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

----Ss. 52-A & 86---Recovery from the person from whom tax was not deducted or collected---Additional tax---Section 52-A of the Income Tax Ordinance, 1979 had nothing to do with S.86 of the Income Tax Ordinance, 1979---Law did not empower the department to impose additional tax under S.86 of the Income Tax Ordinance, 1979 in the case of deductee/payee who had been already charged under S.52-A of the Income Tax Ordinance, 1979---Section 86 of the Income Tax Ordinance, 1979 was an independent section, action wherein was possible alongwith action under S.52 of the Income Tax Ordinance, 1979 end not under S.52-A of the Income Tax Ordinance, 1979.

2000 PTD (Trib. 484 rel.

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

----Ss. 156, 86 & 52-A---Rectification of mistake---Charge of additional tax under S.86 of the Income Tax Ordinance, 1979 by treating the assessee in default under S.52-A of the Income Tax Ordinance, 1979-- Application for adjustment/refund of such additional tax wrongly charged/paid by way of rectification of such order under S.1 .56 of the Income Tax Ordinance 1979 without moving first for cancellation of order passed under S.86 of the Income Tax Ordinance, 1979 by way of appeal or rectification ---Validity---Assessee had moved rectification application in assessment proceedings and had requested for refund adjusting the amount relating to S.86 of the Income Tax Ordinance, 1979 which was not legally possible for the reason that adjustment of amount related to S.86 of the Income Tax Ordinance, 1979 and refund thereof would be legally possible in case the order under S.86 of the Income Tax Ordinance, 1979 was cancelled by way of appeal or rectification in the original order under S.86 of the Income Tax Ordinance, 1979---Order under S.86 of the Income Tax Ordinance, 1979 was separately passed to create -an independent charge which was still in field ---Assessee had moved rectification application in the assessment proceedings without seeking any relief against the order under S.86 of the Income Tax Ordinance, 1979 which still was in the field ---Assessee suffered because of invoking wrong jurisdiction for adjustment or credit of tax charged as additional tax, under S.86 of the Income Tax Ordinance, 1979 treating the assessee in default under S.52-A of the Income Tax Ordinance, 1979-- As long as the order under S.86 of the Income Tax Ordinance, 1979 was in field rectification application for refund of such additional tax would not be legally possible ---Assessee ought to have moved application for cancellation of the order under S.86 of the Income Tax Ordinance, 1979 by way of rectification and then to move for refund but due to failure to strike off the order under S.86 of 'the Income Tax Ordinance, 1979 there remained no question of allowing the rectification application containing request for adjustment credit of additional tax under S.86 of the Income Tax Ordinance, 1979 earlier levied in pursuance of order under S:52-A of the Income Tax Ordinance, 1979---Appeal was dismissed by the Appellate Tribunal in the circumstances'.

Abdul Tahir A.R. for Appellant

Faiz Elahi D.R. for Respondent.

Date of hearing: 29^th September, 2003.

ORDER

S. HASAN IMAM (JUDICIAL MEMBER).---In the present appeal assessee has challenged the order, dated 25-2-2002 passed by the learned CIT(A) confirming the order rejection of application for rectification of the assessment order for the assessment year 1998-99 under section 156 of the Income Tax Ordinance, 1979 refusing the refund of additional tax under section 86 for Rs.282,108.

Facts leading to present 'appeal are that the assessee initially moved an application under section 156 of the Income Tax Ordinance, 1979 for rectification of the assessment order for the reason that while framing assessment for the assessment year 1998-99 effect of tax at Rs.434,225 out of total charge of Rs.738,014 recovered by invoking, section 52A of the Income Tax Ordinance, 1979 read with section 50(7A) of the Ordinance has not been given. The assessee further alleged therein that deduction made under section 50(7A) is not final discharge of, liability and was adjustable. The learned Assessing Officer accepted the contention of the assessee consequently rectified the order under section 156 of the Income Tax Ordinance, 1979 being mistake apparent on record whereby allowed the credit of tax paid under section 50(7A) against final tax liability determined under section 62 of the Income Tax Ordinance for the relevant year.

3. In the first instance the assessee preferred appeal for not accepting the plea of refund of additional tax under section 86 for Rs.282,108 since this issue was not arising from the impugned order the appeal was withdrawn and a rectification application for rectification under section 156 of order under section 62 was preferred on 4-10-2001 stating there that the learned Assessing Officer was not, justified to charge additional tax under section 86 of the Ordinance treating the assessee in default under section 52(A) of the Ordinance.

4. However, rectification application was rejected vide order, dated 5-11-2001 for the reason that for the default of non-deduction of tax under section 57A of the Income Tax Or3inance, 1979 at the time of auction of Messrs Indus Flour Mills orders under sections 52A and 86 of the Income Tax Ordinance, 1979 were passed whereas the previous application moved for rectification of the order on behalf of the assessee, dated 8-5 -2001 was allowed in view of the fact that deduction made under section 57-A is final discharge of liability thus adjustable whereby credit of tax paid under section 57A was given order under section 156, dated 9-6-2001 against final tax liability determined under section 62.of the Income Tax Ordinance, 1979.

5. The learned CIT(A) dismissed the appeal of the assessee preferred from the rejection of the rectification application. Ratio of the order stood hereunder:--

"That as on the request by the assessee himself for credit/adjustment of tax recovered by invoking section 52-A, he has himself admitted the right application of section 52-A of the Income Tax Ordinance, 1979 (as amended) in his case for the period transaction under consideration, therefore, now the agitation by the appellant against the imposition of additional tax imposed under section 86 of the Income Tax Ordinance, 1979 (as amended) which was a consequence of the earlier action taken against him under section 52-A of the Income. Tax Ordinance, 1979 (as amended) is not sustainable in law as the law does not permit anybody to blow hot and cold from the same breath, therefore, the contention of the appellant on this ground stands repelled. That the other grounds agitated before the forum by the learned counsel of the appellant being self contradictory with the stand earlier taken by the appellant in the light of fact as discussed above and also contrary to the legal provisions of law on the subject, are herby found to be devoid of any merit and substance hence need no further dilation.

That keeping in view the above discussion the impugned order of rejection passed by the learned officer is found to be perfectly in accordance with law and as, such needs no interference therefore, the same is hereby upheld:"

6. We have heard the learned representatives of the two parties. The learned counsel for the assessee vehemently argued that charge of additional tax under section 86 at Rs.282,108 is without jurisdiction hence refusal to rectify the application for refund of additional tax is unjustified. The counsel further urged that the additional tax under section 86 of the Income Tax Ordinance, 1979 can be recovered only from payer deductee agent whereas the assessee is a recipient deductee. He also relied upon a case-law reported as 2000 PTD (Trib.) 484. The ratio of the order is hereunder:--

"Sections 52 and 52A---Distinction---Difference between sections 52 and' 52A of `the Income Tax Ordinance, 1979 was that section 52 of the Income Tax Ordinance, 1979 empowers the Assessing Officer to treat the deducting authority in case of its default as assessee in default while section 52A of the Income Tax Ordinance, 1979 did not give his power to the Assessing Officer and so the Assessing Officer could recover only the undeducted tax or shortfall in deductible tax from the deductee but he could not treat the deductee as assessee in default---No nexus existed between sections 52 and 52A of the Income Tax Ordinance, 1979."

7. Before taking into consideration the arguments above we would like to prefer to refer sections 52 and 52A of the Income Tax Ordinance, 1979:--

"52. Liability of persons failing to deduct or pay tax.---Where any person fails to deduct or collect or having deducted or collected as the case may be fails to pay the tax as required by or under section 50, he shall without prejudice to any other liability which he may incur under this Ordinance, be deemed to be an assessee in default in respect of such tax.

52.A. Recovery from the person from whom tax was not deducted or collected. ---Where any slim deductible or collectable by any person has not been deducted or collected as required by an under section 50, the Deputy Commissioner having jurisdiction over the case of the person from whom tax was deductible or collectable, without prejudice to an liability which the person responsible for deduction or collection of tax under section 50 may incur under this. Ordinance. may recover the sum not deducted or collected from the person from whom tax was to be deducted or collected and all provisions of this Ordinance relating to recovery of tax shall apply."

8. We are in agreement with the learned counsel of the assessee that section 52 of to the Income Tax Ordinance, 1979 has nothing to do with section 86 of the Ordinance. Law does not empower the department to imposed additional tax under section 86 of the Income Tax Ordinance 1979 in case of the deductee/payee who has been already charged under section 52(A). Section 86 is an independent section. Action therein is, possible alongwith action under section 52 and not section 52A as in case of assessee.

9. The case-law reported above although fully applicable in the case of assessee but could not be helpful for him so far this appeal is concerned. Reason beyond this phenomenon is that the assessee has, moved rectification application in the assessment proceedings and has requested for refund adjusting the amount related to section 86 which is not legally possible for the reason that adjustment of the amount related to section 86 and refund thereof would be legally possible in case the order under section 86 is cancelled by way of appeal or rectification in the original order under section 86. The order under section 86 is separately passed to create an independent charge which is still in the field therefore, intact as assessee moved rectification application in the assessment proceedings without seeking any relief against the order under section 86 which still find field. In fact assessee suffered because of invoking wrong jurisdiction whereby selected wrong forum for adjustment or credit of tax charged as additional tax under section 86 treating .the assessee in default under section 52(a) of the Ordinance.

10. We are therefore, of the considered opinion that till the order under section 86 of the Income Tax Ordinance is in field rectification application for refund of the additional tax under section 86 at Rs. 282,108 would not be legally possible. The assessee ought to have moved application for cancellation of the order under section 86 by way of rectification and then to move for refund but due to his failure to strike the order under section 86 there remains no question of allowing) the rectification application containing request for adjustment credit of additional tax under section 86 of the Income Tax Ordinance, 1970 earlier levied in pursuance of order under section 51A. In the circumstances supra the appeal find no merit whereby stand dismissed.

C.M.A./1058/Tax (Trib.)Appeal dismissed