I.T.A. No. 905/IB of 2002, decided on 19th September, 2005. VS I.T.A. No. 905/IB of 2002, decided on 19th September, 2005., 2006 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 2575 (2005)

Income Tax Ordinance (XXXI of 1979)-

---S. 134---Appeal to Appellate Tribunal---Order was passed by the First Appellate Authority after the Appellate officer had relinquished charge of his post on 19-7-2002---While the order itself bore no date of hearing or the date of passing the order, the date of receipt recorded by the assessee himself on the order was 25-10-2002--Such order was never served on the Department, however, a copy thereof was delivered by the assessee to the Department on 17-1-2003---No indication of the date on which the order was legally served on the parties was found---Department, at the very outset, objected to the maintainability of the assessees appeal on the grounds, inter alia, that the order of First Appellate Authority was fake, illegal and void ab initio because the order surfaced up in a surreptitious manner long after the signatory officer, had been transferred and had relinquished charge as First Appellate Authority on 19-7-2002---Validity---Officer who had became functus officio after he was relieved of his office, should not have been allowed to have anything to do with the judicial work of the office over which he previously presided---Conduct of the out-going officer in not serving his order on the party adversely affected by his order, was an incurable error, because of the fact that, the Revenue had not been served any order (none was said to exist on record) preventing the Department from going to in appeal---Such acts having been done deliberately, same tantamount to commitment of a fraud against the Revenue---Order of First Appellate Authority was declared as illegal, void ab initio and of no significance whatsoever having been passed coram non judice in the circumstance by the Appellate Tribunal and appeal of the assessee was held still to be pending and was to be heard and decided in accordance with law while assessee was directed to pursue the same.

1995 MLD 1596; 1995 CLC 1951 and 1990 ALD 510(2) ref.

PLJ 2003 Lah. 319; (2003) 88 Tax 319 (Trib.); PLD 1978 Lah. 1139; PLD 1978 Lah. 458; PLD 1982 Kar. 250; PLD 1974 Lah: 294; 1979 CLC 114 and PLD 1985 Kar. 95 distinguished.

Ali Akbar v. State 1969 PCr.LJ 1307 and Mehar Din v. Murad Begum PLD 1964 SC 446 rel.

1994 PTD 1974; (2002) 86 Tax 117 (H.C. Kar.) = 2002 PTD 407; 1984 50 Tax 115 (H.C. Kar.) = 1984 PTD 355; 1996 PTD 263 (Lah,) B.C.); 1998 PTD (Trib.) 686; (1994) 50 Tax 44 (Trib.) and 1998 PTD (Trib.) 2106 not considered.

Hafiz Muhammad Idrees for Appellant.

Raja Muhammad Irshad, DAG/Legal Advisor, Dr. Muhammad Iqbal, I.A.C. and Muhammad Tahir Khan, D.R. for Respondents.

ORDER

SYED AQEEL ZAFAR-UL-HASAN (ACCOUNTANT MEMBER).---This further appeal preferred by the titled assessee against an order passed by the DCIT, Circle-38, Rawalpindi, takes the following grounds of appeal:

(1) That both the orders of Commissioner (Appeals) Rawalpindi and Deputy Commissioner of Income Tax/Wealth Tax, Circle Rawalpindi is bad in law and contrary to the facts and circumstances of the case.

(2) That the rejection of declared version is illegal and unwarranted.

(3) That the DCIT had rejected the audited accounts version and CIT (A) had also confirmed the same which is illegal and baseless that treatment given is against the proviso to section 62.

() That no notice, under section 62 was given in which any specific objection was raised for rejection of audited books/account as such the order is illegal.

(5) That all objections raised by the DCIT were satisfied but the DCIT had ignored the explanation offered by the appellant which is highly unjustified.

(6) That the said DCIT was not at all justified in estimating the production of feed mills and CIT(A) had fixed the same at 600. bags which is illegal and unjustified.

(7) That relief allowed in the estimate of sales of feed is not sufficient, further relief be allowed.

(8) That application of GP rate of 15% on sales of chicks is illegal and unwarranted. That finding of CIT(A) is not clear on this ground.

(9) That confirmation of addition made under section 24(ft) out of following heads is illegal and baseless:--

(10) That confirmation of addition of Rs.812,380 under section 24(ff) on account of of advertisement is illegal.

(11) That relief allowed in following P&L expenses is not sufficient, further relief be allowed:---

(1) Vaccination Charges

(2) Transportation Charges

(3) Commission on feed

(4) Lading/Unloading

(12) That the special treatment was given by the DCIT which is against the treatment given in other parallel cases as such the order is highly unjustified.

(13) That your appellant begs leave to add to, amend or alter the above said grounds.

It is, therefore, humbly prayed that the declared version be accepted, alternatively relief, which is fair and just, be allowed.

2. The case was initially heard on 24-6-2003 and later from time to time on 7-8-2003, 30-8-2003, 4-11-2003, 17-1-2004, 24-1-2004, 7-2-2004, 21-2-2004, 28-2-2004, 13-3-2004, 17-4-2004 and finally 5-6-2004.

3. During the above hearings, it had been brought to our notice that the impugned order was passed by the Commissioner after he had relinquished charge of his post on 19-7-2002. While the order itself bears no date of hearing or the date of passing the order, the date of receipt recorded by the assessee himself on the order is 25-10-2002. It was never served on the Department. However, a copy thereof was delivered by the assessee to the Department on 17-1-2003. There being no indication of the date on which the order was legally served on the parties, it was considered important to ascertain this aspect as well. This observation having come up during the course of dictation of our order another opportunity of hearing to the parties was provided to ascertain the said dates. For this purpose, initially a letter was intended to be issued to the incumbent Commissioner Appeals. However, during the course of hearing on 20-11-2004, the learned AR opposed the issuance of the proposed letter and declared that it was unnecessary to make such a reference to the Commissioner Appeals as it would only delay disposal of the case. Instead, he furnished copies of correspondence with the Commissioner Appeals whereby the successor incumbent Commissioner Appeals vide his letter No. 1630, dated 9-5-2003 had communicated as under:

"Office of the

Commissioner of Income Tax

Wealth Tax (Appeals), Rawalpindi.

Date 9-5-2003

To,

Messrs Sadiq Brother Poultry,

Allied Plaza Chandni Chowk,

Murree Road, Rawalpindi.

Subject: NOTICE UNDER SECTION 131 OF INCOME TAX ORDINANCE, 1979 MESSRS SADIQ BROTHERS POULTRY ASSESSMENT YEAR 2001-2002

Please refer to your Letter No. SBG-Tax/3-0001, dated 2001-2003 on the above subject.

The records of this office were checked and the aforesaid appellate order was never issued from this office.

The person who has signed the order received by you on 25-10-2002, had relinquished the charge of the office of the Commissioner of Income Tax (Appeals), Rawalpindi on 19-7-2002. Therefore he was neither competent nor authorized to do so. Notice for hearing of your appeal follows:-

(Sd.)

Commissioner of Income Tax

(Appeals) Rawalpindi Zone,

Rawalpindi."

4. The learned AR further stated that the service of appellate order was the basic issue in this case and any reference to the Commissioner Appeals at that stage was not needed in the presence of the aforementioned letter, dated 9-5-2003. The departmental position in this regard was also clear and the Tribunal should proceed to decide the case on the basis of available record, he maintained. We agree with the learned AR and produced to decide the case on the basis inter alia, of the above referred correspondence/notice furnished by him.

5. At the very outset when hearing began, the department objected to the maintainability of the assessee's appeal on the grounds inter alia that order of the CIT Appeals was fake, illegal and void ab initio because:-

(i) the order surfaced up in a surreptitious manner long after the signatory Officer, had been transferred and had relinquished charge as CIT Appeals on 19-7-2002;

(ii) the impugned order itself bears date of institution of appeal as 17-7-2002 whereas hearing took place on 16-7-2002 per AR/order sheet entry;

(iii) the order bore no date of issue nor was any date of hearing recorded therein;

(iv) the appellate batches or orders communicated by that Officer, did not include the order presently under appeal;

(v) signed statements by the record keepers/office staff, confirm that the assessment as well as appellate record was never summoned or otherwise available to the Commissioner Appeals;

(vi) the Zonal CIT nor the concerned DCIT had to date been served with a copy of the order thereby prejudicing the department's right of appeal nor does a copy of the order exist on record;

(vii) the successor CIT Appeals had confirmed that the assessee's appeal stood un-decided and was till pending decision before him.

6. Earlier, after intimation of filing of appeal, two letters, dated 8-5-2003 and 17-5-2003 had been received from the CIT, Rawalpindi Zone pointing out that the appellate order of the Commissioner was invalid in law as it had been written by him after transfer to Sargodha Zone and relinquishment of charge on 19-7-2002. Later, an application, dated 7-8-2003 was also moved in writing by the Department through its counsel agitating the issue, which was received by office on 21-8-2003. The subsequent hearings from time to time witnessed conflicting arguments of the parties on this basic issue. The learned AR maintained that the application moved by the, counsel of the department was not maintainable and the respondent Department having filed no appeal against the CIT's order, could only support his order. Cases cited as 1995 MLD 1596; 1995 CLC 1951 and 1990 ALD 510(2) quoted by the learned AR, however, hold that where respondent felt aggrieved by any finding of a Court, he could challenge the same either by filing cross appeal or cross objections without which he could only support the impugned judgment. This is based on provisions of the Civil Procedure Code (V of 1908) and goes in favour of the Revenue. Had not the department raised this objection through correspondence and written objections referred to above, the order of the CIT Appeals would have become unassailable on technical grounds.

7. The DAG Raja Muhammad Irshad appearing as the Legal Advisor of the department, placed reliance on PLJ 2003 Lahore 319 and maintained on the authority of the honourable Supreme Court of Pakistan that, on the principles of natural justice which must be read into every statute unless specifically prohibited. He pleaded that his aforementioned application, dated 7-8-2003 merits to be sustained. Op the other hand, the learned AR then placed reliance on (2003) 88 Tax 319 (Trib.) to plead that an MA could only to moved under section 156 of the Repealed Ordinance, but not until a final order had been passed by the Tribunal.

8. We have considered the respective arguments of the parties and are convinced that the department is well within its rights to file written objections to the assessee's appeal. Such objections need not be treated as a Miscellaneous Application nor viewed in the context of section 156 of the Ordinance. In fact, had these not been filed, the case of the Revenue would have been foreclosed on this issue. Even rule 22 of the ITAT Rules, 1982 allowing a respondent to support an appellate order on any grounds decided against him; does not prevent filing such written objections. The case law cited as (2003) 88 Tax 319 (Trib.) by the learned AR relates to a case where hearing had been concluded and difference of opinion between members of the Bench led to appointment of a third member to resolve their difference. The questions framed for this purpose were sought by the assessee to be reframed. However, the assessee was denied any way in the framing of the said questions and it was held that rectification could only be sought under section 156 after an order was finally passed by the Tribunal. The cited case is, clearly not attracted to the present situation and is accordingly disregarded being distinguishable and relevant only to a totally different set of facts. Thus, the objections against the departmental application are over-ruled and the case made out therein is taken up for an objective appraisal.

9. From available facts, it is admitted by both parties that the impugned order was issued at least three months after charge was relinquished by the signatory CIT, Appeals. He relinquished charge as an appellate, authority on 19-7-2002 and on 25-10-2002, when the said order was received by the assessee, he was discharging duties as the Zonal Commissioner at Sargodha. The two positions have nothing in common. As Commissioner Appeals, he was performing judicial functions. As Zonal Commissioner, he was performing executive and supervisory functions. The Revenue contests the legality of his aforementioned order on the ground that after his transfer and consequent upon relinquishment of charge on 19-7-2002, he became functus officio and any appellate order issued by him thereafter, was coram non judice.

10. The learned AR, however, insists that the order received by the assessee, was lawful and without any legal infirmity. Case law quoted by him in support of his stance though not related to any tax jurisdiction and therefore, having no direct nexus with the present situation, is nevertheless of illustrative relevance. The closest he came to justifying legality of the impugned order, was in citing case law reported as PLD 1978 Lahore 1139, and PLD 1978 Lahore 458. However, we find the quoted cases as being distinguishable. The order passed by an officer several months after his transfer and promotion within the judicial hierarchy, was validated on the express reason that even after transfer and promotion, he had remained a judicial officer, performing similar functions, though in a higher capacity. The same, however, is not true of the signatory Commissioner in the present case. The peculiarities of the tax appellate hierarchy do not conform to that of the judiciary. Had he remained a Commissioner Appeals in another jurisdiction after his transfer from Rawalpindi, the situation might have been slightly different. On the contrary, he no more remained a judicial officer nor was performing any appellate functions. There remained no parallel between the two positions as was the case in the quoted instance. His area of jurisdiction too, no more remained Rawalpindi and he had physically shifted to Sargodha. He could not in all propriety, even access the appellate record, much less pass orders thereon.

11. It was further pleaded by the learned AR that where a short order had been recorded or announced in Court, a detailed order could validly be issued later. Reliance in this regard was placed on PLD 1982 Karachi 250 and PLD 1974 Lahore 294. Since the relevant order sheet bore the observation, "After discussions, it is for orders" he construes that as being a short order. The argument, to say, the least, is misconceived as the said words convey no definite decision in appeal and cannot be equated with a short order. Nor does record show that any order had otherwise been verbally announced. Indeed such verbal announcement has no sanction in tax adjudication/appeals. The case law quoted is therefore, of no help to the assessee. On the other hand, referring to the 100% add back out of Freight Outwards/Transportation of Goods, the then CIT Appeals records, "Why it should have been allowed. The detail will follow by AR" (sic). This indicates the inconclusive nature of the hearing on 16-7-2002. No finality can thus be attributed to it.

12. We notice also that the case law quoted in this regard by the learned AR pertains to cases governed by the Rules of Procedures in Appeals, Volume V of the Rules and Orders of the High Court, rule 3, Chapter 4H. It could not be shown that they were otherwise applicable to income tax appellate hierarchy. Even otherwise, in re: Ali Akbar v. State, 1969 PCr.LJ 1307 it was held by their lordships of the High Court that where a retiring member of a Bench, forwarded a signed copy of a judgment for the signatures of the other Judge on the Bench, such order reaching the other Judge on a date subsequent to the retirement of the author, could not be treated a legally valid order even though it had been penned down in consultation with the other Judge. This, it was explained, was so held because until the moment a final judgment was delivered, the order could be altered, amended or changed any time. The retiring Judge being no more able to so amend or change an order, his signed, authored, judgment remained in the nature of draft minutes and was not a valid order when it reached the other Judge. On the same analogy, the present author Commissioner Appeals, stood divested of any authority to issue an appellate order after relinquishing charge on 19-7-2002. This view is further strengthened by the pronouncement of the Supreme Court in re: Mehar Din v. Murad Begum, cited as PLD 1964 SC 446 where with reference to judgment written by a person on transfer or on leave, it was held that a Judge who has become functus officio after he. was relieved of his office, should not be allowed to have anything to do with the judicial work of the Court over which he previously presided.

13. We do, however, agree with the learned AR that as held in 1979 CLC 114 and PLD 1985 Kar. 95, the delay of several months in issuance of order after the date of hearing could not itself render an order invalid in law. In the present case, however, it is not the delay but the accompanying facts as detailed below which are fatal, to the sustainability of the said order. Also, the, conduct of the out-going Officer in not serving his order on the party adversely affected by his order, was an incurable error, given the fact that, the Revenue has not been Served any order (none is said to exist on record) preventing the Department from going in appeal. Having been done deliberately, it tantamounts to commitment of a fraud against the Revenue. The predominance of improprieties in this regard, is further evidenced by the facts that:

(a) The AR's application for out-of-turn hearing, dated 16-7-2002 (over-written as 12-7-2002) received by CIT(A)'s office on 17-7-2002 (changed by over-writing to 12-7-2002) has been initialed as "Seen" by the CIT Appeals on 12-7-2002. This manipulation of dates and back-dating indicates grave improprieties and the same is also evident from the date of issue of notice for hearing of appeal.

(b) The learned AR claims that as per order sheet entries,' the case was heard on 16-7-2002 whereas evidence furnished by the Department shows that the appeal papers were received from the AAC in the office of the CIT (Appeals) on 17-7-2002. This, corresponds also to the date of institution of appeal as recorded on the impugned order. Thus the case was heard a day before the appellate record became available to the CIT Appeals.

(c) As per record produced by the Department, assessment record was never summoned nor the department/Assessing Officer provided opportunity to defend the assessment.

(d) The Commissioner appeared to be in undue haste to pass an order having heard the case purportedly on 16-7-2002 in the absence of appellant as well as assessment record and without opportunity to the Department, evidently with a view to beat the charge relinquishment date of 19-7-2002.

(e) A single hearing on 16-7-2002 resulting in a Voluminous 45 page order, is in itself intriguing. A fair examination of evidence referred to in the order; would require mare time than appears to have been taken by the out-going CIT Appeals.

(f) The order finally passed was deliberately structured to omit the dates of order and hearing of the case but was elaborate enough to consist of 45 pages. This, in the backdrop of his transfer and relinquishment of charge on 19-7-2002 casts serious doubts on the very integrity of the order.

(g) Unlike all other orders passed by him in other cases e.g. Appeal No.383 decided on 26-11-2001, Nos.910,911 and 912 decided on 15-4-2002 No. 307 decided on 13-11-2001, No.773, dated 19-2-2002, No.618, dated 11-1-2002 No.860, dated 16-3-2002 as furnished by the AR, the impugned order neither records the date of hearing nor the date of order.

(h) No (original) copy of the appellate order obtains on record of the Appellate Commissioner.

(i) The periodical batches of orders passed- on decided appeals did not contain the said order now under appeal.

(j) The mandatory provisions under section 134 of the repealed Ordinance have been violated in as much as neither the Commissioner nor the DCIT have been served with a copy of the appellate order.

14. If anything, the foregoing acts of omission and commission by the Commissioner Appeals, especially keeping the department and its record out of the way as referred to at para 13C above, reflects an unmistakable stamp of mens rea on his part. We have no option in the circumstances, but to uphold the departmental objection and declare the order of the Commissioner Appeals as being illegal, void ab initio and of no significance whatsoever, having been passed coram non judice. In this situation, it is not necessary to adjudicate on the grounds of appeal of the assessee. Besides, we would not like to prejudice the case by commenting upon them and would leave the issues to be thrashed out by the competent first appellate authority, on merits. The case law quoted by the learned AR cited as 1971 SCMR (sic), 1994 PTD 1974, (2002) 86 Tax 117 (H.C. Kar.) = 2002 PTD 407 (H.C. Kar.), 1984 50 Tax 115 (H.C. Kar.) = 1984 PTD 355, 1996 PTD 263 Lah. (H.C.), 1998 PTD (Trib.) 686, (1994) 50 Tax 44 (Trib.) and 1998 PTD (Trib.) 2106 which impinge upon the merits of the assessee's appeals are also therefore, not being examined by us at this stage as the appeal of the assessee before the Commissioner is held still to be pending and is to be heard and F decided in accordance with law. The assessee is directed to pursue the same.

15. Appeal is dismissed as not being maintainable.

C. M.A. /128/Tax (Trib.)Appeal dismissed.