I.T.A. No.2607/LB of 2005, decided on 30th November, 2005. VS I.T.A. No.2607/LB of 2005, decided on 30th November, 2005., 2006 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 673 (2005)

Income Tax Ordinance (XLIX of 2001)---

----S.122---Amendment of assessment---Issuance of notice without indication of specific provision of S.122 (1), Income Tax Ordinance, 2001---Validity---Notice issued for assumption of jurisdiction was defective and when initial action was defective subsequent action could not be termed as legal---Assessment in the present case, was made before the promulgation of Income Tax Ordinance, 2001 i.e. on 30-3-2002---Department could not go beyond the period of promulgation of the Income Tax Ordinance, 2001---Department was not justified in invoking the provisions of S.122 of the Income Tax Ordinance, 2001 in circumstances which was ab initio void and illegal---Appellate Tribunal cancelled the order of the Assessing Officer and restored the position which stood before the initiation of proceedings by the Department.

Aqeel Ahmad, I.T.P. for Appellant.

Muzammal Hussain, D.R. for Respondent.

Date of hearing: 29th November, 2005.

ORDER

The instant appeal has been preferred at the behest of assessee against order dated 5-4-2005 relevant to the assessment year 2001-02 passed by the learned C.I.T.(A) Zone III, Lahore to agitate the setting aside or order passed by the Taxation Officer under section 122 of the Income Tax Ordinance, 2001.

2. The learned A.R. of the assessee agitated against the action of the learned C.I.T.(A) as per grounds. In further support of the assessee's grievance the learned A.R. for the assessee stated that when the notice under section 122 of the Income Tax Ordinance, 2001 was issued no specific provision of subsection (1) of section 122 of the Income Tax Ordinance 2001 was indicated on the said notice. The learned A.R. has provided a copy of the same notice bearing No.99/05 dated 23-10-03 issued by the D.C.I.T. Circle-5, Special Zone, Lahore. Caption of this notice is notice under section 122 of the Income Tax Ordinance, 2001 Messrs Legler Nafees Denim Ltd., Lahore assessment year 2001-02. With these observations the learned A.R. stated that the notice through which department assumed jurisdiction under section 122 was defective and of no legal consequence. On the other hand, the learned D.R. supported the action of the learned first appellate authority.

3. We have heard both the sides and perused the orders of the authorities below. We have observed that there is considerable force in the. arguments of the learned A.R. as the notice issued for assumption of jurisdiction is defective and when the initial action is defective how can the subsequent action can be termed as legal. Even otherwise we have observed that the assessment was made before the promulgation of the new Income Tax Ordinance, 2001 when in the instant case assessment was made on 30-3-2002. This being the case the department could not go beyond the period of promulgation of the New Income Tax Law. Hence on this score too the action of department is totally illegal. In view of the foregoing discussion we hold that the department was unjustified in invoking the provisions of section 122 of the Income Tax Ordinance, 2001 which are ab initio void and illegal. We, therefore, direct the cancellation of the order passed by the D.C.I.T. Circle-5, Special Zone under section 122 of the Income Tax Ordinance, 2001 and restore the position which stood before the initiation of proceedings by the department on 23-10-2003. The assessee's appeal is accepted.

C.M.A./579/Tax(Trib.)Appeal accepted.