COMMISSIONER OF INCOME TAX VS Messrs SUI NORTHERN GAS PIPELINES LTD., LAHORE, 2006 PTD-LAHORE-HIGH-COURT-LAHORE 521 (2005)

(a) Income Tax Ordinance (XXXI of 1979)---

---Ss.65 & 136(1)---Reference to High Court---Findings of Tribunal as to reopening of assessment on basis of same material already available on record while framing of original assessment---Such findings of fact not disputed by any party---No question of law would arise out of the impugned order---High Court dismissed reference in circumstances.

(b) Income Tax Act (XI of 1922)---

----S.34---Income Tax Ordinance (XXXI of 1979), S.136(1)---Income escaping assessment after expiry of two years---Non-consideration of objection of limitation by Tribunal---Findings of Tribunal as to re-opening of assessment on the basis of material already available on record not challenged by Revenue in reference application---Failure of Tribunal to place complete facts of case before High Court---Effect---In absence of clear identification of material and documents stated to be available on record and their evaluation by Tribunal in perspective of objection of assessee qua change of opinion, question as framed could not be said to have arisen out of impugned order---High Court declined to answer referred questions.

Muhammad Ilyas Khan for Petitioner.

Azhar Maqbool Shah, for Respondent.

Date of hearing: 8th September, 2005.

JUDGMENT

NASIM SIKANDAR, J.---This Tax Reference under section 136(1) (Reference to High Court) to the late Income Tax Ordinance, 1979 has been made by the Income Tax Appellate Tribunal, Lahore. Following question of law has been referred for our consideration and answer, which statedly arose out of their order recorded on 21-11-1990 disposing of ten cross-appeals each by the assessee Messrs Sui Northern Gas Pipelines Limited, Lahore as well as Income Tax Officer, Salary Circle-III, Lahore:---

QUESTION OF LAW

"Whether on the facts and circumstances of the case the learned Tribunal was justified to annul the assessments made under section 65 of the Income Tax Ordinance, 1979, while sufficient material was available on record to justify reopening the assessment?"

2. According to the statement of the case original assessments in respect of the assessee were completed under section 23(3) (assessment) of the repealed Income Tax Act, 1922 for the assessment years 1971-72 to 1978-79 and under section 62 (assessment on production of accounts, evidence etc.) of the late Income Tax Ordinance, 1979 for the assessment years 1979-80 and 1980-81. Subsequently, in the year 1982 the Assessing Officer reopened the assessments by invoking provisions of section 65 (Additional assessment) of the late Income Tax Ordinance, 1979 and finalized re-assessments for the year 1971-72 on 12-6-1982 and for the years 1972-73 to 1980-81 on 31-5-1982. The C.I.T. (Appeals) Zone-I, Lahore on 27-3-1986 rejected the objection of the assessee with regard to expiry of limitation for the purpose of re-opening of the assessments earlier framed under the late Act of 1922 for the assessment years 1971-72 to 1976-77. Also he disagreed with the submissions made before him that in case of the assessment years 1977-78 to 1980-81 the re-opening was bad in law on account of its being a case of change of opinion inasmuch as all material and documents on the basis of which the case was re-opened were already available on record and were considered at the time of framing of the assessments. Learned C.I.T. (Appeals), however, allowed partial relief to the assessee as far quantum of the income was concerned. As noted earlier, both the department as well as the assessee filed cross-appeals.

3. Before the Tribunal the assessee again agitated that the assessments for the years 1971-72 to 1976-77 were barred by limitation of two years as provided in section 34 (Income Escaping Assessment) of the late Act, 1922 and that for the assessment years 1976-77 to 1980-81, it was a case of change of opinion. The department, on the other hand, challenged partial relief given by C.I.T. (Appeals) under various heads of income reducing the liability of the assessee as earlier assessed by the Assessing Officer in the re-opening proceedings. The Tribunal by way of the impugned order, however, held that re-assessments in all these years were bad inasmuch as it was a case of change of opinion because admittedly the case was re-opened on the basis of the same material which was already available on record at the time of framing of original assessments.

4. Thereafter, as noted above, at the request of the department through Commissioner of Income Tax, Company Zone, Lahore, the learned Tribunal referred the aforesaid question for our consideration and answer.

5. Heard the learned counsel for the parties. Learned counsel for the respondent/assessee contends and we will agree that the question as framed cannot be said to arise out of the said order of the Tribunal for the following reasons:---

"First, in operative para. 11 of the order the Tribunal observed that it was an admitted fact that the assessments were re-opened on the basis of same material which was already available on record. That statement of fact has neither been countered by the department as petitioner nor it is claimed that these findings of fact are otherwise not supported from the record or are against it.

Second, the question as framed is more in nature of an argument rather than posing a leading controversy to be resolved by this Court.

Third, the reading of the impugned order of the Tribunal shows that the learned Members did not consider any rule upon the objection of the assessee with regard to expiry of limitation of two years for the purpose of re-opening of the assessment as provided in section 34 of the late Act of 1922. Instead they made the aforesaid observation to the prejudice to the Revenue/present petitioner that admittedly the re-opening of the assessment in all these years was based upon the material and evidence, which was already available on record. That observation does not appear to have been challenged by the Revenue in their application for reference to this Court and the Tribunal despite absence of an objection or challenge to such finding referred the aforesaid question. It was totally improper.

Fourth, in the sketchy statement of the case, the Tribunal has again failed to make a reference to any material or document, which was considered by them in para. 11 of the impugned order to be already available on record. In that manner apparently complete facts of the case have not been placed before us. In such a situation this Court cannot answer the question as referred by the Tribunal. In re: Commissioner of Income Tax v. Ciba of India Ltd. (1990) 182 ITR 455, a Division Bench of the Bombay High Court observed that a High Court on a reference proceeds upon the facts found and placed before it. Where complete facts were not placed before the High Court it could not answer the question referred. In absence of a clear identification of the material and documents which were stated to be available on record and their evaluation by the Tribunal in the perspective of the objection of the assessee qua a change of opinion, the question as framed cannot be said to have arisen out of their order.

6. Answer declined.

S.A.K./C-3/LAnswer decline