M.As. Nos. 381/LB to 383/LB of 2005, decided on 30th December, 2005. VS M.As. Nos. 381/LB to 383/LB of 2005, decided on 30th December, 2005., 2006 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 2693 (2005)

Income Tax Ordinance (XXXI of 1979)---

----S. 156---Partnership Act, (IX of 1932), S. 19(2)(b)---Rectification of mistake---Association of persons---Bank account in the name of partner---Department contended that no partner was allowed to open a bank account in his own name on behalf of the firm under the provisions of S.19(2)(b) of the Partnership Act, 1932 and such mistake in Income Tax Appellate Tribunal's order was apparent and the order was clearly rectifiable on the mistake of facts and law---Appellate Tribunal had mistakenly held that partner of the firm was maintaining bank accounts on authorization of Association of Persons/Firm in the name of Firm, declared in Association of Person's name, which was allegedly detected by the Assessing Officer---Copy of Account Opening Form was furnished and contended that bank accounts were opened in the name of partner instead of Association of Persons/Firm---Validity---Held, it was not a focal point at the time of hearing that partner of the firm had opened bank account in his name without authorization of Association of Persons/Firm whereas the vital objection at that time was that partner of the firm could not operate bank accounts on behalf of the Association of Persons/Firm---Department came up with new set of arguments with the support of additional evidence, which did not form the subject-matter of the case till hearing before Appellate Tribunal---Department was pressing with fresh arguments on the basis of a document of account opening Form for consideration and reassessment of the matter, which did not fall within the scope of rectification under S.156 of the Income Tax Ordinance, 1979---If a mistake which had to be discovered by a long-drawn process of reasoning of examining arguments on points where there may conceivably be two opinions could not be said to be a mistake or error which was apparent from record---Apparent error must be from the record of the assessee and not an error discovered from other sources---No mistake was floating on the surface of Appellate Tribunal's order---Rectification application was declined by the Appellate Tribunal being devoid of legal force.

(1962) 5 Tax 126 (Trib.); I.T.As. Nos. 556 and 557 of 1965-1966; Oxford Dictionary; 1995 PTD (Trib.) 770; 1993 PTD (Trib.) 964; National Foods' case; Narayan Nairs' case AIR 1959 Ker. 116 and Aggarwala's Book at page 380 ref.

PLD 1967 Dacca 35 and 1999 SCMR 2189 rel.

Haji Ahmad Din, D.R. and Faqir Hussain, C.I.T. for Applicants.

Saqib Bashir and Javed Iqbal for Respondent.

ORDER

ZAFAR ALI THAHEEM (JUDICIAL MEMBER).---By the instant Miscellaneous Applications, the Revenue seeks recall of ITAT order, dated 30-6-2003 recorded in I.T.As. Nos. 4017 to 4019/LB of 2001 pertaining to assessment years 1996-97 to 1998-99 on the following grounds as per contents of applications.

(i) That there are mistakes of facts and of law in the learned ITAT's order, dated 30-6-2003. The assessment order has been cancelled on the ground that the Bank Account No.20 1116, 112372 and 20 1116 144721 maintained by the assessee Mr. Mohsin Bilal in his personal name and joint account in his name and Mr. Muhammad Yousaf Amin were assessed in the case of an AOP styled Messrs Ittehad Traders, Commission Agents, Basti Chirag Shah, Kasur on the strength of case-law cited as (1962) 5 Tax 126 (Trib.) and I.T.As. Nos. 556 and 557 of 1965-1966, dated 5-6-1965. As per these judgments it was held that one partner can be given exclusive right to operate the bank account opened in the name of the firm but the position was not so in the case of Messrs Ittehad Traders, Kasur, as the bank accounts considered in this case were not in the name of Messrs Ittehad Traders, Kasur but the same were in the name of Mr. Mohsin Bilal and Messrs Mohsin Bilal and Muhammad Yousaf Amin. Since, the bank accounts were not in the name of the firm/AOP Messrs Ittehad Traders, Kasur, there was no question of authorization to any single partner to operate the bank account.

(ii) That the learned ITAT had mistakenly held that re-opening of assessment in the case of the assessee Mr. Mohsin Bilal by DCIT, Faisalabad was without any lawful jurisdiction and was a double taxation as the assessee had declared the impugned two bank accounts in the returns filed at Circle-19, Kasur against which an assessment order, dated 30-5-1999 was also finalized. The fact remains that DCIT, Circle-l0, Faisalabad held legal jurisdiction over the case of Mr. Mohsin Bilal being director in Messrs Aala Processing (Pvt.) Ltd., Faisalabad which was regular assessee of Companies Circle-10, Companies Zone, Faisalabad at NTN 31-67-0658214 and had concealed both the bank accounts, one Account No.20 1116 112372 opened/ maintained in his personal name and other Account No. 20 1116 144721 held jointly along with Mr. Muhammad Yousaf Amin and hence his case was rightly reopened and re-assessment was made on the basis of concealed bank accounts. These bank accounts maintained in the name of Mr. Mohsin Bilal and Mohsin Bilal and Muhammad Yousaf Amin could not be claimed in any case to have been maintained by one Messrs Ittehad Traders, Kasur and declared by it and the learned ITAT was, therefore, mistakenly held that the said bank accounts were already considered and assessed in the case of Messrs Ittehad Traders, Commission Agent, Kasur.

(iii) That no partner is allowed to open a bank account in his own name on behalf of the firm under the provisions of section 19(2)(b) of the Partnership Act, 1932.

The learned DR has emphatically argued that mistake in ITAT order, dated 30-6-2003 is apparent and the order is clearly rectifiable on the mistake of facts and law under section 158 of the repealed Income Tax Ordinance, 1979 (hereinafter called repealed Ordinance). He has elaborated his viewpoint that ITAT has mistakenly held that Mr. Mohsin Bilal was maintaining Bank Accounts No.20 1116 112372 and 20 1116 144721 on authorization of AOP/Firm in the name and style Messrs Ittehad Traders at Kasur, declared in AOP's name, which was allegedly detected by the Assessing Officer at Faisalabad. He has furnished before us a copy of account opening Form and contends that above stated bank accounts were opened in the name of Mr. Mohsin Bilal despite of AOP Messrs Ittehad Traders. The learned DR has vigorously asserted that ITAT vide order, dated 30-6-2003 has misplaced reliance on cited cases as (1962) 5 Tax 126 (Trib.) and I.T.As. Nos.556 and 557 of 1965-66, dated 5-6-1965 whereby it was held that one partner can be given exclusive right of operating bank accounts opened in the name of Firm, which erroneously resulted in cancellation of assessment order, dated 12-6-2000. In this context, according to his view, ITAT order under attack by the Department clearly reflects the apparent mistake and is rectifiable by recalling the same. He has also emphatically argued that ITAT has also mistakenly held that reopening of assessment in the case of assessee Mr. Mohsin Bilal by DCIT was without lawful jurisdiction as it amounted to double taxation because the bank accounts were already declared by the assessee in the case of AOP at Kasur. He has stressed that mistake is floating on the surface of impugned ITAT order because Mr. Mohsin Bilal had made concealment of these accounts in his return filed in Messrs Aala Processing (Pvt.) Limited being regular assessee there. He has stressed that had it been considered by ITAT at the time of hearing of the case. The ITAT could not have given adverse finding on the issue of re-opening of the case by Assessing Authority at Faisalabad. In short, he has summed up that ITAT has ignored the provisions of section 19(2)(b) of Partnership Act, 1932. Therefore, the order in question may be recalled and fresh finding be given in the light of his arguments.

In rebuttal to the line of arguments put forth by learned DR and objections raised a per contents of the instant Miscellaneous Applications, at the outset, the learned AR has highlighted the Dictionary meaning of "mistake apparent from record". For the purpose, he has referred Oxford Dictionary wherein the word "apparent" has been defined as under:

"Apparent. L apparent stem of "apparere, appear, open to sight, plainly visible. Manifest to the understanding evident, obvious, palpable."

"Palpable. Able to be touched, felt, or handled.

Fig. (of heat, darkness etc.) intense, so extreme as to be almost felt. Readily perceived by one of the other senses, or by the mind, plain, obvious, evident."

....He has asserted that the learned ITAT has also expressed its opinion on this issue in the following two reported judgments:--

(ii) 1995 PTD (Trib.) 770.

Essential condition for exercise of such power is that the mistake should be apparent on the face of record; mistake which may be seen floating on the surface and does not require investigation or further evidence. The mistake should be so obvious that on mere reading the order it may immediately strike on the face of it. Where an officer exercising powers under section 156 enters into controversy, investigates the matter, reassesses the evidence or takes into consideration additional evidence and on that basis interprets a provision of law and forms an opinion different from the order.

(ii) 1993 PTD (Trib.) 964

Power of rectification of mistake under section 156 cannot be extended or stretched to authorize Income Tax Authority/ Tribunal to sit in judgment as an Appellate Court against its own order and reverse the same by finding faults in it or by taking additional grounds to come to a conclusion in favour of the applicant "Mistake" and "Finding" are not only two different words but also connote two absolutely different situations.

He has emphatically argued that pleas taken in the grounds of appeal or during appeal proceedings are a part of Tribunal's order, dated 30-6-2003. If there is an apparent mistake in the order in the light of record, a Miscellaneous Application seeking rectification can be filed to correct the same. The learned AR has further asserted that new and fresh plea taken by the Department that "section 19(2)(b) of the Partnership Act does not allow a partner to pen an account in his own name on behalf of the Firm" does not fall within the scope of rectification as the august Supreme Court of Pakistan has commented upon the meaning of "mistake apparent from record" used in rectification under section 35 of 1922 Act, section 156 of Income Tax Ordinance, 1979 and now section 221 of Income Tax Ordinance, 2001 in the case of National Foods, wherein it has been held that:

"A mistake which cannot be gathered from the record as it stands and requires, for being shown to be a mistake, matter or evidence extraneous to the record, is not a mistake "apparent from the record" which can be corrected under this section. The plain meaning of the word "apparent" has been held to be something which appears to be ex facie and is incapable of argument or debate. For instance, a mistake apparent from the record would be where mandatory provisions of a statute are overlooked, or, for that matter, where an order is plainly and obviously inconsistent with a specific and clear provision, as, for example, initiation of re-assessment proceedings is found to be beyond the prescribed limitation period.

A mistake which has to be discovered by a long-drawn process of reasoning or examining arguments on points where there may conceivably be two opinions, cannot be said to be a mistake or error which is apparent from record. An apparent error must be from the record of the assessee and hot an error discovered from other sources."

He has further contended that by the instant Miscellaneous Application, the Revenue has raised second defence to its assessment by maintaining that under section .19(2)(b) of Partnership Act, the partner cannot open an account in his own name on behalf of the Firm and seeks reversal of ITAT order, dated 30-6-2003, which cannot be allowed as the Law provides that a party to. a suit must not raise its defence piece meal. In order to support his contention, he has referred before us Narayan Nair's case reported as AIR 1959, Kerala 116 and also submitted comments contained in Aggarwala's Book at Page 380, which have been perused by us and placed on case file.

He has stressed that in view of the foregoing discussion, since, a fresh plea cannot be taken in a rectification application, therefore, the instant Miscellaneous Application merit dismissal on this sole point. He has apprised the Court that even if for arguments sake, this objection is taken up for consideration, the same is weightless because the section 19(2)(b) although forbids any partner to open a bank account in his personal name on behalf of the Firm but if all the partners feel that one amongst than needs such special powers for conducting business, they can give to him such powers by means of an agreement and this is exactly what was done in para-4 at page-5 of the Partnership Deed executed by the partners on 13-6-1993, reproduced as under:--

"That the bank account/accounts will be opened and operated in the name of Mr. Mohsin Bilal or joint account with other partners of the firm, as and when required by Mohsin Bilal, party of the First part."

In support of his version, he has relied before us reported judgment cited as PLD 1967 Dacca 35, which explains the distinction between the implied powers of section 19(2)(b) and special powers emanating from an agreement between the partners. He has also drawn our attention to ITO's order in this case, which begins with following words:--

"That the AOP authorized Mr. Mohsin Bilal to operate bank account in his own name or joint account with other members of the AOP on behalf of the said business."

-----and has laid emphasis on this point that if the ITO realized that this power given to Mr. Mohsin Bilal was against the prohibition of section 19(2)(b) then he should have told the assessee and discussed it in the body of order. At least, the learned DR should have raised it during the course of hearing of appeal before the ITAT. He has submitted that power given in a written agreement to open and to operate bank account to one partner is not violative of section 19(2)(b) as held in reported judgment cited supra as PLD 1967 Dacca 35. He has stressed that section 19(2)(b) does not debar partners to agree to give power to one of them to open and operate a bank account on behalf of the Firm. While passing the impugned order, dated 30-6-2003, the learned ITAT had also given due consideration to Partnership Deed, as well as its specific authorization to Mr. Mohsin to operate bank accounts page-64 of the order in the following manner:--

"Our finding of the sanctity of partnership and authorization of Mr. Mohsin Bilal judgments operating bank accounts also lends credence from reported judgments cited as PLD 1951 Dacca 56..."

He has argued that argument of applicability of S.19(2)(b) was not raised during the course of hearing of the assessee's appeal, for which reason it has not been discussed and dealt with elaborately, separately and manifestly but the issue contained in it has been clearly answered. According to him, the learned ITAT has clearly held that partnership deed as well as authorization to Mr. Bilal are valid and legal. Such-like legality and validity has also been upheld by the Dacca High Court in its above stated reported judgment cited as PLD 1967 Dacca 35, by virtue of which the partners can agree to authorize one partner both to open and operate bank account in his name on behalf of the Firm. He has stressed that since all arguments and facts have been considered and a conscious decision is given, therefore, a party to a suit/dispute cannot be allowed to re-argue the case, and seek a reversal in the garb of review. In support of his contention, he has referred before us a reported judgment of august Supreme Court of Pakistan cited as 1999 SCMR 2189, a copy of which has also been furnished before us.

Arguments advanced by both parties have been considered and relevant record perused by us. In our considered view, the assertions made by learned DR. are uncalled for and meaningless because it was not

a focal point at the time of hearing of the case that the assessee Mr. Mohsin Bilal had opened bank account in his name without authorization of AOP Messrs Ittehad Traders whereas the vital objection by the Department at that time was that Mr. Mohsin Bilal could not operate bank accounts on behalf of the aforementioned AOP. Now before us the Department has come up with new set of arguments with the support of additional evidence, which did not form the subject-matter of the case till hearing before ITAT. We have no hesitation to hold that Department is pressing with fresh arguments on the basis of a document of account opening Form for our reconsideration and re-assessment of the matter, which does not fall within the scope of rectification under section 156 of the Ordinance. The Superior Judicial Forums have consistently held in the aforementioned reported cases relied by learned AR, whereby it has become crystal clear that if a mistake which has to be discovered by a long-drawn process of reasoning or examining arguments on points where there may conceivably be two opinions, cannot be said to be a mistake or error which is apparent from record. An apparent error must be from the record of the assessee and not an error discovered from other sources.

As a result of our above discussion in the light of arguments we do not find any mistake floating on the surface of our order, dated 30-6-2003. Hence, Rectification Application is declined being devoid of legal substance.

C.M.A./l30/Tax (Trib.)Application rejected.