I.T.As. Nos. 5349/LB and 5350/LB of 2005, decided on 17th March, 2006. VS I.T.As. Nos. 5349/LB and 5350/LB of 2005, decided on 17th March, 2006., 2006 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 2680 (2006)

Income Tax Ordinance (XXXI of 1979)---

----Ss. 13(1)(d), 61, 134 & 156---Appeal to Appellate Tribunal---Rectification of mistake---Commissioner Income Tax (Appeals), on rectification applications by appellant company for assessment of relevant years, admitted applications on the ground that Assessing Officer had not given adequate opportunity to explain his version before making impugned assessments---Commissioner Income Tax, set aside the case and remanded same to Assessing Officer with direction to reframe assessment order afresh after giving full opportunity to and confronting assessee/appellant regarding proposed treatment---Appellant had filed appeal against order of Commissioner Income Tax, contending that it was beyond the jurisdiction of Commissioner Income Tax (Appeals) to have set aside the entire assessment made in the case for the assessment years against the prayer of appellant for giving a finding on `escaped' ground which only needed proper dilation---Contention of appellant/ assessee that Commissioner Income Tax (Appeal) had acted beyond his jurisdiction in setting aside assessment years for relevant years---Impugned orders of Commissioner Income Tax, were vacated and those of his predecessor, were restored accordingly.

2000 PTD (Trib.) 3732; 2000 PTD (Trib.) 3752; 1993 PTD (Trib.) 964; 1987 PTD (Trib.) 66 and 1997 PTD (Trib.) 85 ref.

Siraj-ud-Din Khalid for Appellant.

Anwar Ali Shah, D.R. for Respondent.

ORDER

The titled appeals have been filed at the instance of the appellant-Company, calling in question the impugned orders, dated 31-5-2005 and 8-6-2005 passed by the learned CIT/WT (Appeals-Zone), Gujranwala for the assessment years 2001-2002 and 2002-2003. As per grounds of appeal, the appellant-Company, mainly assailed the following common issue in both the years:--

"That the learned first appellate authority is legally not justified inasmuch as setting aside the whole assessment against the prayer for giving finding on the escaped ground which need proper dilation."

Briefly stated the facts of this case are that the appellant, a private limited company, which continued to derive income from manufacturing and sale of `ball point pens and fibre tips pens'. Returns of total income for the assessment years under appeal were filed by declaring net income at Rs.18,91,836 and Rs.1,09,16,742 respectively. To finalize the assessments, the Assessing Officer issued statutory notices under section 61 of the I.T. Ordinance, 1979 to the assessee appellant, in response thereto, the A.R. of the assessee was appeared to whom the case was discussed in detail by the ACIT/WT, Circle-02, Gujranwala. For the assessment year 2001-2002, the assessee has shown the total purchases of Rs.20,06,36,455 which mainly consist of imports apart from materials purchased from local market. The Assessing Officer made addition under section 13(1)(d) by valuation of opening stock by drawing the inference that the assessee has not truly disclosed his "opening stock of tampons". Sales of garbage wastage estimated at Rs.36,76,200 against declared sales of Rs.16,87,332. During the assessment year 2002-2003, the Assessing Officer estimated the sales of moulds at Rs.45,00,000 on the ground that the company has failed to provide the sale rate and actual quantity sold and also on the ground that since sales were made to other sister concern, the unverifiability cannot be denied. The Assessing Officer made certain additions under the heads "production overheads', at Rs.13,71,353, `suppressed production' at Rs.2,76,760 and also made certain additions under the P&L account expenses for the detailed reasons as mentioned therein and finally assessed the net income at Rs.4,39,45,427 and Rs.7,08,81,741 for the assessment years 2001-2002 and 2002-2003 respectively.

Being aggrieved, the appellant-Company went in appeal before the learned CIT(Appeals-Zone), Gujranwala by taking the plea that the learned' CIT (Appeals) vide orders, dated 1-2-2003 and 7-10-2003, has not properly considered the overall facts of the case and he has simply given his finding regarding, the issues as mentioned in the appellate orders for the two years under appeal.

Against this treatment, the appellant-Company filed rectification applications for the assessment years, 2001-2002 and 2002-2003, whereby the learned CIT(A) vide orders cited (supra), admitted the rectification applications on the ground that the Assessing Officer has not given adequate opportunity to explain his version before making the impugned assessments. The learned CIT(Appeals) accordingly set aside the case and remanded the same back to the Assessing Officer with the direction to reframe afresh after giving full opportunity and confronting the assessee-appellant regarding the proposed treatment. Hence the present appeals are contested before us.

We have heard the rival arguments of both the sides and perused the orders passed by the authorities below. The learned A.R. of the assessee argued at length that it was beyond the jurisdiction of the learned CIT(Appeals) to have set aside the entire assessment made in the case for the assessment years 2001-2002 and 2002-2003 against the prayer for giving a finding on the escaped ground which only needed proper dilation. In this context, the learned A.R. submitted that the orders passed by the 'Authorities below, dated 31-5-2005 and 8-6-2005 had fact superseded the orders passed in the case for the assessment years, 2001-2002 and 2002-2003 by his predecessor, (CIT-Appeals), dated 1-2-2003 and 7-10-2003 by setting aside the case and remanding it back to the Taxation Officer with the directions to frame a fresh order after giving the assessee full opportunity and confronting him regarding any objections the Taxation Officer has. According to the learned A.R., the above set of directions was beyond the competence of the successor, CIT (Appeals). To support his contention, the learned A.R. relied on a number of reported cases which are cited as 2000 PTD (Trib.) 3732, 2000 PTD (Trib.) 3752, 1993 PTD (Trib.) 964, 1987 PTD (Trib.) 66 and 1997 PTD (Trib.) 85. It would be relevant to reproduce here the operating part of the judgment reported as 2000 PTD (Trib.) 3732 which is on `all fours' with the case of the assessee:

"The action of the successor CIT(A) in invoking the provisions of section 156 to rectify the order of his predecessor in office is found to be illegal for the reason that the predecessor in office has recorded firm findings after discussing exhaustively all pertinent aspects and these findings are not open .to review by successor CIT(A). That being so, the appellant was required to file formal appeal against the appellate order of (predecessor) CIT(A) rather than move a rectification application before successor CIT(A). As successor CIT(A) had no jurisdiction in law to take action under section 156 in the manner done by him in the present case, we, therefore, annul the order of successor CIT(A) and restore the order of predecessor CIT(A)."

In view of the preceding position, we are inclined to agree with the contentions of the learned A.R. that the CIT(A) acted beyond his jurisdiction in setting aside the case for assessment years 2001-2002 and 2002-2003 and in view of which the order of the learned CIT(Appeals) is vacated and that of his predecessor, dated 1-2-2003 and 7-10-2003 are restored accordingly.

The appeals are succeeded as above.

H.B.T./124/Tax (Trib.)Appeals succeeded.