M. As. (Rect.) Nos.226/KB to 228/KB of 2003 in I.T.As. Nos.511/KB to 513/KB of 2002 VS M. As. (Rect.) Nos.226/KB to 228/KB of 2003 in I.T.As. Nos.511/KB to 513/KB of 2002, 2004 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 689 (2003)

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

‑‑‑‑Ss. 135(4)(c), 135(5), 23(1) & 66‑A‑‑‑Income Tax Ordinance (XLIX of 2001), S. 221(1)‑‑‑Disposal of appeal by Appellate Tribunal‑‑ Rectification of mistake‑‑‑Setting aside of order of Inspecting Additional Commissioner by the Appellate Tribunal ‑‑‑Assessee contended that setting aside order was silent about the directions to Assessing Officer which was mistake apparent on record in view of subsections (3) & (4) of S. 135 of the Income Tax Ordinance, 1979 which provided that if the Appellate Tribunal, while disposing of appeal, is satisfied that the assessment which is subject‑matter of appeal ought to be set aside, it shall set aside the assessment, directing Assessing Officer to make such assessment and as such order setting aside the matter for fresh adjudication by the Inspecting Additional Commissioner would apparently be vitiated being illegal and would amount to exercise of jurisdiction in excess of the vested powers‑‑‑Validity‑‑‑Subsection (5) of S. 135 of the Income Tax Ordinance, 1979 was an independent provision and had nothing to do with the powers envisaged under S.135(4)(a), (b) & (c) of the Income Tax Ordinance, 1979‑‑‑Said provision of law read with S.134 of the Income Tax Ordinance, 1979 would enable Appellate Tribunal to meet the situation by ‑remanding the matter back to the Inspecting Additional Commissioner, as the provisions of subsection (5) of S. 135 of the Income Tax Ordinance, 1979 were sufficient, clear, unambiguous‑‑‑Case was remanded back to the Inspecting Additional Commissioner where the order was varied by the Appellate Tribunal.

Chamber's and Concise Oxford Dictionaries ref.

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

‑‑‑‑Ss. 66‑A, 62 & 135(4)(c)‑‑‑Powers of Inspecting Additional Commissioner to revise Deputy Commissioner's order ‑‑‑Assessment‑‑ Setting aside of‑‑‑Powers‑‑‑Order under S.66‑A of the Income Tax Ordinance, 1979 had the character of an assessment i.e. determined the income and tax liability itself wherein either the order under S.62 of the Income Tax Ordinance, 1979 was cancelled for fresh orders were to be passed or directions were to be issued to follow a particular course of action‑‑‑Judicious course would be to remand the case to the official who invoked S. 66‑A of the Income Tax Ordinance, 1979 instead of setting aside the same directing the Assessing Officer as in the case of order under S.62 of the Income Tax Ordinance, 1979.

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

‑‑‑‑S.135‑‑‑Disposal of appeal by Appellate Tribunal‑‑‑Inherent powers‑‑ Procedural lacuna/omission or irregularity could be corrected by invoking the inherent powers of the Appellate Tribunal‑‑‑Inherent powers were normally exercised where there was no express provision of law applicable to the case.

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

‑‑‑‑Ss. 135(4)(c), 135(5), 23(1) & 66‑A‑‑‑Income Tax Ordinance (XLIX of 2001), S. 221(1)‑‑‑Disposal of appeal by Appellate Tribunal‑‑ Rectification of mistake‑‑‑Setting aside of order ought to be to Assessing Officer rather than to Inspecting Additional Commissioner‑‑‑Validity‑‑ While providing appeals from the order under S.66‑A of the Income Tax Ordinance, 1979 through amendment, no change in consequence thereof, had been brought up in subsections (3) & (4) of S. 135 of the Income Tax Ordinance, 1979 providing powers for disposing of an appeal‑‑‑In order to meet the situation arising from legal technicalities, it would be judicious, legally suitable and justified to exercise inherent powers referring to subsection (5) of S. 135 of the Income Tax Ordinance, 1979 to secure the ends, of justice and to prevent abuse of process of law.

PLD 1975 Kar. 858; 19 All. 155 (PC); PLD 1978 Pesh. 19 and PLD 1977 Kar. 2000 (sic) rel.

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

‑‑‑‑S. 135‑‑‑Disposal of appeal by the Appellate Tribunal ‑‑‑Jurisdiction‑‑ Where the manner of doing something is not prescribed, the Appellate Tribunal is at liberty to infer that the statute by implication empowers that detail to be carried out, and where law confers jurisdiction, it impliedly also grant power of doing all such acts or employing such means as are necessary for just adjudication.

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

‑‑‑‑S. 135(4)(c)‑‑‑Disposal of appeal by Appellate Tribunal‑‑‑Setting aside remand‑‑‑Bar to remand the matter to Inspecting Additional Commissioner‑‑‑Validity‑‑‑Inherent powers were possessed by the Court or Appellate Tribunal by virtue of its duty to do justice between the parties before it‑‑‑Where Appellate Tribunal was satisfied that an order which was the subject‑matter of appeal, ought to be varied, then there will be no bar to remand the matter to Inspecting Additional Commissioner and to issue consequential direction to Inspecting Additional Commissioner as the case may require, in order to enable him to pass a fresh order‑‑‑Where the matter was being set aside by the Inspecting Additional Commissioner, there would be no other judicious course except to direct the Assessing Officer to conclude the assessment afresh vide S. 135(4)(c) of the Income Tax Ordinance, 1979.

PLD 1975 Kar 858; 19 All. 155 (PC); PLD 1978 Pesh. 19 and PLJ 1977 Kar. 2000 (sic) rel.

Rehan Hasan Naqvi for Appellant:

Shaikh M. Hanif, D.R. for Respondent.

Date of hearing: 15th August, 2003.

ORDER

S. HASAN IMAM (JUDICIAL MEMBER). ‑‑‑Applications captioned above have been moved by the assessee invoking section 221(1) of the Income Tax Ordinance, 2001 for rectification of consolidated order, dated 28‑2‑2003 passed in I.T.A. Nos.511 to 513/KB of 2002.

2. Record reveals that the learned IAC added Rs.6,60,000 to the assessed income considering the assessment framed under section 62 of the Income Tax Ordinance, 1979 erroneous and prejudicial to the interest of Revenue on the plea that the amount of Rs.6,60,000 paid to IRC Trust by the assessec for using their premises for running Marriage Lawn business acknowledged as donation by the payee (IRC Trust) does not fall within the ambit of section .23(1) of the Income Tax Ordinance, 1979, whereby modified the assessment order invoking section 66A of the Income Tax Ordinance, 1979.

3. The real ratio of the order, dated 28‑2‑2003 passed by the I.T.A.T. in I.T.A. No.511 to 513/KB of 2002 is set out here under:‑‑

(7) Admittedly the receipt issued by Messrs IRC Trust available in the files indicates donations received from the assessee and at no stage the assessee challenged or disputed the issuance of receipts as donations receipts. It is also not clear that whether Messrs IRC Trust fulfils the conditions for receiving the donations and whether the provisions of subsection (34A) of section 47 have been taken into consideration during the assessment of the Messrs IRC Trust and also at the time of the assessment of assessee. On the contrary, the contention of the assessee is baseless as the assessee has neither furnished trading account nor has ever claimed that at any stage, it indulged in any sale or purchase activity, hence to resolve the controversy as to whether it is donation or a trading expenditure for using the ground owned by the Trust as Marriage Lawn, we find that it would be mandatory to hear the Messrs IRC Trust as the order invoking section 66A order would directly affect Messrs IRC Trust, who has been issuing receipts of donations, as such sufficient reason appears to set aside the matter for fresh adjudication after complete enquiry in this context from the parties concerned and affording an opportunity of hearing to the assessee, taking into consideration the above fact and directions."

4. We have heard the learned representatives of the two parties. To support the version broadly taken in rectification application, the learned A.R. of the assessee contended that the setting aside order reproduced above, is silent about the directions to the learned DCIT and therefore it is a mistake apparent on record in view of subsections (3) and (4) of section 135 of the Income Tax Ordinance, 1979, which provides that if the ITAT while disposing of appeal is satisfied that the assessment which is subject‑matter of appeal ought to be set aside, it shall set aside the assessment, directing the DCIT to make such assessment, as such the order, dated 28‑2‑2003 setting aside the matter for fresh adjudication by the learned IAC would apparently be vitiated being illegal and would amount to exercise of jurisdiction in excess of the vested powers. It is added that in the settled circumstances, fresh enquiry is to be conducted by the Assessing Officer only.

5. We have given our anxious consideration to the arguments addressed by the learned A.R. at the bar and have also gone through relevant provisions of law in order to arrive at a proper conclusion in this respect. However, before further discussion is made, it would be necessary to refer to the provisions of section 134(1) of the Income Tax Ordinance, 1979 relating to appeal to the Appellate Tribunal, after amendment (inserted by the Finance Act, 1994):‑‑

"(134) Appeal to the Appellate Tribunal.‑‑‑(1) An assessee objecting to an order passed by an Appellate Additional Commissioner under section 111 or 132 or subsection (2) of section 148, or an order made by the Appellate Additional Commissioner under section 156, having the effect of enhancing the assessment or reducing a refund or otherwise increasing the liability of the assessee or an order made by an Inspecting Additional Commissioner under section 66A may appeal to the Appellate Tribunal against such order,

(2) ..................

(3).................

(4).................

(5).................

(6) ................."

The provision before the amendment reads as under:‑‑

"(134) Appeal to the Appellate Tribunal.‑‑‑(1) An assessee objecting to an order passed by an Appellate Assistant Commissioner under section 111 or 132 or subsection (2) of section 148, or an order made by the Appellate Assistant Commissioner under section 156, or an order made by an Inspecting Additional Commissioner under section 66A having the effect of enhancing the assessment or reducing a refund or otherwise increasing the liability of the assessee may appeal to the Appellate Tribunal against such order. "

The lines below have been inserted by Finance Act, 1994 in a manner that all orders passed by the ACIT have now become appealable.

"or an order made by an Inspecting Additional Commissioner under section 66A may appeal to the Appellate Tribunal against such order."

6. Apparently the order passed by an Additional Commissioner of Income Tax under section 66A setting aside income tax assessment made by an Assessing Officer for de novo proceedings was not appealable earlier. Being a drafting omission, section 134 had been amended in a manner that all orders passed by an Additional Commissioner of Income Tax under section 66A have now become appealable, "whereas vide subsections (3), (4) & (5) of section 135, following powers for disposing of an appeal continued to be vested in the Appellate Tribunal:‑‑

"(3) If the Appellate Tribunal is not satisfied that the assessment or the order which is the subject of the appeal ought to be interfered with, it shall reject the appeal.

(4) If the Appellate Tribunal is satisfied that an assessment which is the subject of appeal‑

(a) ought to be reduced or annulled, it shall reduce or annul the assessment accordingly; or

(b) ' is insufficient, it shall enhance the assessment accordingly; or

(c) ought to be set aside, it shall set aside the assessment and direct the Deputy Commissioner to make a fresh assessment.

(5) If the Appellate Tribunal is satisfied that an order which is the subject of appeal, ought to be interfered with, it shall cancel or vary the order accordingly and shall issue such consequential directions as the case may require. "

7. The learned counsel for the appellant contended that the provisions of subsection (4) of section 135 provides that if the Appellate. Tribunal is satisfied that an order which is the subject of appeal, ought to be set aside it shall set aside the assessment and direct the Deputy Commissioner to make a fresh assessment. However, contrary to this, the Tribunal while maintaining the verdict of JAC regarding erroneousness of the order under section 62 so far as also, being prejudicial to the interest of Revenue, set aside the issue for fresh adjudication by the IAC with directions to make enquiry, from the assessee and Messrs IRC Trust, to whom amount has been paid, as the order invoking section 66A would also directly effect Messrs IRC Trust which has received amount as donations‑from the assessee.

8. In the circumstances, the argument that under section 135(4)(c) of the Income Tax Ordinance, 1979, the ITAT while disposing of the appeal, is satisfied that the assessment which is the subject‑matter of the appeal, ought to be set aside, it shall set aside the assessment and direct the DCIT to make fresh assessment, possess sufficient force as above cited provision of law as discussed has restricted the powers of Tribunal to refer the matter back to the DCIT only while setting aside the assessment. However, before parting with the order, it would be prudent and necessary to discuss the grounds taken by the learned D.R. viz. (i) that in various orders the ITAT has been pleased to remand the cases back to the learned JAC while deciding the appeals preferred from the order under section 66A, as such what would be the fate of those orders frequently passed by the Income Tax Appellate Tribunals in the past, remanding the cases back to the learned IAC (ii) whether setting aside order to the DCIT would not amount to empower him to sit over the orders of the superior officers. In view of our above finding, "where the order under section 66A being in the nature of an assessment has been set aside by the ITAT, there would be no other course except to direct the Assessing Officer to conclude the assessment order afresh vide section 135(4)(c)".

9. In fact the present situation appears to have arisen due to procedural omission as while providing an appeal, from an order passed under section 66A through Finance, Act, 1994. Section 135 relating to disposal of appeal by the Appellate Tribunal remained unamended. Although in consequence of the amendment in section 134 while providing remedy of appeal from the order under section 66A, it was necessary to amend section 135 also to empower the ITAT to set aside the orders under section 66A directing the learned IAC to make fresh order.

10. The situation appears to have created legal technicalities. However by referring subsection (5) of section 135, it could be restored. We would, therefore, prefer to conclude that these powers vested with the Tribunal includes powers either to cancel or to vary the JAC's order with further consequential directions in case the impugned order which is the subject of appeal, required to be interfered with. Subsection (5) of section 135 is an independent provision and has nothing to do with the powers envisaged under section 135(4)(a)(b) and (c). Hence this provision of law read with section 134, would enable ITAT to meet the situation by remanding the matter back to the learned IAC , as the provisions of subsection of section 135 are sufficient, clear, unambiguous and import to remand the case back to the learned IAC where the order is varied by the Tribunal. The impugned order, dated 28‑2‑2003 has in fact varied the order under section 66A in real spirit of law envisaged under subsection (5) of section 135 as the term "vary" defined in the Chambers and Concise Oxford Dictionaries "to change to something else; to make of different kinds; modify, express in other words, alter or be altered; to be or become different; to change in succession; to deviate; and to disagree".

11. It is worth‑mentioning that order under section 66A has the character of an assessment i.e. determines the income and tax liability itself wherein either the order under section 62 is cancelled for fresh orders are to be passed or directions are to be issued to follow a particular course of action, hence judicious course would be to remand the case to the official who invoked section 66A instead of setting aside the matter directing the DCIT as in case of orders under section 62.

12. Even otherwise as already stated it is a procedural lacuna/ omission or irregularity which can be corrected invoking the inherent powers of the ITAT. The inherent powers are normally exercised where there is no express provision of law applicable to the case and as discussed above, while providing appeals from the order under, section 66A through amendment, no change in consequence thereof, has been brought up in subsections (3) and (4) of section 135 providing) powers for disposing of an appeal. In order to meet from legal technicalities, it will be judicious, justified to exercise inherent powers referring to section 135 to secure the ends of justice and to prevent abuse of process of law. In this context, we find support from a judgment reported as PLD 1975 K 858, 19(A) 155 PC, PLD 1978 Peshawar 19, and PLJ 1977. Kar. 2000 (sic), the ratio of which stood as under:‑‑

"It cannot be said that Courts have no power to do justice or redress a wrong merely because no express provision of the Court".

13. In the circumstances supra, we are of the considered view that where the manner of doing something is ‑not prescribed, the Tribunal is at liberty to infer that the statute by implication empowers that detail to be carried out, and where law confers jurisdiction, it impliedly also grants power of doing all such acts or employing such means as are necessary for just adjudication. Since the inherent powers are inherent in, the Court or Tribunal by virtue of its duty to do justice between the parties before it, we, therefore, have no hesitation to hold that where the Tribunal is satisfied that an order which is the subject‑matter of appeal, ought to be varied, then there will be no bar to remand the matter to the learned IAC and to issue consequential direction to the learned IAC as the case may require in order to enable him to pass a fresh order. However, where the matter is being set aside by the IAC, there would be no other judicious course except to direct the Assessing Officer to conclude the assessment order afresh vide section 135(4)(c).

14. For the above said reason, we propose to rectify the order deleting the last lines of the order after the word donation, "as such sufficient reason appears to set aside the matter for fresh adjudication" and to amend the order as under:‑‑

as such sufficient reason appears to remand the matter to learned IAC for fresh adjudication after complete enquiry in this context from the parties concerned affording an opportunity of hearing to the assessee and taking into consideration two and directions."

15. Order accordingly.

C.M.A./1007/Tax (Trib.) Order accordingly.