I.T.A. No. 3831/KB of 1993-94, decided on 5th May, 2001. VS I.T.A. No. 3831/KB of 1993-94, decided on 5th May, 2001., 2003 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 228 (2001)

(a) Income‑tax‑‑‑‑

‑‑‑‑Self‑Assessment Scheme ‑‑‑I.T. 30 Form‑‑‑Assessment order‑‑‑Order issued in I.T. 30 Form or assessment completed on computerized I.T. 30 Form was also an assessment order and there was no need for formal assessment order.

(1991) 191 ITR 634; (1971) 81 ITR, 759 and 1998 PTD (Trib.) 3718 rel.

(b) Income Tax Ordinance (XXXI of 1979)‑‑‑‑

‑‑‑‑Ss. 65(1)(c), 59(B) & 156‑‑‑C.B.R. Circular No. 14 of 1992 dated 1‑7‑1992‑‑‑Additional assessment‑‑‑Order passed under S. 59(B) of the Income' Tax Ordinance, 1979 and later rectified under S. 156 of the Income Tax Ordinance, 1979 was re‑opened under S. 65 of the Income Tax Ordinance, 1979‑‑‑Validity‑‑‑Once an order was passed under S. 59(B) or 59(1) then any credit of tax which was not allowed previously could be allowed by invoking S.156 of the Income Tax Ordinance, 1979, which was rightly done by the Assessing Officer‑‑ Explicit position was that the order once passed by the Assessing Officer by using I.T. 30 as assessment order, then any subsequent changes would be made by invoking provisions of section 156 of the Income Tax Ordinance, 1979, therefore, such a case could not be opened under S.65 of the Income Tax Ordinance, 1979‑‑‑Order passed under S. 65(1)(c) of the Income Tax Ordinance; 1979 was cancelled and the order passed under S.59(B) of the Income Tax Ordinance, 1979 was restored.

1992 PTD 513 rel.

(1982) 135 ITR 368 and 1988 PTD (Trib.) 987 ref.

Haji Yousuf for Appellant.

Mr. Umer Farooq, D.R. for Respondent.

ORDER

SYED KABIRUL HASAN (JUDICIAL MEMBER).‑‑‑The appellant has challenged the order of learned CIT(A) on various grounds, the most important being that the Assessing Officer was not justified to reopen the case of the assessee under section 65(c)(i) and that the Assessing Officer had rectified his order under section 156 of the Income Tax Ordinance, 1979. The assessment year involved is 1989‑90.

2. We have heard Haji Yousuf, learned counsel for the assessee and Mr. Umer Farooq, learned D.R. we have also perused the orders and case‑law.

3. The main contention, amongst others, raised by learned counsel was that the assessment could not be re‑opened under section 65 of the Ordinance because the original assessment was finalized under section 59(B) and which was rectified under section 156. According to him, clause (c) of subsection (1) of section 65 contained a bar on the re opening of the assessment under this provision. In support of his contention, the learned counsel has relied on case‑law 1992 PTD 513, (1982) 135 ITR 368, (1991) 191 ITR 634, (1971) 81 ITR 759 and 1998 PTD (Trib.) 3718.

4. Before hearing the arguments of learned counsel, it was pointed out to him that tax credit was not allowed to the assessee as the same was under verification then whether the order passed to rectify this error would fall under section 156 of the Ordinance.

5. In this respect, the learned counsel relied in case reported as (1982) 135 ITR 368, wherein it is mentioned that the Assessing Officer while preparing the assessment order did not charge interest under section 139(1) of the Ordinance taking the status of the assessee that of a registered firm: This mistake was rectified later on. This case is of Indian jurisdiction which signifies that rectification of registered firm would amount to order passed under section 156 (in our law).

In case reported as (1991) 191 ITR 634, it is held that any document which is also in writing and which has received the imprimatur of the Income‑tax Officer, should not be treated as part of the assessment orders in the wider sense in which the expression has to be understood in the context of section 143(3).

In case reported as (1971) 81 ITR 759, the assessment was made on order sheet and for the tax payable, a separate letter was written by the Income Tax Officer. This was treated as sufficient compliance.

6. All the above cases are of Indian jurisdiction and on the point that without issuing the formal assessment order anything which is equivalent to income would also be treated as assessment order.

7. Now we take up the Pakistani cases.

In case reported as 1998 PTD (Trib.) 3718, a question arose whether the order under section 66‑A could be passed in case there is no order of assessment but only the IT‑30, the Tribunal decided in affirmative and the Full Bench of the Tribunal held:‑

"15. To sum up, having considered the provision of section 59(1) in comparing the same to the provisions of normal assessment under section 62.and having considered the meaning of the word `assessment' in the context of the Self‑Assessment Scheme under section 59(1) and having distinguished the decided cases in respect of requirement of law for an order in writing as a pre‑requisite for levy of tax demand, we are of the considered opinion that in case where return was filed under Self -Assessment Scheme and was qualified for processing under such Scheme without requiring any adjustment under section 59(3) or otherwise so that the returned income is accepted in toto the assessed income the requirement of an assessment in writing are sufficient, fulfilled by preparation of a tax computation sheet in the manner described in the prescribed I.T. 30 Form duly signed by the Assessing Officer and such an order under section 59(1) can be held to have been properly made by the Assessing Officer for the relevant year. The contention of the appellant, therefore, that section 66‑A could not be invoked as there was no order in writing for the years under appeal is, therefore, rejected on this ground."

8. In view of above, it is settled that an order issued in I.T. 30 was also an assessment order and there was no need for formal assessment order.

9. Now we take up the other issue which was whether order passed under section 59(3) by issuing I. T. 30 could be rectified` under section 156 of the Ordinance if tax credit was not allowed because that was under verification. This issue has been decided by the Honourable high Court of Sindh, Karachi vide case reported as 1992 PTD 513 herein on page 518 it is held:

"Kanga and Palkhiwala in the Law and Practice of Income Tax, Eighth Edition, Volume I, at page 1127 have commented upon the word `assessment'. They have observed that the word `assessment' is used in the Act as meaning sometimes the computation of income, sometimes the determination of the amount of tax payable, and sometimes the whole procedure laid down in the Act for imposing liability on the taxpayer. The word `assessment' must be understood in each section of this Act with reference to the context in which it is used: in some sections it has a comprehensive meaning and includes reassessment (e.g. section 265) and in some sections it has a restricted meaning and is used as distinct from reassessment (e.g. section 147). They have further observed that the word assessment in its most comprehensive sense as including the whole procedure for imposing liability upon the taxpayer‑‑‑consists of the following steps. In the first place, the taxable income of the assessee has to be computed. In the next place, the sum payable by him on the basis of such computation has to be determined. Finally, a notice of demand in the prescribed form specifying the sum payable has to be served upon the assessee."

It has been further observed :‑

"The power of rectification is available under section 156 of the Ordinance. No doubt, it is exercisable within the statutory time prescribed. But, once it is invoked and an order of rectification is made; the order of assessment becomes merged in the order corrected by rectification. The corrected order is then the `statutorily deemed order of assessment' for it would be anomalous to hold that even after correction, a mistaken order ought to prevail. In cases where assessment orders are rectified, the original orders whose mistakes and. errors are corrected no longer can hold the field. As pointed out in Vedantham Raghaviah v. Third Additional Income Tax Officer, Madras (1963) 49 ITR 314 that `once an order of rectification is passed the assessment itself is modified and what, remains is not the order of rectification, but only the assessment as rectified."

10. If we take up all the case law enumerated above, then we come to a picture which spells out that once an order is passed under section 59(B) or 59(1) then any credit of tax which was not allowed previously would be allowed by invoking section 156 of the Ordinance, which was rightly done by the Assessing Officer in this case. The explicit position was that the order once passed by the Assessing Officer by using I.T. 30 as assessment order, then any subsequent changes would be made by invoking provision of section 156 of the Ordinance, therefore, such a case cannot be opened under section 65 of the Ordinance as held by the Honourable High Court of Sindh, Karachi in, case reported as 1992 PTD 513. In view of above, the order passed under section 65(1)(C) of the Ordinance is hereby cancelled and the order passed under section 59(b) is hereby restored.

11. This appeal is disposed of as above.

(Sd.)

(Syed Kabirul Hasan)

Judicial Member

As per Mr. Shahid Jamal ‑ Accountant Member

1. With utmost respect for my learned brother the Judicial Member, I beg to differ with him on the question of re‑opening of assessments, originally finalized under Self‑Assessment and later on rectified. My brother has held that such re‑opening was not permissible in view of decision given by Karachi High Court in reported judgment of 1992 PTD 513.

2. In this appeal the appellant had raised following two questions namely:‑

(i) Whether assessment completed on computerized I.T. 30 without a formal assessment order, was an assessment under the provisions of 59(B) of Income Tax Ordinance, 1979?

(ii) Whether such an order, later on rectified under section 156, could be re‑opened under section 65 considering the bar placed by clause (C) of subsection (1) of section 65?

3. As far as the first question is concerned, I am in agreement with my learned brother that assessment completed on computerized I.T. 30 was an assessment order in view of decision by Supreme Court of India reported as (1991) 191 ITR 634 and Full Bench of this Tribunal reported as 1998 PTD (Trib.) 3718, cited supra. There is thus no dispute that assessment completed on I.T. 30 under the simplified assessment procedure was valid assessment.

4. The second question arises due to that assessment completed under section 59(B), rectified under section 156 to allow credit of tax deducted/paid at source. After credit of these taxes appellant was entitled to refund. But the Income Tax Officer discovered that appellant had cleared an import consignment of Rs.17,17,930 dated 24‑5‑1989 whereas his capital as on 1‑7‑1988 was only Rs.60,033, the income declared for year ended 30‑6‑1989 was Rs.71,380 and there was no apparent source to justify the import consignment. There was thus a `reasonable belief' with the ITO that 'investment was suppressed. However, prior to issuance of notice cinder section 65, the ITO issued a show‑cause notice dated 17‑3‑1991 and asked the assessee to explain financial resources with regard to the import consignment. The assessee, instead of explaining the source, objected to the proceedings on the basis of Tribunals judgment reported 1988 PTD (Trib.) 987. Thereafter, the ITO narrated the facts to the concerned IAC and sought approval to re‑open the assessment under section 65. The approval was given, and notice under section 65 was issued on 2‑4‑1991 and served on 7‑4‑1991. The notice was not complied. Subsequent notices issued to explain the source of investment were also not responded. The ITO was, therefore, constrained to hold that assessee had no explanation regarding investment in the import consignment and added Rs. 6,50,000 under section 13(1) (aa) on this account. The assessment was completed ex parte at Rs.7,21,321 in corporating income originally assessed under section 59(B).

5. Appellant's contention before CIT(A) as well as before this forum was that original order passed under section 59(B) was merged with the rectification order under section. 156 and in view of bar placed by section 65(1)(c): no action could be taken under section 65. This argument was supported by High Court's decision reported as 1992 PTD 513. Now as the facts stand section 65(i)(c) was substituted by Finance Act, 1992, and substitution was retrospective in effect. The provision of the said clause are reproduced below, before substitution and after substitution: ‑‑

"Section 65(1)(c). Clause (c) before substitution read as follows:‑

(c) the total income of an assessee or the tax payable by him has been assessed or determined under subsection (1) of section 59 and no order of assessment has subsequently been made under this section or any other provision of this Ordinance."

After Substitution

(c) the total income of an assessee and the tax payable by him has been assessed or determined under subsection (1) of section 59 or section 59‑A or deemed to have been so assessed or determined under subsection (1) of section 59 or section 59‑A.

Explaining the substituted clause C.B.R. had issued clarificatory Circular No. 14 of (1992) dated July 1, 1992:‑‑‑

"Through a retrospective amendment in section 65 of the Ordinance, the Income Tax Officer has been empowered to re assess the income assessed earlier under the Self‑Assessment Scheme or simplified procedure of assessment or deemed to have been so assessed under subsection (1) of section 59 or 59‑A read with actions 80‑B, 80‑C and 80‑CC. This provision aims at providing a remedy against the possible loss of revenue on account acceptance of declared income without scrutiny and verification."

6. A bare reading of the substituted clause and the clarification issued by C.B.R. shows that the bar placed in clause (c) was removed and assessment completed under sections 59(1) and 59‑A could be re-opened. The assessment in this case was completed on 17‑6‑1992 when the amendment had already been introduced with retrospective effect. The ratio of judgment contained in 1992 PTD 513 decided on 2‑1‑1992 was not applicable in view of the substituted clause. In my opinion, therefore the proceedings initiated under section 65 could not be held to be without jurisdiction, I would, therefore, uphold the impugned order c 'tis point.

(Sd.)

(Shahid Jamal)

Accountant Member

The difference of opinion has arisen in this case, therefore, the following issue referred to the learned Chairman who is requested to refer this case for adjudication by another member :‑

"Whether on the facts and circumstances of the case, the order passed under section 59(13) and later rectified under section 156 could be re-opened under section 65 of the Income Tax Ordinance, 1979?"

(Sd.)

(Syed Kabirul Hasan)

Judicial Member

(Sd.)

(Shahid Jamal)

Accountant Member

ORDER

JAWAID MASOOD TAHIR BHATTI (JUDICIAL MEMBER).‑‑‑The instant appeal is been fixed before me due to difference of opinion in the order of this Tribunal dated 5‑5‑2001 in I.T.A. No. 3831/KB of 1993‑94 (assessment year 1989‑90) between my learned brothers the Judicial Member, Mr. Syed Kabirul Hassan and Mr. Shahid Jamal the Accountant Merrh, (as he then was). Following question has been referred to me for solution :‑

"Whether on the facts and circumstances of the case, the order passed under section 59(13) of the Income Tax Ordinance and later rectified under section 156 of the Ordinance could be re‑opened under section 65 of the Income Tax Ordinance, 1979"?

2. The facts have been discussed in the said order of my learned brothers as well as in the impugned order made by the Assessing Officer under sections 63/65 of the Ordinance in detail but in order to refresh the memory and to have focussed attention on the issue, these are reproduced at the cost of repetition:‑‑

While perusal of the order under sections 63/65 of the Income Tax Ordinance, 1979, I have observed that the assessment for the assessment year 1989‑90 was originally completed under section 59(13) of the Ordinance at net income of Rs.71,380. However, the case was rectified under section 156 of the Ordinance as credit of tax was not allowed being under verification. Subsequently it transpired that the capital available with the assessee on 1‑7‑1988 was Rs.60,033 but the assessee got cleared a consignment of Rs.7,17,930 on 24‑5‑1989. Assessing Officer, therefore, started proceeding under section 65 of the Ordinance and addition of Rs.6,50,000 under section 13(1)(aa) of the Ordinance was made. The assessee agitated that order before learned CIT(A) on the grounds that:

(i) the assessment order was completed on 11‑6‑1992 which was a close holiday on account of Eid‑ul‑Azha hence order become illegal;

(ii) order is against total disregard to the decision of Honourable Sindh High Court in Constitutional Petitions Nos. D‑428, 623, 624 and 429 of 1991;

(iii) order in question was completed in total contradiction to the decision of Honourable Lahore High Court Constitutional Petition No.3511 of 1988;

(iv) the assessee was not confronted twice as mandatory due to decision of this Tribunal;

(v) the order is based on imagination;

Learned CIT(A) dismissed the appeal of the assessee who filed second appeal before this Tribunal which was decided oar 9‑5‑2001, which is before me for further consideration.

3. Learned Judicial Member has given his findings after discussing the arguments of both the representatives of two sides and cases referred before him. Relevant portion starting from para. 3 of the order to para. 11 are reproduced hereunder: ‑‑

"3. The main contention, amongst others, raised by learned counsel was that the assessment could not be re‑opened under section 65 of the Ordinance because the original assessment was finalized under section 59(B) and which was rectified under section 156. According to him, clause (c) of subsection (1) of section 65 contained a bar on the re‑opening of the assessment under this provision. In support of his contention, the learned counsel has relied on case‑law 1992 PTD 513, (1982) 135 ITR 368, (1991) 191 ITR 634, (1971) 81 ITR 759 and 1998 PTD (Trib.) 3718.

4. Before hearing the arguments of learned counsel, it was pointed out to him that tax credit was not allowed to the assessee as the same was under verification then whether the order passed to rectify this error would fall under section 156 of the Ordinance:

5. In this respect, the learned counsel relied on case reported as (1982) 135 ITR 368, wherein it is mentioned that the Assessing Officer while preparing the assessment order did not charge interest under section 139(1) of the Ordinance taking the status of the assessee that of a registered firm. This mistake was rectified later on. This case is of Indian jurisdiction which signifies that rectification of registered firm would amount to order passed under section 156 (in our law).

In case reported as (1991) 191 ITR 634, it is held that any document which is also in writing and which has received the imprimatur of the Income‑tax Officer, should not be treated as part of the assessment orders in the wider sense in which the expression has to be understood in the context of section 143(3).

In case reported as (1971) 81 ITR 759, the assessment was made on order sheet and for the tax payable, a separate letter was written by the Income Tax Officer. This was treated as sufficient compliance.

6. All the above cases are of Indian jurisdiction and on the point that without issuing the formal assessment order anything which is equivalent to income would also may be treated as assessment order.

7. Now we take up the Pakistani cases.

In case reported as 1998 PTD (Trib.) 3718, a question arose whether the order under section 66‑A could be passed in case there is no order of assessment but only the I.T. 30, the Tribunal decided in affirmative and the Full Bench of the Tribunal held :‑

"15. To sum up, having considered the provision of section 59(1) in comparing the same to the provision of normal assessment under section 62 and having considered the meaning of the word 'assessment' in the context of the Self‑Assessment Scheme under section 59(1) and having distinguished the decided cases in respect of requirement of law for an order in writing as a pre‑requisite for levy of tax demand, we are of the considered opinion that in case where return was filed under Self -Assessment Scheme and was qualified for processing under such Scheme without requiring any adjustment under section 59(3) or otherwise so that the returned income is accepted in toto the assessed income the requirement of .an assessment in writing are sufficient, fulfilled by preparation of a tax computation sheet in the manner described in the prescribed I. T. 30 Form duly signed by the Assessing Officer and such an, order under section 59(1) can be held to have been properly made by the Assessing Officer for the relevant year. The contention for the appellant, therefore, that section 66‑A could not be invoked‑as there was no order in writing for the years under appeal is, therefore, rejected on this ground. "

8. In view of above, it is settled that an order issued in I.T. 30 was also an assessment order and there was no need for formal assessment order.

9. Now we take up the other issue which was whether order passed under section 59(A) by issuing I.T.30 could be rectified under section 156 of the Ordinance if tax credit was not allowed because the same was under verification. This issue has been decided by the Honourable High Court of Sindh, Karachi vide case reported as 1992 PTD 513 wherein on page 518 it is held:

"Kanga and Palkhivala in the Law and Practice of Income Tax, Eighth Edition, Volume I, at page 1127 have commented upon the word `assessment'. They have observed that the word `assessment' is used in the Act as meaning sometimes the computation of income, sometimes the determination of the amount of tax payable, and sometimes the whole procedure laid down in the Act for imposing liability on the taxpayer. The word `assessment' must be understood in each section of this Act with reference to the context in which it is used: in some sections it has a comprehensive meaning and includes re‑assessment (e.g. section 265) and in some sections it has a restricted meaning and is used as distinct from re‑assessment (e.g. section 147). They have further observed that the world assessment in its most comprehensive sense as including the whole procedure for imposing liability upon the taxpayer consists of the following steps. In the first place, the, taxable income of the assessee has to be computed. In the next place, the sum payable by him on the basis of such computation has to be determined. Finally, a notice of demand in the prescribed form specifying the sum of payable has to be served upon the assessee."

It has been further observed :‑

"The power of rectification is available under section 156 of the Ordinance. No doubt, it is exercisable within the statutory time prescribed. But, once it is invoked and an order of rectification is made, the order of assessment becomes merged in the order corrected by rectification. The corrected order is then the `statutorily deemed order of assessment' for it would be anomalous to hold that even after correction, a mistaken order ought to prevail. In cases where assessment orders are rectified, the original orders whose mistakes and errors are corrected no longer can hold the field. As pointed out in Vedantham Raghaviah v. Third Additional Income Tax Officer, Madras (1963) 49 ITR 314 that `once an order of rectification is passed the assessment itself is modified and what remains is not the order of rectification, but only the assessment as rectified."

10. If we take up all the case‑law enumerated above, then we come to a picture which spells out that once an order is passed under section 59(A) or 59(1) then any credit of tax which was not allowed previously would be allowed by invoking section 156 of the Ordinance, which was rightly done by the Assessing Officer in this case. The explicit position was that the order once passed by the Assessing Officer by using I.T. 30 as assessment order, then any subsequent changes would be made by invoking provision of section 156 of the Ordinance, therefore, such a case cannot be opened under section 65 of the Ordinance as held by the Honourable High Court of Sindh, Karachi in case reported as 1992 PTD 513. In view of above; the order passed under section 65(1)(C) of the Ordinance is hereby cancelled and the order passed under section 59(b) is hereby restored.

11. This appeal is disposed of as above."

4. Learned Accountant Member on the other hand has given his difference view in the following manner :‑

1. With utmost respect for my learned brother the Judicial Member, I beg to differ with him on the question of re‑opening of assessments, originally finalized under Self‑Assessment and later on rectified. My brother has held that such re‑opening was not permissible in view of decision given by Karachi High Court in reported judgment of 1992 PTD 513.

2. In this appeal the appellant had raised following two questions namely :‑

(i) Whether assessment completed on computerized I.T. 30 without a formal assessment order, was an assessment under the provisions of 59(B) of Income Tax Ordinance, 1979?

(ii) Whether such an order, later on rectified under section 156, could be re‑opened under section 65 considering the bar placed by clause (C) of subsection (1) of section 65?

3. As far as the first question is concerned, I am in agreement with my learned brother that assessment completed on computerized I.T. 30 was an assessment Order in view of decision by Supreme Court of India reported as (1991) 191 ITR 634 and Full Bench of this Tribunal reported as 1998 PTD (Trib.) 3718, cited supra. There is thus no dispute that assessment completed on I.T. 30 under the simplified assessment procedure was valid assessment.

4. The second question arises due to that assessment completed under section 59(B), rectified under section 156 to allow credit of tax deducted paid at source. After credit of these tax appellant was entitled to refund. But the Income Tax Officer discovered that appellant had cleared an import consignment of Rs.17,17,930 dated 24‑5‑1989 whereas h s capital as on 1‑7‑1988 was only Rs. 60,033, the income declared for year ended 30‑6‑1989 was Rs. 71,380 and there was no apparent source to justify the import consignment. There was thus a `reasonable belief' with the ITO that investment was suppressed. However, prior to issuance of notice under section 65, the ITO issued a show‑cause notice dated 17‑3‑1991 and asked the assessee to explain financial resources with regard to the import consignment. The assessee, instead of explaining the source, objected to the proceedings on the basis of Tribunals judgment reported 1988 PTD (Trib.) 987. Thereafter, the ITO narrated the facts to the concerned IAC and sought approval to re‑open the assessment under section 65. The approval was given, and notice under section 65 was issued on 2‑4‑1991 and served on 7‑4 1991. The notice was not complied. Subsequent notices issued to explain the source of investment were also not responded. The ITP was, therefore, constrained to hold that assessee had no explanation regarding investment in the import consignment and added Rs. 6,50,000 under section 13(1) (aa) on this account. The assessment was completed ex parte at Rs. 7,21,321 in corporating income originally assessed under section 59(8).

5. Appellant's contention before CIT(A) as well as before this forum was that original order passed under section 59(1) was merged with the rectification order under section 156 and in view of bar placed by section 65(1)(c), no action could be taken under section 65. This argument was supported by High Court's decision reported as 1992 PTD 513. Now as the facts stand section 65(1)(c) was substituted by Finance Act, 1992, and substitution was retrospective in effect. The provision of the said clause are reproduced below, before substitution and after substitution:

"Section 65(1)(c). Clause (c) before substitution read as follows :‑

(c) the total income of an assessee or the tax payable by him has been assessed or determined under subsection (1) of section 59 and no order of assessment has subsequently‑been made under this section or any other provision of this Ordinance."

After Substitution

(c) the total income of an assessee and the tax payable by him has been assessed or determined under subsection (1) of section 59 or section 59‑A or deemed to have been so assessed or determined under subsection (1) of section 59 or section 59‑A.

Explaining the substituted clause C.B.R. had issued clarificatory Circular No. 14 of (1992), dated July 1, 1992:‑‑

"Through a retrospective amendment in section 65 of the Ordinance, the Income Tax Officer has been empowered to re assess the income assessed earlier under the Self‑Assessment- Scheme or simplified procedure of assessment or deemed to have been so assessed under subsection (1) of section 59 or 59‑A read with sections 80‑B, 80‑C and 80‑CC. This provision aims at providing a remedy against the possible loss of revenue on account of acceptance of declared income without scrutiny and verification. "

6. A bare reading of the substituted clause and the clarification issued by C.B.R. showed that the bar placed in clause (c) was removed and assessment completed under sections 59(1) and 59‑A could be re‑opened. The assessment in this case was completed on 17‑6‑1992 when the amendment had already been introduced with retrospective effect. The ratio of judgment contained, in 1992 PTD 513 decided on 2‑1‑1992 was not applicable in view of the substituted clause. In my opinion, therefore, the proceedings initiated under section 65 could not be held to be without jurisdiction, I would, therefore, uphold the impugned order on this point."

5. I have heard learned representatives of both the parties and have also perused the views referred above of both my learned brothers as given in the order dated 5‑5‑2001 of this Tribunal. I have found that the learned Accountant Member due to some misunderstanding has held that the proceedings initiated under section 65 of the Ordinance could not be held to be without jurisdiction in the present case and has upheld the order of the officer below. I am of the view that the assessment in this case was admittedly completed on 17‑6‑1992 while section 65(1)(c) was substituted in the Income Tax Ordinance, 1979 by Finance Act, 1992 with retrospective effect and the learned Accountant Member has given his finding due to misconception that the amendment had already been introduced, without considering the fact that the amendment through Finance Act, 1992 were introduced on 30th June, 1992 and before that date, the law as interpreted by the Hon'ble High Court of Sindh as reported in 1992 PTD 513 decided on 2‑1‑1992 was applicable on the facts and circumstances of the present case. I am of the considered view that the substituted section 65(1)(c) of the Income Tax Ordinance, 1979 had the retrospective effect but on the date of assessment as the amendment was not in the field, the law at that moment has to be taken as interpreted by the Hon'ble High Court and my learned brother Judicial Member, Mr. Syed Kabirul Hassan' has rightly cancelled the order passed under section 65 of the Ordinance and has restored the order passed under section 59(B) of the Ordinance. I cannot, with due deference and regard to my brother, the learned Accountant Member (as he then was) pursued myself to agree to such proposition that `the assessment completed on 17‑6‑1992 when the amendment had already been introduced with retrospective effect, the ratio of judgment contained in 1992 PTD 513 (Karachi H.C.) decided on 2‑1‑1992 was not applicable in view of the substituted clause". I am inclined to agree with my learned brother Judicial Member who has very rightly in the facts and circumstances of the case cancelled the order passed under section 65 and has restored the order passed under section 59(B) of the Ordinance for the reasons given by him on the ratio of decision of Hon'ble Sindh High Court referred supra which in my view was intact and fully applicable uptill the substitution of section 65(1)(c) of the Ordinance through Finance Act, 1992 to be implemented on 1st July 1992. I am, therefore, of the considered view that on the facts and circumstances of, the case the order passed under section 59(B) of the Income Tax Ordinance and later rectified under section 156 of the Ordinance could not be reopened under section 65 of the Income Tax Ordinance, 1979.

6. For the reasons given in this order, I concur with the findings of the learned Judicial Member and the order of the learned CIT(A) is cancelled and the order passed under section 59(B) of the Ordinance is restored.

7. The appeal succeeds.

C.M.A./505/Tax (Trib.) Order accordingly.