(a) Income Tax Ordinance (XXXI of 1979)---

---S. 156(1) & (3)---Rectification of mistake---Deeming effect---Terms any Income-tax Authority" or "Appellate Tribunal "---Bifurcation exists to the provisions of S.156(1) of the Income Tax Ordinance, 1979 with regard to the terms "any Income-tax Authority" or the "Appellate Tribunal" which had been disjoined from each other by using the word "or" in between them---In subsection (3) of S.156 of the Income Tax Ordinance, 1979, only the words "any Income-tax Authority" have been used but there was no mention of "Appellate Tribunal"---Such appeared to be a cautious omission/intentional omission by the Legislature of not including the words "the Appellate Tribunal" alongwith the words "Income-tax Authority" in the provisions of subsection (3) of S.156 of the Income Tax Ordinance, 109-whereas specifically the said words (the Appellate Tribunal) were mentioned in subsection (1) of S.156 of the Income Tax Ordinance, 1979---Various classes of "Income-tax Authorities" had been enumerated in S.3 under Chap. II of the Income Tax Ordinance, 1979, the Appellate Tribunal had nowhere been included in the categories of "Income-tax Authority".

(b) Income Tax Ordinance (XLIX of 2001)-----

-----S. 221(3)---Rectification of mistake---Application of rectification of mistake to Appellate Tribunal---Deeming effect---Provision of S.221 of the Income Tax Ordinance, 2001 dealing with the rectification of mistake wherein the words "the Appellate Tribunal" have been specifically mentioned alongwith the words "the Commissioner, Commissioner (Appeals)" in subsection (3) of S.221 of the Income Tax Ordinance, 2001---Effect---Income Tax Ordinance, 2001 has made the Appellate Tribunal liable to give deeming effect to the rectification application if no order as passed within the time period as fixed therein.

(c) Income Tax Ordinance (XXXI of 1979)----

----S.156(3)---Rectification of mistake---Rectification application to Appellate Tribunal---Deeming effect---Neither could be inferred nor suggested that the terms "Income-tax Authority" or "such Authority" as used in subsection (3) of S.156 of the Income Tax Ordinance, 1979 could at all be understood to include "the Appellate Tribunal" as well for giving deeming effect to the mistake sought to be rectified through the Appellate Tribunal.

(d) Interpretation of statutes---

---- Deeming provision to be strictly construed. and its scope should not be extended beyond what was intended and required by the Legislature.

(e) Income Tax Ordinance (XXXI of 1979)---

--S.156(3)---Rectification of mistake---Rectification application to Appellate Tribunal---Deeming effect---Request of the assessee for giving deeming effect to the main application for rectification in view of provisions of subsection (3) of S. 156 of the Income Tax Ordinance, 1979 could not be acceded to and the same was refused by the Appellate Tribunal.

PLD 1988 Lah 49; PLD 1984 Kar. 345; PLD 1970 SC 29; Interpretation of Statutes by Shaukat Mahmood; 1991 PTD 258 and (1958) 33 ITR 106 ref.

(f) Income Tax Ordinance (XXXI of 1979)---

---S. 134---Appeal to the Appellate Tribunal---Remand of case-- Scope---Non-speaking order---Issues left undecided---Contention that Appellate Tribunal had no power to remand the case to the Appellate Authority, was not tenable for the reason that an appellate forum provided under any law in the absence of specific provision is having an inherent power to remand the case to the lower forum of which the order has been appealed against if the adjudication by that lower forum is improper or where the impugned order is a non-speaking order and not fulfilling the requirements of a judicial order or where the matters or issues raised have been left undetermined.

(g) Income Tax Ordinance (XXXI of 1979)---

---Ss.135(5) & 156---C.B.R. Circular No.5 of 1997, dated 12-7-1997---Simplied Self-Assessment Scheme--Disposal of appeal by the Appellate Tribunal---Rectification of mistakes---Mistake of law---Remand of assessment---Annulment of assessment---Mistakes of law apparent from record, which were obvious and glaring and going to the roots of the case; were liable to be rectified by way of annulling. the assessment instead of remanding the case to lower forum---Validity---Provision of S.135(5) of the Income Tax Ordinance, 1979 empowered the Appellate Tribunal to cancel or vary the order and to issue such consequential directions as the case may require---No restriction or prohibition existed for the Appellate Tribunal for passing an order of remand or remitting the case back to the First Appellate Authority alongwith consequential directions for rehearing the appeal for deciding the legal and factual issues raised before such authority on merits by giving findings on each issue by a speaking order with reasons of each finding to that effect-- Such order could not be termed as having any mistakes of law apparent from record liable to be rectified---No mistake of law attracting rectification by the Appellate Tribunal as envisaged in provisions of S.156 of the Income Tax Ordinance, 1979 was found---Normally, it was desirable that the forum seized of the matter, in-the hierarchy of the forums provided under law for the redressal of the grievances of the parties through appeal or revision etc., should properly adjudicate the issues raised before such forum by giving findings on each such issue with reasons to that effect---Application for rectification was rejected by the Appellate Tribunal in the circumstances.

Understanding the Statutes by S.M. Zafar ref.

Mir Ahmad-Ali for Applicant.

Abdul Jaleel, DR for Respondent.

Date of hearingr25th January, 2003.

ORDER

The applicant/assessee through this miscellaneous application has sought rectification of the order, dated 23-8-2000 passed by the Tribunal in I.T.A. No.736/IB of 1999-2000.

2. The applicant/assessee while reproducing the relevant part and observations' of the order of the Tribunal and also the concluding part of the order of the first appellate forum and further quoting the provisions of section 135 of the then Income Tax Ordinance, 1979, alleged. as under:---

(1)That all issues raised before both the appellate forums in the instant. appeal were based upon application of statutory provisions and procedure provided under Self-Assessment Scheme made for the year under consideration such as:--

(a)The statutory provisions wherein an order was required to be passed where a return qualified for acceptance under SAS as provided under said Scheme but selected for special audit through random ballot;

(b)Effect of non-compliance of procedure of assessment provided under subordinate legislation.

(2)That the applicant was astonished to note that the decision on the issues were brushed aside and appeal was decided with the observations. (Relevant part of the observation of the Tribunal have been reproduced in the application).

(3)That in order to appreciate the order of the Tribunal in appeal, it is essential to reproduce concluding part of the first appellate forum. (The concluding part of the order of the first appellate forum has been reproduced in the application).

(4)That before going further in the matter it is essential to look at applicable provisions and that under section 134 of 'the Ordinance, it is provided that appeal before Tribunal may be filed, after appellate decision, against assessments finalized by the Deputy Commissioner. (The applicant then reproduced the provisions of section 135(4) of the then Ordinance, 1979 in the application)

(5)That in other subsections, emphasis is also given on assessment and not on appellate order because such order merges in appellate order and as such Legislature has not provided limitation for this very purpose and that under principle of interpretations, intention of lawmakers must be gathered from language of provisions and if same practice remains static the assessee will become football to bare kicks at every stage and litigation process will never end and that it is adjudged; "Looking to the labour put in by learned counsel for the appellant I wished to decide issues on merit" but end remains Zero and that it can safely be called. "Bell calls others to Church but goes not itself' and that as aforesaid, from plain reading of statutory provisions and principles of law enunciated by the Superior Courts, following points are raised to apply in similar facts and circumstances of case:--

(a)Provisions of Ordinance riot permit Tribunal to remand back to First Appellate Authority.;

(b)No limit is provided for appeals to be re-decided;

(c)Orders remanded by higher forums on question of laws never appreciated but regarded as misapplication of mind;

(d)Remand be avoided to shorten litigation and to save people from avoidable expenses and mental agony;

(e)Appellate Courts are bound to decide controversy itself;

(f)Remanded order passed in improper exercise of appellate jurisdiction is never being called a judicial order.

(6)That at the time of hearing, it was very humbly, whole heartedly submitted that on .the directions of the Bench written arguments, photocopies of precedents, extracts from famous books on interpretation of statutes compiled by learned Messrs Shaukat Mahmood and S.M. Zafar were also provided to assist Bench on both the issues raised, being important, legal in totality and bears significance, to be decided considering statutory provisions and principles of law as laid down by the superior judicial authority.

3. Lastly, the applicant/assessee prayed that these are, mistakes of law apparent from record which are glaring, obvious and were going to the roots of the case and therefore, the order under reference may be rectified/modified as provided under statutory provisions and in the light of decision of judicial authorities as well Tribunal itself.

4. We have heard Mr. Mir Ahmad Ali, Advocate for the applicant/ assessee and Mr. Abdul Jaleel, DR for the respondent/department and have perused the respective orders.

5. Briefly the relevant facts that the assessee declared net income at Rs.124,000 and her case was selected for special audit through random ballot. The AR of the assessee attended the proceedings in response to statutory notices and furnished documents as called for. Books of accounts were not produced being not maintained. The Assessing Officer did not accept the declared version. He observed that all the previous returns were accepted under SAS and no normal assessment has been made upto assessment year 1996-97. He ;further observed that the declared sales were completely unverifiable as no duplicate vouchers were being maintained by the assessee. He then termed the declared daily sales to be very low and then estimated the daily sales at Rs.7,000 to calculate total sales at Rs.2,100,000. The Assessing Officer applied G.P. rate at 20% as applied by the assessee and allowed expenses as claimed and then made add backs under P&L account expenses on account of unverifiability of the claims as per details in the assessment order and then computed total income at Rs.295,367.

6. Against the above treatment, the assessee went in appeal before the first appellate forum and the learned Appeal Commissioner vide appellate order, dated 25-3-2000 set aside the assessment with the direction to reconsider the claim of the assessee to the effect that the return qualifies to be accepted under SAS, on merits.

7. Thereafter, the assessee preferred appeal before the Tribunal and the Tribunal vide order, dated 23-8-2000 (passed by the then learned Chairman sitting singly) remanded the appeal back `to the learned CIT(A) with the direction to re-hear the appeal and decide the legal and factual issues raised before him on merits. It was also directed that the learned Appeal Commissioner should not set aside any issue for reconsideration of the Assessing Officer but should give findings on each issue raised before him by an speaking order duly supported with the reasons for each finding.

8. Now the applicant/assessee has again approached this Tribunal through this miscellaneous application under section 156 of the then Ordinance, 1979 for rectification of the said order of the Tribunal on the averments made in the said application as narrated above.

9. During the hearing proceedings of the instant application, another application was moved on behalf of the applicant/assessee on 24-9-2002 on the basis of averments as made in the said application resultantly tire requesting that the notice of the Tribunal may be withdrawn and the proceedings may be filed and the mistakes sought to be rectified shall deem to have been rectified in terms of subsection (3) of section 156 of the then Ordinance, 1979. It was stated in the said application that the above miscellaneous application. was received in the office on 28-9-2000 and the financial year in terms of subsection (3) of section 156 in which this application was filed ended on 30-6-2001 and the order was required to be passed by 20-6-2002 and that since no order under section 156(1) was passed as provided in law and hence it is deemed to have been rectified and all provisions of the Ordinance shall have effect accordingly. In this application; the comparison of provisions of section 156 of the then Ordinance, 1979 and the provisions of section 221 of the new Income Tax Ordinance, 2001 has also been made and the case-law with regard to word "Deemed" used in a statute, has also been quoted vis-a-vis creation of legal fiction in the statute to solve the proposition by referring (i) PLD 1988 Lahore 49; (ii) PLD 1984 Karachi 345; and (iii) PLD 1970 SC 29.

10. The learned AR of the assessee/applicant first of all argued the case in respect of the later application which has been fled in the main. miscellaneous application requesting for passing a deemed order of rectification in terms of provisions of subsection (3) of section 156 of the then Ordinance, 1979. He contended that the miscellaneous application for rectification was filed on 28-9-2000 and it was to be decided by 30-6-2002 while calculating the period from the financial year in which the application was filed and which ended on 30-6-2001 in view of provisions of subsection (3) of section 156 of the then Ordinance, 1979. He further contended that no order under section 156(1) has been passed by the Tribunal by 30-6-2002 and therefore, the mistake pointed out in the said application shall be deemed to have been rectified and the provisions of subsection (3) of section 156 of the Ordinance shall have effect accordingly. He while referring the relevant provisions of section 156, contended that the term "income-tax authority" and the term "such authority" have been used in subsection (3) of section 156 of the Ordinance, 1979 and the term "such authority" included the Tribunal which too was the authority in view of the scheme of different forums provided under the Income Tax Ordinance, 1979. He in order to define the term `authority' referred the book on "interpretation of Statutes" by Mr. Shaukat Mahmood. He then stated that authority includes the authority of all the forums provided under a law. He also cited various case-law from Indian jurisdiction such.as 1991 PTD 258 and (1958) 33 ITR 106 to establish that the term "authority" as mentioned in sub-section (3) of section 156 of the Ordinance, 1979 included the Income Tax Appellate Tribunal as an authority for deciding the said application. The learned AR then laid emphasis on the word "deemed" used in the said provision in order to establish that the Tribunal was also bound to give deeming effect to the application for rectification filed before the Tribunal and the mistake pointed cut in the application shall be deemed to have been rectified. For this argument he referred the case-law of the Superior Court as quoted above with regard to the interpretation of word "deemed" used in a statute and creation of fiction of law in the statute to that effect for solving the proposition of a case.

11. On the other hand, the learned DR contended that there was a specific distinction between the Income-tax Authorities and the Appellate Tribunal under. the provisions of the Ordinance, 1979 and the Tribunal was not a income-tax authority under the said Ordinance and a separate forum/entity and as such the time period fixed in subsection (3) of section 156 of the Ordinance, 1979 was not applicable to the Tribunal for passing any deemed order.

12. We have considered the above contentions of both the sides with regard to the said application and have also gone through the relevant provisions of the law.

13. In our view, there is a clear cut bifurcation in the provisions or subsection (1) of section 156 of the Ordinance., 1979 with regard to the terms "any income-tax authority" or the "Appellate Tribunal" which have been clearly disjoined from each other using the word "or" in between them. In subsection (3) of the said section, only the words "any income-tax authority" have been used but there is no any mention of Appellate Tribunal. In these circumstances, there appeared to be a cautious omission/intentional omission by the Legislature of not including the words "the Appellate Tribunal" alongwith the words "income-tax authority" in the provisions of subsection (3) of section 156 whereas specifically the said words (the Appellate Tribunal) were mentioned in subsection (1) of said section. Even otherwise, the various classes of "income-tax authorities" have been enumerated in section under Chapter-II of the then Ordinance, 1979 but the Appellate Tribunal has nowhere been included in the categories of "income-tax authorities". In fact, the Appellate Tribunal stands constituted by separate provision under section 133- under Chapter-XIII of the Ordinance, 1979 and as such is a forum not falling within the category of term "income-tax authority". Our view is further strengthened by another circumstance an( the position which emerged in the parallel provisions of section 221 or the new Income Tax Ordinance, 2001 dealing with rectification at mistakes wherein the words the Appellate Tribunal" have also been specifically mentioned alongwith the words "the Commissioner, Commissioner, (Appeals)" in subsection (3) of section 221 of the Income Tax Ordinance 2001. Obviously the new Ordinance 2001 was making the Appellate Tribunal liable to give deeming effect to the rectification application if no order is passed within the time period as fixed therein. The instant case is a case under the old income Tax Ordinance, 1979 and it is to he decided in accordance with the provisions of old Income Tax Ordinance, 1979 because the assessment year (1997-98) involved in the case would be dealt with under the said Ordinance. Moreover, it is pertinent to mention here that there are "savings" provided in sub section (1) and subsection (4) of section 239 of the new Income Tax Ordinance, 2001 with regard to the applicability of the repealed Ordinance (Income Tax Ordinance, 1979) in case of making of any assessment in respect , any income year ending on or before 30-6-2002 and in case of any proceedings under the repealed Ordinance pending on the commencement of the-new Ordinance (of 2001) for to be continued and disposed of under the repealed Ordinance (of 1979). In this situation, there remained nothing to infer air suggest that the terms "income tax authority" or "such authority" as used in subsection (3) of section 156 of the Income Tax Ordinance, 1979 could at all be understood to include "the Appellate Tribunal" as well for giving deeming effect to the mistake sought to be rectified through the "Tribunal. Obviously, the deeming provisions- under the Ordinance, 1979 will only be applicable to the "income-tax authorities" as categorized in the said Ordinance of 1979. Moreover, it is an established principle of, interpretation of statutes that a deeming provision of law is to be strictly construed and its scope should not be extended beyond as to what was intended and required by the Legislature.

14. As a result of above discussion, the request of the assessee for giving deeming effect to the main application for rectification in view of provisions of subsection (3) of section 156 of the Ordinance, 1979 cannot be acceded to and as such that same is hereby refused.

15. Now, we proceed to discuss the main application for rectification of the order, dated 23-8-2000.

16. In order to have a clear view of the findings of the Tribunal which have been sought to be rectified, the relevant para No.2 of the order, dated 23-8-2000 of the Tribunal from the original file (part of which has also been reproduced in the instant miscellaneous application) is reproduced asunder:--

"(2) The learned CIT(A) held that the return was fully qualified for acceptance under Self-Assessment Scheme which was selected for special audit and the processing of return filed and selected for audit is very clearly provided in Para. 7 of the Scheme and that the appellant has taken plea that return set apart for special audit still remained under the parameter of section 59 and it should be assessed under section 59. After: making these observations the learned CIT(A) made a very strange order. He set aside the assessment with .the direction to re-consider the claim of the appellant to the effect that return qualifies to be accepted under the Self-Assessment Scheme on merits. The learned CIT(A) has not given any finding whatsoever on the issues raised before him. The learned CIT(A) instead of giving the findings himself has acted as a post-office and has passed on the issues to the Assessing Officer for decision. This attitude on the part of appellate authority cannot be approved as it is a case of shifting of responsibility to the subordinate officer. As already observed by me the objection to the jurisdiction of Assessing Officer was never raised before the Assessing Officer and was raised for the first time in first appeal.. The issues raised were points of law and, therefore, the learned CIT(A) ought to have decided the legal issues first and thereafter the other factual issues on merits. The learned counsel for the appellant has reiterated the same contentions before me and has requested for findings on the points of law. Looking to the labour put in by learned counsel for the appellant I wished to decide the issue on merits. However, I am refraining from doing so because I would not like to approve the tendency on the part of First Appellate Authority to dispose of the appeal without deciding the issues raised before him. In the present case the learned CIT(A) has merely disposed of the appeal without deciding the issues raised before him. The treatment is very strongly deprecated. disapprove the tendency of disposing of the appeal without deciding the issues and leaving the assessee in lurch. I, therefore, remand the appeal back to the learned CIT(A) with the direction to re-hear the appeal and decide the legal and factual issues raised before. him on, merits. The learned CIT(A) should not set aside any issue for re-consideration of the Assessing-Officer but should give findings on each issue raised before him by an speaking order duly supported with the reasons for each finding."

17. The learned AR of the assessee/applicant also referred the said para of the order of the Tribunal and contended that the issues and points raised before the Tribunal were-not dilated upon by the Tribunal and were brushed aside without giving any specific findings on the issues and points as raised before the Tribunal. He further contended that action of the Tribunal in remanding the case back to the learned Appeal Commissioner was not warranted under the law as there was no power of remand available to the Tribunal for remitting the case to the first appellate forum. He then contended that it was a case where whole of the proceedings initiated in consequence to the selection of the case through random ballot were without any lawful authority and jurisdiction and the provisions of Para-7 of the Scheme have not been followed and as such the assessment framed under section 62 was illegal. He also tried to explain the import of words "may" and "shall" as have been interpreted and elaborated in S.M. Zafar's book titled "Understanding the Statutes'." and contended that the word "may" can also be taken to be mandatory in nature in certain circumstances. He further contended that the procedure was not followed as per para. 7 of Circular No. 5 of 1997 and hence it was case of annulment of assessment and not a case of remand as has been done by the Tribunal. He finally argued that there appeared mistakes of law apparent from record in the said order of the Tribunal which were obvious and glaring and going to the roots of the case and as such liable to be rectified by way of annulling the assessment instead of remanding the case to lower forum.

18. On the other hand, the learned DR contended that no illegality has been committed by the Tribunal in remanding the case to the learned Appeal Commissioner. He stated that the matter was still open for reconsideration by the learned Appeal Commissioner on all issues as raised in first appeal before the learned CIT(A) and then raised in second appeal before the Tribunal and as well as in the instant application.

19. We have considered the respective contentions of the learned representatives of the parties and have gone 'through the respective orders.

20. We may like to mention at the very outset .that the thn learned Chairman while sitting singly on the Bench. has passed the order, dated 23-8-2002 vide I.T.A. No.736/IB of 1999-2000 in the appeal of the assessee and all the written arguments furnished before the learned CIT(A) in first appeal have been reproduced in the order alongwith case law, referred therein. Thereafter, a detailed order was passed by the Tribunal while looking to all the aspects of the case in. the light of contentions of learned AR of the assessee and then the case was remanded to the learned Appeal Commissioner. Here we may like to refer again the relevant part in para 2 of the said order of the Tribunal which has also been reproduced above wherein it was recorded that "the learned counsel for the appellant has reiterated the same contentions before me and has requested for findings on the points of law". It was further observed in the said order by the then learned Chairman as under;--

"Looking to :the labour put in by learned counsel for the appellant I wished to decide the issues on merits. However, I am refraining from doing so because I would not like to approve the tendency on the part of First Appellate Authority to dispose of the appeal without deciding the issues raised before him."

21. If we see to the observations and directions given by the then learned Chairman .in the said order, the same reflect that the learned Appeal Commissioner has been directed to re-hear the appeal and decide the legal and factual issue raised before him on merits and further, that the learned Appeal Commissioner should not set aside any issue for -reconsideration of the Assessing Officer but should give findings on each issue raised before him by an speaking order duly supported with the reasons for each finding. The argument of learned AR that there was no power with the Tribunal to remand the case to the First Appellate Authority, was not tenable for the reason that an appellate forum provided under any law in the absence of specify provision is having an inherent power to remand the case to the lower forum of which the order has been appealed against if the adjudication by that lower forum is improper or where the impugned order is a non-speaking order and not the requirements of a judicial order or where the matters or issues raised have been left from being adjudicated upon. Moreover, while seeing to the provisions contained in subsection (5) of section 135 of the Income Tax Ordinance, 1979 empowering the Tribunal to cancel or vary the order and to issue such consequential directions as the case may require, it can easily be inferred that there is no. restriction or prohibition for the Tribunal for passing an order of remand or remitting the case back to the First Appellate Authority alongwith consequential directions for rehearing the appeal for deciding the legal and factual issues raised before such authority on merits by. giving findings on each issue by a speaking order with reasons of each finding to that effect. How can such an order be termed as having any mistakes of law apparent from record liable to be rectified? We do not see, any mistake of law in the order, dated 23-8-2000 passed by the Tribunal in I.T.A. No.736/IB of 1999-2000 for the assessment year 1997-98, attracting rectification of the same by the Tribunal as envisaged in the provisions of section 156 of the Income Tax Ordinance, 1979. Even otherwise, it is normally desirable that the forum seized of the matter, in the hierarchy of the forums provided under a law for the redressal of the grievances of the parties through appeal or revisioner etc., should properly adjudicate the issues raised before such forum by giving findings on each such issue with reasons to that effect. Therefore, the arguments advanced by the learned AR of the assessee are having no, force. Accordingly, we see no merit in the application for rectification.

22. Consequently, the above miscellaneous application filed by the assessee is rejected.

C.M.A./695/Tax(Trib.)Application rejected.