M.As. Nos. 322/LB to 327/LB of 2002, decided on 15th April, 2003. VS M.As. Nos. 322/LB to 327/LB of 2002, decided on 15th April, 2003., 2004 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 861 (2003)

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

‑‑‑‑Ss. 156 & 135(2)‑‑Rectification of mistake‑‑‑Difference of opinion between two members of Appellate Tribunal‑‑‑Matter was referred to the third member‑‑‑Miscellaneous application for rectification of such order‑‑‑Validity‑‑ Miscellaneous application could only be filed if final order had been passed by the Bench and there arose a mistake, which was apparent from the record, and that mistake was being brought to its notice either by assessee or by Department‑‑‑‑Such was the only occasion upon which the provisions of S.156 of the Income Tax Ordinance, 1979 could be invoked and not otherwise‑‑‑Even S.135(2) of the Income Tax Ordinance, 1979 would not come at the assessee's rescue particularly when the final order was in pipeline‑‑‑Subsection (2) of S.135 of the Ordinance only refers to affording an opportunity of being heard to each one of the parties who were in appeal before the Appellate Tribunal and nothing else‑‑‑Assessee should have waited till the receipt of the final order by the Appellate Tribunal and if he had found that any mistake had arisen therein, only then he could file the miscellaneous application against the order in terms of S. 156 of the Income Tax Ordinance, 1979‑‑‑Miscellaneous application filed was premature and was not maintainable.

(1936) 4 ITR 157; (1972) 86 ITR 11; (1985) 155 ITR 310 and 2002 PTD 2570 ref.

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

‑‑‑‑S. 133(7)‑‑‑Appellate Tribunal‑‑‑Difference of opinion between two members‑‑‑Question proposed by dissenting members was modified by the third member‑‑‑Validity‑‑‑If there arises a difference of opinion in between the members, they shall state point or points on which they differ and the case shall be referred by the Chairman for hearing on such point or points by one or more of the other members of the Appellate Tribunal and such point or points shall be decided according to the opinion of the majority of the members of the Appellate Tribunal who had heard the case including those who had first heard it‑‑‑Third member was not competent to modify, the questions proposed by the dissenting members.

(1936) 4 ITR 157; (1972) 86 ITR 11; (1985) 155 ITR 310 and 2002 PTD 2570 ref.

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

‑‑‑‑S. 133(7)‑‑‑Appellate Tribunal‑‑‑Difference of opinion between two members‑‑‑Proposal of questions by dissenting members‑Jurisdiction of third member‑‑‑Restriction‑‑‑Language of proposed questions in any manner did not restrict the jurisdiction of third member ‑‑‑ Appellate Tribunal was fully competent to adjudicate upon the point or points stated by the dissenting members after having taken regard to the real controversy of the case, otherwise questions proposed by the dissenting members did cover the real controversy set out by the assessee in its re framed questions.

(1936) 4 ITR 157; (1972) 86 ITR 11; (1985) 155 ITR 310 and 2002 PTD 2570 ref.

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

‑‑‑‑Ss. 135(2) & 156‑‑‑Disposal of appeal by the Appellate Tribunal‑‑ Difference of opinion between two members‑‑‑Reframing of question‑‑ Questions proposed by the dissenting members could be refrained‑‑‑Since each member of Division Bench had passed a separate order and had been signed by each one of them which meant that two separate orders were in the field, therefore, the questions proposed by the dissenting members could be refrained at the behest of assessee/applicant‑‑‑Validity‑‑No final order was in existence‑‑‑Formulation of points by dissenting members were in the nature of issue(s) framed on which the Members differed'‑‑‑Once this had been done and the third member(s) had heard the parties and expressed his/their opinion, the point of the points were to be decided in accordance with the opinion of the majority‑‑‑Final result or decision in accordance with the opinion of the majority was to be recorded and signed by all the members who had heard the case‑‑‑Since the opinion of the dissenting members had yet to attain finality meaning thereby no final order was in the field therefore, provisions of S.135(2) read with S.156 of the Income Tax Ordinance, 1979 would not come into play.

(1936) 4 ITR 157; (1972) 86 ITR 11; (1985) 155 ITR 310 ‑and 2002 PTD 2570 ref.

Siraj ud Din Khalid for Appellants.

Shahbaz Butt: Amicus curiae.

Muhammad Asif D.R. for Respondent.

Date of hearing: 12th April, 2003.

ORDER

RASHEED AHMAD, SHEIKH (JUDICIAL MEMBER).‑‑By exercising powers under section 133(7) of the Income Tax Ordinance, 1979, this Full Bench has been constituted by the order of the Chairman of the Tribunal, dated 26‑7‑2002 in order to resolve controversy arisen between the learned Members, Mr. Syed Nadeem Saqlain the Judicial Member and Mr. Muhammad Munir Qureshi the learned Accountant Member with regard to applicability of section 52 of the Income Tax Ordinance, 1979. The following questions were proposed by the learned Members for our consideration:‑‑

(1) "Whether, following amendments made in section 52 through the Finance Act 1999, the DCIT of the `payer' is competent to pass order under section 52?"

(2) "Whether, following amendment in section 52 through Finance Act 1999, the decision in the "Tapal Energy" case has been rendered ineffective?"

(3) "Whether, appeals filed by appellant before the Tribunal for 1994‑95 and 1995‑96 against the orders of the CIT(A) are barred from adjudication following the finding of the CIT(A) that the appellant's appeals for these years against the order of the DCIT are "time‑barred?"

(4) "Whether this Bench is hound to follow its earlier order viz. ITA Nos. 1339‑40/LB/2000, dated 28‑3‑2001 notwithstanding the fact that in the cited order the amendments to section 52 have been (erroneously) held to be applicable prospectively when the said amendments are prima facie, procedural amendments and hence applicable retrospectively/retroactively as held by the Tribunal in decision cited as (2000) 81 Tax 26 (Trib.)?

2. As this case had yet to be fixed, a miscellaneous application was moved at the instance of the assessee‑applicant requesting the Bench that as the questions framed by the learned Members do not solve real controversy arising in the case thus the necessity has arisen to reframe the questions posed supra so that the third Member could answer the questions in its proper perspective. Following are the questions, which have been reframed by the learned A.R. so that, real controversy, in main appeals could be resolved:‑‑

"(1) Whether the Deputy Commissioner having jurisdiction under section 5 over the payer assessee after initiation of action can also finalize the proceedings? (refraining of question referred by the D.B.)

(2) Whether the Explanation inserted in section 52 through the Finance Ordinance, 1999, is retrospectively applicable?

(refraining of question No.2 referred by the D.B.)

(3) If the answer to above question 2 is in affirmative, whether it would be even the order passed, by the DCIT having jurisdiction under section 5 over the payer‑assessee, earlier to insertion of the Explanation?

(4) Whether on the facts and in the circumstances of the case, appeals filed by the appellant before the Tribunal for 1994‑95 and 1995‑96 are barred from adjudication?

(refraining of question N6.3 referred by the D.B.).

(5) Whether an Accountant Member of a Division Bench is within his jurisdiction and competency to declare an earlier judgment, of which he is the authority, as "erroneous" when the Judicial Member granted relief on the basis of so called "erroneous view"?

(refraining of question No.4 referred by the D.B.)

3. These miscellaneous applications have also been entrusted to the present Bench by the order of the Chairman Tribunal, dated 1‑3‑2003. It is imperative to mention here that at the first place, while adjudicating the questions posed by the dissenting member, this Bench will act as a "third member" or as a "referee" and in the second place, while disposing of the Miscellaneous application, this Bench will step into the shoes of the Division Bench which was earlier constituted in order to dispose of the main appeals. Hence, this Bench is fully competent to settle the issue of maintainability of these miscellaneous applications.

4. We have heard Mr. Siraj ud Din Khalid, Advocate the learned counsel for the assessee‑applicant at great length and also Mr. Shahbaz Butt, Advocate who has requested the Bench to grant him leave to plead the case in the capacity of amicus curiae. The permission was granted by the Bench and he has also been heard in this regard. The case‑law referred to, in re: (1936) 4 ITR 157 (H.C. Calcutta), (1972) 86 ITR 11 (S.C. Ind.) (1985) 155 ITR 310 (H.C. Madras) and (2002 PTD 2570 (H.C. LHR) in support of their contentions have also been perused. On the other hand the arguments advanced by the learned D.R. have also been taken into account.

5. Main thrust of the learned counsel for the assessee was that the questions framed by the dissenting members do not depict real controversy arisen in the present case and whether the third member can modify the questions proposed by the dissenting members and whether the language of the proposed questions in any manner restrict the jurisdiction of the third member. It was also added that the questions should not be divorced from the facts of the case and should not be in the abstract as has been done in the case in hand. Actually, the Miscellaneous, application filed, by the assessee/applicant, whether the questions proposed by the dissenting Members for the consideration of the third Member were refrained, is misplaced. The purport and the tenor of the application is, in fact, to meddle in the process of passing the final order by the third Member, which is obviously not at all warranted by the judicial propriety. Factual position on the ground is that the final order, which is to be passed by, the third member in the present case is still in the pipeline. Reasons being a difference of opinion had arisen between the learned Members: who were hearing the main appeals, consequent upon which the case has been entrusted by the Chairman of the Tribunal to three Members of the Tribunal to decide the appeals so that the points in issue could be decided according to the opinion of the majority in terms of section 133(7) of the Income Tax Ordinance, 1979. According to section, 158 of the Income Tax Ordinance, 1979, a miscellaneous, application can only be filed if the final order has been passed by the Bench and there arises a mistake, which is apparent from the record, and that mistake is being brought to its notice either by the assessee or by the Income Tax Authority. So, this is the only occasion upon which the provisions of section 156 can be invoked and not, otherwise. Even subsection (2) of section 135 of the Income Tax Ordinance would not come at the assessee's rescue particularly when the final order is in pipeline. This subsection only refers to affording an opportunity of being heard to each one of the parties who are in appeal before the Tribunal and nothing else, which is duly being afforded to the applicant. In fact, the assessee should have waited till the receipt of the final order by the Tribunal and if he finds that any mistake has arisen therein, only then he could file the Miscellaneous application against that order in terms of section 156 of the Ordinance. In view of foregoing scenario we are of the considered view that the miscellaneous applications filed at the instance of the assessee applicant are pre‑mature and as such are not maintainable.

6. Next anxiety of the learned counsel for the assessee is whether the third Member can modify the questions proposed by the dissenting Members. According to subsection (7) of section 133 of the Income Tax Ordinance, 1979, if there arises a difference of opinion in between the learned members, they shall state point or points on which they differ and the case shall be referred by the Chairman of the Tribunal for heating on such point or points by one or more of the other members of the Tribunal and such point or points shall be decided according to the opinion of the majority of the members of the Tribunal who have heard the case including those who first heard it. Viewing the assessee's contentions in this perspective, the third Member is not competent to modify the questions proposed by the dissenting Members. Anyhow, the decision on all those points shall rest after' thrashing out and evaluating legal as well as factual controversy arisen therein. Hence, this contention of the assessee is not sustainable as well.

7. The other plea of the learned counsel for the assessee is whether the language of the proposed questions in any manner restricts the jurisdiction of the third Member. To our view certainly not. This Tribunal is fully competent to adjudicate upon the point or points stated by the dissenting Members after having taken regard to the real controversy of the case. So far as the questions appearing at Serial Nos. 1 to 4 are concerned, these are duly covered in the questions proposed by the dissenting members in their orders. As regards Question No.5 this is the questions, which should be taken up by the assessee in the reference application and not by way of filing miscellaneous application. But this could only be done once the final order is passed by the Tribunal, and not when the final order is in the offing. In no way this question can be posed at this stage. We therefore, feel satisfied that the questions proposed by the dissenting‑ Members do cover the real controversy set out by the assessee in its refrained questions re‑produced supra.

8. Mr. Shahbaz Butt Advocate, the learned A.R has contended that since each Member of the Division Bench has passed a separate, order and has been signed by each one of them which means that two separate orders are in the field, therefore, the questions proposed by the dissenting Members can be re‑framed at the behest of the assessee applicant. This argument of the learned counsel is misconceived. In fact there is no final order in existence. Rather, formulation of points by the dissenting Members are in the nature of issue (s) framed on which the learned Members differed. Once this has been done and the third Member(s) has/have heard the parties and expressed his/their opinion the point or the points are to be decided in accordance with the opinion of the majority. The final result or decision in accordance with the opinion of the majority is to be recorded and signed by all the Members who had heard the case. Since the opinion of the dissenting Members has yet to attain finality meaning thereby no final order is in the field at this stage, therefore, the provisions of section 135(2) read with section 156 will not come into play at this juncture.

9. Coming to the case‑law referred to by the learned counsel for the assessee in support of their contentions, we feel convinced that none of them would help the assessee's contentions as the facts recorded in those cases are quite distinguishable viz. the present case coupled with if the decision in all those cases rests upon altogether variable set of facts and as such do not apply to the facts of this case on all fours.

10. In the result the Miscellaneous applications filed at the behest of the applicant are dismissed for the reasons stated supra.

C.M.A./946/Tax (Trib.)Applications dismissed.