WELCON CHEMICALS (PVT.) LIMITED through Chief Executive VS CENTRAL BOARD OF REVENUE, ISLAMABAD through Chairman, C.B.R. and 3 others
2006PTD 116
[Lahore High Court]
Before Syed Hamid Ali Shah, J
WELCON CHEMICALS (PVT.) LIMITED through Chief Executive and others
versus
CENTRAL BOARD OF REVENUE, ISLAMABAD through Chairman, C.B.R. and 3 others
Writ Petitions Nos.5673, 8934, 8186, 8376, 9783 and 10850 of 2005, heard on 08/07/2005.
Income Tax Ordinance (XLIX of 2001)---
---Ss. 114(1), 120(1)(b)(3) & 177(1)---Central Board of Revenue's Circular No.5 of 2003, dated 30-6-2003---Constitution of Pakistan (1973), Art. 199---Constitutional petition---Return under "Universal Self Assessment Scheme"---Issuance of notice selecting return for audit without first hearing assessee---High Court in view of principles laid down in Ch. Muhammad Hussain's case (2005 PTD 152) accepted constitutional petition and set aside impugned notice declaring same to be without lawful authority while observing that Commissioner of Income Tax could initiate proceedings afresh after meeting legal requirements.
Ch. Muhammad Hussain v. Commissioner of Income Tax 2005 PTD 152 fol.
Noor Ahmed Qureshi for Petitioner.
Zahid Ferani Sheikh for Respondents.
Date of hearing: 8th July, 2005.
JUDGMENT
SYED HAMID ALI SHAH, J.---Six constitutional petitions, bearing No.5673-2005 titled. "Welcon Chemicals (Pvt.) Ltd. v. The Central Board of Revenue and 3 others", Writ Petition No.8934 of 2005 titled "Messrs Ittfaq Sugar Mills Ltd. v. Central Board of Revenue and 4 others", Writ Petition. No.8186 of 2005 titled "United Industries Ltd. v. Central Board of Revenue and 2 others", Writ Petition No.8376 of 2005 titled "Muhammad Nadeem v. Federation of Pakistan and 4 others", Writ Petition No.9783 of 2005 titled "Aslam Textile Mills Ltd. v. Central Board of Revenue and 2 others" and Writ Petition No.10850 of 2005 titled "Messrs Continental Travels v. Federation of Pakistan and 4 others" have been filed by various assessees who filed their return under section 114(1). As common question of law is involved in all these petitions, therefore, these petitions are heard together and this judgment will dispose of all of them.
2. The petitioners have filed the Income Tax Returns under Universal Self Assessment Scheme, read with Section 114(1), of the Income Tax Ordinance, 2001. The writ petitioners' Tax Returns, are assessment orders under the provisions of Clause (b) of Subsection (1) ofsection 120 of the Ordinance, 2001. Since no notice under section 120(3) of the Ordinance, 2001 was issued to the petitioners; therefore, the return submitted by petitioner attained the status of assessment order for all intent and purpose. Central Board of Revenue vide Circular No.5 of 2003, dated 30-6-2003 further clarified the above position.
3. The petitioners were issued letter by the respondent, conveying therein, the selection of their Income Tax Returns for audit. The petitioners have challenged through constitutional petitions before this Court, the order/notice of the Commissioner of Income Tax as to the selection of the petitioners' case for audit.
4. The learned counsel appearing on behalf of the various petitioners have addressed the similar arguments and laid their emphasis on the decision of this Court in the case of Ch. Muhammad Hussain v. Commissioner of Income Tax (2005 PTD 152), wherein it was declared that Commissioner of Income Tax while invoking the provisions under section 177 of the Ordinance is required to mention the relevant clause, as well as the reason for selection of a case for audit, as return filed under section 114 of the Ordinance is treated as assessment order. The matter cannot be reopened for audit unless the notice of hearing is issued to the assessee, because proceedings adverse to his interest are commenced. It. was further argued that decision referred above is binding on respondent and the respondents have wilfully neglected to follow the dictum laid down in the said judgment. It was argued, further that the decision of Federal Tax Ombudsman, in this respect has also been ignored, while issuing the impugned notice/ order.
5. Learned counsel appearing for the respondents has vehemently contested the petitions and has argued that the petitioners have build their case on the case of Muhammad Hussain (supra), which is under challenge before the august Supreme Court and leave has been granted. Adds that these petitions are not maintainable for the reason that the petitioners instead of contesting the matter before the Revenue Department have approached this Court through constitutional petition. It was contended that since the remedy was available, therefore, writ jurisdiction in the circumstances cannot be invoked. Learned counsel on merits, has argued that there was sufficient material available with the respondents who have initiated impugned proceedings against the petitioners in accordance with law. It was further argued that the object of filing the petition is not bona fide. Learned counsel has lastly contended that the petitioners have moved these petitions with ulterior motives to cause loss to the Revenue.
6. Heard learned counsel for parties and perused the record.
7. It was held in the case of Muhammad Hussain v. C.I.T. (supra), that: ---
"This brings me to hold that Commissioner of Income Tax can proceed against any person but while so doing he has to mention under the clause of Section 177(1) of the Ordinance, 2001, under which he proposed to proceed and at the same time, he has to give reasons for the action against the assessee because his assessment order is, to be reopened and declaration in the return is to be scrutinized which is an order adverse to the provisions of section 120 of the Ordinance (ibid)."
It was further observed that:---
"Law regarding notice to the concerned party is settled by this time and the superior judiciary of country is consistent on the question of giving notice to the concerned persons before proceedings against him, besides the applicability of principles of natural justice whereunder no one is to be condemned unheard. The Hon'ble Supreme Court of this country has very graciously mandated that provision of notice to the person against whom you propose to proceed, has to be read in every statute irrespective of the fact that no such provision is incorporated therein."
8. The above referred judgment of Muhammad Hussain's case applies to the case of the petitioners before me and I following the dictum laid down, declare the impugned notices to be illegal, void and passed/issued without lawful authority and of no legal effect. The Commissioner of Income Tax, however, can initiate proceedings afresh after meeting the legal requirements.
9. As regards the argument of learned counsel for the Revenue that the matter is sub judice before the august Supreme Court of Pakistan, therefore, it will be in the interest of justice to wait for the judgment to be delivered by the august Supreme Court of Pakistan. Argument advanced on behalf of the respondents is not well founded. Order XX of the Supreme Court Rules, 1980 is reproduced hereunder for ready reference:--
"The filing of a petition for leave to appeal or an appeal shall not prevent execution of the decree or order appealed against but the Court may, subject to such terms and conditions as it may deem fit to impose, order a stay of execution of the decree or order, or order a stay of proceedings, in any case under appeal to this Court."
10. The result, therefore, is that all the petitions succeed, which are accepted. The impugned notice under section 177(1) is declared being B without lawful authority and are set aside. Parties to bear their own costs.
S.A.K./W-48/L??????????????????????????????????????????????????????????? Petition accepted.