I.T.As. Nos. 322/KB, 323/KB, 324/KB of 2005. VS I.T.As. Nos. 322/KB, 323/KB, 324/KB of 2005.
2007 P T D (Trib.) 830
[Income-tax Appellate Tribunal of Pakistan]
Before Muhammad Ashfaq Baloch, Judicial Member
I.T.As. Nos. 322/KB, 323/KB, 324/KB of 2005.
(a) Interpretation of statutes--- ----Retrospective operation of a statute---Principles---Statute would operate prospectively, unless it expressly provided for its retrospective operation---If on perusal of provision of statute, it could be implied that it was intended that a particular provision should be enforced retrospectively the statute would be so enforced---Substantive laws would ordinarily be enforced prospectively, whereas procedural laws could be enforced with respect to pending cases as well.
(2005) 91 Tax 60 (FTO Pak) ref.
(b) Income Tax Ordinance (XLI of 2001)---
----Ss. 122(5-A) & 131---Amendment of assessment---Appeal to Appellate Tribunal---Assessments for the relevant years under S.62 of Income Tax Ordinance, 1979, were finalized much before insertion of S.122(5-A) of newly promulgated Income Tax Ordinance, 2001---No retrospective effect was given to subsection (5-A) of S.122 of Income Tax Ordinance, 2001---Subsection (5-A) of S.122 of Income Tax Ordinance, 2001, being a substantive law and not procedural law, itsapplication retrospective, was not justified---Impugned orders framed by I.A.C. under subsection (5-A) of S.122 of Income Tax Ordinance, 2001, being ab initio, void and illegal, were vacated and original orders passed under S.62 of Income Tax Ordinance, 1979, were restored.
Colonial Sugar Refining Company Ltd. v. Irving 1905 AC 369 and 2001 PTD 1525 ref.
Muhammad Iqbal and Hamidullah, I.T.P. for Appellant.
Fazal Abrejo, D.R. for Respondent.
ORDER
MUHAMMAD ASHFAQ BALOCH (JUDICIAL MEMBER).---The above captioned appeals have been filed by the assessee against consolidated order dated 29-11-2004 passed by the learned Commissioner of Income Tax (appeals), Zone-e, Karachi pertaining to assessment years 1998-1999, 1999-2000 and 2000-2001. For all the years under appeal the assessee has challenged the legality of the orders passed under section 122 of the Income Tax Ordinance, 2001.
2. The Brief facts so far as relevant for disposal of this appeal are that the assessee is a private limited company. The assessee derives income mostly under contract executed with different clients for providing security guards. The assessee appellant has challenged the assessment amended under section 122 of the Income Tax Ordinance, 2001, by the learned Inspecting Additional Commissioner of Income Tax, Range-I, Companies-III, Karachi, for the assessment years 1998-1999, 1999-2000 and 2000-2001, wherein its tax liabilities were re-determined at Rs.817,383/Rs.294,471 and Rs.165,826 respectively. The assessee being aggrieved with the amended assessment order passed by the learned I.A.C. preferred appeals before the C.I.T.(A) who vide his order mentioned supra confirmed the amended assessment orders passed by the learned I.A.C. Hence present appeals have been filed before this Tribunal.
3. Mr. Muhammad Iqbal, the learned counsel for the appellant has vehemently contended the legality and validity of the assessments framed under subsection (5-A) of the section 122 of the Income Tax Ordinance, 2001. The learned counsel submitted that the original assessments for the assessment years 1998-99, 1999-2000 and 2000-2001 under section 62 of' the Income Tax Ordinance, 1979 were finalized on 31-1-2000, 29-5-2000 and 28-1-2001, i.e. much before the insertion of subsection (5-A) of the Income Tax Ordinance, 2001. It was further submitted that sub-section (5-A) inserted through Finance Act, 2003 dated 17-6-2003, with effect from 1-7-2003. No retrospective effect was given to the newly inserted subsection and consequently, it shall not be applicable to assessments finalized before 1-7-2003 and, therefore, the impugned orders dated 29-3-2004 passed by the I.A.C. under subsection (5A) of the Income Tax Ordinance, 2001 are liable to be annulled. In support of his submission the learned counsel relied upon a case law bearing Const. Petitions Nos.D-643 to 646 of 2004 in this very case. Further case laws were also cited reported as (2005) 91 Tax 60 (FTO Pak) and (2001) 84 Tax 86 (Lah.).
4. Mr. Fazal Abrejo, the learned D.R. on the other hand supported the orders of the officers below. He has submitted that subsection (5A) of section 122 of the Income Tax Ordinance, 2001 has retrospective effect and gave the powers to the I.A.C. to amend/alter/revise the order, if he considers that the assessment order is erroneous and prejudicial to the interest of Revenue.
5. The arguments of the learned representatives of both the parties have been heard and record perused. Perusal of the record reveals that the orders under section 62 of the Income Tax Ordinance, 1979 on the following dates:
| Assessment year 1998-99 | 31-1-2000 |
| Assessment year 1999-2000 | 29-5-2000 |
| Assessment year 2000-2001 | 28-1-2001 |
6. The above dates of orders of the Assessing Officer passed under section 62 of the Income Tax Ordinance, 1979 clearly show that the orders were finalized much before the insertion of subsection (5A) in statute on 16-6-2003 through Finance Act, 2003. It is noted that at the time of passing the orders under section 122 no such powers to amend/alter/revise the orders passed under section 62 were available to the concerned officer. It is cardinal principle of interpretation of statute that the same would operate prospectively unless it expressly provides for its retrospective operation, if on perusal of the provision of the statute, it can be implied that it was intended that a particular provision should be enforced retrospectively, the statute would be so enforced. The other principle is to be kept in view with respect to substantive laws and procedural laws. Substantive laws would ordinarily be enforced prospectively whereas procedural laws can be enforced with respect to pending cases as well. In arriving at this observation we are fortified with the interpretation of law as laid down in the well known case of the Colonial Sugar Refining Company Ltd. v. Irving 1905 AC 369 wherein it has been held that if the matter in question be matter of procedure only, the provision would be retrospective, on the other hand, if it be more than a matter of procedure, the legislation would not operate retrospectively. The subsection (5A) of section 122 being a substantive law and not the procedural law, therefore, its application retroactively is not justified. The Hon'ble High Court in Const. Petition No.D-643 of 2004 has also observed that subsection (5A) of section 122 of the Income Tax Ordinance, 2001 inserted with effect from 1-7-2003, is not retrospective in operation. That in this view of the matter, we are of the considered opinion that the impugned orders framed by the I.A.C. under subsection (5A) of section 122 are ab initio void and illegal. Accordingly, the order of the learned C.LT.(A) for the years under consideration is vacated and the original assessment orders passed under section 62 of the Income Tax Ordinance, 1979 are hereby restored.
In consequence all the three appeals are allowed.
H.B.T./2/Tax(Trib.)Appeal allowed.