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

----Ss. 24(1), 16(2)(b)(iv) & 66-A---Deductions not admissible-- Perquisite---Loan on concessional/reduced rate of interest---Excess perquisite---Addition---Validity---Addition made by the Inspecting Additional Commissioner under S.66-A of the Income Tax Ordinance, 1979 on account of concessional and reduced interest on the loan granted by assessee/employer to its employee for purpose of house building and transport was confirmed by the Appellate Tribunal.

I.T.A. No.652/KB(HQ) of 1999-2000 rel.

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

----S.66-A---Powers of Inspecting Additional Commissioner to revise Deputy Commissioner's order ---Revision---Review---Rectification-- Power to revise an order was distinguishable from review and rectification.

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

----Ss. 66-A & 5(1)(cc)---Powers of Inspecting Additional Commissioner to revise Deputy Commissioner's Order---Jurisdiction---Assessment by the panel consisting of Inspecting Additional Commissioner-- Cancellation of assessment by the same Inspecting Additional Commissioner---Cancellation of assessment by the same Inspecting Additional Commissioner under S.66-A of the Income Tax Ordinance., 1979---Validity---Assessment framed by the pastel consisting of an Inspecting Additional Commissioner as Chairman was found by the Inspecting Additional Commissioner as erroneous and prejudicial to the interest of Revenue and same ought to have referred to the Commissioner of Income Tax for exercising the jurisdiction as Inspecting Additional Commissioner in terms of S.5(1)(cc) of the Income Tax Ordinance, 1979---Assessment made by a panel consisting of Commissioner of Income Tax, the assumption of jurisdiction by the Inspecting Additional Commissioner under S.66-A of the Income Tax Ordinance, 1979 was not proper and order passed by Inspecting Addl Commissioner under S.66-A of the Income Tax Ordinance, 1979 was cancelled on the point of jurisdiction by the Appellate Tribunal.

Javed Khurram for Appellant.

Muhammad Ali Indhar, D.R. for Respondent.

Date of hearing: 23rd March, 2002.

ORDER

JAVED IQBAL (JUDICIAL MEMBER).---These four appeals at the instance of assessee are instituted against the orders recorded by learned IAC under section 66-A of the Income Tax Ordinance, 1979, (hereinafter called ordinance), assessee agitated the order-of learned CIT(A) on the following issue.

*That the learned IAC has erred in law in invoking jurisdiction under section 66-A of the Income Tax Ordinance. 1979.

That the learned IAC of Income Tax has erred in making an addition of Rs. 6,514,000 under section 24(1) read with section 16(2)(6)(iv) of the Income Tax Ordinance, 1979.

2. Besides the above stated objections the learned A.R. of the assessee for assessment year 1999-2000 took additional objection that as the learned IAC being member of Income Tax panel constituted under section 5(i)(cc) of the Income Tax Ordinance was involved, in original assessments hence subsequent action of learned IAC under section 66-A is not tenable being of equal authority in status.

3. Both the parties were represented through their respective representatives and were heard. The learned A.R. of the assessee assailed the orders recorded by learned IAC, while learned D.R. Mr. Muhammad Ali Indhar supported the impugned order.

4. As common issues are involved in all the appeals, hence, are disposed of through a single consolidated order. Brief relevant facts of the case are that for assessment year 1996-97 to 1998-99, original assessments were completed by the learned DCIT at circle level, while for assessment year 1999-2000 it was completed by Income Tax Panel constituted under section 5(i)(cc) of the Income Tax Ordinance, 1979, and then IAC, was member of Income Tax Panel and performed the function as DCIT.

5. The loans for the purposes of house building and for transport purposes were granted by the assessee (employer) to its employee as per terms of employment at a reduced and concessional rate of 10%. The Assessing Officer assessed the record and concessional rates of the interest as offered by the assessee thereby ignoring the section 16(2)(b)(iv) read with the section 24(1), of the Income Tax Ordinance. The value of concession provided by the employer to its employee constitutes the excess perquisite and according to the above mentioned provisions be taxed accordingly, while at the time of original assessment, the Assessing Officer has not done so. After examining the record and considering the same as erroneous and prejudicial to the y interest of Revenue, the learned IAC after issuing the show-cause notice under-section 66-A and finding the reply of assessee as unsatisfactory," revised the order of assessment under section 66-A of the Ordinance, thereby making the additions of the concession @ 5 % for assessment years 1996-97 to 1998-99 and the reduced rate of interest @ 4.87 % for assessment year 1999-2000. In this way he made addition of Rs.3,594,900, Rs.5,166,000, Rs.6,514,000 and Rs.7,406,348 for assessment year 1996-97 to 1999-2000 respectively under section 24(1) read with section 16(2)(b)(iv) of the Ordinance.

6. We have considered the arguments advanced by the representatives of the parties and perused the orders of lower forums the judgments and cases-law referred by the representatives. The learned IAC under section 66-A made the additions of the concessional and reduced interest on the loan granted by assessee/employer to its employee for purpose of house building and transport. The learned IAC by doing so took guidance from the judgment of learned ITAT in ITA No.652(KB(H.Q) of 1999-2000 (assessment year 1998-99). The learned I.T.A.T. in its judgment had confirmed the likewise addition. The learned A.R. of the assessee failed to controvert the above finding. In these circumstances we hold that as the order of learned IAC is in line with the finding of learned ITAT in ITA No.652/KB and is not open to any exception. Consequently the appeals' of the assessee fail for assessment years 1996-97 to 1998-99. The matter for assessment year 1999-2000 is discussed as under.

7. For assessment year 1999-2000 an additional major legal objection has been raised by assessee and is commented by us. It was contended by the learned A.R. of the assessee that the revising authority of the order passed under section 66-A and the authority making original assessment order being equal in authority and status, the subsequent action' under section 66-A was illegal. He has supported his view by referring the case-law (2001), 83 Tax 551 (H.C. Lah.), I.T.A. No.165/HQ of 1999-2000 for assessment year 1986-87, 1999-2000, I.T.A. No. 1259/ KB of 1991-92 (assessment year 1996-97, dated 26-6-1998) (unreported). The matter has been considered by us. Assessment in this was framed by IAC being a member of Income Tax Panel under section 5(i)(cc) of the Ordinance, under which the learned IAC was the member of Income Tax Panel which exercised the jurisdiction in the capacity of WIT to frame the original assessment. However on framing the assessment as a Chairman of the Panel he did not cease to remain an IAC. The provision of section 66-A confer the powers to an IAC to revise a Deputy Commissioners order. As a rule original jurisdiction is never exercised by the same revising authority. The power to revise, be it suo motu or on the application

of an aggrieved party, necessarily involves the consideration of impugned order by a person or authority placed higher in the hierarchy to adjudge its legality and propriety. The jurisdiction so confirmed normally has a colour of supervisory power to correct mistakes at administration side. Once an authority has passed an order, it cannot sit in revision of the same order to pick up faults and to interfere with it taking a different view of the issues involved. The power to revise an order is clearly distinguishable from review and rectification. It is simple enough to understand the purpose of section 66-A which inter alia provides for calling and examining the record of any proceedings under the Ordinance. Obviously, an authority equal in status cannot call for the record and `examine' the same. In the present case the assessment framed by the Panel consisting of an IAC as Chairman. If the learned IAC had found the order for assessment year 1999-2000 to be erroneous and prejudicial to the interest of Revenue he ought to have referred to the learned CIT for exercising the jurisdiction as IAC in term of the provision or section 5(1)(cc) reproduced as under:

"Notwithstanding anything contained in clause (c), the Commissioner may by general or special order in writing, direct that all or any of the powers conferred on the (Deputy Commissioner) and the Inspecting (Additional Commissioner) shall; in respect of all or any proceedings relating to specified cases or classes of cases or specified persons or classes of persons, be exercised by the Income Tax Panel and the Commissioner, respectively, and, for the purposes of any proceedings in respect of such case or persons, references in this Ordinance or any rules made thereunder to (Deputy Commissioner)" shall be deemed to be references to "income Tax Panel" and "Commissioner", respectively."

8. In the light of above provision the reference to I.A.C. in the case of an assessment made by the Panel being that of CIT, the assumption of jurisdiction by the present I.A.C. under section 66-A is not be taken to be proper and the order passed by him for this year is cancelled on the point of jurisdiction and we, are therefore, not giving any finding on merit for this year.

10. Resultantly, where the appeals for assessment years 1996-97 to 1998-99 fail, the appeal for assessment year 1999-2000 is disposed of as above.

C.M.A./823/Tax (Trib.)Appeals accepted.