Miss SABIRA B. NANJIANI, KARACHI VS DEPUTY COMMISSIONER OF INCOME TAX, SALARY CIRCLE-03, ZONE-D, KARACHI, 2007 PTD-KARACHI-HIGH-COURT-SINDH 1810 (2007)

Income Tax Ordinance (XXXI of 1979)---

-----Ss. 57, 58 & 136---Reference to High Court---Submission of wealth statement---Where wealth statement had been filed in terms of sub-section (2) to S.58 of Income Tax Ordinance, 1979 and not under subsection (1) of said section, assessee had the right to submit his revised wealth statement within the parameters of S.57 of Income Tax Ordinance, 1979---Observations of the Appellate Tribunal that such interpretation would lead to a very unbalanced conclusion, seemed to be untenable in law---Other observations of the Tribunal contained in impugned order that provisions of S.58(2) of Income Tax Ordinance, 1979 being general in nature could not be given overriding effect to the special provisions of S.57 of Income Tax Ordinance, 1979; was also misconceived as S.58(2) had no overriding effect on S.57, but it simply extended its application to statement of. wealth filed in terms thereof for filing of revised wealth statement---When the law-makers in their wisdom had categorized the assessees in two categories for filing of wealth statement in terms of Ss.58(l) & 58(2) of Income Ordinance, 1979 benefit extended to one category of assessee, falling under S.58(2) in clear and unambiguous words, for filing of revised wealth statement, could not be denied to them for the reason that such benefit was not available to other category or it would create unbalanced conclusion which would be open to objection in legal norms---Said interpretation of two provisions of Income Tax Ordinance, 1979 had got support from newly-inserted subsection (2) of S.58, which had shown that shortcoming/lacuna in the statute noticed by the Tribunal in its impugned order, was taken care of by the law-makers at the subsequent stage and consequently, the new subsection (2) was inserted by Finance Ordinance, 2001.

Rehan Hasan Naqvi and Miss Lubna Pervaiz for Applicant.

Nasrullah Awan for Respondent.

Date of hearing: 31st January, 2007.

JUDGMENT

ANWAR ZAHEER JAMALI, J.---Through this reference made by the Income Tax Appellate Tribunal, Karachi following questions of law proposed by the appellant have been referred for the opinion of this Court in terns of section 136(1) of the Income Tax Ordinance, 1979:---

"(1) Whether on the facts and circumstances of the case the learned Income Tax Appellate Tribunal was justified in law that the provisions of section 58(2) of the Income Tax Ordinance is of general nature and section 57 of the Income Tax Ordinance, 1979 is of specific nature and thus cannot override the specific provision?

(2) Whether on the facts and circumstances of the case the learned Income Tax Appellate Tribunal was legally justified in confirming the addition of Rs.9,00,000 under section 13(1)(b) of the Income Tax Ordinance, 1979'?"

2. Briefly stated, relevant facts of the case are that in respect of the assessment case of the appellant viz. Miss Sabira B. Nanjiani for the year 1990-91. Income Tax Appellate Tribunal, Karachi had passed its order dated 25-1-1994 whereby the order of C.I.T. (Appeals) dated 13-11-1990, passed in her favour was set aside, and consequently the order of the Assessing Officer/I.T.O. passed against the assessee was restored for the following reasons:---

"4. The arguments advanced by the learned A.R. do not stand judicial scrutiny because section 57 lays down that return of total income can be revised at any time before assessment is made. Wealth statement cannot be considered as return of income by any stretch of imagination, it can form part of the return in me situation when return of income is revised and as a result of version of income the balance of cash or receivable etc. increase or decrease according to a revised statement of affairs or balance sheet. The omissions or wrong statements in the return of income resulting in upward and downward revision of the return may necessitate the revision of statement of assets and liabilities.

5. In the present case what happened was that the assessee only increased his prize bonds balance and increased his liability by an equal amount. This has no connection with the revision in income.

6. When the learned A.R. was confronted with the situation he tried to rely on provisions of section 58(2) which is as follows:---

"(2) Notwithstanding anything contained in subsection (1) every assessee, whose total Income is not less than one hundred thousand rupees, shall furnish a wealth statement along with his return of total income and all the provisions of this Ordinance shall, so far as may be, apply to the wealth statement as they apply to a return of total income."

The examination of the above mentioned provisions shows that wealth statement has to be filed along with return by those assessees whose income exceeds Rs.1,00,000 and according to the learned A.R. the provision allows the assessee to revise his return, it will lead to a very unbalanced conclusion that assessees having income of more than Rs.1,00,000 are entitled to a revision of their wealth statement while others are not. No legal norm can tolerate this kind of conclusion.

7. Another difficulty in the way of the learned A.R. is that provisions of section 58(2) are of general nature whereas those of section 57 are specific. It is a well-established principle that general provisions cannot be used to override specific provisions. In view of the above mentioned observations it can be safely concluded that the assessee had no right to revise his wealth statement and addition made by the I.T.O. was in accordance with law. Therefore, order or the I.T.O. is hereby restored."

3. Mr. Rehan Hasan Naqvi, learned counsel for the appellant, has seriously questioned the interpretation of sections 57 and 58(2) of the Income Tax Ordinance, 1979 advanced by the Income Tax Appellate Tribunal, which has resulted in the restoration of original assessment order passed by the I.T.O. against the appellant. Making Reference to the above quoted sections of Income Tax Ordinance, 1979, he contended that indeed section 57 (ibid) deals with the submission of revised return of total income of the assessee at 'any time before the assessment is made, but by virtue of subsection (2) to section 58 (ibid) its applicability has also been extended to the submission of revised wealth statement in terms thereof, as any, other interpretation or subsection (2) to section 58, particularly as made by the Tribunal in its impugned order dated 25-1-1994 will be misleading and will make it redundant, which can never be the intention of the law-makers.

4. Mr. Nasrullah Awan, learned counsel for the respondent, initially contended that since subsection (2) to section 58 of the Income Tax Ordinance was omitted by Finance Ordinance, 1984 thus the interpretation of this subsection, advanced by Mr. Naqvi, has no relevancy to the present case of the appellant pertaining to the assessment year 1990-91. However, on pointation of Mr. Rehan Hasan Naqvi that subsection (2) to section 58 was omitted by virtue of Finance Act, 1996 and not by Finance Ordinance, 1984, he candidly realized his mistake and conceded to this position. Learned counsel was further unable to controvert the submissions of Mr. Rehan Hasan Naqvi as regards the true import of subsection (2) to section 58, which has enabled the appellant to submit revised wealth statement in consonance with her revised return of income tax.

5. We have carefully considered the arguments advanced by the learned counsel and perused the material placed on record. In order to appreciate properly the contention raised by Mr. Rehan Hasan Naqvi, it will be useful to reproduce hereunder sections 57 and 58 of the Income Tax Ordinance, 1979 which read thus:

"57. Revised return of total income.---If any person has not furnish a return of total income as required by, or under, any provision of this Ordinance (hereinafter in this section referred to as return) or having furnished a return, discovers any omission or wrong statement therein, he may, without prejudice to any liability incurred by him under any provision of this Ordinance of the repealed Act, furnish a return or a revised return, as the case may be, at any time before the assessment is made.

58. Wealth Statement.---(1) The Deputy Commissioner may, by notice in writing, require any assessee to furnish, on a date to be specified in the notice, a statement (hereinafter referred to as the wealth statement) in the prescribed form and verified in the prescribed manner giving particulars:--

(a) his total assets and liabilities as on the date or dates specified in such notice;

(b) the total assets and liabilities of his spouse, minor children and dependents as on the date or dates specified in such notice;

(c) any assets transferred by him to any person during the period or periods specified in such notice and the consideration therefor;

(d) the total expenses incurred by the assessee, his spouse, Minor children and dependents during the period or periods specified in the notice and the details thereof.

(2) Notwithstanding anything contained in subsection (1) every assessee, whose total income is not less than one hundred thousand rupees, shall furnish a wealth statement along with his return of total income and all the provisions of this Ordinance shall, so far as may be apply to the wealth statement as they apply to a return of total income."

6. A plain reading of above reproduced provisions of the Income Tax Ordinance, 1979 go to show that section 57 deals with the furnishing of return of total income by the assessee and also enables him to furnish revised return, if he discovers any omission or wrong statement therein at any time before assessment is made by the Assessing Officer, section 58(1) deals with the filing of wealth statement in certain cases in the prescribed form, verified in the prescribed manner, containing the particulars as prescribed in its clauses (a), (b), (c) and (d), while subsection (2) to section 58 provides that notwithstanding any thing contained in subsection (1) if the assessee whose total income is not less than Rs.100,000 has to furnish wealth statement along with his return of total income, them for this purpose all the provisions of the Ordinance shall, as far as may be, apply to the wealth statement in the same manner as they apply to the return of total income. Thus, it is evident that in a case where wealth statement has been filed in terms of subsection (2) to section 58 and not under subsection (1) to section 58, as in the instant case, the assessee has the right to submit his revised wealth statement within the parameters of section 57 of the Income Tax Ordinance, 1979. The observations of learned Tribunal that such interpretation will lead to a very unbalanced conclusion, therefore, seems to be untenable in law. Similarly the other observation of the Tribunal contained in the impugned order that the provisions of section 58(2) being general in nature cannot be given overriding effect, to the specific provisions of section 57 is misconceived as section 58(2) has no overriding effect on section 57 (ibid) and it simply extends its applicability to the statement of wealth filed in terms thereof for filing of revised wealth statement. When the lawmakers in their wisdom have categorized the assessees in two categories for filing of wealth statement in terms of sections 58(1) and 58(2) of the Income Tax Ordinance, 1979, the benefit extended to one category of assessees, falling under section 58(2) in clear and unambiguous words, for filing of revised wealth statement, cannot be denied to them for the reason that such benefit is not available to the other category or it will create unbalanced conclusion which will be intolerable in legal norm.

7. The above interpretation of the two provisions of the Income Tax Ordinance, 1979 referred to above further gets support from the newly inserted subsection (2) to section 58 to Finance Ordinance, 2001, after the omission of earlier subsection (2) to section 58 by Finance Act, 1996, which reads thus:---

"Subsection (2) to section 58 inserted by Finance Ordinance, 2001:

Where a person, who has furnished a wealth statement as required under subsection (1), discovers any omission or wrong statement therein, he may, without prejudice to any liability incurred by him under any provision of this Ordinance, he may furnish revised wealth statement at any time before the assessment is made."

8. The above reproduce subsection (2) to section 58 goes to show that the shortcoming/lacuna in the Statute noticed by the Tribunal in its impugned order, with the observations reproduced above, was taken care of by the law makers at the subsequent stage and consequently such new subsection (2) was inserted in section 58, by Finance Ordinance, 2001.

9. In view of the foregoing discussion, the question No.1 reproduced above is answered in the negative.

10. As a result of answer to question No.1 in the negative, the question No.2 is also answered in the negative.

11. Foregoing are the reasons of our short order passed today whereby this Reference Application was disposed of in the terms that both the questions proposed in this reference were answered in the negative.

12. A copy of this judgment under the seal of this Court and the signature of the Registrar be sent to the Appellate Tribunal, which shall pass such orders as are necessary to dispose of the case conformably to this judgment.

H.B.T./S-20/KOrder accordingly.