Income Tax Ordinance (XXXI of 1979)---

----S. 136 [as substituted by Finance Ordinance (XXI of 2000)]-- Reference to High Court without first approaching Tribunal for referring proposed questions of law---Validity---High Court dismissed such reference in limine for being misconceived.

Arif Moton for Applicant.

Aminuddin Ansari for Respondents.

Date of hearing: 30th May, 2003.

ORDER

Commissioner of Income Tax, Karachi has filed this application under section 136(1) of the Income Tax Ordinance, 1979 proposing the following questions of law for consideration by this Court:--

"Whether on the facts and in the circumstances of the case the learned Income Tax Appellate Tribunal is justified in holding that provisions of section 80-D with reference to a Registered Firm is applicable with effect from assessment year 1993-94 and not for assessment year 1992-93"

On perusal of the file, it transpires that the Income Tax Appellate Tribunal passed an order, dated 12-9-2001 in I.T.A. No.2178/KB of 1994/95 (Assessment year 1992-93) whereby the appeal was allowed, the order, of the Inspecting Additional Commissioner was set aside and the original order passed under section 59(1) of the Income Tax Ordinance was restored.

It is pertinent to mention here that by the Finance Act, 1997, section 136 of the Ordinance was amended to read as follows:--

"136. Appeal to High Court.---(1) An appeal shall lie to the High Court in respect of any question of law arising out of an order under section 135.

(2) The appeal under this section shall be filed within sixty days of the date upon which an assessee or the Commissioner is served with notice of an order under section 135. "

However, the provisions of sections 136 of the Income Tax Ordinance, 1979 were again amended by the Finance Ordinance, 2000, whereby the old provisions of the Income Tax Ordinance were restored. After such amendment section 136 read as follows:--

"136. Reference to High Court.--- (1) Within ninety days of the date upon which he is served with notice of an order under section 135, the assessee or the, Commissioner may, by application in such form and accompanied by such documents as may be prescribed, require the Appellate Tribunal to refer to the High Court any question of law arising out of such order, and the Appellate Tribunal shall, within ninety days of the receipt of such application, draw up a statement of the case and refer it to the High Court.

Explanation.---For the removal of doubts it is hereby declared that a reference application under this section may be made in respect of a question of law arising out of an order of the Appellate Tribunal made on or after the first day of July, 2000.

(2) If, on an application made under subsection (1), the Appellate Tribunal refuses to state the case on the ground that no question of law arises, the assessee or the Commissioner, as the case may be, may within one hundred and twenty days from the date on which he is served with notice of the refusal, apply to the High Court and the High Court may, if it is not satisfied with the correctness of the decision of the Appellate Tribunal, frame a question of law and the provisions of subsections (5), (6), (7) and (8) shall,, so far as may be, apply as they apply to a reference made under subsection (1).

(3) If on any application made under subsection (1), the Appellate Tribunal rejects it on the ground that it is time-bared, the assessee or the Commissioner, as the case may be; may, within three months from the date on which he is served with notice of the rejection, apply to the High Court, and the High Court, if it is not satisfied of the correctness of the Appellate Tribunal's decision, may require the Appellate Tribunal to treat the application as made within the time allowed under subsection (1)."

A bare reading of the above section clearly shows that if an assessee or the Commissioner is dissatisfied with the order of the Income Tax Appellate Tribunal, he is required to file an application to the Appellate Tribunal or refer to the High Court any question of law arising out of such order and the Appellate Tribunal is thereafter required to draw up a statement of the case and refer it to the High Court. If the Tribunal rejects the application, the assessee or the Commissioner, as the case may be, is entitled to file within three months from the date on which he is served with the notice of the rejection, a Reference to the High Court for deciding the questions of law arising out of the order of the Tribunal. In the instant case, the Tribunal allowed the appeal on 12-9-2001 on which date the latest amended provisions of section 136(1) with its Explanation as stated above were in force. The Commissioner was accordingly required to first file an application under section 136(1) of the Income. Tax Ordinance before the Tribunal for referring to the High Court the questions of law proposed by him. Mr. Arif Moton concedes that this was not done and this reference application was filed without first approaching the Income Tax Appellate Tribunal under section 136(1), of the Income Tax Ordinance, 1979.

In view of the above discussion, it is clear that this reference application filed by the Commissioner is misconceived and is accordingly dismissed in limine.

S.A.K./C-86/K Reference dismissed.