I.T.As. Nos.283-IB, 174-IB, 180-IB, 188-IB, 189-IB, 190-IB, 192-TB, 193-IB, 204-IB VS I.T.As. Nos.283-IB, 174-IB, 180-IB, 188-IB, 189-IB, 190-IB, 192-TB, 193-IB, 204-IB, 2007 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 803 (2006)

Per Khawaja Farooq Saeed, Chairperson-

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

----S.64---General Clause Act (X of 1897), S.24-A---Limitation for assessment---Service of assessment order---Annulment of assessment order by the First Appellate Authority by holding that limitation provided under S.64 of the Income Tax Ordinance, 1979 included service up to the said 30th June---Validity---Provision of S.64 of the Income-tax Ordinance, 1979 applied on the process of assessment which stood completed on making an entry in the relevant registers of the department on the date of passing---If entry in the relevant registers was beyond the provision of S.64 only then the case would become barred by time---If the same stood completed before two years from the end of the assessment year in which the return was first filed, its service thereafter would not make the case as barred by time---Decision given by the First Appellate Authority was unjustified.

2005 PTD (Trib.) 960 per incuriam.

1966 PTD 40 rel.

1991 PTD (Trib.) 26; 1998 PTCL CL 372 and 1974 (93) ITR p.215 distinguished.

ITR 1960 Supreme Court 1313; 1966 PTD 40; M.S. Shah Jewana Textile Mills Limited v. Income Tax Appellate Tribunal 2003 PTD 2023; Multiline Associates v. Ardeshir Cowasjee PLD 1995 SC 423; (1977) 75 Tax 108 (Trib.); Jowwitt's Dictionary of English Law, Second Edition; Bourier's Law Dictionary; Bellentine's Law Dictionary, Third Edition and Law Dictionary by Max Radin and Words and Phrses First Edn. By D. Varagarajan ref.

(b) Judgment---

----"Per incuriam"---Definition---Decision delivered in ignorance or forgetfulness of some statutory provisions or of some authority binding on the Court is decision given per incuriam.

Jowwitt's Dictionary of English Law, Second Edition; Bourier's Law Dictionary; Bellentine's Law Dictionary, Third Edition and Law Dictionary by Max Radin rel.

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

----S.64---Limitation for assessment---Term "assessed' and "communicated"---Term "assessed" as used in S.64 of Income Tax Ordinance, 1979 could not be equated with the term "communicated".

(d) Precedent---

----Binding judgment---Where there was an earlier binding judgment in field which was never disturbed by a larger bench of the Appellate Tribunal or by the Superior Courts in terms of High Court as well as the Supreme Court of Pakistan, Court must ignore the subsequent judgment given in ignorance of the earlier ones.

(e) Judgment---

----Per incuriam---Bench of higher strength or Court having a superior authority need not hold an earlier judgment to be as per incurriam as it had no binding force on them---Concept of per incuriam only come to surface when ratio decidendi of a bench of equal strength appears to have been ignored by the other bench of the similar strength.

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

----S.64---Limitation for assessment---Communication and assessment---Communication to the parties was a ministerial act and it had got nothing to do with the process and procedure of assessment.

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

----S.64---Limitation for assessment---Process of assessment---Process of service---Effectiveness of assessment order---Passing of an order obviously would not become effective unless the parties concerned come to know of the decision therein---Generally and more particularly in the higher Courts the judgments were announced immediately after the hearing and the same became effective there and then---In income tax proceedings since the concept of announcing the judgment did not exist at all, obviously it was after communication of the order that the same became effective for all purposes---Without communication in terms of service of the said order it was not only the assessee who could not be asked to pay for the consequent responsibilities but the department also could not implement the same in terms of recovery of taxes etc., unless assessee received the order as well as demand notice---Order was complete till the day it was communicated---One view could be that L was not effective or that it could not be implemented but to say that them was no order prior to the same was not a correct interpretation---Keeping the order pending for administrative reasons or other ministerial bottleneck would. not amount to non-completion of the order---Service was entirely a separate process and procedure than assessment proceedings and was consequent to an assessment order---Such two could not be mixed so as to say that the process of assessment had not completed till the order was served---Point was only that the order did not become operative but it did not mean that it was not in existence.

Per Syed Aqeel Zafar ul Hasan, Accountant Member.---

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

----S.64---Limitation for assessment---Term `making' and `finalization'--Connotations---Two terms namely, `making' and `finalization' carry every different connotations---Statute speaks of 'making' as opposed to `finalization' of an assessment.

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

----S.64---Limitation for assessment---Ineffective order---Legality of---Contention that unless a tax was communicated to an assessee, it was not effective (meaning evidently that it was not recoverable) also favours an assessee but did not undermine the legality of an assessment order which did not lead to the conclusion drawn that if, for delay in communication, an order remains ineffective same was therefore no order at all.

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

----S. 64---Limitation for assessment---Terms "finalized" and "communicated"---Perception that S.64 of the Income Tax Ordinance, 1979 says that the assessment should be `finalized' and `communicated' was at variance with law---Neither of said two terms had been employed/ mentioned in the statute.

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

----S.64---Limitation for assessment---Order became effective after service---View that order became effective only after service had not evidently negated the concept of `making' an otherwise valid order.

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

----S.64---Limitation for assessment---Judicial act i.e. of passing an order was different from communications thereof which was a ministerial act---Order made within a given time frame, could not be said to be time-barred merely because the ministerial act of service was delayed.

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

----Ss.64 & 62---Limitation for assessment---General Clauses Act (X of 1897), S.24-A---Section 24-A, of the General Clause Act, 1897 neither restricts the legality of an assessment on the basis of date of service thereof nor had it otherwise been shown that the power to make an order under S.62 of the Income Tax Ordinance, 1979 had been exercised unreasonably, unfairly, unjustly or was otherwise not for advancing the purpose of enactment of the Income Tax Ordinance, 1979.

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

----Ss.64 & 62---Limitation for assessment---Service of an assessment order---Neither S.62 nor S.64 of the Income Tax Ordinance, 1979 required service of an assessment order within any specific time frame and only speak of an assessment by an order in writing made within two years from the end of the assessment year in which the income was first assessable.

1991 PTD (Trib.) 26; (1998) PTCL CL 372 and 1974 (93) ITR 215 distinguished.

Saeed Ullah Khan, D.R. for Appellant (in all I.T.As.).

Hafiz M. Idrees for Respondent (in I.T.As. Nos.283/IB, 343/IB of 2006).

Saeed Anwar Kazmi, I.T.P. for Respondent (in I.T.As. Nos.174/IB, 271/IB of 2006).

Asad Azam, F.C.A for Respondent (in I.T.A. No.180/IB of 2006).

Nemo for Respondents (in I.T.As. Nos.188/IB, 189/16, 204/IB, 205/IB, 215/IB. 222/IB, 223/IB, 225/IB, 227/IB, 235/IB, 237/IB, 267/IB, 268/IB, 272/IB, 285/IB, 287/IB, 288/IB, 291/IB, 303/IB, 307/IB, 314/IB, 318/IB, 321/IB, 331/IB to 334/IB, 336/IB, 339/IB, 342/IB, 346/IB, 349/IB and 350/IB of 2006).

Zahid Hussain, A.C.M.A. for Respondents (in I.T.As. Nos.190/TB. 216/1B, 228/IB, 304/IB, of 2006).

Sohail Sabir, I.T.P. For Respondents (in I.T.As. Nos.192/IB, 193/IB, 363/TB, 364/IB of 2006).

Kaleem Ashraf, A.C.A. for Respondents (in I.T.As. Nos.206/IB to 214/IB, 226/IB, 240/IB, 269/IB, 315/IB to 317/IB, 327/IB and 389/IB or 2006).

Aurangzeb, I.T.P. for Respondent (in I.T.As. Nos.217/IB, 218/IB, 273/IB, 289/IB, 386/IB of 2006).

Saeed Hassan Khan, Accountant for Respondent (in I.T.A. No.219/TB of 2006).

Aamer Ehsan, I.T.P. for Respondent (in I.T.A. No.220/IB of 2006).

Jehangir, I.T.P. for Respondent (in I.T.A. No.221/IB of 2006).

Abdul Hafeez, I.T.P. for Respondents (in I.T.A. No.224/IB of 2006).

Shakeel Ahmed, I.T.P. for Respondents (in I.T.As. Nos.236/IB, 242/IB, 243/IB of 2006).

S.A. Kazmi, I.T.P. for Respondents (in I.T.As. Nos.238/IB, 345/IB of 2006).

Zahid Masood Chatha for Respondents (in I.T.As. Nos.239/IB and 244/IB of 2006).

Waseem Ahmed Siddiqui, F.C.A for Respondents (in I.T.As. Nos.241/IB, 270/IB, 286/IB of 2006).

Farrukh Jamil, A.C.A. for Respondent (in I.T.As. Nos.245/IB, 251/IB to 253/IB, 256/IB to 261/IB, 280/IB to 282/IB, 301/IB, 308/IB, 328/IB, 337/IB, 338/IB 341/IB, 347/IB of 2006).

M. Moyhuddin, I.T.P. for Respondent (in I.T.As. Nos.246/IB to 250/IB, 265/IB, 309/IB, 330/IB, 344/IB of 2006).

Abdul Basil, F.C.A. for Respondent (in I.T.As. Nos.262/IB, 274/IB, 290/IB, 306/IB, 320/IB, 329/IB of 2006).

Zafar Iqbal, Company Secretary (in I.T.A. No.264/IB of 2006).

Sajid Ali, I.T.P. for Respondent (in I.T.As. Nos.275/IB, 300/1B of 2006)

Amir Ahmed, I.T.P. for Respondent (in I.T.A. No.276/IB of 2006).

Tahir Razzaq Khan, F.C.A. for Respondent (in I.T.As. Nos.279/IB, 313/IB of 2006).

Jawaid Anwar, F.C.A. for Respondent (in I.T.A. No.284/IB of 2006).

Zubair Ahmed, I.T.P. for Respondent (in I.T.A. No.302/IB of 2006).

Rao Shabbir Ahmed for Respondent (in I.T.A. No.305/IB of 2006).

Azam Mehmood, A.C.A. for Respondent (in I.T.A. No.322/IB of 2006).

Khurram Shahzad, I.T.P. for Respondent (in I.T.A. No.324/IB of 2006).

Waked Shahzad for Respondent (in I.T.A. No.348/IB of 2006).

Shaheed Ahmed, I.T.P. for Respondent (in I.T.A. 362/IB of 2006).

Ahmed Ali for Respondent (in I.T.A. No.469/IB of 2006).

Khalid Mehmood, F.C.A. for Respondent (in I.T.As. Nos.385/IB and 388/IB of 2006).

ORDER

The petitioner in all the cases is the department and the grounds, which are mostly common are against annulment of the assessment orders by holding that limitation provided under section 64 of the repealed Income Tax Ordinance, 1979 includes service upto the said 30th June. In this regard the reliance is on the judgment reported as (2005) 91 Tax 322 (Trib.) and 2005 PTD 960.

The contention of department which, has been reiterated before us is that the limitation provided under section 64 is for making an assessment, which means and includes issuance of a notice concluding of the proceedings as well as finalization of the order in terms its registration in the D.C.R. (demand and collection register). Service of the order in the opinion of the D.R. is not included in the language provided therein. The departmental contention remained that making of an order does not mean communication of the order. Referring section 64 of 'the Income Tax Ordinance, 1979 (now repealed) he said that it provides for the limitation of making an assessment while service of the same is provided under section 85 of the said Ordinance.

2. The D.R. read section 64(1) and section 62 of the repealed Income Tax Ordinance which speak as under:---

"64(1) No assessment under section 59A section 62 or section 63 shall be made after expiration of two years from the end of the assessment year in which the total income was first assessable."

"62. Assessment on production of accounts, evidence etc.---(1) The Deputy Commissioner after considering the evidence or record (including evidence, if any, produced under section 61) and such other evidence as the Deputy Commissioner may require, on specific points, shall, by an order in writing, assess the total income of the assessee and determine the tax payable by him on the basis of such assessment."

He said the plain reading of the above section shows that the limitation for assessment of total income and determination of the tax payable under section 62 of the Income Tax Ordinance, 1979 has been provided in section 64 of the repealed Ordinance. In these cases limitation for completion of assessment under section 62 was to expire after two years from the end of the 30th June before which the return was filed and assessment was thus completed within prescribed limitation. It was argued that section 64 provides limitation for the charging sections 59A, 62 and 63 whereby total income of the assessee is assessed and tax payable is determined, whereas for communication of demand, governing section is 85 which is not charging section. He remarked that the assessee in his arguments filed on 12-11-2005 before the C.I.T.(A) has itself admitted that the demand notice is procedural, which itself speaks of the truth that section 64 only provides limitation for passing order in writing whereas the communication of demand is a procedural matter for which no limitation has been prescribed in section 64 of the Income Tax Ordinance, 1979. Therefore, the order passed by 30-6-2005 and communicated to the assessee after 30-6-2005 is valid and within the language of law.

2A. It remained department's view at all subordinate stages and before us that the word "order of assessment" cannot be construed so as to include the notice of demand as well. The notice of demand does not form part of the assessment order as it is prepared after the assessment order is passed and tax or penalty etc. is found payable by the assessee in consequence of that order. Referring Gauhati High Court in its judgment reported as (1985) 151 ITR 216 it was said that the stage of issuing a notice of demand is a distinct stags and it cannot be contended that demand notice also should be issued within the said period of limitation. The relevant extract of the order is reproduced as under:--

"There is no substance in the contention that not, only the assessment order but the demand notice should also be issued before the expiry of four years from the end of the assessment year in which the income of the assessee was first assessable. Subsection (1) of section 153 of the Act requires an I.T.O. to pass an order of assessment within the period prescribed in the Act.

It does not require that the demand notice should also be issued within that period. The words "order of assessment" cannot be construed as to include a demand notice as well. The demand notice does not form part of the order of assessment as is evident from the provisions of S.156 of the Act which says that when any tax, interest, penalty, fine or any other sum is payable in consequence of any order passed under this Act, the I.T.O. shall serve upon the assessee a notice of demand in the prescribed for specifying the sum so payable.

The demand notice is prepared after the assessment order is passed and tax or interest or penalty, etc., is found payable by the assessee in consequence of the order. The stage of issuing the notice of demand is therefore, a distinct stage. There is, therefore, no substance in the contention that the demand notice also should be issued within the period of four years from the end of assessment year in question."

The department further referred the honourable Calcutta High Court and judgment reported as (1978) 113 ITR 380 in the case of Commissioner of Income Tax West Bengal-I Calcutta v. Karnani Industrial Bank Ltd. wherein it is held that though an assessment has to be completed within four years from the completion of assessment year, a notice of demand can be validly issued even after that period as there is no statutory limit for the issue of notice of demand. The honourable Court held that:

"But the date of-communication of the order cannot be the date of making the order because communication presupposes the determination of the thing to be communicated. From the point of view of the taxability or liability to pay tax on the part of the assessee, the date of communication may be the most effective date. An order to be communicated must be supposed the existence of an order and the existence of the order is possible when the Income Tax Officer has made that order. From this point of view of the Income Tax Officer, he has discharged the statutory obligation to assessee if he makes an order of assessment within 4 years after the expiry of the assessment year. The statute does not say that the Income Tax Officer must communicate the order of assessment within 4 years after expiry of the assessment year"

It was further held by the Court that:---

"Though an assessment has to be completed within 4 years from the completion of assessment year, a notice of demand be validly issued even after that period. The right to appeal against the demand arises from the date or service of 2nd notice it cannot be held that the assessee's right is being prejudiced in any way"

Summarizing the above argument the D.R. said that from the plain reading of sections 59A, 62, 63, 64 and 85 of the Income Tax Ordinance, 1979 and the above referred decisions of the Courts, it is abundantly clear that making of an order cannot be said to include its service also.

3. From assessee's side, the two learned brothers Haft', Muhammad Idrees and Mr. Waseem Ahmed Siddiqui argued the cases. The main arguments were by Mr. Hafiz Muhammad Idrees, which were adopted by all others. Challenging the legality of service after 2 years from the end of the year in which the return was first assessable under section 62 of the repealed Income Tax Ordinance, 1979. Mr. Idrees referred section 62. Going through the contents thereof he said that by using the term no assessment shall be made after expiration of two years; the legislature has controlled the misuse, which earlier was prevailing in respect of such assessments. Regarding rest of the language he added that since there is no dispute with regard to the terminal date the same needs no discussion. The contention is only with regard to whether if upto this date the order has not been served to the assessee or his Authorized Representative, whether it can be legally presumed that the assessment has been finalized? His emphasis remained that finalization of assessment upto a fixed date cannot be determined unless the 'concerned party come to know of the said order. He repeatedly said that it is unethical rather an illegality on the part of the department to not convey the decision finalized by them in terms of the assessment order. Communication, he remarked is the bench mark of an assessment. Its implementation in the terms of payment of tax in consequence, thereof, and further proceedings by way of appeal, rectification, reopening etc. also are attached with them. Reverting back to section 62(1) he said that the assessment does include determination of total income and also taxpayable on the basis of said assessment, hence unless it is passed on to the effected party it is not effective. Further, if it is not effective it is not an order. The A.R. further said that section 64 is not to be read in isolation being continuation of section 55 in which a return of total income is firstly furnished. All subsequent proceedings with regard thereto in terms of sections 56, 57, 61 and 62 are part and parcel of the same. All sections, he remarked are intervening and section 64 provides for the final step, which says that the assessment should be finalized and communicated. Finalization in his opinion cannot be assumed as complete unless it is communicated. Moving on to section 85 he said that the same speaks of service or demand notice, which is prepared in consequence and to implement the determination of income and tax calculated on the basis thereof. The language of section 85 does not provide for the service of order along with the notice of demand. The Demand Notice can separately be served or may also served with the assessment order but the same by no means can cure the illegality caused by non-service of the assessment order before the end of two years provided by section 64. It was pointed out to him that the language used in section 64 is with regard to framing of `an assessment' and it does not speak about the assessment order. He replied that assessment includes determination of income by way of an assessment order. He added that the provisions with regard to the 'filing of appeal strengthens his argument. The law has provided for 30 days for filing of appeal from the date of service of demand notice, which also is very fair. The order even if served earlier than Demand Notice would convey the liability but, however, the lis starts against him from the date of the service of the order of the demand notice and it is from the said date that he is supposed to pay the taxes calculated in consequence to the assessment order. Moving further he said that making of an assessment means service and communication thereof. In his support he has referred 1991 (63) Tax 23 (Trib.) wherein the Honourable Tribunal held that the word "order" is to be equated with the impression, served. In the said case the learned Tribunal has held that passing of an order alone is not enough and that it becomes effective only after service.

The ratio of the judgment speaks as follows:---

"From perusal of the case-law it appears that Chagla, C.J. an eminent Judge, was also called upon to answer the same question in the case reported as (1957) 31 ITR 683 C.I.T. v. D.V. Ghuryue. In that case a notice under section 34(1)(a) of the repealed Income Tax Act was served after 8 years though it was issued before eight years.

The Revenue advanced the same arguments but Chagla, C.J. rejected it with the following observation made at page 686:---

"------In other words the attempt is to equate the expression served" used in section 34 with the expression "issued" used in the proviso to subsection (3). Now we must frankly confess that we find it difficult to understand why legislature has used in the proviso the expression "where a notice under subsection (1) has been issued within the time therein limited". In subsection (1) no time is limited for the issue of notice; time is only limited for the service of notice and therefore it is more appropriate that the expression "issued" used in the proviso to subsection (3) should be equated with the expression served rather than that the expression "served" used in subsection (1) should be equated with the expression "issued" used in the provisos to subsection (3)....

4. The A.R. further referring (1998) PTCL CL 372, the relevant extracts therefrom speak as follows:---

"In case of difference of opinion amongst the Members of the Tribunal the law is same as applicable to a Bench of Judges.---The law with regard to the decision of the Tribunal on a point on which the members thereof differ, is not different than that applicable to a Bench of Judges of any Court for that matter. It provides that if the members of a Bench differ in opinion on any point, the point shall be decided according to the opinion or the majority, if there is a majority. This exercise of formulating Court's order or Tribunal's order in case of difference of opinion, cannot be left to any other individual or a Judge alone but has to be done by all the Judges constituting the Court or Tribunal for that particular case. They must agree with regard to the Court's order irrespective of their individual differences and must decide upon each point in view of the legal provisions made for such a situation. Actually, the view advanced by the learned counsel for the appellants, is loaded with mischief because the parties would be going behind and looking to the tentative views expressed by the Judges while finalizing their own opinion in a case heard by them.

Communication of an order of the Tribunal is a ministerial act.---We may agree with the learned counsel for the appellants that the act of communication of an order of the Tribunal is a ministerial act where the Tribunal has decided upon an order to be so communicated."

5. He then referred 1974 (93) ITR p.215 to say that any order passed by any authority under a statutory provision does not become effective until it is served upon the party affected. The relevant para. of the judgment is as follows:---

"However, once such an order of approval has been passed it should be communicated to the assessee. An order made by an authority under a statutory provision does not become effective and valid until it is served upon the party affected. It is possible for the Commissioner to give his approval to a proposal for retention of books any number of times and for any length of period subject to the limitation in the proviso to subsection (8). Against each order of approval made by the Commissioner the person legally entitled to the books has the statutory right under subsection (10) to apply to the Board for return of the books to him. This statutory right would be completely denied to the party legally entitled to the books if he is not told when the order approval was made and for what length of time. Assuming that the person legally entitled to the books is different from the person from whose custody the books were seized, the income-tax department's obligation will be fully discharged if the approval of the Commissioner is communicated to the person from whose custody the books were seized."

6. He further referred 2005 PTD 60 but since the said judgment has been 'recalled for rectification by the Full Bench constituted for the purpose it obviously no more holds field. He, however, remarked that even the decision, of the Full Bench has held that mere passing of an order is not sufficient and it can only be implemented after it is served upon the parties concerned. He also referred ITR 1960 Supreme Court 1313 saying that Honourable Supreme Court of India in this judgment has in a very clear terms held that "mere" passing of an order of dismissal is not effective unless it is published and communicated to the officer concerned. The relevant extracts therefrom are as follows:---

"The mere passing of an order of dismissal is not effective unless it is published and communicated to the officer concerned. An order of dismissal passed by an appropriate authority and kept on its file without communicating it to the officer concerned or otherwise publishing it does not take effect as from the date on which the order is actually written out by the said authority; such an order can only be effective after it is communicated to the officer concerned or is otherwise published.

Held that the order of dismissal passed against the officer on the 3rd June, 1949 could not be said to have taken effect until he came to know about it on the 28th May, 1951.

(B) Pep---Bishan---Provision (Administration)---That (16 or 2005 BK) section 14(2)---Government Officer---Dismissal of---Suit filed by officer to challenge---Held, officer did not receive reasonable opportunity to make defence."

7. He concluded his argument with the remarks that the service of notice is not something outside the purview of an assessment or making of an assessment so unless the order is known to the assessee it cannot be said that it had been made or the assessment had been completed. He added that it is the assessee who is to be intimated of what has been done by the department in his case so as to further proceed in the matter. Service therefore, has to be within the time prescribed under section 64 and the same is two years from the last date of the assessment year in which the return was assessable. Mr. Waseem Ahmed Siddiqui also started his arguments by referring section 62.

8. He said that it does not only speak of consideration of evidence on record but also produced in compliance to notice under section 61 as or any other evidence required by the D.C.I.T. After considering the said record the D.C.I.T. then by an order in writing will assess the total income of the assessee and consequently determine the tax payable by him on the basis of such assessment. He argued that the provision lays complete procedure and determination of the tax payable is a part of the assessment process. The order in his opinion therefore, includes the determination of income as well as the calculation of tax thereof. He said that the legislature has intentionally used the word payable. It has not intentionally used the word receivable by the department to avoid ambiguity. He then remarked that unless the process is complete and the tax payable has been intimated to the assessee concerned, one cannot say that process has completed. Further referring section 24(a) of the General Clauses Act he said that the power to be exercised by every officer in making of an order as is mentioned in the section 62 is to be exercised justly, fairly and reasonably and for the advancement of the purposes of enactment. Further referring subsection (2) of the said G.C.A. he remarked that non-service of an order as per said subsection is violation of the order itself. He added that an order can only be considered as an order if it served within the period mentioned in section 64. The provision of section 24A is as follows:---

24-A. Exercise of power under enactments.---(1) Where, by or under any enactment, a power to make any order or give any direction is conferred on any authority, office or person such power shall be exercised reasonably, fairly, justly and for the advancement of the purposes of the enactment.

(2) The authority, office or person making any order or issuing any direction under the powers conferred by or under any enactment shall, so far as necessary or appropriate, give reasons for making the order or, as the case may be for issuing the direction and shall provide a copy-of the order or as the case may be, the direction to the person affected prejudicially.

9. Moving on to section 129 he said that the same speaks of the appeal from the date of service of the demand notice which means that the service of order alone is not the condition. Further more section 156 in his opinion concludes the issue. Relying upon the language of section 156(2) he said that there may be an order on record as the same cannot be rectified unless it is served and obviously if it is not served it is not made.

Mr. Mir also advanced similar comments. He adopted the arguments of the two counsel. He added that the practice so far is the same as argued by the department and remarked that an illegality remains incurable even if people keep on accepting the same and do not object to it. He remarked that it is a trite law that consent cannot make an illegal action as legal. The void order or action can always be challenged as and when the aggrieved party considers it wise. In this regard the Courts have allowed to argue even those matters which had not been considered by the subordinate officers. The department of Income Tax under the garb of the completion of assessment has made it a practice to keep the order with them for weeks and sometimes for months which obviously is not only unfair but also illegal and it is for this reason that the legislature wants the term `assessment' to include `communication' as well as in addition to completion of the desk work at their end. He said that since all his arguments have been duly taken care of by his colleagues he would like to avoid repetition but, however, insisted that this Tribunal should also hold the other judgment on the issue decided by the Full Bench to be as per incuriam being on different facts and circumstances as that of this case.

This is where mentioning of the larger bench judgment of ITAT comprising of 3 members including the then president reported as 1966 PTD 40 becomes imperative. The same speaks as follows:---

"The order under section 23(3) will therefore the perfectly legal order if it fulfils the three essential requirements viz., (i) it is in writing; (ii) assesses the total income of the assessee; and (iii) determines the sum payable by him on the basis of such assessment. The present order passed by the Income Tax Officer on the 30th June, 1965, in our view fulfils all these three conditions. When, therefore, it was signed and dated it became an effective order within the meaning of law fot the purpose of section 23(3) and as we have already stated in the requirements of section 34(2) were also duly fulfilled as this order under 23(3) was made before the expiry of the four years from the end of the year in which the income, profits and gains of the assessee were first assessable the last date for the assessment of the income being the 30th June 1965. The date of communication of this order was immaterial so far as its validity within the meaning of these two sections of the Income Tax Act was concerned. The eases relied upon by the appellant's representative in this context do not appear to be relevant or material, as they are relevant and confined to a very limited field and in the final analysis relate to rights of appeals and determination of the period of limitation. These matters are completely distinct from the present issue. We accordingly hold that the order under section 23(3) within the period prescribed by section 34(2) of the Income Tax Act and is a perfectly valid order.

Above judgment had escaped the attention of tribunal at the time of deciding the issue earlier, hence it was necessary to dilate this issue by taking advantage of the same. Further honourable Lahore High Court in its judgment reported as 2003 PTD 2023 in the case of M.S. Shah Jewana Textile Mills Limited v. Income Tax Appellate Tribunal has held that bar of limitation would not attract in matter of collection of revenue and where no such limitation was prescribed, for a Court to fix limitation would amount to legislate. It was further held that in revenue matters failure to raise a demand within stipulated period does not extinguish the levy unless so provided in law. The relevant extract of the judgment is reproduced as under:--

"However, where no such limitation has been prescribed, for a Court it would amount to legislate that any length of time however long is settled or fixed after which a levy would not be enforceable. The law of limitation proceeds on primary concept that it does not extinguish a right. It only bars a remedy. In revenue matters as well, failure to raise to demand within a stipulated period does not extinguish the levy unless so provided in law. All such bars of limitation only restrain the State from enforcing a levy against a citizen without affecting the legality/ chargeability of the levy. The rationale remains the same. It is that a citizen should be clear in his mind that after a certain period even he was liable to pay, the State cannot enforce the levy against him. It would be interesting to guess if a conscientious grandson comes forward to pay the taxes which his grandfather should have paid many years ago but which escaped the eye of the tax collector. Will the State refuse to accept that money which a gentleman offers on the ground that it was due to it? The position of a time-barred debt between two individuals is exactly the same. The parallel are not far-fetched. For the sake of discussion if one goes for the option to lay down some length of time, which is reasonable, and beyond that it would not be reasonable to frame an assessment, the void is to open to be reduced down to a certainty. The different kinds of taxes different lengths of time may be needed to answer the peculiar nature of the levy. Income Tax and Wealth Tax being perennial levies stand separately from Sales Tax, Customs and Excise duty etc., which accrue on the basis of a kind of transaction. Where the respective statutes do not provide of a time limit for enforcement of levy, will a period of three years for the former and two years for the latter be a reasonable period'? Why it should not be vice versa'? Why not there be a shorter or a longer length of time'? None of these questions can possibly be answered if we venture to settle a definite period to declare the charge of levy to be barred by limitation".

The C.I.T.(A) was not justified in relying upon the judgment of Tribunal in his order dated 22-12-2005, which has already been declared to be .a judgment `per incurium' by Tribunal vide his order dated 23-9-2005. It is appropriate to reproduce here an extract from PLD 1995 SC 423 in re: Multiline Associates v. Ardeshir Cowasijee.

"In such circumstances, legal position which emerges is that the second Division Bench of the High Court should not have given finding contrary to the findings of the 1st Division Bench of the same Court on the same point and should have adopted the correct method by making a request for constitution of a larger Bench, if a contrary view had to be taken. In support reference can be made to the cases of the Province of East Pakistan v. Dr. Azizul Islam PLD 1963 SC 296 and Sindheswar Ganguly v. State of West Bengal PLD 1958 SC (Ind.) 337 which is a case of Indian jurisdiction. We, therefore, hold that the earlier judgment of equal Bench in the High Court on the same point is binding upon the second Bench and if a contrary view had to be taken, then request for constitution of larger Bench should have been made."

Income Tax Appellate Tribunal did not lag behind in following this rule and in case (1977) 75 Tax 108 (Trib.) it was laid down as under:---

"The above discussion leaves no scintilla of doubt that in view of the law as laid down by the superior Courts the decision of a Division Bench is binding on the other Division Benches of the same judicial institution. As already held by the Honourable High Court and Honourable Supreme Court it is absolutely necessary to observe this principle in order to avoid the conflicting decisions by the Benches of equal strength which is bound to create complications, confusion and chaos which will result in uncertainty and would be ultimately disastrous to the administration of justice.

Consequently to the above conclusion we are of the considered opinion that mistake of law has taken place whereby the earlier decision of Division Bench of the Tribunal has been ignored and a different view has been taken by the learned Accountant Member sitting in the Division Bench and the learned third Member to whom the difference of opinion was referred. It appears that the learned third Member was not assessed properly on this aspect of the legal decision and consequently a different view was taken whereby the earlier view taken by the Division Bench was dissented and contrary view was taken instead of making reference to the Chairman for constitution of larger bench."

Above binding effect of precedent is subject to certain exceptions. One of those being when the precedent is found to be per incuriam. It is pertinent to mention here the observations of Lord Evershed M.R. that as a general rule the cases in which decision should be held to have been given per incuriam are those decisions delivered in, ignorance or forgetfulness of some inconsistent statutory provisions or of some authority binding on the Court. In different law dictionaries we find the word per incuriam defined as follows:

(1) Jowwitt's Dictionary of English Law---Second Edition---Per incuriam is decision given through want of care or decision which is the result of oversight.

(2) Bourier's Law Dictionary---Decision given through inadvertence.

(3) Bellentine's Law Dictionary---Third Edition--Order passed through lack of care.

(4) Law Dictionary by Max Raclin---Decision given through inadvertence.

(5) Black's Law Dictionary---"Per incuriam (per in-kyoor-ee-am), adj. (Of a judicial decision) wrongly decided, usu., because the Judge or Judges were ill-informed about the applicable law.

"As a general rule the only cases in which decisions should be held to have been given per incuriam are those of decisions given in ignorance or forgetfulness of some inconsistent statutory provision or of some authority binding on the Court concerned, so that in such cases some features of the binding on the Court concerned, so that in such cases some features of the decision or some step in the reasoning on which it is based is found on that account to he demonstrably wrong. This definition is not necessarily exhaustive, but cases not strictly within it which can properly be held to have been decided per incuriam must in our judgment, consistently with the stare. decisis rule which is an essential part of our law, he of the rarest occurrence." Rupert Cross & J.W. Harris, Precedent in English Law 149 (4th Ed. 1991).

6. Words and Phrases First Edition by D. Varagarajan per incuriam---

"A decision would be treated as given per incuriam when it is given in ignorance the term of statute, or of a rule having the force of law. An order passed without reference to the relevant provisions of the Act and without any citation of authority is per incuriam (see Municipal Corporation of Dehli v. Gurnam Kaur AIR 1989 SC 38. In the case of Punjab Land Development and Reclamation Corporation Ltd. v. Presiding Officer (1990) 77 FIR 17; (1990) 3 SCC 682, the Supreme Court explained the principle of per incuriam and held that the Latin expression per incuriam means through inadvertence. A decision can be said to be given per incuriam when a High Court has acted in ignorance of the decision of the Supreme Court."

The decision of' the larger bench of the ITAT reported as 1966 PTD 40 was binding on the Division Bench of' the Tribunal, the judgment of which has been relied upon by the C.I.T.(A) while deciding the instant appeal and C.I.T.(A) before relying upon the decisions of the Double Bench of the ITAT should also have kept in view the decision of a larger bench of the same ITAT.

In the light of above judgment of the superior authorities the order of the Tribunal relied upon by the C.I.T.(A) while deciding the instant case has rightly been declared as a judgment per incuriam by the Tribunal vide its order dated 23-9-2005. Therefore, the C.I.T.(A) has wrongly relied upon this judgment.

The learned Tribunal in its judgment reported as 2005 PTD (Trib.) 1960 on which reliance has been placed by the C.I.T.(A) has itself held that--

"It is to be highlighted that notice of demand and IT-30 form get a legal shape after passing of an order. The sequence of the events is that firstly an order is passed which is followed by issuing a notice of demand, IT-30 forms and copy of the assessment order."

This finding of the Tribunal itself distinguishes the passing of an assessment order and issuance of demand notice and communication of copy of assessment order. Copy of an order can only be communicated when a valid order has already been passed. Section 64 of Income Tax Ordinance, 1979 provide limitation for passing of an assessment order and not for communication of' copy of an assessment order. The learned Tribunal has given two different findings contrary to each other, as in the earlier part of its order it has distinguished passing of an assessment order from its communications, whereas in later of the order it tried to construe the word order to include notice demand as well by holding that unless the order is communicated to the affected party on or before the date prescribed under section 64, the order shall be invalid and affective.

The sum and substance of this discussion is that order of Tribunal itself speaks of the fact that an assessment order passed within prescribed limitation under section 64 and communicated to the assessee later on is a valid order.

The case-law reported as (1974) 93 ITR 215 misquoted in Tribunal's order as (1994) 93 Tax 215 relied upon by it is also distinguishable. In this case books of accounts and documents were seized under section 132(1) beyond the prescribed period and since the documents and books of accounts were in custody of the department, the approval of the Commissioner for keeping the books of accounts seized behind the prescribed limit must be communicated to the assessee so as against this order he was legally entitled to statutory guide under subsection (10) to apply to the board for return of books to him. If such order of the Commissioner is not communicated to the assessee before the completion of prescribed period for which books of accounts were seized his right to apply to the board for return of books of accounts is infringed. Whereas right of appeal against the assessment order passed arises from the date of service of demand notice and the assessee's right cannot be prejudiced in any way. Therefore, the facts and circumstance of the case relied upon by the Tribunal are different from the instant case.

In the light of above discussed facts issues can be identified as under:---

(a) Whether making assessment order, issuance of' demand notice and service of notice or communication of assessment order are different stages or steps before an assessee pays the assessed tax'?

(b) Whether notice of demand forms part of the assessment order or not keeping in view that it is prepared after the assessment order is passed and lax or penalty etc. is found payable by the assessee in consequence of that order? .

(c) Whether in the absence of a prescribed period of limitation any Court or other Government functionary can prescribe the same?

(d) Whether under section 64 any limitation has been provided for communication of notice of demand and copy of assessment order?

(e) What is the status of the judgment relied upon by the learned C.I.T.(A) in the presence of earlier judgments on the subject specially by a full bench reported as 1966 PTD 40?

The summary of' the departmental view is as follows:

(i) Making of assessment order, issue of demand notice and service of notice or communication of assessment order are different stages or steps before an asscssee pays the assessed tax.

(ii) Limitation under section 64 has been provided for assessment order under sections 59A, 62 and 63 whereby Assessing Officer has to assess total income of the assessee and determine the tax payable by him on the basis of such assessment.

(iii) Notice of demand does not form part of the assessment order as it is prepared after the assessment order is passed and tax or penalty etc. is found payable by the assessee in consequence of that order.

(iv) Stage of issuance of notice of demand is a distinct stage and it cannot be contended that demand notice also should be issued within the period of limitation as no limitation has been prescribed for communication of demand notice under section 85 of the Income Tax Ordinance, 1979.

(v) Date of communication of order cannot be the date of making the order because the communication presupposes the existence of the thing for communication.

(vi) The right of appeal against the demand arises from the date of service of demand notice and the assessee's right is not prejudiced in any way.

The result thereof would be obvious. The assessee has been allowed a favour which does not emerge from any law in any manner. As already mentioned in the earlier part of this order, the term `assessed' as used in section 64 has never been equated with the term `communicated'. In this regard the mistake started because of ignorance of a binding judgment in terms of 1966 PTD 40. This is a Full Bench judgment and obviously was binding on the Division Bench and consequently upon the First Appellate Authority. This judgment was not produced before the ITAT and it was in ignorance thereof that two judgments in terms of 2005 PTD (Trib.) 960 were decided. This is where a misconception needs to be corrected in the minds of some of the friends. In a situation like this where there was an earlier binding judgment in field which was never disturbed either by a larger bench of the ITAT or by the superior Courts in terms of High Court as well as the Supreme Court of Pakistan, another Court could-and rather must ignore the subsequent judgment given in ignorance of the earlier ones. To say that even in such circumstances a Court of equal strength cannot hold the said judgment to be a judgment as per incuriam may not be appropriate. In fact a bench of higher strength or Court having a superior authority does not need to hold an earlier judgment to be as per incuriam as it has no binding force on them. The concept of per incuriam only comes to surface when ratio decidendi of' a bench of equal strength appears to have been ignored by the other bench of the similar strength. In these circumstances one cannot say that the earlier judgments do not hold field for the reason of the subsequent judgments which in fact were given in ignorance of the said earlier judgments. However, we have in dozens. of cases held and we still re-emphasize that in the presence of conflicting views the best and the safest course is to request for formation of' a bench of higher strength. This situation, however, obviously does not arise in the present case. The Full Bench judgment of 1966 PTD 40 for all practical purpose is in field and the facts therein are applicable on all fours on the facts of the cases under discussion. There was, therefore, absolutely np reason of its ignorance by the ITAT and in fact it was the said judgment which was binding on ITAT and obviously on the subordinate officers including C.I.T.(A). Had this order been brought to the notice of the First Appellate Authority, we have no doubt in our mind in saying that the situation of the case would have been different. In fact the matter has attained finality so far as the ITAT is concerned after decision by the Full Bench of Lahore in 1.T.A. No.3934/LB of 2002 and I.T.A. No.717/LB of 2002. Though in this case the formation of the bench was to decide a miscellaneous application for rectification, however, the issue therein also is direct and is applicable on these cases as well. The purpose of dilation through this Division Bench once again was felt as the two judgments one by the Full Bench of the Tribunal already mentioned above and the other by the Lahore High Court, escaped the attention again in this Full Bench order having not been brought to the notice of the ITAT. However, the issue has very ably decided by the members therein and the relevant para. is as follows:

"Para. 31.

Further held that the limitation period prescribed under section 64 of the repealed Income Tax Ordinance, 1979 is relevant to making of assessment order and not its communication to the parties within that limit of time."

The above finding is categorical and it has held in unequivocal terms that communication to the parties is a ministerial act and it has got nothing to do with the process and procedure of assessment.

Furthermore, the learned counsel representing bar have relied upon those judgments which say that the order becomes effective after it is served. There is obviously no cavil about the ratio decided therein. The passing of an order obviously does not become effective unless the parties concerned come to know of' the decisions therein. Generally and more particularly in the higher Courts the judgments are announced immediately after the hearing. The same, therefore, become effective there and then. In case of income tax proceedings since this concept of announcing the judgment does not exist at all obviously it is after communication of the order that the same becomes effective for all purposes. Without communication in terms of service of the said order it is not only assessee who cannot be asked to pay for the consequent responsibilities but the department also cannot implement the same in terms of recovery of taxes etc. unless assessee receives the order as well as demand notice. However, it cannot be said that the order was not complete till the day it was communicated. One may say that it is not effective or that it cannot be implemented but to say that there was no order prior to the same is not a correct interpretation. Keeping the order pending for administrative reasons or other ministerial bottleneck would not amount to non-completion of the order. Service is entirely a separate process and procedure than assessment proceedings and is consequent to an assessment order. The two cannot be mixed so as to say that the process of assessment had not completed till the order was served. The fine point only is that the order does not become operative but it does not mean that it was not in existence. In all the referred judgments at no where the Hon'ble Courts have given any finding to say that process of assessment is not complete if the order is not served. On the other hand the judgments referred to by the Department including the Full Bench judgment on which we have our reliance now the issue has categorically been decided and the language is clear and unequivocal. Since we have reproduced the relevant paras in the earlier part, further details would be unnecessary. Not only that we are convinced of the ratio decided by the earlier case but even otherwise we are bound to accept the same and thus ignore the judgments referred by the CIT(Appeais). We also do not hesitate in holding that the order passed by the Tribunal in terms of 2005 PTD (Trib.) 960 should henceforth be considered as inapplicable and not enforceable. The provision of section 64, therefore, applies on the process of assessment which stands completed on making an entry in the relevant registers of the department on the date of passing. If the entry in the relevant registers is beyond the provisions of section 64, only then the case can become barred by time. However, if the same stands completed before two years from the end of the assessment year in which the return was first filed, its service thereafter would not make the case as barred by time. So far as the ethical value of keeping an order pending for reasons other than ministerial bottleneck is concerned, obviously no one can support such an action but one cannot ignore that this is not the only case against the assessee but also against the department as well. The implementation of the order starts from the date of its service; hence delay is equally bad for the department as well.

As a result we hold that the decisions given by the First Appellate Authority in ignorance of a Full Bench judgment and other reasons given above is unjustified and the same is hereby disapproved.

This is where a word of caution is required. Since in all the said cases the First Appellate Authority has decided the same on a law point, the other grounds of petitioners have been ignored. ,Our disagreement on the issue of communication/assessment cannot deprive them of their right of the consideration of the cases on merits. All cases, therefore, are set aside for separate consideration of each one of them on the basis of grounds other than the one which has been decided by us in the aforesaid para.

The result therefore, is obvious, all the departmental appeals stand accepted in the manner and to the extent mentioned hereinabove.

(Sd.)(Sd.)

AQEEL ZAFARUL HASANKHAWAJA FAROOQ SAEED

ACCOUNTANT MEMBERCHAIRPERSON

AQEEL ZAFARUL HASAN (ACCOUNTANT MEMBER).---While fully agreeing with the detailed discourse in the foregoing paras. as very ably recorded by my learned brother the Chairperson Judicial Member, I may add that:---

(i) the date etc. referred to by the learned D.R. though related to a specific Appeal the main arguments and thrust of the case, are para materia and hence fully relevant to all appeals presently under adjudication;

(ii) While the learned D.R. has throughout referred to the 'making' of an order as required under section 64 of the repealed Ordinance, the learned A.R. (Hafiz Muhammad Idris, Advocate) spoke of 'finalization' of an assessment. It may be stated for the record that the two terms namely, 'making' and 'finalization' carry very different connotations. We find that the statute speaks of 'making' as opposed to 'finalization' of an assessment and therefore, the arguments of the learned A.R. must he distinguished in the context provided by the legislature alone.

(iii) The argument for the appellants that appeals rectifications reopening etc. are attached with the bench-mark namely, communication of an order, are undoubtedly correct with the exception perhaps of re-opening assessments. In the filing of appeals, the assessee is clearly at an advantage as his limitation stands duly extended in accordance with the date of service of an order. Indeed in certain cases the presently referred A.R. has availed such extended limitation in certain cases by a number of years on the plea that the assessment orders had either been served very late or were not served at all and the assessees were forced to obtain certified copies of orders for instituting appeals. Similar benefit to contest orders passed by an Assessing Officer also become available to assessees where they find errors requiring rectifications. His argument that unless a tax is communicated to an assessee, it is not effective (meaning evidently that it is not recoverable) also favours an assessee but does not undermine the legality of an assessment order. It does not however, lead to the conclusion drawn by him that if for delay in communication an order remains ineffective and is therefore no order (at all). His further argument in referring to the scheme of interdependency of sections 55, 56, 57, 61 and 62 with section 64 as perceived by him, is certainly at variance with law when he pronounced that (section 64) says that the assessment should be `finalized' and `communicated'. Neither of these two terms have been employed/mentioned in the statute. Since it is trite law that nothing can be read into the law, his premise in this context is to say the least unfounded.

(iv) The reliance placed by the learned A.R. on (1991) 63 Tax 23 (Trib.) is slightly, though crucially different. The Tribunal in holding that an order becomes effective only after service has not evidently negated the concept of `making' an otherwise valid order.

(v) As for the reliance placed on (1991) 63 Tax 23 (Trib.), it is evident that in the case from Indian jurisdiction quoted therein, the facts as well as the law is materially different from the present cases. The delay of eight years is certainly too long a period and could not have attracted any comments other than those recorded by Chagla, C.J. Also the relevant law namely, the Indian Income, Tax Act then in force, used the expression "issue" in relation to a notice which leaves the matter somewhat open ended whereas section 64 limits an "assessment -----made" after expiration of two years.

(vi) The case cited as 1998 PTCL CL 372 in fact differentiates between a judicial act (of passing an order) from communication thereof which is a ministerial act. In the same vein, an order made within a given timeframe, cannot be said to be time-barred merely because the ministerial act of service thereof was delayed. It does not advance the case of any of the appellant assessees. At the same time (1974) 93 ITR 215 is also not applicable to the present cases, as it pertains to communication of reasons for detention of books and not the issue of limitation for finalizing an assessment. The reasons recorded at page 48 of this order also further differentiate the present cases from the order referred to by the A.R.

(vii) As for the arguments of Mr. Waseem Siddiqui, A.R. his reliance on section 24A of the General Clauses Act does not till the balance against the department inasmuch as the said section neither restricts the legality of an assessment on the basis of date of service thereof nor has it otherwise been shown that the power to make an order under section 62 had been exercised unreasonably, unfairly, unjustly or was otherwise not for advancing the purpose of enactment of the Income Tax Ordinance, 1979. The explicit requirements of providing a copy of the orders to the person prejudicially affected have undisputedly been duly met. We have not somehow, been moved by the reference made by him to the rectification regime under section 156 ibid while the provisions of section 129, in any ease, provide limitation for filing an appeal to commence from the date of service of an order of assessment without otherwise affecting the legality of making an order. It is significant in this backdrop to recall that neither section 62 nor section 64 at all require service of an assessment order within any specific time-frame and only speak of an assessment by an order in writing made within two years from the end of the assessment year in which the income was first assessable.

For the foregoing additional reasons. I concur with the findings and hold the orders of the Lahore Bench reported as 2005 PTD (Trib.) 960 to be per incuriam. As a consequence, the correct interpretation of limitation under section 64 is declared to be as per order of the Full Bench reported as 1966 PTD 40.

(Sd.)

AQEEL ZAFARUL HASAN

ACCOUNTANT MEMBER

C.M.A./217/Tax(Trib.)Departmental appeals accepted.