COMMISSIONER OF INCOME TAX and others VS Messrs MEDIA NETWORK
2006 P T D 2502
[Supreme Court of Pakistan]
Before Iftikhar Muhammad Chaudhry, C.J., Faqir Muhammad Khokhar and Mian Shakirullah Jan, JJ
Civil Appeals Nos.233 to 315 of 2004
COMMISSIONER OF INCOME TAX and others
Versus
Messrs MEDIA NETWORK and others
(On appeal from the judgment and order of the Lahore High Court, Lahore, dated 24-9-2003, passed in W.Ps. Nos. 4320, 4786, 5320, 5033, 6786, 4551, 5397, 4648, 4407, 6843, 4055, 7764, 6344, 6827, 6797, 6477, 6883, 5975, 5978, 5973, 7235, 5976, 6641, 6342, 7228, 10328, 5977, 7238, 5317, 4691, 4144, 7026, 4546, 4654, 4651, 4545, 4877, 6523, 4054, 7293, 4861, 4358, 4583, 5396, 4874, 7022, 5318, 5717, 4470, 4699, 4429, 5376, 5461, 4056, 4954, 5368, 4582, 929, 6971, 4862, 4319, 4875, 6230, 4682, 4639, 4476, 6521, 4700, 16879, 16003, 6370, 16079, 12338, 15374, 6490, 4688, 6345, 9016, 6478, 4683, 6343, 5974 and 9015 of 2003)
Civil Appeals Nos. 833 to 848 of 2004
REGIONAL COMMISSIONER OF INCOME TAX and others
Versus
M. YOUSAF ACADEMY QUICK FILL CNG and others
(On appeal from judgments , dated 10-6-2004, 31-3-2004, 4-5-2004, 12-4-2004, 10-6-2004, 13-11-2003, 19-11-2003, 19-11-2003, 17-11-2003, 29-1-2004, 18-11-2003, 29-1-2004, 24-9-2003, 26-2-2004, 26-2-2004, 17-3-2004, passed by the Lahore High Court, Lahore in W. Ps. Nos. 11719, 14047, 11306, 15467 of 2002, 15942, 16002, 16000, 16081, 8899, 16197, 12124, 6808, 17875, 17876 of 2003, 618 of 2004 and 17056 of 2005).
Civil Appeals Nos. 1041 to 1046 of 2004
REGIONAL COMMISSIONER OF INCOME TAX and others
Versus
SADAQAT RAHIM and others
(On appeal from judgment and order of the Lahore High Court, Lahore dated 10-10-2003, 10-10-2003, 1-4-2004, 2-4-2004, 24-9-2003, 31-5-2004, 24-9-2003, passed in W. Ps. Nos. 13516, 13517 of 2003, 3632, 616 of 2004 and 16540 & 9979 of 2003).
Civil Appeals Nos. 1211 to 1214 of 2005
COMMISSIONER OF INCOME TAX and others
Versus
Messrs Haji MUHAMMAD TANVIR and others
(On appeal from the judgments and orders of the Lahore High Court, Lahore dated 24-9-2003, 5-8-2003, 31-3-2004, 29-6-2005, passed in W.Ps. Nos. 4653/2003, 4721/2003, 66/2004 and W.P. No.11614/2005).
Civil Appeals Nos.1641 and 1704 of 2005
REGIONAL COMMISSIONER OF INCOME-TAX and others
Versus
Messrs MIAN COLD STORAGE MEWA MANDI, SIALKOT and others
(On appeal from the judgments and orders of the Lahore High Court, Lahore dated 7-9-2005 and 29-9-2005, in W.Ps. Nos. 11847/2005 and 11948/2005)
Civil Appeals Nos. 233 to 315, 833 to 848, 1041 to 1046 of 2004, 1211 to 1214, 1641 and 1704 of 2005, decided on 28/02/2006.
(a) Income Tax Ordinance (XXXI of 1979)---
----Ss.55 & 59---Self Assessment Scheme---Filing of income tax return under the scheme---Scope---Assessee was not under statutory obligation to tile his return of total income for any year in terms of provisions of S.59 of Income Tax Ordinance, 1979 under Self Assessment Scheme---Person who otherwise was required to file a normal return under S.55 of Income Tax Ordinance, 1979, was given option to tile his return under S.59 of Income Tax Ordinance, 1979, for its acceptance in accordance with the provisions of Self Assessment Scheme made by Central Board of Revenue for that year---Deputy Commissioner of Income Tax would then assess, by order in writing, the total income of the assessee on the basis of such return and determine the tax payable on the basis of such assessment.?
(b) Income Tax Ordinance (XXXI of 1979)----
---Ss.59, 59 (1-A), 62 & 63---Self Assessment Scheme---Total audit---Selection of case--Procedure---By non-obstante clause of S.59 (1-A) of Income Tax Ordinance, 1979, it was provided that Central Board of Revenue or any authority subordinate to it, if so authorized by Central Board of Revenue could select out of returns, any cases or class of cases or persons or class of persons howsoever determined for assessment under S.62 of Income Tax Ordinance, 1979, and Deputy Commissioner would proceed to make the assessment under that section or if the circumstances so warranted, under S.63 of Income Tax Ordinance, 1979, accordingly---In such situation, the procedure provided under S.62 or S.63 of Income Tax Ordinance, 1979, as the case might be, would be followed by the Deputy Commissioner.?
(c) Income Tax Ordinance (XXXI of 1979)---
----Ss.4-A, 59 (3) & 59 (1-A)---Self Assessment Scheme, (2002-2003), paras. 9 & 10---Total audit---Procedure---For total audit, under paragraph 9 of Self Assessment Scheme, (2002-2003), twenty per cent. returns were to be selected, through computer ballot which might be random or parametric as deemed fit by Central Board of Revenue or / and by Regional Commissioners of Income Tax on the recommendations of the Commissioners concerned in the light of guidelines issued by Central Board of Revenue in that behalf---Assessing Officer would make necessary adjustments under S.59 (3) of Income Tax Ordinance, 1979, if so required, after giving a notice in writing to the assessee and considering his explanation if any---Cases selected for total audit would be scrutinized in detail, under paragraph 10 of Self Assessment Scheme, (2002-2003), including field audit by departmental officers or by professional auditors authorized under S.4-A of Income Tax Ordinance, 1979, by utilizing the information collected from available sources for determining income of the taxpayer and tax payable thereon by observing the procedure of paragraphs 9 and 10 of the Scheme---No limitation or restriction was imposed by S.59 (1-A)` of Income Tax Ordinance, 1979, as' "any cases or classes of cases or person or class of persons" could be selected for the purpose of total audit.?
(d) Words and phrases---
----`Any'---Connotation---Word "any" has diversity of meaning and may be employed to indicate "all" or "every" as well as "some" or "one"---Meaning of word "any" in a' given statute depends upon the context and subject matter of the statute.?
Ch. Zahoor Elahi M.N.A. v. The State PLD 1977 SC 273; N.-W.F.P. v. Muhammad Irshad PLD 1995 SC 281; Inam-ur-Rehman v. Federation of Pakistan 1992 SCMR 563 and M. Amjad v. Commissioner of Income Tax and 2 others 1992 PTD 513 rel.
(e) Income Tax Ordinance (XXXI of 1979)---
----Ss.4-A, 59 (3) & 59 (1-A)---Self Assessment Scheme, (2002-2003), paras. 9 & 10---Total audit---Selection of cases---Non-specification of percentage of cases to be selected for total audit---Returns of assessees filed under Self Assessment Scheme, (2002-2003), were selected for total audit---Plea raised by assessees was that Central Board of Revenue did not specify percentage of cases to be selected for total audit and paragraphs 9 and 10 of Self Assessment Scheme, (2002-2003), were ultra vires the provisions of S.59 of Income Tax Ordinance, 1979---Validity---No exception could be taken to the selection of cases of assessees in respect of their returns filed under Self Assessment Scheme, (2002-2003)---Final selection of case or cases were made by Regional Commissioners of Income Tax, after affording fair and adequate opportunity of hearing to assessees, who were issued show cause notices and their replies to the same were duly considered---For total audit, under Self Assessment Scheme, (2002-2003), maximum of 20% of returns filed by assessees could be selected---Percentage of selected cases through computer ballot or by Regional Commissioners of Income Tax was not squarely laid down with precision---No prejudice was shown to have been caused to assessees on account of non-specification of percentage of cases to be selected by Central Board of Revenue through computer balloting or by Regional Commissioners---Paragraphs 9 and 10 of the Self Assessment Scheme were not ultra vires the provisions of S.59 or any other provision of Income Tax Ordinance, 1979.?
(f) Income Tax Ordinance (XXXI of 1979)---
----S. 59---Self Assessment Scheme (2002-2003)---Selection of cases for total audit---Policy guidelines---Scope---Policy guidelines were administrative in nature meant for internal consumption of Income Tax functionaries, which did not create any rights nor did they impose any obligations---Such instructions did not take away any vested right of assessees and did not govern the adjudicatory proceedings of quasi-judicial nature---Guidelines were not, in any way, extraneous, irrelevant or unfair to the object to be achieved by the process of selection of cases for total audit.?
(g) Income Tax Ordinance (XXXI of 1979)---
----Ss.59 & 59 (1-A)---Self Assessment Scheme, (2002-2003), paras. 9 & 10---Constitution of Pakistan (1973), Art. 25---Total audit---Selection of cases---Reasonable classification---Non-issuance of policy guidelines before promulgation of Self Assessment Scheme, (2002-2003),---Assessees were aggrieved of their selection of cases for total audit, by Regional Commissioners of Income Tax---Such order passed by Income Tax Authorities, was set aside by High Court---Plea raised by the authorities was that policy guidelines had not become invalid for the reason of not having been issued either before or contemporaneously with the promulgation of Self Assessment Scheme---Validity---Held, there was no requirement of S.59 of Income Tax Ordinance, 1979, or any other provision of the Ordinance or rule for issuance of guidelines either before or along with the Scheme---Very object of the provisions of S.59 (1-A) of Income Tax Ordinance, 1979, would have been frustrated if income tax payers were informed, before hand, of the categories of cases or persons which would be selected for total audit---If that was done, the possibility of tax evasion under the scheme at the massive scale could not be ruled out---Assessees were required to file their true returns under the Scheme as far as possible---Previous publication of the guidelines would have been a hay-day for all the tax evaders as they would be knowing before hand that their cases were not going to be selected or scrutinized---As long as the income tax Authorities acted within the four corners of S.59 of Income Tax Ordinance, 1979, and the Self Assessment Scheme and did not abuse their power or authority, the objection as to the provisional or and final selection of cases for total audit was not sustainable---Guidelines for selection of cases by Regional Commissioners would not suffer from any taint of invalidity merely because certain categories had been identified for total audit based on reasonable classification, which was not violative of Art.25 of the Constitution---No requirement of law existed for issuance of guidelines by Central Board of Revenue, side by side with the announcement of the Scheme as they were to follow the Scheme after its announcement and not to precede it---Judgment passed by High Court was set aside---Appeal was allowed by the Supreme Court.?
Administrative Law by Sir William Wade Ninth Edition pages 547-548; Dominion Law Reports (DLR) (2nd) 622 pp.638-640; Ch. Manzoor Elahi v. Federation of Pakistan and others PLD 1975 SC 66 (100); Mehreen Zaibun Nisa v. Land Commissioner, Multan and others PLD 1975 SC 397 at P. 413); Fazal Ilahi and others v. P.T.C. and others 2001 SCMR 768 at P. 770); Sheikh Muhammad Rashid v. Majid Nizami, Editor-in-Chief, The Nation and Nawa-e-Waqt, Lahore and another PLD 2002 SC 514 at P.521); Province of Punjab through Secretary, Excise and Taxation, Government of Punjab and others v. Sargodha Textile Mills Ltd., Sargodha and others PLD 2005 SC 988; The Federation of Pakistan through Secretary Establishment Division, Government of Pakistan, Rawalpindi v. Saeed Ahmad Khan and others PLD 1974 SC 151; Muhammad Asghar and others v. Income Tax Officer and others 1986 PTD 357 (Lahore); Al-Ahram Builders (Pvt.) Ltd. v. Income Tax Appellate Tribunal 1993 SCMR 29; Khalid Mehmood v. Collector of Customs, Customs House, Lahore 1999 SCMR 1881 at P. 1887; Messrs Novitas International v. Income Tax Officer (Films Circle) and others 1991 PTD 968; Messrs H.M. Abdullah v. Income Tax Officer Circle v. Karachi and 2 others 1993 SCMR 1195; Messrs Central Insurance Company and others v. Central Board of Revenue and others 1993 SCMR 1232 and Province of Punjab v. Muhammad Tayyab and others 1989 SCMR 1621 ref.
Muhammad Hussain and others v. Muhammad and others 2000 SCMR 367 and Ali Muhammad through Legal Heirs and others v. Chief Settlement Commissioner and others 2001 SCMR 1822 distinguished.
(h) Income Tax Ordinance (XXXI of 1979)---
----S. 59---Self-Assessment Scheme (2002-2003)---Policy guidelines---Non-publication in official Gazette---Effect---No statutory obligation on the part of Central Board of Revenue to have published the guidelines in official Gazette---Such guidelines were in nature of administrative instructions meant for internal consumption of Regional Commissioners issued in aid of carrying out purpose of Self Assessment Scheme---Policy guidelines did not enjoy the status of statutory rules, which were required to be notified through publication in official Gazette.?
Pakistan through Secretary, Ministry of Defence and others v. Late Ch. Muhammad Ahsan through legal heirs and others 1991 SCMR 2180; Muhammad Siddique v. Market Committee, Tandlianwala 1983 SCMR 785; Saghir Ahmed through legal heirs v. Province of Punjab through Secretary Housing and Physical Planning, Lahore and others PLD 2005 SC 261 and Mazur.-ul-Haq v. Controlling Authority, Local Councils, Montgomery and others PLD 1963 SC 652 rel.
(i) Notification---
----Publication of notification in official Gazette---Principle---Held, it all depends on the nature and context of statute whether the provisions requiring publication of a notification in official gazette would be construed as directory only or mandatory, so as to invalidate a notification or instructions on account of non-publication in official Gazette.?
Jalal Din v. Natha Ram and another AIR 1922 Lah. 474 rel.
(j) Natural justice, principles of---
----Preliminary inquiries or investigations---Opportunity of hearing---Principles---Rules of natural justice are not inflexible, which yield to and change with the exigencies of different situations---Such rules do not apply in the same manner to situations which are not alike---Said rules are not cast in a rigid mould nor can they be put in a legal strait-jacket; these are not immutable but flexible and can be adopted and modified by the statutes---Need to act in an emergency may also exclude at least a prior hearing or where a decision affects so many people that a hearing would be impracticable---In some cases there may be collective right of hearing or to be consulted although not necessarily a hearing in individual cases---Depending upon the facts and circumstances of each case, there is no mandatory requirement of natural justice that in every case the other side must be given a notice before preliminary steps are taken---It might suffice if reasonable opportunity of hearing is granted to a person before an adverse action or decision is taken against him---However, it is not possible to lay down an absolute rule of universal application governing all situations as to the exclusion or otherwise of the audi alteram partem rule during the course of preliminary inquiries or investigations.?
R. v. Saskatchewan College of Physicians and Surgeons et al. ex parte Samuel (1966) 58; Parry Jones v. Law Society (1969) 1 Ch Division 1 at pp. 8 and 10; Norwest Hoist Ltd. v. Secretary of State for Trade (1978) (1 Ch. D 201); Christopher John Moran v. Lloyd's (1981) 1 Lloyd's Law Reports (Volume-I) 423 at page 427); Rees and others v. Crane (1994) 1 All E.R. 833 at P.P. 842-845); Pearlberg v. Varty (Inspector of Taxes) (1972) 2 All England Reports 7; R. v. Church Assembly Legislative Committee (1972) All England Reports 696; Liberty Oil Mills v. Union of India AIR 1984 SC 1271; India v. Tulsi Ram Patel AIR 1984 SC 1416; Lewis v. Heffer and others (1978) (2 All E.R. 354); Paul Wallis Furnell v. Whangarei High Schools Board (1973) (P.C.) Appeal Cases 660; Wednesbry Corporation v. Minister of Housing and Local Government 1965 1 All E.R. 186; Hardutt Mull Jute Mills v. State of Bihar AIR 1957 Patna 21 and Muhammad Hayat v. The Chief Settlement and Rehabilitation Commissioner and another PLD 1970 Lah. 679 rel.
(k) Income Tax Ordinance (XXXI of 1979)---
----Ss.59 & 59 (1-A)---Self Assessment Scheme, (2002-2003), paras. 9 & 10---Total audit---Selection of cases---Principles of natural justice---Applicability---Assessees were aggrieved of non-providing of opportunity of hearing to them, before finalizing their cases for total audit---Validity---Opportunity of hearing was not required to be afforded by Commissioners to the assessees at preliminary stage of making proposals or recommendations of their cases to Regional Commissioners for total audit---Before final selection of cases, the policy guidelines seemed to have been faithfully observed by the Regional Commissioners of Income Tax, who were required to confront the assessees with the material, provide them due opportunity of being heard and communicate them the basis of their proposed selection---In none of the cases, any allegation of personal bias, mala fide or other unfair treatment by Regional Commissioners or other officers of Income Tax Department were specifically levelled or substantiated by the assessees---No exception could be taken to the selection of the cases of assessees by Regional Commissioners made after due process of law.?
(l) Constitution of Pakistan (1973)--
----Art.185---Law Reforms Ordinance (XII of 1972), S.3---Direct appeal to Supreme Court---Non-filing of Intra-Court Appeal---Principles---Ordinarily, Supreme Court insists the petitioner or appellant to avail the remedy of Intra-Court Appeal, in the first instance; however, this is .a rule of practice for regulating the exercise of discretion which does not oust or abridge the Constitutional jurisdiction of Supreme Court---Supreme Court, in certain exceptional circumstances can entertain petitions, or as the case may be, direct appeals even where the remedy of Intra-Court Appeal under S.3 of Law Reforms Ordinance, 1972, has not been availed by a party.?
Imtiaz Ali Malik v. Mst. Surrya Begum and others 1979 SCMR 22; Mst. Shohrat Bano v. Ismail Dada Adam Soomar 1968 SCMR 574; Province of Punjab through Secretary Excise and Taxation, Government of Punjab and others v. Sargodha Textile Mills Ltd., Sargodha and others PLD 2005 SC 988 and Punjab Employees Social Security Institution Lahore and others v. Manzoor Hussain Khan and others 1992 SC.MR 441 rel.
Makhdoom Ali Khan, Attorney General for Pakistan, Muhammad Ilyas Khan, Senior Advocate Supreme Court, Muhammad Aslam Chatha, Advocate-on-Record, assisted by Shahid Jamil Khan, Advocate, Khurram M. Hashmi, Advocate and Danish Zuberi for Appellants.
Shahid Hamid, Senior Advocate Supreme Court for Respondents (in C.A. No.1046 of 2004).
Shahbaz Butt, Advocate Supreme Court for Respondents (in C.As. Nos.233, 241, 243, 256, 261, 271, 274, 275, 279, 283, 286, 293, 296, 301, 304 of 2004).
Siraj-ud-Din Khalid, Advocate Supreme Court for Respondents (in C. As. Nos. 238 of 2004 and 1212 of 2005).
Muhammad Iqbal Hashimi, Advocate Supreme Court for Respondents (in C. As. Nos.248 to 251, 256, 259, 303 and 1041 of 2004).
Mian Ashiq Hussain, Advocate Supreme Court for Respondents (in C. As. Nos.262, 265, 266 to 269, 294, 298, 835, 844 of 2004 and 1214 of 2005).
Muhammad Qamar-uz-Zaman, Advocate Supreme Court for Respondents (in C. A. No.263 of 2004).
Muhammad Naeem Shah, Advocate Supreme Court for Respondents (in C. As. Nos. 276, 288, 315 of 2004 and 1213 of 2005).
Dr. Ilyas Zafar, Advocate Supreme Court for Respondents (in C. As. Nos.841 and 843 of 2004).
M.S. Khattak, Advocate-on-Record for Respondents (in C.As. Nos.248 to 251, 259, 303 of 2004).
Raja Abdul Ghafoor, Advocate-on-Record for Respondents (in C.A. No.263 of 2004).
Dates of hearing: 27th and 28th February, 2006.
JUDGMENT
FAQIR MUHAMMAD KHOKHAR, J.---The Central Board of Revenue (C.B.R.) announced Self-Assessment Scheme for the assessment year 2002-2003 through Circular No.7 of 2002, dated 15-6-2002 in exercise of powers under section 59 of the Income Tax Ordinance, No.XXXI of 1979 (since repealed) (hereinafter referred to as the Ordinance). The last date for filing the returns for non-company cases was fixed as 30-9-2002 (subsequently extended to 15-10-2002) and for company cases 31-12-2002. Thereafter, the Board issued policy guidelines to all the Regional Commissioners of Income Tax vide letter, dated 17-12-2002 for selection of cases for total audit with the direction to finalise the process by 10-1-2003. By letter, dated 31-1-2003, the C.B.R. informed the Regional Commissioners that in view of a small number of returns of companies, the holding of ballot for selection of 20% cases out of each category was not logical. Therefore, they were directed to select the returns for audit up to 20% at their own level under para. 9(2)(ii) of the Scheme and the guidelines, dated 17-12-2002.
2. The respondents, who were individual firms and companies limited by shares filed their returns under the Scheme for the year, 2602-2003. Their cases were selected by the concerned Regional Commissioners of Income Tax on the recommendations of Commissioners of the Income Tax after following the procedure laid down in the scheme and the policy guidelines, dated 17-12-2002. The respondents felt aggrieved and filed writ petitions in the Lahore High Court Lahore, which were allowed, by the impugned judgments and the selection of their cases by the Regional Commissioners of Income Tax was quashed. Hence, these appeals under Article 185 of the Constitution of Islamic Republic of Pakistan, by leave of the Court.
3. Mr. Makhdoom Ali Khan, the learned Attorney General for Pakistan submitted that Self-Assessment Scheme as announced on 15-6-2003 by Circular Letter No.7 and the policy guidelines issued by the Board vide letter, dated 17-12-2003 were not ultra vires any of the provisions of the Constitution and the law. They were issued in conformity with letter and spirit of section 59 (1-A) of the Ordinance and section 177 of the Income Tax Ordinance, 2001. There was no violation of the principles of natural justice. It was further contended that during the preliminary stage of the process of selection of cases through in-house mechanism in the light of the scheme and the guidelines, the respondents were not entitled to any show-cause notice or hearing as no adverse decision had yet been taken. However, they were issued notices by the Regional Commissioners before making a final selection. He referred to a Textbook titled Administrative Law by Sir William Wade Ninth Edition pages 547-548. He also relied on the cases of R v. Saskatchewan College of Physicians and Surgeons et al, ex parte Samuel (1966) 58 Dominion Law Reports (D.L.R.) (2nd) 622 at pages 638-640), Parry Jones v. Law Society (1969) 1 Ch Division 1 at pages 8 and 10), Norwest Holst Ltd. v. Secretary of State for Trade (1978) 1 Ch. D 201), Christopher John Moran v. Lloyd's (1981) 1 Lloyd's Law Reports (Volume-I) 423 at page 427) and Rees and others v. Crane (1994) 1 All E.R. 833 at P.P. 842-845), in support of his submission that hearing was not required to be afforded at preliminary stage of investigation or inquiry when no adverse action was taken. Under section 59 of the Ordinance, once a case was selected for total audit, the normal process as contemplated by section 62 was to take place. In any case, even under the guidelines, dated 17-12-2002 a definite, fair and reasonable procedure had been provided for to enable an income tax assessees to place his point of view before the final selection of a case. The discretion of the Regional Commissioners of the Income Tax and the Commissioner's of Income Tax had been further curtailed by the C.B.R. through the scheme and the guidelines.
4. It was further argued that it would have certainly created more complications including the evasion of income tax if the guidelines were made known either simultaneously with, or immediately after, the announcement of the Self-Assessment Scheme. In such a case, all the assessees would have known before hand as to who were going to be selected or left out. A prior warning would have produced undesirable results detrimental to the Revenue and the public interest. The course adopted by the C.B.R. had resulted in minimizing the evasion of the income tax as everybody could expect that his case might be scrutinized. If the C.B.R. had identified the classes or categories of cases or persons and laid down guidelines before, the very purpose of provisions of section 59 of 1979 Ordinance and the Self-Assessment Scheme announced thereunder would have been defeated. The guidelines issued by the C.B.R. vide circular letter, dated 17-12-2002 did not contravene the provisions of section 59 (1-A) of the Ordinance or the Self-Assessment Scheme. The guidelines could not be considered to be an amendment to the Self-Assessment Scheme as originally announced on 15-6-2002. The Self-Assessment Scheme and the guidelines issued by letters, dated 17-12-2002 and 22-3-2003 were valid in all respects.
5. It was next contended by the learned Attorney General that although certain appeals of the appellants were barred by limitation but the delay ought to be condoned by this Court for the grounds stated in the applications for condonation of delay and in view of the law laid down in the cases of Ch. Manzoor Elahi v. Federation of Pakistan and others (PLD 1975 SC 66) (100), Mehreen Zaibun Nisa v. Land Commissioner, Multan and others (PLD 1975 SC 397) at P. 413), Fazal Ilahi and others v. P.T.C. and others (2001 SCMR 768) at P. 770) and Sheikh Muhammad Rashid v. Majid Nizami, Editor-in-Chief, The Nation and Nawa-e-Waqt, Lahore and another (PLD 2002 SC 514) at P.521).
6. It was further argued that in view of the substantial questions of law of public importance involved in these cases, failure to avail the alternate remedy of Intra-Court Appeal under section 3 of the Law Reforms Ordinance, 1972 was not an absolute bar for invoking the constitutional jurisdiction of this Court. He referred to the case of Province of Punjab through Secretary, Excise and Taxation, Government of Punjab and others v. Sargodha Textile Mills Ltd., Sargodha and others (PLD 2005 SC 988). It was emphasized that mala fide against a public functionary was not to be assumed but the same was required to be proved through positive evidence and material. The case of The Federation of Pakistan through Secretary Establishment Division, Government of Pakistan, Rawalpindi v. Saeed Ahmad Khan and others (PLD 1974 SC 151) was referred.
7. On merits, it was stated by the learned Attorney General that the selection of the cases of the respondents was made after issuance of show-cause notices and receipt of the replies of the assessees who were afforded reasonable opportunity of hearing. The learned Attorney General referred to the case of Muhammad Asghar and others v. Income Tax Officer and others (1986 PTD 357) (Lahore) in that the selection of cases for scrutiny by Income Tax Authorities could not be objected to as the assessees were required to file true income tax returns under the Self-Assessment Scheme. The guidelines laid down an intelligible criteria with specificity which could not be said to be capricious or arbitrary. The respondents were disentitled to invoke the constitutional jurisdiction of the High Court conferred by Article 199 of the Constitution of Islamic Republic of Pakistan in the presence of availability of adequate remedies provided by the Income Tax Ordinance. Reliance was placed on the cases of Al-Ahram Builders (Pvt.) Ltd. v. Income Tax Appellate Tribunal (1993 SCMR 29), Khalid Mehmood v. Collector of Customs, Customs House, Lahore (1999 SCMR 1881) at P. 1887). It was lastly submitted that in cases in which notices had not been issued, the same would be issued by the relevant authorities before making a final selection for proceeding further in accordance with law.
8. On the other hand, Mr. Shahid Hamid, Senior Advocate Supreme Court, the learned counsel for the respondent (in Civil Appeal No.1046/2004) submitted that the appeal filed by the appellants was hopelessly barred by the time and no sufficient cause was shown in their application for condonation of delay. He referred to the cases of Muhammad Hussain and others v. Muhammad and others (2000 SCMR 367) and Ali Muhammad through Legal Heirs and others v. Chief Settlement Commissioner and others (2001 SCMR 1822) to impress upon that the delay in filing an appeal could not be condoned merely because some connected appeals filed within time were to be heard on merits. It was next contended that the remedy of Intra-Court Appeal provided by section 3 of the Law Reforms Ordinance, 1972, against the impugned judgment, passed by a learned Single Judge in Chambers of the Lahore High Court had not been invoked by the appellants in these cases. Therefore, a petition or an appeal before this Court under Article 185 of the Constitution was not competent in view of the law laid down by this Court in the case of Imtiaz Ali Malik v. Mst. Surrya Begum and others (1979 SCMR 22).
9. He further argued that the guidelines issued by the C.B.R. were over-broad and went beyond the scope of section 59(1-A). They were ex facie discriminatory in nature and were also capable of arbitrary application. They conferred uncanalised power on the Regional Commissioners and the Commissioners of Income Tax to pick and choose. There was no method to ascertain as to how many cases were to be selected for computer balloting by the C.B.R. or by the Regional Commissioners on the recommendations of the Commissioners. An unfettered discretion had been conferred on them. He pointed out that in the Self-Assessment Scheme for the year, 1998-99 a provision was made to outsource the selected cases for audit purpose under sections 4 and 4-A of the Ordinance and the C.B.R. was required to specify classes/ categories of cases for special audit through a separate circular. However for the assessment years 2002-2003, the assessees were entrapped through the Self-Assessment Scheme and the guidelines. The conduct of the C.B.R. was unconscionable, non-transparent and discriminatory in nature.
10. Mr. Siraj-ud-Din Khalid, Advocate Supreme Court, learned counsel for the respondents (in C.As. No.238 of 2004 and 1212 of 2005), adopted the arguments advanced by Mr. Shahid Hamid, Senior Advocate Supreme Court and further stated that the appeals were also liable to be dismissed on the point of limitation as no sufficient cause was shown for condonation of delay.
11. Mian Ashiq Hussain, Advocate Supreme Court, the learned counsel for the respondents (in Civil Appeals No.262, 265, 266, 269, 294, 298, 835, 844/2004 and 1214/2005) highlighted the history of the Self-Assessment Scheme in. a chronological order. He submitted that selection of cases through random ballot as well as by the Regional Commissioners of Income Tax was not only against the basic concept and purpose of the scheme but the same also suffered from the vice of uncertainty. Para-9 of the Scheme was not clear, as to the exclusion of cases from the Scheme on the basis of computer balloting and the ratio out of total of 20% of cases which were to be selected by the Regional Commissioners of Income Tax. No justification was spelt out by the C.B.R. while issuing the letter, dated 31st January, 2003 permitting the Regional Commissioners to select such cases at their own level. A long arm was given to the Revenue Officers to take advantage of the ambiguity of the Scheme as to the percentage to be allocated for computer balloting and Regional Commissioners of Income Tax. It was argued that the guidelines were required to be issued either before or at least simultaneously with the announcement of the Scheme so that the assessees were not kept in dark to exercise their option for the Scheme or otherwise before the period provided under section 59(4) of the Ordinance had run out. It was very unfair on the part of the C.B.R. to adopt a mechanism of laying a bobby trap for the assessees. The C.B.R. was not expected to be secretive in the matter of identifying each category of cases to be selected for total audit or scrutiny till the last date of submission of returns. It would have been just and fair that the guidelines were made known to the assessee well in time and not to hold them back for considerable period even after filing of the returns. It was not the intention of law to give wide discretion to the C.B.R. to issue the guidelines as contemplated in para. 9 (a)(2) of the Scheme at its sweet will whenever it thought fit. It was further urged that Assessing Officer had no discretion but to make assessment under section 9(1) of Ordinance, 1979, in accordance with the returns once the requirements of the Scheme was satisfied. The guidelines, dated 17-12-2002 were in the nature of a bill of attainder i.e. pains and penalties and the net was so widened that no taxpayer could feel safe even if all the codal formalities were fulfilled. The parameters laid down by the guidelines were exhaustive in nature as if those were an independent Scheme. The hunt for cases involving "Revenue Potential" would give a licence and unbridled, discretion to the Commissioners/Regional Commissioners of Income Tax to pick and choose anyone on unreasonable grounds. The guidelines could be invoked in a selective manner without providing any intelligible differentia and the same were hit by the equality clauses laid down by Article 25 of the Constitution of Islamic Republic of Pakistan; 1973. Reliance was placed on the case of Messrs Novitas International v. Income Tax Officer (Films Circle) and others (1991 PTD 968). It was lastly submitted that exclusion of cases from benefit of the scheme by itself amounted to an adverse order which could not be done without affording adequate opportunity of hearing by the relevant authorities during the process of selection of cases by the Commissioners and Regional Commissioners of Income Tax.
12. Mr. M. Naeem Shah, Advocate Supreme Court, learned counsel for the respondents (in Civil Appeals No.276, 288, 315/2004) submitted that Circular No.7 of 2002, dated 15-6-2002 and the guidelines, dated 17-12-2002 issued by the C.B.R. purportedly under section 59 of the Ordinance, 1979, were violative of Article 4 of the Constitution and the principles of natural justice. It was an inalienable right of every citizen to enjoy the protection of law and no action detrimental to reputation or property of any person could be taken except in accordance with law. He argued that under the provisions of section 59(1) once a return filed under the Scheme qualified for acceptance, the Deputy Commissioner of Income Tax was under an obligation to assess the total income of the assessee on the basis of such return and to pass an order of determination of the tax accordingly.
13. Dr. Ilyas Zafar, Advocate Supreme Court, the learned counsel for the respondents (in Civil Appeals No.841 and 843/2004) submitted that the guidelines issued by the Board were required to be published in the official Gazette as required by section 165 of the Ordinance where-under the C.B.R. was empowered, by notification in the official Gazette, to make rules and prescribe the manner and the procedure by which the income, profits and gains liable to tax and the tax payable under the Ordinance, would be determined in the cases of persons to whom section 59 was applicable. Since the guidelines, dated (?) therefore, they were not enforceable at law. It was next contended that the guidelines vested the Income Tax Authorities with the powers of reopening the cases for total audit in an arbitrary manner and without recording any reasons. Therefore, those were invalid ineffective for non-compliance of the requirements of section 24-A of the General Clauses Act, 1897, whereunder every authority, officer or person making any order or issuing any direction in exercise of powers conferred by or under any law was required to give reasons for such an order or direction. The guidelines also ran counter to and nullified the effect of section 59 ibid and those were an encroachment of quasi-judicial functions of the Income-tax Authorities. Reliance was placed on the case of Messrs H.M. Abdullah v. Income Tax Officer Circle v. Karachi and 2 others (1993 SCMR 1195) in which it was held that the C.B.R. exercising administrative control or supervision could not give any directions or instructions to the Assessing Officer, Appellate Assistant Commissioners, Income Tax Appellate Tribunal or the Commissioners of Income Tax vested with quasi judicial powers. He also made a reference to the case of Messrs Central Insurance Company and others v. Central Board of Revenue and others (1993 SCMR 1232) wherein it was held that although the C.B.R. had administrative control over the functionaries discharging their functions under the Ordinance, but it did not figure in the hierarchy of the forums provided for adjudication of cases of assessees as to the income-tax. It was further held therein assessees as to the income-tax. It was further held therein that interpretation placed by the C.B.R. on a statutory provision could not be treated as a pronouncement by a forum competent to adjudicate upon such a question judicial or quasi-judicial. Therefore, it was contended that the C.B.R. could not issue any directions of the nature which would interfere with the judicial or quasi-judicial adjudicatory functions entrusted to various functionaries under a statute.
14. Messrs Muhammad Iqbal Hashmi, Advocate Supreme Court, and Shahbaz Butt, Advocate Supreme Court, the learned counsel for the respondents (in Civil Appeals No.248-251, 256, 259, 303, 1014/2004) and (Civil Appeals No.233, 241, 243, 256, 261, 271, 274, 275, 279, 283, 286, 293, 296, 301, 304 of 2004) submitted that the C.B.R. was not empowered to issue guidelines having the effect of modification of the Scheme already announced by it or to extend the date for scrutiny of cases for total audit unilaterally.
15. We have heard the learned Attorney General for Pakistan and the learned counsel for the respondents at length. Section 55 of the Ordinance required the filing of Income Tax return by every person whose total income or the total income of any other person in respect of which he was assessable for any income year exceeded the maximum amount which was not chargeable to tax under the Ordinance or who had been charged to tax for any of the four income tax years immediately preceding the said income year. Section 59 of the Ordinance, made a provision for self-assessment of the income tax as under:--
??????????? 59. Self-assessment: (1) Where the return of total income for any income year ? furnished by the assessee (not being a public company or a company engaged in ????? the business of banking leasing and modaraba), under section 55 qualifies for ??????????? acceptance in accordance with the provisions of a scheme of self assessment made ?????? by the Central Board of Revenue for that year or under any instructions or orders ????????? issued thereunder the (Deputy Commissioner) shall assess, by an order in writing, ? the total income of the assessee, on the basis of such return and determine the tax ???????? payable on the basis of such assessment.
??????????? (Explanation: For the removal of doubt it is hereby declared that a return of total ?????????? income furnished under section 55 does not include a return of total income ????? furnished under section 57)
??????????? (1-A) Notwithstanding anything contained in subsection (1), the Central Board of ???????? Revenue or any authority subordinate to it if so authorized by the Central Board ? of Revenue in this behalf, may in accordance with a scheme referred to in ???? subsection (1), select out of returns referred to in that subsection any cases or ?? classes of cases or persons or classes of persons howsoever determined, for ? assessment under section 62, and the (Deputy Commissioner) shall proceed to ??????? make the assessment under that section or, if the circumstances so warrant, under ???????? section 63 accordingly).
??????????? (1-B)
???????????
??????????? (2)
??????????? (3) In (assessing the total income and determining the tax payable under ??????????? subsection (1)) (Deputy Commissioner) may make such adjustments as may be necessary, including any adjustment under sections 34, 35, 36, 37, 38, 50, 53 or ?? 54, the rules made under section 165, the First Schedule and the Third Schedule.
??????????? (4) No order under subsection (1) shall be made in any cases after the thirtieth day ?????? of June of the financial year next following the income year in respect of which a ????? return of total income has been furnished under section 55:
??????????? (Provided that if such order is not passed by such date, the acknowledgement ?? issued under section 55A in respect of the return of total income shall be deemed ??? to be the assessment order and notice of demand referred to in section 85)
16. However, section 59-A of the Ordinance laid down that if the Deputy Commissioner was satisfied without requiring the presence of the assessee or the production by him of any evidence that a return furnished under section 55 was correct and complete, he would by an order in writing assess the total income of the assessee and determine the tax payable on the basis of such return. It was further provided therein that the provisions of subsection (3) of section 59 would apply to an assessment and determination under section 59-A as they applied to an assessment and determination under section 59.
17. The C.B.R. by Circular No.7 of 2002 (Income Tax), on 15th June, 2002 announced the Self-Assessment Scheme (S.A.S.) for the Assessment year 2002-2003 under section 59 of the Ordinance. Paragraphs 1.1, 9 and 10 thereof are reproduced below for the sake of convenience:-
??????????? 1.1 All returns filed by taxpayers, other than those that are in-eligible under para. ????????? 7 of this Scheme, shall qualify for acceptance subject to the fulfilment of the ???? following conditions, namely:--
??????????? (a) tax has been fully paid under section 54 of the Ordinance and proof of such payment is attached with the return;
??????????? (b) Return of income for the assessment year 2002-2003 has been filed under ? section 55 of the Ordinance, within due date as defined in this Scheme;
??????????? (c) Returns of Public Limited companies quoted stock exchange, where tax ????? payable on the income declared is equal to or more than the tax payable on the ???? income last declared or assessed, whichever is higher;
??????????? (d) Returns of other Companies where tax payable on the income declared is ??? higher by ten percent (10%) or more compared to the tax payable on the income ???????? last declared or assessed, whichever is higher;
??????????? (e) Returns of Registered Firms of Professionals not liable to pay Super Tax under ??????? clause (2B) of para (A) of Part-IV of 1st Schedule to the Ordinance, where the tax ?????????? computed, under Part-II of the 1st Schedule to the Ordinance, on income declared ??????????? is higher by twenty per cent. (20%) as compared to the similar tax computed on ??????????? the income last declared or assessed, whichever is higher; and
??????????? (f) Return of Persons not being Companies or Registered Firms of Professionals, ????????? as indicated in sub-paras (c) (d) & (e) above, where tax payable to income declare ? is higher by twenty per cent. (20%) or more as compared to the tax payable on the income last declared or assessed, whichever is higher;
??????????? (9) SELECTION OF CASES FOR AUDIT:
??????????? (a) From amongst the returns filed under the Self-Assessment Scheme (excluding ????????? salary and only property income cases), twenty per cent. (20%) returns may be ? selected for total audit in the following manner:--
??????????? (1) through computer ballot which may be random or parametric, as deemed fit by ??????? C.B.R.
??????????? (ii) by Regional Commissioners of Income Tax on the recommendations of ??????? Commissioners concerned, in the light of guidelines issued by the Central Board ?? of Revenue in this behalf.
??????????? (b) Returns qualifying for self-assessment shall be expeditiously processed either ?????????? manually, or through computer, after the selection of cases for total audit. The ?????????? Assessing Officer shall' make necessary adjustments under section 59(3) of the ????? Ordinance, if so required, after giving a notice in writing to the assessee and ????? considering his explanation, if any, These adjustments may include add-backs on ????????? account of:--
??????????? (i) expenses claimed which are legally inadmissible;
??????????? (ii) any sum(s) deemed to be income under the Ordinance; and
??????????? (iii) adding agricultural income to the chargeable income for rate purposes in ????? terms of Proviso to Clause (1), Part-I of the Second Schedule to the Ordinance.
??????????? (10) PROCESSING OF CASES SELECTED FOR AUDIT.
??????????? The cases selected for total audit, shall be scrutinized in detail, including field ???? audit by departmental officers or by professional auditors authorized under ? section 4A of the Ordinance. The investigation and assessment proceedings shall ??????????? be monitored and completed under guidance of supervisory officers within the ?? meaning of section 7 of the Ordinance. Information collected from available ??????????? sources shall be utilized for determining income of the taxpayer and tax payable ????? thereon.
18. The C.B.R. Islamabad vide Letter No.7(7) S. Asstt/2002, dated 17-12-2002 issued policy guidelines to all the Regional Commissioners of Income Tax for selection of cases for total audit under para-9 (a)(ii) of the Self-Assessment Scheme for the assessment year 2002-2003 Paragraphs 2, 3 and 4 thereof, being relevant, read as under:--
??????????? "(2) In order to fulfil the above obligation of the Scheme regarding issuance of the ???????? guidelines, it has been decided that the Resit shall select only those revenue ???? potential cases., where there is an evidence, information or reasons to believe that ? the true particulars of income have been suppressed: Such selection may be based ??????? upon factors including an evident decline in income and disparity in expenses on ??????? utilities vis-a-vis income declared. Besides, cases' of taxpayers acquiring new ?????????? assets or incurring a liability of Rs.50,000 or more through a non-institutional ???? loan, as declared in their wealth statements or where Department is otherwise in ??????????? the knowledge of some investments made by them, also need to be considered for ?????????? selection, it is felt that sources of such acquisition/investment require detailed ??????????? examination. In order to identify such cases the tax profiles of survey and ????????? Registration may also be consulted.
??????????? (3) Further, the RCsIT may poee recall that last year a number of taxpayers ????? lodged complaints before he learned Federal Tax Ombudsman that their cases ???????? were selected on frivolous grounds. This time it must be ensured that selection is ?????? based on material evidences and a fair and just treatment is accorded to all ?????? taxpayers. Before making a final selection, the RCsIT must confront the ????? assessees, provide them due opportunity of being heard and must indicate the ?????? basis of their proposed selection in the notices to be communicated to them.
??????????? (4) Board would like to further add that powers to set apart cases for total audit ?????????? must not be indiscriminately used and be restricted to only those revenue potential ?? cases where there is a sound basis. Board desires that the process of selection of ? cases for total audit must be finalized by 10th of January, 2003 and thereafter b' ?????????? favoured with Zone-wise list of cases so selected. It may be reiterated that ? selection of cases for total audit must be carried out in a judicious and transparent ??????????? manner."
By another directive, dated 22-3-2003, the C.B.R. extended final date of selection of non-company cases for total audit up to 31-3-2003 in order to allow sufficient time to the taxpayers to submit their replies to the show cause notices to the Regional Commissioners of Income Tax. The same date was also extended in respect of company cases.
19. A number of issues have been raised by both sides with regard to the validity and scope of the Circular No.7 of 2002, dated 15-6-2002 and policy guidelines, dated 17-12-2002 of the C.B.R. together with extension in fixing dates for completion of total audit of cases. An assessee was not under any statutory obligation to file his return of total income for any year in terms of provisions of section 59 under the Self-Assessment Scheme. A person who was otherwise required to file a normal return under section 55 of the Ordinance was gived the option to file his return under section 59 for its acceptance in accordance with the provisions of self-assessment scheme made by the C.B.R. for that year. The Deputy Commissioner of Income Tax would then assess, by an order in writing, the total income of the assessee on the basis of such return and determine the tax payable on the basis of such assessment. By non-?obstante clause of section 59 (1-A) it was provided that the C.B.R. or any authority subordinate to it if so authorized by the C.B.R. could select out of returns any cases or class of cases or persons or class of persons howsoever determined for assessment under section 62 and the Deputy Commissioner would proceed to make the assessment under that section or if the circumstances so warranted, under section 63 accordingly. In such a situation, the procedure provided under section 62 or section 63, as the case might be, would be followed by the Deputy Commissioner. Under paragraph 9 of the scheme, 20% returns were to be selected for total audit through computer ballot which may be random of parametric as deemed fit by the C.B.R. or and by Regional Commissioners of Income Tax on the recommendations of the Commissioners concerned in the light of the guidelines issued by the C.B.R. in that behalf. The Assessing Officer would make necessary adjustments under section 59(3) of the Ordinance, if so required, after giving a notice in writing to the assessee and considering his explanation if any. Paragraph 10 of the Scheme further laid down that the cases selected for total audit would be scrutinized in detail including field audit by departmental officers or by professional auditors authorized under section 4-A of the Ordinance by utilizing the information collected from available sources of determining income of the taxpayer and tax payable thereon by observing the procedure of paragraph 9 and 10. There was no limitation or restriction imposed by section 59(1-A) of the Ordinance as any cases or classes of cases or person or class of persons" could be selected for the purpose of total audit.
20. The word `any' used in subsection (1-A) of section 59 of the Ordinance was not without significance. In the case of Ch. Zahoor Ellahi M.N.A. v. The State (PLD 1977 SC 273) the import of the word `any' was considered in the context of section 13(1)(b) of the Defence of Pakistan Ordinance (XXX of 1971) whereunder it was provided that.... "no Court would have authority to revise such order or sentence------or to transfer any case from a Special Tribunals.... or have any jurisdiction of any kind in respect of any proceedings in a Special Tribunal." It was held that word `any' was of very wide amplitude and was defined in Stroud's Judicial Dictionary as a word which excluded limitations or qualifications and, therefore, "any order" would include both interim as well as final orders. Similarly, in N.-W.F.P. v. Muhammad Irshad (PLD 1995 SC 281), this Court took the view that the expression `any law' was used to enlarge the amplitude of the term to which it was attached and there seemed to be no reason why expression `any law' occurring in Article 8(1) of the Constitution would be so narrowly construed as to exclude from its purview a regulation which possessed the efficacy of law in a part of Pakistan. In Inam-ur-Rehman v. Federation of Pakistan (1992 SCMR 563) (at page 587) it has been stated that the term `any' according to the Black's Law Dictionary (Fifth Edition) page 86 means "one out of many; an indefinite number; one indiscriminately of whatsoever kind or quantity. The word "any" has a diversity of meaning and may be employed to indicate "all" or "every" as well as "some" or "one" and its meaning in a given statute depends upon the context and the subject-matter of the statute. In M. Amjad v. Commissioner of Income Tax and 2 others (1992 PTD 513), it was held by a learned Division Bench of the High Court of Sindh that the word `any' used in the context of section 59 of the Ordinance was a word of expansion indicative of width and amplitude sufficient to bring within the scope and ambit of the words it governed, all that could possibly be included in them.
21. Therefore, no exception could be taken to the selection of cases of the respondents in respect of their returns filed under the Self-Assessment Scheme. It goes without saying that final selection of a case or cases had been made by the Regional Commissioner of Income Tax after affording fair and adequate opportunity of hearing to the assessees/respondents who were issued showcause notices and their replies to the same were duly considered. It may be observed that under the scheme a maximum of 20% of the returns filed by the assessees could be selected for total audit. The percentage of the selected cases through computer ballot or by the Regional Commissioners of Income Tax had not been squarely laid down with precision. However, no prejudice was shown to have been caused to the respondents on account of the non-specification of the percentage of cases to be selected by the C.B.R. through computer balloting or by the Regional Commissioners. In our view, paragraphs 9 and 10 of the Scheme could not be said to be ultra vires the provisions of section 59 or any other provision of the Ordinance.
22. As regards the policy guidelines, dated 17-12-2000 issued by the C.B.R. to the Regional Commissioners of the Income Tax, it seems that discretion of the Regional Commissioners in selecting the cases for total audit was thereby restricted. They could select only those revenue potential cases where there was an evidence, information or reason to believe that the true particulars of income had been suppressed. Under the Scheme, the number of selected returns could not exceed the maximum limit of 20%. However, the Regional Commissioner's were further directed to identify and select the revenue potential cases only based upon factors including an evident decline in income and disparity in expenses on utility vis-a-vis income declared. Besides, cases of taxpayers acquiring new assets or incurring a liability of Rs.50,000 or more through a non-institutional loan, as declared in their wealth statements or where Department was otherwise in the knowledge of some investments made by them, could also be considered for selection. If it was felt that sources of such acquisition/investment required detailed examination. In order to identify such cases, the tax profiles of Survey and Registration might also be consulted. The C.B.R. specifically directed that before making a final selection, the Regional Commissioners of Income Tax must confront the assessees, provide them opportunity of being heard and must indicate the basis of their proposed selection in the notices to be communicated to them. These guidelines were administrative in nature meant for the internal consumption of the Income Tax functionaries which did not create any rights nor did they impose any obligations. Those instructions had not taken away any vested right of the assessees and would not govern the adjudicatory proceedings of quasi-judicial in nature. However, it could not be said that the guidelines were, in any way, extraneous, irrelevant or unfair to the object to be achieved by the process of selection of cases for total audit. In our view, the procedure of selection of cases for total audit as provided by paragraphs 9 and 10 of the Scheme was not nullified or whittled down by the policy guidelines, dated 17-12-2002.
23. Now, we have to examine whether the policy guidelines, dated 17-12-2002 were invalid for the reason of not having been issued either before or contemporaneously with the promulgation of the Self-Assessment Scheme. There was no requirement of section 59 or any other provision of the Ordinance or rule for issuance of guidelines either before or along with the Scheme. The very object of the provisions of section 59(1-A) would have been frustrated if the income taxpayers were informed, before hand, of the categories of cases or persons which would be selected for total audit. If that was done, the possibility of tax evasion under the scheme at a massive scale could not be ruled out. The assessees were required to file their true returns under the Scheme as far as possible. The previous publication of the guidelines would have been a hay-day for all the tax evaders as they would be knowing before hand that their cases were not going to be selected or scrutinized. As long as the Income-tax Authorities acted within the for corners of section 59 of the Ordinance and the Self-Assessment Scheme and did not abuse their power or authority, the objection as to the provisional or/and final selection of cases for total audit was not sustainable. The guidelines for the selection of cases by the Regional Commissioners would not suffer from any taint of invalidity merely because certain categories had been identified for total audit based on the reasonable classification which was not violative of Article 25 of the Constitution. There was no requirement of law for issuance of the guidelines by the C.B.R. side by side with the announcement of the Scheme as they were to follow the Scheme after its announcement and not to precede it.
24. The objection of Dr. Ilyas Zafar, Advocate Supreme Court, as to non-publication of guidelines in the Official Gazette also needs to be attended. There was no statutory obligation on the part of the C.B.R. to have published the guidelines in the Official Gazette. They were in the nature of administrative instructions meant for the internal consumption of the Regional Commissioners issued in aid of carrying out the purposes of Self-Assessment Scheme. They did not enjoy the status of statutory rules which were required, by section 165 of the Ordinance, to be notified through publication in the Official Gazette. Moreover, it all depends on the nature and context of statute whether the provisions requiring publication of a notification in the Official Gazette would be construed as directory only or mandatory so as to invalidate a notification or instructions on account of non-publication in the Official Gazette. The purpose of publication and the legal effect of non-publication of a Gazette Notification in the Official Gazette has been examined by the superior Courts in a number of cases. In Jalal Din v. Natha Ram and another (AIR 1922 Lahore 474), a learned Division Bench of the High Court observed that a notification was a method implied for communicating orders, rules, etc. to the general public. In Pakistan through Secretary, Ministry of Defence and others v. late Ch. Muhammad Ahsan through legal heirs and others (1991 SCMR 2180), certain lands had been requisitioned under the Defence of India Act, 1939 and the owners of the land were paid yearly lease money there-under. But the notification of the acquisition/requisition of land had not been published in the official Gazette. It was observed that depending upon the circumstances of each case, the mere fact that publication in the official Gazette was delayed could neither invalidate the notification nor would make its operation retrospective as such vis-a-vis the date of actual signing it. It was found that factual acquisition of land had been acted upon for nearly 50 years and there was an air field in the land for such a long time. Notice/notification although had been signed and issued to all concerned but had not been gazetted. In other words, the purpose of the publication in the ordinary sense was practically served almost contemporaneously when the acquisition took place and in fact it was more substantial publication insofar as the owners were concerned than if it would lave been in the official Gazette. Mere fact that publication in the gazette was delayed, could not invalidate the notification. A somewhat similar view was taken in the case of Muhammad Siddiquie v. Market Committee, Tandlianwala (1983 SCMR 785). In the case of Saghir Ahmed through legal heirs v. Province of Punjab through Secretary Housing and Physical Planning, Lahore and others (PLD 2005 SC 261), a housing scheme had been approved and notified by the Government. There was no stipulation of publication of such an approval in the official Gazette as a mandatory condition. It was held that the non-publication of the Government's approval of the scheme in the official gazette would not invalidate the approval. It was further observed that the official acts performed by public authorities deserved due regard by the Courts and every possible explanation for their validity should be explored and the whole gamut of powers in pursuance of which they acted or performed their function and discharged their duties should be examined. In Mazur-ul-Haq v. Controlling Authority, Local Councils, Montgomery and others (PLD 1963 SC 652), the names of the official members were not notified in the official Gazette as provided by Article 26 of the Basic Democracies Order, 1959, and section 17 of Municipal Administration Ordinance, 1960. It was held that unless there be something in the language of a statute which showed that the person concerned would not commence to hold office till there was a notification in the Gazette, a provision for a notification should not be interpreted as a condition precedent to the holding of an office.
25. The learned counsel for the respondents also took a strong exception to the preliminary selection of cases for total audit by the Commissioners of Income Tax without affording prior opportunity of hearing to the assessees. We find that the C.B.R. through policy guidelines had clearly directed the Regional Commissioners of Income Tax to ensure that the selection was based on material evidence and that a fair and just treatment was given to all taxpayers. Before making final selection, they were required to issue notices to the assessees indicating therein the basis of their proposed selection, to confront them with relevant material and provide them due opportunity of being heard. Therefore, the interests of the taxpayers were adequately safeguarded by the policy guidelines of the C.B.R. in the process of final selection of their cases by the Regional Commissioners even though they were not heard by the Commissioners at an early stage.
26. The rules of natural justice are not inflexible. They yield to and change with the exigencies of different' situations. They do not apply in the same manner to situations which are not alike. These rules are not cast in a rigid mould nor can they be put in a legal strait-jacket. They are not immutable but flexible. They can be adopted and modified by the Statutes. The need to act in an emergency may also exclude at least a prior hearing or where a decision affects so many people that a hearing would be impracticable. In some cases there may be collective right, of hearing, or to be consulted although not necessarily a hearing in individual cases. Depending upon the facts and circumstances of each case, there is no mandatory requirement of natural justice that in every case the other side must be given a notice before preliminary steps are taken. It might suffice if reasonable opportunity of hearing is granted to a person before an adverse action or decision is taken against him. However, it is not possible to lay down an absolute rule of universal application governing all situations as to the exclusion or otherwise of the audit alteram partem rule during the course of preliminary inquiries or investigations.
27. The application or otherwise of the principles of natural justice at preliminary stage of administrative proceedings was examined in various jurisdictions by way of judicial review. In Pearlberg v. Varty (Inspector Taxes) (1972) 2 All England Reports 7) the Income-tax Authorities made an application to the Commissioner under the provisions of section 6(1) of the Finance Act of 1964 for leave to make assessment on a taxpayer for the years 1946-47 and 1950-51. The permission was granted without giving the taxpayer an opportunity to be heard. The taxpayer claimed that those assessments were invalid on the ground that the Commissioner had acted ultra vires in granting leave without giving him an opportunity of hearing. The House of Lords observed that the Commissioner was not required to give the taxpayer an opportunity to be heard as his decision to give leave would not tantamount to any final determination of the rights of the taxpayer.
28. In the case of Regina v. Saskatchwan College of Physicians and Surgeons (supra) it was held that the preliminary inquiry committee had no power to decide whether Dr. Samuels had been guilty of misconduct; it had no power to affect any of his legal rights in any way whatever; and it had no power to impose any penalty or obligation upon him. Having no power to adjudicate anything, it was not, when conducting its investigation, acting in a judicial or quasi-judicial capacity. In R. v. Church Assembly Legislative Committee (1972) All England Reports 696) it was observed that the Church Assembly of the Church of England and its Legislative Committee were bodies that set in motion in a preliminary way, proposals for legislation, and they did not exercise judicial functions for determination judicially questions affecting the rights of subjects. In the case of Parry Jones v. Law Society and others, (supra), the Court of Appeal took the view that where the only inquiry was as to whether there was prima facie evidence, natural justice did not require that the party should be given notice of it. In Norwesi Holst (supra), the company had moved the Court for a declaration that the view of the Inspectors to investigate the affairs and submit report to the department was unlawful and ultra vires as the information and the material had not been disclosed to the company. The Court of Appeal held that under section 165(b) of the Companies Act, 1967, the department had wide discretion to appoint inspector to investigate and report to it which was exercised at a preliminary stage for the purpose of good administration and carried with it no implication that there was any case against the company. Accordingly, the principles of natural justice were at that stage inapplicable.
29. In Christopher John Moran (supra), the Court of Appeal observed that it was no good for the tactician to appeal to the rules of natural justice. They had no application to a preliminary inquiry of that kind. The inquiry was made with a view to seeing whether there was a charge to be made. It did not do anything which adversely affected the man concerned or prejudiced him in any way. It was simply a preliminary hearing to see if there was going to be a charge. If there was, there should be a hearing in which an impartial body would look into the rights and wrongs of the case. In all such cases, all that was necessary was that those who were holding the preliminary inquiry should be honest men--acting in good faith - doing their best to come to the right decision. In that case, a Committee had been appointed to investigate dealings of the plaintiff Christopher John Moran who was an insurance broker and a member of Loyd's auditors.
30. In Rees and others (supra). It was held by the Privy Council that there were many situations in which natural justice did not require that a person must be told of the complaints made against him and given a chance to answer them at the particular stage in question. Essential features leading the Courts to that conclusion had included the fact that the investigation was purely preliminary, that there would be a full chance adequately to deal with the complaints later, that the making of the inquiry without observing the audit alteram partem maxim was justified by urgency or administrative necessity, that no penalty or serious damage to reputation was inflected by proceeding to the next stage without such preliminary notice, that the statutory scheme properly construed excluded such a right to know and to reply at the earlier stage. However, their Lordships did not lay down an absolute rule to that effect.
31. In Liberty Oil Mills v. Union of India (AIR 1984 SC 1271), an order of investigation was challenged on the ground of non-compliance with the principles of natural justice. The Supreme Court of India observed that procedural fairness embodying natural justice was to be implied whenever action was taken affecting the rights of parties. An opportunity to be heard might not be predecisional; it might necessarily have to be post-decisional where the danger to be averted or an act to be prevented was imminent or where the action could break no delay. In Union of India v. Tulsi Ram Patel (AIR 1984 SC 1416), it was observed that right of prior notice could be excluded where the same would obstruct the taking of prior action. In Lewis v. Heifer and others (1978 (3 All E.R. 354), the National Executive Committee of Labour Party had suspended the Constituency Officers and Committee pending inquiry without affording opportunity of hearing or issuance of show-cause notice. Lord Denning (as he then was) speaking for the Court of Appeal held that there had been no breach of rules of natural justice. It was only where the suspension was to be effected by way of punishment that natural justice demanded that the persons concerned should be given an opportunity of being heard before the suspension was imposed. Where the suspension was made as a holding operation pending inquiries, the rules of natural justice did not apply, because the suspension was merely done as a matter of good administration in a situation where prompt at action was necessary.
32. In Paul Wallis Furnell v. Whangarei High Schools Board (1973) (I (P.C.) Appeal Cases 660), the Privy Council dealt with the challenge of a school teacher against whom sub-committee of the school conducted a preliminary investigation without giving him opportunity to make a representation. The Supreme Court of New Zealand had set aside the suspension of the school teacher by the school board on the ground that the principles of natural justice had not been followed by the 'sub-committee and by the board before conducting preliminary investigation or passing the suspension order. It was held that one of the principles of natural justice was that a man should not be condemned and the teacher knew that under the terms of his employment he might be suspended pending the determination of charges against him, In Wednesbry Corporation v. Minister of Housing and Local Government (1965 1 All E.R. 186), the Minister's action to issue instructions to the Inspectors as regards scope of inquiry was held to be not subject to hearing. In Hardutt Mull Jute Mills v. State of Bihar (AIR 1957 Patna 21), a learned Division Bench of the Patna High Court while dealing with a wealth tax case held that as a matter of law it was not correct to say that the party adversely affected should be heard at each and every stage of administrative process.
33. In Muhammad Hayat v. the Chief Settlement and Rehabilitation Commissioner and another (PLD 1970 Lah. 679), the registration of criminal case and commencement of police investigation before hearing the accused were held to be not violative of principles of natural justice. In that case the investigation into a case of bogus claim of a refugee by Police Officer was challenged on the plea that the said Officer before making a report, had not afforded an opportunity of hearing to the accused.
34. We are inclined to agree with the learned Attorney General for Pakistan that the opportunity of hearing was not required to be afforded by the Commissioners to the respondents at the preliminary stage of making proposals or recommendations of their cases to the Regional Commissioners for total audit. However, before the final selection of cases, the policy guidelines, dated 17-12-2002 seem to have been faithfully observed by the Regional Commissioners of Income Tax, who were required to confront the assessees with the material, provide them due opportunity of being heard and communicate them the basis of their proposed selection. In none of these cases, any allegations of personal bias, mala fide or other unfair treatment by the Regional Commissioners or other officers of the Income Tax Department were specifically levelled or substantiated by the respondents. Therefore, no exception
could be taken to the selection of the cases of the respondents by the Regional Commissioners made after due process of law.
35. Some of these cases such as Civil Appeals No.282, 299, to 309, 312 to 315, 835, 837, 840, 842, 844/2004, 1211, 1212, 1213, 1214, 1641, 1704/2005 have been filed after the expiry of limitation period. They are accompanied by the applications for condonation of delay. Since the other appeals were filed within limitation period, therefore, we condone the delay in all such appeals for the reasons stated in the applications for condonation of delay and by following principles laid down in the cases of Sheikh Muhammad Rashid (supra), Ch. Manzoor Elahi (supra), Mehreen Zaib-un-nisa (supra), Fazal Elahi and others (supra) and Province of Punjab v. Muhammad Tayyab and others (1989 SCMR 1621). The cases of Muhammad Hussain and others (supra) and Ali Muhammad (supra) referred to by Mr. Shahid Hamid, Senior Advocate Supreme Court are distinguishable from the facts of these cases.
36. The objection as to filing of these appeals without availing remedy of Intra-Court Appeals has been taken by the respondents at a belated stage of final hearing of these appeals. Ordinarily, this Court does insist the petitioner or appellant to avail the remedy of Intra-Court appeal, in the first instance, as was done in the case of Imtiaz Ali Malik (supra) referred to by Mr. Shahid Hamid, Senior Advocate Supreme Court. However, this is a rule of practice for regulating the exercise of discretion which does not oust or abridge the constitutional jurisdiction of this Court. Therefore, in certain exceptional circumstances, this Court can entertain petitions, or as the case may be, direct appeals even where the remedy of Intra-Court appeal under section 3 of the Law Reforms Ordinance, 1973 has not been availed by a party. Reference may usefully be made to the cases of Mst. Shohrat Bano v. Ismail Dada Adam Soomar (1968 SCMR 574), Province of Punjab through Secretary Excise and Taxation, Government of Punjab and others v. Sargodha Textile Mills Ltd., Sargodha and others (PLD 2005 SC 988) and Punjab Employees Social Security Institution Lahore and others v. Manzoor Hussain Khan and others (1992 SCMR 441). The present appeals involve important questions of law of great public importance having far-reaching consequences. Therefore, the objection of the respondents is not tenable in the peculiar facts of this case.
37. For the foregoing reasons, these appeals are allowed and the impugned judgments of the High Court are set aside with no order as to costs.
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