2007 P T D (Trib
2007 P T D (Trib.) 2601
[Income-tax Appellate Tribunal Pakistan]
Before Khawaja Farooq Saeed, Chairperson
I.T.A. No. 188/IB of 2007, decided on 20/07/2007.
(a) Income Tax Ordinance (XLIX of 2001)---
----S. 122---Amendment of assessment---Jurisdiction---Order for cancellation or reopening for modification of an assessment was made in disregard to the declaration of the assessee---Assessing Officer needs to be very clear in its mind as to why he wants to modify the assessment---Factual basis as well as the provision of law must be indicated for acquiring proper jurisdiction.
(b) Income Tax Ordinance (XLIX of 2001)---
----Ss. 122, 76 & 66-A---Income Tax Ordinance (XXXI of 1979), Ss.65
& 66A---Amendment of assessment---Provisions in terms of Ss.65 and 66A of the Income Tax Ordinance, 1979 were different in their application from those of S.122 of the Income Tax Ordinance, 2001.
(c) Income Tax Ordinance (XLIX of 2001)---
----S. 122---Amendment of assessment---Expression "subject to this section"---Meaning and scope---Provisions of S.122 of the Income Tax Ordinance, 2001 start with the language "subject to this section"---Such language restricts all further proceedings for amendment of an assessment which means it could only be amended if they were covered by the provisions of this section---Amendment of assessment for which this section had been prescribed could not be made if the requirements and qualifications prescribed in this section were not completed before making such amendment of the assessment.
(d) Income Tax Ordinance (XLIX of 2001)---
----S. 122---Amendment of assessment---"By making such alterations or additions as the Commissioner considers necessary"---Meaning and scope---Commissioner, through this part of S.122(1) of the Income Tax Ordinance, 2001 had been allowed to make such alternations or additions as were required obviously- for the reason of the information and circumstances before him---Comment made by such provision in terms of information and circumstances with reference to the first part of the section which says subject to this section, creates an embargo on the Commissioner---Term used as "Commissioner considers necessary" in the provision was obviously subject to S.122 of the Income Tax Ordinance, 2001---Parameters had been prescribed in S.122(2)(3), (4), (4A), (5), (5A), (5B), (6), (7), (8) and (9) of the Income Tax Ordinance, 2001---All these parameters were relevant to amendment, for example subsection (2) provides for a period during which such amendment could be made in one particular situation and subsection (3) prescribes the limitation in case of multiple amendments of an assessment in certain situations while subsection (4A) also deals with the limitation but in respect of the assessment finalized under the Income Tax Ordinance, 1979.
(e) Income Tax Ordinance (XLIX of 2001)---
----S. 122(5) & (5A)---Amendment of assessment---Amendment of the assessment was subject to provisions of subsections (5) and (5A) as well as the other provisions of section 122---Subsection (5) provides for an embargo on the Assessing Officer that he could only amend an assessment under subsection (1) or may further amend an assessment under subsection (4) if he had in his custody a definite information that any income of the assessee had escaped assessment or his income had been under assessed or had been assessed at too low a rate or had been subject to excessive relief or refund or if the income had been misclassified.
(f) Income Tax Ordinance (XLIX of 2001)---
---S.122---Amendment of assessment---Definite information---Accumulated reading of S.122 of the Income. Tax Ordinance, 2001 gave the impression that one could go for amendment of an assessment if he had definite information with regard to the various requirements mentioned therein.
(g) Income Tax Ordinance (XLIX of 2001)---
----S. 122---Income Tax Ordinance (XXXI of 1979), Ss. 62, 63 & 65---Amendment of assessment'---`Re-opening of assessment'---Comparison---Definite information---In the present law it is amendment of assessments while in old law it was re-opening of the assessment and consequent assessment under the provisions of Ss.62 & 63 etc. as the case maybe of the Income Tax Ordinance, 1979--Present law appeared to be having a wider scope was the Commissioner would be simultaneously entitled to alter or amend the assessment which was not possible under S.65 of the Income Tax Ordinance, 1979---Assessment later on was again to be finalized after issuance of a notice under S.61 either under S.62 or 63 or any other provision applicable in the circumstances of-the case---In the present scheme of law the Commissioner is empowered to make alternations or additions which he considers necessary---For this purpose he is not required to invoke the other provisions of Income Tax Ordinance, 2001---Under Income Tax Ordinance, 1979 in S.65 of the Income Tax Ordinance, 1979, the. assessee was required to file fresh return in compliance with the notice issued under the said section which again was not a requirement under S.122 of the Income Tax Ordinance, 2001 and Assessing Officer could continue and proceed on the basis of deemed assessment order before him but obviously if there was any definite information available---Amendment could not be made without giving a chance to the assessee of being heard as is provided in jurisprudence---Principles of natural justice comes into picture with full force and the maxim `audi alteram partem' needs to be read as a part and parcel of such proceedings---Such is not only a known and settled requirement of jurisprudence, but has also specifically been added as S.122(9) of the Income Tax Ordinance, 2001---New law definitely appears to be as more comprehensive but not without the strings which had already been prescribed by the earlier decisions of the higher and superior Courts while defining the term `definite information'---Amendment being subject to S.122(5) of the Income Tax Ordinance, 2001, chain of judgments by the Supreme Court and other subordinate Courts in Pakistan are definitely attracted.
(h) Income-tax---
--Definite information---Explanation---Tangible information and such proof that leads to the `reason to believe' could only be considered as a `definite information'---Any estimate, gossip, personal whims or surmises could not be termed as the `definite information'---Prefix of definite with suffix of information makes the term more strong---Any information which creates doubts or provides reason to suspect that the income has been concealed does not form a part of the term definite information.
(i) Income Tax Ordinance (XLIX of 2001)---
----S. 120---Assessment---Application of mind, due consideration of the facts, opinion and scrutiny of the documents---Acknowledgement slip of the filing of return had been declared to be as an assessment order duly assessed by the Commissioner of Income Tax under S.120 of the Income Tax Ordinance, 2001----Concept of application of mind, due consideration of the facts, opinion and scrutiny of the documents enclosed had totally vanished from the assessment proceedings---Such new deemed assessment order did not have any application of mind from the Assessing Officer's side.
(j) Income Tax Ordinance (XLIX of 2001)---
----S. 122---Income Tax Ordinance (XXXI of 1979), Ss.62, 63, 59 & 59A---Assessment---Deemed assessment order could not be equated with the assessment framed earlier under Ss.62, 63, 59 or 59A etc. of the Income Tax Ordinance, 1979.
(k) Income Tax Ordinance (XXXI of 1979)---
----S.62---Income Tax Ordinance (XLIX of 2001), S.120---Assessment on production of accounts, evidence etc.---Sanctity attached to the assessment order under the provisions of Income Tax Ordinance, 1979 could not be equated with or extended to the deemed assessment order under the provisions of the Income Tax Ordinance, 2001.
(l) Income Tax Ordinance (XLIX of 2001)---
----S. 122(5)---Income Tax Ordinance (XXXI of 1979), S. 65---Unlike
S.65 of the Income Tax Ordinance, 1979 which was also in respect of re-assessment of the proceedings, the new provision of S.122 (1) and S.122(5) of the Income Tax Ordinance, 2001 had some different parameters.
(m) Income Tax Ordinance (XLIX of 2001)---
----S. 122---Amendment of assessment---Claim that mentioning of S.122 alone on the notice was enough to cover all the probabilities like concealment of income as well as erroneous assessment etc. was not correct.
(n) Income Tax Ordinance (XLIX of 2001)---
----S. 122(1)---Amendment of assessment---Section 122(1) of the Income Tax Ordinance, 2001 is the mother provision while all other subsections are helping and the same determine the fitness of the amendment of the assessment to be made under S.122(1) of the Income Tax Ordinance, 2001.
(o) Income Tax Ordinance. (XLIX of 2001)---
----S. 122(5) & (5A)---Amendment of assessment---Issuance of notice without mentioning exact provision of law---Validity---Assessing Officer had not bothered to mention the subsection in its notice---Even if one was confident that S.122 of the Income Tax Ordinance, 2001 could be enough for acquiring jurisdiction, non-mentioning of the other provision in terms of subsection (5) or (5A) was fatal as the parameters for each of the said provisions were entirely different from the other---Besides, erroneousness of the assessment for determining prejudice to the interest of revenue in a deemed assessment order shall also need a good deal of dilation and discussion---Jurisdiction could only be acquired by Taxation Officer after receiving of an information from audit department by issuance of a notice under S.122(5) of the Income Tax Ordinance, 2001--Said notice having not properly been issued for acquiring jurisdiction, one could not agree with the department that the subsequent proceedings were justified---Notice issued under S.122 of the Income Tax Ordinance, 2001 was without jurisdiction having not mentioned the exact provision of law---Subsequent proceedings being based on all illegal notice would crumble to ground and cancelled by the Appellate Tribunal.
2006 PTD 673 rel.
Atif Waheed for Appellant.
Sardar Taj Muhammad, D.R. for Respondent.
ORDER
KHAWAJA FAROOQ SAEED (CHAIRPERSON).---This appeal on behalf of the tax payer is on various issues. The same are decided in the subsequent paras of the order.
2. The first issue is with regard to issuance of notice under section 122 without mentioning of subsection.
3. The A.R. says that under new set of laws the language of the section is different from the earlier law wherein para-materia section was 65. The provision of section 122 starts with subsection (1) which says that an assessment can be modified as and when the Commissioner considers fit. All other subsections of section 122 prescribe the fitness for said modification of the order. The fitness for reopening subsequently as subject to availability of `definite information' as is obtaining in subsection (5). All provisions are separate and have laid out criteria for determining the fitness for the modification of the assessment. The A.R. has produced before me a judgment of the ITAT also wherein this issue has been discussed, however, not in detail but the ultimate decision is that section 122 being an issue of jurisdiction, subsections provided therein must be mentioned in the notice for giving a fair chance for reply.
4. In principle I agree with the said judgment that cancellation or reopening for modification of an assessment comes as a disregard to the declaration of an assessee. One, therefore, needs to be very clear in its mind as to why he .wants to modify the assessment. The factual basis as well as the provision of law, must, therefore, be indicated for acquiring proper jurisdiction. It is true that there are cases in favour of the above proposition as well as against the same. However, one can agree on the basic argument that the provisions in terms of sections 65 and 66A of the Income Tax Ordinance, 1979 are different in their application than that of section 122 of the Income Tax Ordinance, 2001. Under the new scheme of law the two sections have been brought under one caption but, however, separate subsections have been provided to determine the fitness of re-assessment. For further elaboration and discussion, one would require reproduction of the relevant section that speaks as follows:--
"Section 122. Amendment of assessments.---(1) Subject to this section, the. Commissioner may amend an assessment order treated as issued under section 120 or issued under section 121, [or issued under sections 55, 59A, 62, 63 or 65 of the repealed Ordinance], by making such alterations or additions as the Commissioner considers necessary.
(2) An assessment order shall only be amended under subsection (1) within five years after the Commissioner has issued or is treated as having issued the assessment .order on the taxpayer.
(3) Where a taxpayer furnishes a revised return under subsection (6) of section 114---
(a) the Commissioner shall be treated as having made an amended assessment of the taxable income and tax payable thereon as set out in the revised return; and
(b) the taxpayer's revised return shall be taken for all purposes of this Ordinance to be an amended assessment order issued to the taxpayer by the Commissioner on the day on which the revised return was furnished.
(4) Where an assessment order (hereinafter referred to as the "original assessment") has been amended under subsection (1) or (3), the Commissioner may further amend, [as many times as may be necessary], the original assessment within the later of--
(a) five years after the Commissioner has issued or is treated as having issued the original assessment order to-the taxpayer; or
(b) one pear after the Commissioner has issued or is treated as having issued the amended assessment order to the taxpayer.
(4A) In respect of an assessment made under the repealed Ordinance, nothing contained in subsection (2) or, as the case may be subsection (4) shall be so construed as to have extended or curtailed the time limit specified in section 65 of the aforesaid Ordinance in respect of an assessment order passed under that section and the time-limit specified in that section shall apply accordingly.
(5) An assessment order in respect of a tax year, or an assessment year, shall only be amended under subsection (1) and an amended assessment for that year shall only be further amended under subsection (4) where, on the basis of definite information acquired from an audit or otherwise, the Commissioner is satisfied that---
(i) any income chargeable to tax- has escaped assessment; or
(ii) total income has been under-assessed at too low a rate, or has been the subject of excessive relief or refund; or
(5A) Subject to subsection (9), the Commissioner may amend, or further amend, an assessment order, if he considers that the assessment order is erroneous in so far it is prejudicial to the interest of revenue.
(5B) Any amended assessment order under subsection (5A) may be passed within the time-limit specified in subsection (2) or subsection (4), as the case may be.
(6) As soon as possible after making an amended assessment under subsection (1), subsection (4) or subsection (5A), the Commissioner shall issue an amended assessment order to the taxpayer stating-
(a) the amended taxable income of the taxpayer
(b) the amended amount of tax due;
(c) the amount of tax paid, if any; and
(d) the time, place, and manner of appealing the amended assessment.
(7) An amended assessment order shall be treated in all respects as an assessment order for the purposes of this Ordinance, other than for the purposes of subsection (1).
(8) For the purposes of this section, "definite information" includes information on sales or purchases of any goods made by the taxpayer, (receipts of the taxpayer from services rendered or any other receipts that may be chargeable to tax under this Ordinance,) and on the acquisition, possession or disposal of any money, asset, valuable article or investment made or expenditure incurred by the taxpayer.
(9) No assessment shall be amended, or further amended, under this section unless the taxpayer, has been provided with an opportunity of being heard.
5. Above provisions of law starts with the language "subject to this section". The language thus restricts all further proceedings for amendment of an assessment which means it can only be amended if they are covered by the provisions of this section. So before going further one C should keep in mind that amendment of assessment for which this section has .been prescribed cannot be made if the requirements and qualifications prescribed in this section are not completed before making such amendment of the assessment.
6. The other part of the provision is as follows:--
"The Commissioner may amend an assessment order treating as issued under section 120 or issued under section 121, or issued under section 59, 59A, 62, 63 or 65 of the Repealed Ordinance."
The provision grants jurisdiction to the Commissioner for amending an assessment which is either treated as issued or is issued under the mentioned provisions of the new Income Tax Ordinance, 2001 as well as the erstwhile Income Tax Ordinance, 1979. The section further provides "by making such alterations or additions as the Commissioner considers necessary". Through this part of section 122(1) the Commissioner has been allowed to make such alterations or additions as are required obviously for the reason of the information and circumstances before him. The comment made by the above provision in terms of information and circumstances with reference to the first part of the section which says subject to this section, creates an embargo on the Commissioner. So the term used as "Commissioner considers necessary" in the above provision is obviously subject to the section which is under discussion.
The parameters have been prescribed in section 122(2) (3), (4), (4A), (5), (5A), (5B), (6), (7); (8) and (9). All these parameters are relevant to the amendment. For example subsection (2) provides for a period during which such amendment can be made in one particular situation and subsection (3) prescribes the limitation period in another situation. Similarly subsection (4) provides for limitation in case of multiple amendments of an assessment in certain situations while section (4A) also deals with the limitation but in respect of the assessment finalized under the repealed Income Tax Ordinance, 1979. Since subsections (5) and (5A) are relevant to the issue before us detailed dilation of the two subsections would be required.
7. Following the above discussion one can mention with confidence that amendment of the assessment is subject to the provisions of subsections (5) and (5A) as well as the other provisions ofthis section detailed above subsection (5) provides for an embargo on the Assessing Officer that he can only amend an assessment under subsection (1) or may further amend an assessment under subsection (4) above if he has in his custody a definite information that any income of the assessee has (a) escaped assessment, (b) his income has been under assessed or has been assessed at too low a rate or has been subject to excessive relief or refund or if the income has been misclassified.
8. The accumulated reading gives the impression that one can go for amendment of an assessment if he has Definite Information with regard to the aforementioned various requirements. Needless to .mention here that it is an assessed income by virtue of deemed assessment which the Commissioner/Taxation Officer is planning to amend. The legislature while drafting this new law has used the term amendment of assessment as against reopening of assessment under section 65 of the Income Tax Ordinance, 1979 (Repealed).
9. So far as parameters for reopening of assessments are concerned they are exactly the same as are mentioned in section 65 of the erstwhile Income Tax Ordinance, 1979. The language also more or less the same except for the change in the connotations.
10. In the present law it is amendment of assessments while in the old law it was re-opening of the assessment and consequent assessment under the provisions of sections 62 and 63 etc. as the case may be of the Income Tax Ordinance, 1979. Present law, therefore, appears to be with a wider scope as the Commissioner would be simultaneously entitled to alter or amend the assessment which was not possible under section 65 of the old law. As already mentioned there the assessment later was again to be finalized after issuance of a notice under section 61 either under section 62 or 63 or any other provision applicable in the circumstances of the case. In the present scheme of law the Commissioner is empowered to make alteration or additions which he considers necessary. For this purpose he is not required to invoke the other provisions of Income Tax Ordinance, 2001. Furthermore, under Income Tax Ordinance, 1979 in section 65 the assessee was required to file fresh return in compliance to the notice issued under the said section which again is not a requirement under section 122 and the Assessing Officer can continue and proceed on the basis of the deemed assessment order before him but obviously if there is any definite information available. One can add for the guidelines of all the concerned that this amendment cannot be made without giving a chance to the assessee of being heard as is provided in the law of jurisprudence. The principle of natural justice comes into picture, with full force and the maxim `audi aletram partem' needs to be read as a part and parcel of these proceedings. This is not only a known and settled requirement of jurisprudence, but has also specifically been added as section 122(9). The new law, therefore, definitely appears to be as more comprehensive but not without the strings which have already been prescribed by the earlier decisions of the higher and superior Courts while defining the term `definite information'. The amendment being subject to section 122(5). The chain of judgments by the Supreme Court and other subordinate Courts in Pakistan are definitely attracted.
11. In the present case the assessee was found having suppressed the gross receipt. The under declaration of receipts was established as the assessee had declared inaccurate particulars of income. The Taxation Officer, therefore, issued a notice under section 122 showing the intention of amendment of assessment. The A.R. in his reply said that there was no suppression and the receipts he declared were inclusive of the gross profit on account of so-called suppressed sales, hence notice should be withdrawn. The Taxation Officer did not accept assessee's version and after rejecting assessee's claim that his declaration was inclusive of the gross profit of the suppressed sales made the assessment. The D.R. challenged the order on issuance of notice under section 12 without making mention of any subsection but, however, failed before the first appellate authority. He brought our attention to the subsection of section 122(5) and said that it is the said subsection which could have been invoked in this case. Non-mentioning of subsection the proceedings initiated under section 122 becomes illegal do the face of it. He also said that there was no definite information available with the Taxation Officer hence reopening even otherwise is illegal.
12. So far as assessee's second claim is concerned I would like to dispose of the same first. I have already in my earlier discussion agreed with the A.R. to the extent of application of the earlier judgments. In this regard tangible information and such proof that leads to the `reason to believe' can only be considered as a `definite information'. Any estimate, gossip, personal whims or surmises cannot be termed as the definite information. The prefix of definite with suffix- of information makes the term more strong. Any information which creates doubts or provides reason to suspect that the income has been concealed does not form a part of the term definite information. If we apply the same on the facts of this case the situation does create a very strong doubt. However, the assessee's reply also is valid. His claim that the repair receipts were inclusive of the amount of fixation and attachments, is supported by the invoices. He has shown some of them to me. Major portion of the same comprises of the parts while portion that relates to the services is nominal. The invoices were confronted to the learned D.R. as well who after inspection agreed that the situation is the same. He, however, objected that said .invoices have not been produced at the subordinate stage. It can, therefore, be an afterthought or a subsequent preparation. Facts does not support the departmental apprehension. These invoices and bills and subsequent receipts are in respect of the same departments the names of whom have already been detailed in the assessment order at page 3. On my direction the A.R. produced documents in respect of supply and services made to SNGPL Islamabad which is almost 50% of the total receipt statedly concealed by the assessee. As already mentioned said receipts comprised of the amount of parts mostly and the services figures are nominal. If we take all the factors in view, it becomes obvious that if the receipts shown by the assessee are less than what the department claims to be as the correct figure, the explanation of the assessee is not faulty. However, even if the benefit of doubt of non-disclosure of the total figure is given to the department the assessee's explanation does satisfy the requirements of the accounting calculations. For detailed understanding it is worthwhile to reproduce what is the claim of the assessee and how the same has been understood by the department. The declaration of the assessee is as follows:--
| Other Business Revenue/Receipts etc. | Rs.10,19,374 |
| Profit and Loss Expenses | Rs.8,78,785 |
| Net Profit | Rs. 1,40,589 |
| Adjustments, including net profit/(Loss) | |
| Attributable to sales, receipts etc. subject | |
| To final taxation if any | Rs. 64,866 |
| Balance income | Rs.75,723 |
13. The information which the department received was that the total receipts of the assessee were Rs.24,37,094. However, after receipt of the notice the assessee bifurcated his receipts mentioned as under:---
| Receipts (Labour Charges). | Rs.4,87,419 |
| Pump Receipts | Rs.61,630 |
| Total Receipts | Rs.5,49,049 |
| Add: Receipts (Final Taxation) | |
| Commission | Rs.4,46,375 |
| Contracts | Rs.23, 950 |
| (10) Total | Rs.10,19,374 |
| (12) Profit and Loss Expenses: | Rs.8,78,785 |
| (13) Net Profit | Rs.1,400,589 |
| (14) Adjustment (Final Taxation) | Rs.64,866 |
| (15) Balance Income | Rs.75,723 |
14. In the above figure of Rs.4,87,419 was stated to be as the G.P. on the total receipts of Rs.24,37,094. This is what the D.R. says was a subsequent made up story while the A.R. claims that even his first declaration was on the basis of the fact that the sale and supply is inclusive of parts. The assessee's gross receipt was not more than 20% of the said Rs.24,37094 being Rs.4,87,419 and was accordingly declared. Reverting back to the discussion on the basis of above charts the situation is fifty, fifty. The doubt in favour of the department as well as the assessee's claim both technically are full of doubt. The net profit declared at Rs.1,40,579 after claim of profit and loss at Rs.8,78,785, however, tilts the doubt more in favour of the revenue, hence the factor with regard to the definite information being more towards the reason to believe in favour of the revenue, I consider the reopening as valid and justified. This, however, is not the only factor for my agreement with the department. There is a marked, difference in the assessments which were framed earlier and the deemed assessment of income under the Income Tax Ordinance, 2001. The .fact of the day is that acknowledgment slip of the filing of return has been declared to be as an assessment order duly assessed by the Commissioner of Income Tax under section 120. The concept of application of mind, due consideration of the facts, opinion I and scrutiny of the documents enclosed has totally vanished from the assessment proceedings. This new deemed assessment order does not have any application of mind from the Assessing Officer's side. In fact Assessing Officer has nothing to do with this assessment and all that has been supplied or furnished by the assessee as per scheme of law is the assessment order. For all practical purposes the Assessing Officer in this case is the assessee insert and the department rule upon the sub-deemed assessment is only that of a post office. In such like situation this deemed assessment order cannot be equated with the assessments framed earlier under sections 62, 63, 59 or 59A etc. of the Income Tax Ordinance, 1979. All judgments given by this forum as well a by the superior Courts have been announced having in mind that while making an assessment by the Assessing Officer under the erstwhile Income Tax Ordinance, 1979, the application of mind was the first condition. The assessment if framed under section 62 or 63 was after issuance of a notice under section 61 but it definitely was after proper application of mind. The mental exercise for those assessments under Income Tax Ordinance; 1979 may be a little or with full concentration but here in the present assessment he does, not have any role to play. Obviously the sanctity attached to the assessment order under the provisions of Income Tax Ordinance, 1979 cannot be equated or extended to the deemed assessment order under the provisions of .the Income 'Tax Ordinance, 2001. The tax payers, appear to be as very happy with this development as a result which of whatever they declare is accepted. But, however, for the mis-doers or wrong doers this can prove to be as a trap. An assessment which does not have any sanctity in the circumstances where one gets more room for concealing either income or particulars of his income cannot be considered as a blanket chit. The Federal Board of Revenue has shown a good deal of confidence in the tax payers which, however, shall definitely prove as trap for those who believe in providing. incorrect or wrong informations and this is obviously for .the reason that the deemed assessment order can easily be modified and the definite information though having the same meanings can .now have more tilt towards the revenue than to the tax payers. However, the matter does not end here. New legislation has come out with some improvement. It has also filled many lacunas. Unlike section 65 which was also in respect of re-assessment of the proceedings, the new provision of section 122(1) and section 122(5) have some different parameters. The D.R. claims that mentioning of section 122 alone is enough to cover all the probabilities like concealment of income as well as erroneous assessment etc does not sound correct. If one goes through M the Income Tax Ordinance, 2001, the section which has been introduced for amendment of the assessment after section-121 is section 121(1). It is under this section that Commissioner has been allowed to amend an already existing deemed assessment. It means that for the assessment in the scheme of Income Tax the section after section 121 is section 122(1) and section 9122 is only the title. Under the said scheme of law the argument of the D.R. that section 122 would cover all its subsections does not attract our mind. This Tribunal has already given a judgment which has been produced by the A.R. of the assessee. It has been reported as 2006 PTD 673, the relevant portion wherefrom is as follows:--
"(2) The learned A.R. of the assessee agitated against the action of the learned CIT(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 of 2005, dated 23-10-2005 issued by the DCIT Circle-5, Special Zone, Lahore. Caption of this notice is notice under section 122 of the Income Tax Ordinance, 2001 Messrs Legler Denim Ltd., Lahore assessment year 2001-2002. 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. "
15. In most of the cases the Courts try to implement the provisions of law and avoid declaring it as redundant. It is obviously under the spirit that laws are always made for implementation and not to just remain as part of the statute without being of any benefit to the public at large. However, this Tribunal has in many cases not allowed issuance of notices in slipshod manner without indicating the actual reason of issuance thereof. The Hon'ble Lahore High Court has even gone to hold that issuance of a notice under section 65 without indicating the reason of issuance of notice in terms of subsections (1), (2) or (3) or (a), (b) or (c) of the said section to be as illegal. In this case notice under section 62 is statedly issued which provision does not exist in the scheme of new law. There is a provision under the title "amendment of the assessment" and the same is 122(1) and all other provisions are subject to the said section 122. In the earlier part of our discussion we .have already held that section 122(1) is the mother provision while all other subsections are N helping and the same determine the fitness of the amendment of the assessment to be made under section 122(1). The Assessing Officer in this case has not even bothered to mention the subsection in its notice. Hence even if one is confident that section 122 could be enough for acquiring jurisdiction non-mentioning of the other provision in terms of subsection (5) or subsection (5A) is fatal as the parameters for each of the said provisions are entirely different from the other. Besides, erroneousness of the assessment for determining prejudice to the interest of revenue in a deemed assessment order shall also need a good deal of dilation and discussion. There are certain more questions which would require answer in a case like this. The Assessing Officer has proceeded to make the assessment under section 120. The provision of section 122 which has been titled as assessments and as a sub title as an amendment of assessments, provides full authority for making an assessment. These provisions in fact are para meteria to the assessments under section 62 as well as 63 in addition to 65 and 66(A) etc. Section 120 does not come into picture for amendment of an assessment. Its application is only upto the deemed assessment order and has no extension beyond the said language.
16. The upshot of the above discussion therefore is obvious. The jurisdiction in this case could only be acquired by the Taxation Officer after receiving of an information from the audit department by issuance of a notice under section 122(5). Since said notice have not properly been issued for acquiring jurisdiction over this case, one cannot agree with the department that the subsequent proceedings are justified.
17. On the basis of discussion as above and the judgment of the ITAT Lahore, I hold the notice .issued under section 122-to be as without jurisdiction having not mentioned the exact provision of law. The subsequent proceedings also being based on an illegal notice thus would crumble to ground hence are hereby accordingly cancelled.
C.M.A./130/Tax (Trib.)Appeal accepted.