Income Tax Ordinance (XXXI of 1979)---

----Ss.156, 80D & 138(2)(c) & Second Sched., Cl. (118E) --- Rectification of mistake---Exemption---Refund was claimed of tax paid under S.80-D of the Income Tax Ordinance, 1979 on turnover by way of rectification under S.156 of the Income Tax Ordinance, 1979 in view of judgment of Supreme Court of Pakistan---Rectification application was rejected being barred by limitation---Validity---Application was admittedly filed after the expiry of four years period and it was not open for the assessee to seek time-barred rectification---Intention and purpose of any limitation period set in law was to ensure that no issue was dragged beyond certain limited period of time giving it the impetus of some finality---Action of the Assessing Officer in rejecting the rectification application being time -barred did not warrant interference in the circumstances---Since law did not provide condonation of delay for certain bona fide reasons the Assessing Officer did not possess power to condone the delay even for bona fide reason---Assessing Officer did possess the power to rectify the order in view of the judgment of Supreme Court in determining refund but could not go beyond the limitation period prescribed by law, while invoking S.156 of the Income Tax Ordinance, 1979---Order of Supreme Court could not be implemented by way of rectification under S.156 of the Income Tax Ordinance, 1979 beyond the limitation period of four years---Remedy was still .available with the assessee under S.138 of the Income Tax Ordinance, 1979 where Commissioner had vast powers to revise the order, either on his own motion or on application made by the assessee and no limitation period was provided for revision of the order by the Commissioner on his own motion and he also possessed powers to condone the delay in case the application was moved beyond the limitation period of 90 days by the assessee under S.138(2)(c) of the Income Tax Ordinance, 1979.

PLD 1997 SC 582 = 1997 PTD 1555 ref.

Qazi Anwer Kamal for Appellant.

Zaki Ahmed for Respondent.

Date of hearing:16th November, 2002.

ORDER

By this order we would like to decide the appeals captioned above preferred by the assessee, being aggrieved and dissatisfied from the common impugned order, dated 29-11-2001 arising from the order refusing to rectify the assessment order under section 156 of the Income Tax Ordinance, 1979.

2. The facts of the, case in brief are that for the assessment years 1992-93 and 1993-94, the assessee had furnished return declaring Nil income, however, income of Rs.610,543 and Rs.30,91,545 was declared in the two respective years in part-II of the returns claiming the same as exempt under clause (118E) of the Second Schedule to the Income Tax Ordinance, 1979. The Assessing Officer completed the assessment tinder section 62 for both the yeas on 16-1-1993 and 30-12-1993 respectively, whereby allowed the claim of exemption, resultantly the income was determined at nil. He, however, charged tax under section 80D of the Income Tax, Ordinance, 1979 on the turn over which was duly adjusted/paid.

3. After a lapse of over seven years, the assessee requested the DCIT in writing through letters followed by reminders to rectify the assessment 'for the purpose of refund, under section 156 of the Income Tax Ordinance, 1979 and to delete the levy of tax under section 80D in view of the judgment of the Hon'ble Supreme Court of Pakistan reported as PLD 1997 SC 582 = 1997 PTD 1555. The rectification was denied vide Letter, No.64, dated 22-8-2001 for the following reasons:--

"1992-93

Assessment under section 62 wherein tax under section 80D was charged was passed on 16-1-1993 therefore, the rectification under section 156 is barred by time even before the delivery of the judgment, cited as PLD 1997 SC 582 = 1997 PTD 1555, dated 4-6-1997.

1993-94

Assessment in this case was finalized on 31-12-1993, therefore, it is also barred by time as you were not appellant in the above cited case, therefore, suo motu action by the DCIT to give effect to the order of the Hon'ble Supreme Court was not required in your case."

4. The learned CIT(A) dismissed the appeals observing hereunder:--

(i) It is a fact that the applications for rectification were hit by limitation under section 156 of the Ordinance since admittedly the assessments under section 62 were completed on 16-1-1993 and 30-12-1993 respectively.

(ii) The Ratio of judgment of Hon'ble Supreme Court of Pakistan laid down in case of Messrs Pfizer Laboratories Ltd. cannot be applied to the instant case since in that case it was an admitted position that "the appellant had paid the aforesaid amount to the respondents which they were not liable to pay under the law." On the other hand in the instant case the tax under section 80D had been rightly charged as per law at the material time and it was only afterwards that the Supreme Court of Pakistan had delivered its judgment reported as PLD 1997 SC 582 = 1997 PTD 1555 in which also the appellant was not a petitioner.

In view of above discussion; I hold that the DCIT had rightly rejected the applications under section 156 of the Ordinance being hit by limitation.

Both the appeals fail."

5. We have heard the learned representatives of the two parties at, length. The learned counsel for the assessee argued that the order confirming the rejection of rectification applications is against the good conscious, natural justice and law of equity, as the officers below were legally bound to allow the effect of the judgment of the Hon'ble Supreme, Court of Pakistan reported as PLD 1997 SC 582 = 1997 PTD 1555 in the case of Messrs Ellahi, Cotton Mills Ltd. and there was no justification to refuse refund of the taxes paid under section 80D.

6. The assessment orders for the assessment years 1992-93 and 1993-94 were passed on 16-1-1993 and 31-12-1993 respectively. The tax under section 80D charged was duly paid and no appeal was preferred. Rectification applications have been admittedly filed after the expiry of four years' period and it was, therefore, not open for the assessee to seek time-barred rectification. The intention and purpose of any limitation period set in law is to ensure that no issue is dragged beyond certain limited period of time giving it the impetuses of some finality, thus the action of the Assessing Officer in rejecting the rectification application being time-barred, does not warrant interference. Since law does not provide condonation of delay for certain bona fide reason, the Assessing Officer does not possess power to condone the delay even for bona fide reason, we, therefore, find that the Assessing Officer do possess the powers to rectify the, order in view of the Supreme Court judgment referred above to in determining refund but cannot go beyond the limitation period prescribed by law, while invoking section 156 of the Income Tax Ordinance, 1979.

7. The learned D.R. accepted the assessee's version that the law is very clear that when a Supreme Court gives its decision in interpretation of law, the Supreme Court decision becomes the law and, therefore, it needs to be implemented being applicable to all with identical situation but the order cannot be implemented by way of rectification under section 156 beyond the limitation period of four years. We are in agreement with the leaned D.R. and further propose that remedy is still available to the assessee under section 138 of the Income Tax Ordinance. 1979 where the learned Commissioner has vast powers to revise the order, either on his own motion or on application made by the assessee, and no limitation period is provided for revision of the order by the learned Commissioner on his own motion and also possess powers to condone the delay in case the application is moved beyond the limitation period of 90 days by the assessee under subsection (2)(c) of section 138.

8. The appeals, in the circumstances supra, stand dismissed.

C.M.A./766/Tax (Trib.).Appeals dismissed.