I.T.As. Nos.1933/LB to 1935/LB, 2103/LB, 2096/LB and 2104/LB of 1996, decided on 9th February, 2005. VS I.T.As. Nos.1933/LB to 1935/LB, 2103/LB, 2096/LB and 2104/LB of 1996, decided on 9th February, 2005.
2006 P T D (Trib.) 1323
[Income-tax Appellate Tribunal Pakistan]
Before Khawaja Farooq Saeed, Chairperson and Mazhar Farooq Sheerazi, Accountant Member
I.T.As. Nos.1933/LB to 1935/LB, 2103/LB, 2096/LB and 2104/LB of 1996, decided on 09/02/2005.
(a) Income Tax Ordinance (XXXI of 1979)---
----S. 154---Service of notice---Postal certificate---Presumption---Rebuttal---Appellate Tribunal directed for re-calling the order and the case was fixed for regular hearing on the ground that assessee had not received the notices and the service being under postal certificate was held to be a presumption rebutable.
2003 PTD 1516; 1994 SCMR 2233 and 1999 PTD 1358 rel.
(b) Income Tax Ordinance (XXXI of 1979)---
----Ss. 59(1)(4), 55-A, 64 & 65---Finance Act (1 of 1995), Preamble---Self-assessment---Assessment years 1990-91 to 1992-93---No order in writing was passed under S.59(1) of the Income Tax Ordinance, 1979---Re-opening of assessment under S.65 of the Income Tax Ordinance, 1979---Department contended that order had been deemed to be an order even prior to assessment year 1995-96---Validity---Provision that had held the acknowledgement issued under S.55-A of the Income Tax Ordinance, 1979 as a deemed order was inserted by Finance Act, 1995---Prior to such amendment the requirement of determination of the income through an order was a part of law---Assessment years 1990-91 to 1992-93 in which no assessment should had been made after the expiry of the next financial year; meaning thereby that on 30th of June, 1993, the same had become barred by time---Pending return could not be assessed subsequent to the said date---Such amendment had made such lapse to be as order but the same could not be made applicable on these returns---No question, of an assessment order would arise as the return pending on the next 30th of June had become time-barred---Provision of S.59(4) was similar to S.64 of the Income Tax Ordinance, 1979; in the said section no return could be finalized after two years from the end of the assessment year in which the return had been filed---Return had become barred by time under S.59(4) of the Income Tax Ordinance, 1979 and unless the legislature had so mentioned in unequivocal terms that all such time-barred returns shall also be considered as an assessment, the assessment in hand could not be given any life--Proceedings initiated were illegal and the same were cancelled by the Appellate Tribunal.
1993 SCMR 1108 = 1993 PTD 1108 ref.
2003 PTD 1530 rel.
(c) Income Tax Ordinance (XXXI of 1979)---
----S. 65(1)(c)---Additional assessment---Assessment years 1990-91 to 1992-93---Acknowledgement slip was not to be treated as an assessment order---Assessing Officer was required to assess and accept the declared income through a formal order---In absence of such an order, the provision of S.65(1)(c) of the Income Tax Ordinance, 1979 did not come to effect---Requirement therein was to assess by an order in writing the total income of the assessee on the basis of return filed by him.
?
2003 PTD 1530 rel.
Akram Tahir, D.R. for Appellant.
Ajmal Khan for Respondent.
Date of hearing: 14th December, 2004.
ORDER
These appeals have been filed by the assessee as well as the Department. The same were earlier finalized by this Tribunal vide its order, dated 11-6-2003 ex parte because of the absence of the assessee. In the said proceedings departmental appeals were also dismissed. Later the assessee filed Misc. Applications through which he contended that he had not received the notices and the service being under postal certificate has been held to be as presumption rebutable by the Hon'ble High Court in its judgment reported as 2003 PTD 1516 as well as 1994 SCMR 2233 A and 1999 PTD 1358 (H.C. Kar.). This Tribunal after going through the record found that the contention of the assessee is correct and directed for re-calling the order and the same have now been fixed for regular hearing.
2. The assessee grounds for the assessment years under appeal before us are as follows:--
Assessment year 1990-91
That the learned Commissioner Income Tax (A) is erred in ignoring the ground No. V related to discount passed on, to the customers claimed at Rs.2,25,000. In Foam Account and Rs.13,800 in Finis Account without any instantive reasons and justification which is against the actual practice of the business. An application has been filed before the CIT(A) for rectification but no reply has been received as yet.
Assessment year 1991-1992
That the learned Commissioner Income Tax (A) is erred in ignoring the ground No. V related to discount passed on to the customers claimed at Rs.2,30,000 without any instantive reasons and justification which is against the actual practice of the business. An application has been filed before the CIT(A) for rectification but no reply has been received as yet.
Assessment year 1992-93
That the learned Commissioner Income Tax (A) is erred in ignoring the ground No. V related to discount passed on, to the customers claimed at Rs.2,10,000 without any instantive reasons and justification which is against the actual practice of the business. An application has been filed before the C.I.T.(A) for rectification but no reply has been received as yet.
Further common additional grounds for the years under appeal have also been taken which speak as follows:--
That the assumption of jurisdiction under section 65 of the repealed Ordinance by the Assessing Officer and confirmed by the CIT(A) is ab initio null and void as no order in writing was passed under section 59(1) of the repealed Ordinance.
That the invocation of powers confirmed under section 65 of the Ex-Ordinance is illegal and unlawful as there was no definite information in possession of the Assessing Officer.
3. Before us the A.R. firstly has argued that the additional grounds if they go to the very root of the order in appeal should never be ignored. He agreed that it is entirely the jurisdiction of the Court to permit entertainment of additional ground, however, the courts have always been generous in permitting additional grounds so that the matter is decided more judiciously. He said that in this regard the courts have even allowed entertainment of additional grounds where the proceedings are complete and the judgment is not announced. He, therefore, urged that the additional grounds should be allowed to be heard.
4. Regarding his claim that there was no definite information so as to justify re-opening under section 65 he firstly explained the facts and later said that in view of the judgment of Supreme Court of Pakistan reported as 1993 SCMR 1108 = 1993 PTD 1108 the cancellation is illegal and unjustified. Furthermore, this is a case in which the order was earlier finalized under section 59(1) which has been held to be as not an order prior to the assessment year 1995-96 by the Hon'ble High Court in its judgment reported as 2003 PTD 1530 (L.H.C.).
5. Regarding the facts he said that the information provided by the Diamond Foam Company was controversial which fact is supported by the correspondence between the said company and this assessee. He said that this correspondence has been made during the financial year in which account with regard to purchases of this assessee has been discussed. The assessee has denied certain claim of the said Diamond Foam Co. which alone is enough to prove that the information was not definite and that the Diamond Foam Co. conveyed an incorrect picture. Further, since there was no written order passed in respect of these three assessment years by the department the ratio of the judgment reported as 2003 PTD 1530 applies in full on the facts of this case.
6. The DR, on the other hand, says that the information was correct and from the parents company of the assessee. Moreover, the assessee has failed to provide the corresponding documents at earlier stages of the proceedings. Regarding assessment he said that the order has been deemed to be an order even prior to 1995-96. He was asked to produce before us the relevant self-assessment scheme which he could not. In fact, the issue that the acknowledgement slip shall be treated as an assessment order has never been a part of law in the assessment years 1990-91 to 1992-93. The acknowledgement slip was not to be treated as an assessment order. In these three assessment years, the Assessing Officer was required to assess and accept the declared income through a formal order. In the absence of such an order, the Hon'ble High Court says the provision of section 65(1)(c) does not come to effect. The requirement therein was to assess by an order in writing the total income of the assessee on the basis of the return filed by him. The provision that has held the acknowledgement issued under section 55-A as a deemed order was inserted by Finance Act, 1995. Prior to the same the requirement of determination of the income through an order was a part of law. All the present cases with relevant assessment years 1990-91 to 1992-93 in which no assessment should have been made after the expiry of the next financial year; meaning thereby that on 30th of June, 1993, the same had become barred by time. This pending return cannot be assessed subsequent to the said date. It is correct that the subsequent amendment has made such labs to be as order but the same cannot be made applicable on the returns in the cases under discussion. The finding of the High Court is very clear and unequivocal. The relevant para wherefrom speaks as follows:
"There is no dispute that under section 59(1) of the late Ordinance which provides for self-assessment as Assessing Officer is required to assess `by an order in writing', the total income of the assessee on the basis of such return and determine not only the total income of the assessee though on the basis of return filed but also. the tax payable on the basis of such assessment. The provisions of section 59-A titled "Assessment on the basis of return" contains similar provisions that an assessment order will be in writing assessing the total income of the assessee as also determining the tax payable. Subsection (2) of section 59-A contained a reference to subsection (3) of section 59 as also to the "determination" under section 59A in the same manner in which an assessment or determination is to be made under section 59(3) of the late Ordinance. An IT-30 Form on the other hand simply comprises of different blocks and columns meant to be filled in containing all information with regard to nature, volume and extent of business or occupation of an assessee as also other relevant information which the department will normally require of an assessee. This printed form which owes its legitimacy to ingenious arrangement of a host of information needed by the department rather than any provisions of law or the rules writing which not only betrays an application of mind but also the fact that the concerned human mind was adequately possessed with the faculty to demonstrate its application. An IT-30 Form filled in by the subordinate officials in the Department and though signed by an officer will not answer the legal requirement of an order in writing which goes to "determine" the tax payable on the basis of an assessment made prior thereto.
In the case in hand original assessment was completed on 12-12-1991 and the additional assessment was completed on 20-5-1996. The assessee was served with notice for framing of additional assessment-re-opening of the assessment on 17-1-1995 much before introduction of proviso to subsection (4) of section 59 of the late Income Tax Ordinance, 1979. As observed earlier the introduction of these provisions providing for deeming of an assessment after a certain period, the addition of sub-clause (c) in section 65(1) of the late Ordinance was of no significance at all. The day on which re-opening was initiated although amended provisions of section 65(1)(c) were very well in the field yet in absence of the corresponding amendment providing for deeming an assessment under section 59 or 59-A that action was not legally possible. In other words in absence of an assessment order in writing till the addition of proviso by Finance Act No. I of 1995, dated 2-7-1995 in section 59(1) no additional assessment could be framed unless the order sought to be reopened was an assessment order in writing under any of the provisions of the late Ordinance.
Therefore for what has been discussed above we will hold that after introduction of sub-clause (c) to subsection (1) of section 65 even with retrospective effect an- Assessing Officer could frame an additional assessment only after the corresponding amendment was made in section 59(1) of the late Ordinance by the Finance Act No. 1 of 1995, dated 2-7-1995 providing for deeming of an assessment under section 59 or 59-A of that Ordinance. Appeal succeeds".
7. The finding, therefore, is obvious in this case there was no question of an assessment order as the return pending tin the next 30th of June had become time-barred. The provision of section 59(4), in fact, is similar to section 64 of the Income Tax Ordinance, 1979 in the said section no return can be finalized after the two years from the end of the assessment year in which the return has been filed. The return had become barred by time under section 59(4) and unless the legislature had so mentioned in unequivocal terms that all such time-barred returns shall also be considered as an assessment, the assessments in hand cannot give any life. We, therefore, agreeing with the AR hereby declare that the proceedings initiated in this case were illegal and the same are hereby cancelled.
DEPARTMENTAL APPEALS
8. Regarding departmental appeals obviously the same shall merge in the above order of the assessee and the same, therefore, are accordingly decided.
C.M.A./486/Tax (Trib.)??????????????????????????????????????????????????????????????????????? Appeal accepted.