Income Tax Ordinance (XXXI of 1979)---

----Ss.134(6), 62/65/132 & 93(2)---Appeal to the Appellate Tribunal-- Stay of recovery---Appeal against order of setting aside was pending before the Appellate Tribunal---Demand was raised in re-assessment against which appeal was pending before the First Appellate Authority-- Stay of recovery of such demand by the Appellate Tribunal---Validity-- Though the appeal against assessment order made under Ss.62, 65 & 132 of the Income Tax Ordinance, 1979 was pending for adjudication before the First Appellate Authority yet the facts remained that if the Appellate Tribunal ultimately declared re-opening of assessment under Ss.62/65 of the Income Tax Ordinance, 1979 to be made without lawful jurisdiction in the appeal pending before it, the entire structure built on the re-assessment order made under Ss. 62, 65 & 132 of the Income Tax Ordinance, 1979 would fall to the ground which would also result into striking down the illegal tax demand created against the assessee---Re assessment proceedings initiated by the Assessing Officer under Ss.62, 65 & 132 of the Income Tax Ordinance, 1979 were ancillary and incidental to the main appeal pending for adjudication before the Appellate Tribunal under Ss.62/65 of the Income Tax Ordinance, 1979 therefore, Appellate Tribunal was competent to grant stay of outstanding tax demand created as a result of re-assessment order made under Ss.62, 65 & 132 of the Income Tax Ordinance, 1979 provided the main appeal was pending for adjudicating before it---Appellate Tribunal directed that recovery proceedings against the assessee, initiated by way of issuing notice under S. 93(2) of the Income Tax Ordinance, 1979 be stayed for a period of 45 days from the date of passing the present order or till the final disposal of the assessee's appeal whichever happened earlier---Miscellaneous application was accepted by the Appellate Tribunal.

Uzma Butt, Advocate.

Imran Raza Kazmi, D.R.

Date of hearing: 13th October, 2001.

ORDER

RASHEED AHMED SHEIKH (JUDICIAL MEMBER).----Vide this miscellaneous application the assessee-applicant seeks stay against outstanding tax demand amounting to Rs.12,46,672 pertaining to the assessment year 1996-97.

2. Learned counsel for the assessee contended that the original assessment in this case was completed under sections 62/65 of the Income Tax Ordinance, 1979 at net income of Rs.23,73,180 creating a huge tax demand of Rs.869,214. When that order was assailed before the CIT(A) who set aside the assessment for de novo proceedings by giving certain directions to the Assessing Officer.

This treatment was challenged by the assessee in further appeal before the Tribunal on 1-6-2000. Anyhow., during the pendency of the assessee's appeal before the Tribunal, re-assessment has been formulated whereby the directions of the CIT(A) were flouted by the Assessing Officer and the net income originally determined was repeated without advancing any rhymes and reasons. Consequently an illegal tax demand of Rs.12,46,672 has been created against the assessee. She further stated that not only re-opening of the already completed assessment is ab initio void illegal but also be addition amounting to Rs.23,30,580 under section 13(1)(aa) of the Income Tax Ordinance, 1979 is made in flagrant violation of law and that is bound to be deleted on the facts and in the circumstances of the case. Now, the department, has resoiled to coercive measures for the recovery of outstanding tax demand of Rs.12,46,672 which is beyond the financial capability of the assessee to discharge with. According to her there is a fair chance of success of the assessee's appeal. She, therefore, earnestly prayed that the demand in question be ordered to be stayed still the disposal of the assessee's appeal pending for adjudication before the Tribunal.

3. The learned DR on the other hand opposed the prayer of the assessee regarding stay of outstanding tax demand. According to him, as the appeal against the re-assessment order made under section 62/65/132 of the Income Tax Ordinance, 1979 is pending for decision before the First Appellate, Authority, the assessee,. should seek stay of the outstanding tax demand either from the Zonal Commissioner or the IAC and not at the tribunal stage. He only requested that out of turn hearing of the assessee's appeal be ordered to be filed on priority basis.

4. We have heard both the learned representatives appearing at the bar and find the prayer of the learned AR to be quite legitimate. Though the appeal against the assessment order made under section 62/65/132 or the Income Tax Ordinance, 1979 is pending for adjudication before the First Appellate Authority yet the facts remain that- if the Tribunal ultimately declares reopening of the assessment under sections 62/65 or the Income Tax Ordinance, 1979 to be made without lawful jurisdiction in the appeal pending, before it, the entire structure built on the re assessment order made under sections 62/65/ 132 of the Income Tax Ordinance, 1979 would dash to the ground. This would also result into striking down the illegal tax demand created against the assessee. It is also pertinent to mention that reassessment proceedings initiated by the Assessing Officer under sections 62/65/132 of the Income Tax Ordinance, 1979 are ancillary or incidental to the main appeal pending for adjudication before the Tribunal under sections 62/65 of the Income Tax Ordinance, 1979 therefore, the Tribunal is competent to grant stay of outstanding tax demand created as a result of re-assessment order made under sections 62/65/132 of the income Tax Ordinance, 1979 provided the main appeal is pending for adjudicating before it. The case of the present assessee involves legal repercussion and also substantial amount of tax. So, we direct that recovery proceedings against the assessee, initiated by way of issuing notice under section 93(2) of the Income Tax Ordinance, 1979, dated 2-10-2001 will be stayed for period of 45 days from the date of passing this order or till the final disposal of the assessee's appeal whichever happens earlier. Let the assessee's appeal be filed for hearing before any available Division Bench of the Tribunal in the 2nd week of November, 2001.

5. The miscellaneous application succeeds accordingly.

C.M.A./737/Tax (Trib.)Order accordingly