DCIT, who rejected the application under section 156 of the Ordinance when mistakes of facts and law both can be rectified under section 156 of the Ordinance. Even the order originally finalized under section 62 was. also suffering from legal infirmities and being framed on incorrect appraisal of facts, law and issues decided by the senior appellate forum.

That the appellant enjoying tax holiday and in view of issues decided by the Income Tax Appellate Tribunal and further under the provisions of the Protection of Economic Reforms Act, 1992 (Act-XII of 1992) prayed that exemption be allowed on gain on sale of fixed assets, sale of fertilizer, bags, income from NDFC and income on security deposit amounting to Rs.133,900, Rs.65,000, Rs.113,054, Rs.13,195 and Rs.140,482 respectively.

That the appellant craves for the proper, tax credit under section 50 of the Income Tax Ordinance, 1979.

2. Both the parties made their appearance through the representatives and were heard.

3. Brief relevant facts of the case are that assessee being manufacturer of sugar carrying on business in the name and style of Larr Sugar Mills Limited. Assessee claimed exemption under section 118D of Part 1^st of the Second Schedule to the Income Tax Ordinance, 1979. (hereinafter called Ordinance) and such exemption was allowed by Assessing Officer. However; profit received from NDFC at Rs.13,195, from sale of fertilizer at Rs.113,054 against security deposit against ADBP loan at Rs.140,482 and from gain on sale of fixed assets at Rs.133,900 were considered as income from other sources and were subjected to section under section 30 of the Ordinance. Feeling dissatisfied with the finding of DCIT, assessee sought remedy through, filing of appeal before learned CIT(A), who vide his appellate Order No.432, dated 3-11-1998 rejected the appeal of assessee recorded his finding the other income shown at Rs.4,65,631 was not exempt under the provision of section 118-D as only profits and gains derived from industrial undertaking set up between certain dates in the particular area linked with either the setting up of the industrial undertaking or its commercial productions whichever is later was to be exempt from tax. On 30-12-2000 assessee once again agitated .the same issues before learned DCIT by way of filing rectification application under section 156 of the Ordinance, who dismissed the application vide order, dated 15-3-2001. The assessee agitated the same and filed appeal against the order, dated 15-3-2001 and the learned CIT(A) rejected the appeal of assessee vide his order, dated 6-7-2001. The assessee before us filed this further appeal against this order of learned CIT(A).

4. Before us the learned A.R. of the assessee, Mr. Muhammad Aleem, contended that the orders of two lower forums refusing the rectification were not tenable and stated that in the light of judgment of Supreme Court in: the case of Ellahi Cotton Mills, the matter was rectifiable. In support of his contention he further referred the cases cited as (1983) 48 (Tax) 56 H.C. Karachi, 1992 PTD 1681 (SC of Pakistan) and order of learned ITAT in M.A. (Rect.) No.450 to 454/KB, dated 30-3-2001. The learned D.R. opposed the contention of the learned A.R. of the assessee.

5. We have heard the submission of the representative of the parties. It has been observed that original order of assessment was completed by Assessing Officer under section 62. The income of sugar mill was exempted under section 118D, however the Assessing Officer assessed the income at Rs.413,659 as income from other source under section 30 of the Income Tax Ordinance, which was appealed against before learned CIT(A) who dismissed the appeal of assessee. However, according to learned A.R. no further appeal was preferred before the ITAT, thus the order of assessment got merged with the order of appellate authority and the order obtained finality The issues in respect of which rectification was sought had already been adjudicated by appellate authority, and who alone was competent to adjudicate the matter under section 156 provided such rectification was called for in the order and rectification by the subordinate authority of the Assessing Officer will under the present condition hamper the process of law and the Assessing Officer or the subordinate forum will be considered to have been clothed with power of nullifying the action of the appellate authority. Such action of lower forum will have reaching repercussion and there will be no sanctity attached to the order of appellate authority which will create indiscipline in the department uncertainty to the tax liability, and taken away the credibility of appeals order. As in the present matter rectification was sought by assessee from the Assessing Officer on the issues in respect of which the appellate authority had already made his adjudication and rejected the contention of assessee, the same was not proper. If in the opinion of assessee that there was any mistake of fact or law as calling for rectification in the learned CIT(A) order the proper course for him was to seek rectification froth that authority. In this respect the case-law reported as 1992 PTD 1681 SC of Pakistan also support our view. The assessee has chosen wrong forum by making application before the learned DCIT i.e. the original application filed by assessee being incompetent the present appeal is also incompetent which is dismissed accordingly.

C.M.A./689/Tax(Trib.)Appeal dismissed