NATIONAL ELECTRIC COMPANY OF PAKISTAN LTD. VS COMMISSIONER OF INCOME TAX, GUJRANWALA ZONE, GUJRANWALA, 2007 PTD-LAHORE-HIGH-COURT-LAHORE 2655 (2007)

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

----Ss.61, 62 & 65---Constitution of Pakistan (1973), Art. 199---Constitutional petition---Maintainability---Alternate remedy---Non-filing of appeal---Effect---Factual controversy---Assessee, instead of assailing order of re-assessment in fourth round of litigation in appeal before authorities, assailed the same before High Court in Constitutional petition---Validity---Matter had attained .finality and order of assessment, in view of availability of alternate remedy of appeal in hierarchy of Income Tax Department, was not open to exception in Constitutional jurisdiction---In earlier rounds of litigation, assessee availed remedy of appeals and orders were set aside---Remedy of appeal was adequate and efficacious---Questions raised in petition, except question of limitation, were controversial questions of fact, determination whereof was outside the ambit of Constitutional jurisdiction---Without exhausting alternate remedy of appeals under Income Tax Ordinance, 1979, Constitutional petition was not maintainable---Petition was dismissed in circumstances.

Income Tax Officer and another v. Messrs Chappal Builder 1993 SCMR 1108; Messrs- H.M. Abdullah v. The Income Tax Officer, Circle-V, Karachi and 2 others 1993 SCMR 1195 and Ch. Samiullah v. Commissioner of Income Tax, Zone-A, Lahore and 2 others 2002 PTD 1212 ref.

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

----Ss. 61, 62, 65 & 66---Constitution of Pakistan (1973), Art. 199---Constitutional petition---Re-assessment---Limitation---Order of assess ment dated 30-6-1983, was declared illegal by High Court and income tax authorities were directed to decide the matter afresh---Notice under S.61 of Income Tax Ordinance, 1979, was issued on 13-6-1997, while notice under S.62 of the Ordinance was issued on 13-6-1997, i.e. within one year of the decision of High Court---Re-assessment under S.65 of Income Tax Ordinance, 1979, was once again challenged by assessee before appellate authority who vide order dated 27-4-1998, set aside the assessment and directed fresh assessment by providing opportunity to assessee to satisfy queries raised---Assessing Officer issued notice under S.61 of Income Tax Ordinance, 1979 before the end of financial year in which order in appeal under S.132 of Income Tax Ordinance, 1979, was received---Plea raised by assessee was that notice issued by authorities was time-barred---Validity---Notice was issued within the period of limitation as envisaged in S.66 of Income Tax Ordinance, 1979---Notice as well as additional assessment was made within the period of limitation as provided under S.66 of Income Tax Ordinance, 1979---Petition was dismissed in circumstances.

Dr. A. Basit for Petitioner.

Muhammad Ilyas Khan for Respondent.

Date of bearing: 7th May, 2007.

JUDGMENT

SYED HAMID ALI SHAH, J.---The petitioner/assessee is a private limited company, deals in the business of manufacturing and assembling of the transformers and selling its products to the respondent/WAPDA. The petitioner submitted its income tax return in respect of the income derived from the above services for the year 1977-78, 1978-79, 1979-80 and 1980-81. Original assessment for the years 1977-78 and 1978-79 were finalized under section 23(3) of the Income Tax Act, 1922 (now repealed). Original assessment for the year 1979-80 was finalized under section 62 of the Income Tax Ordinance, 1979 (now repealed) vide order dated 5-12-1979. Original assessment for the year 1980-81 was finalized vide order 9-8-1980 under section 59(1) of Ordinance, 1979. The assessee/petitioner's declared and assessed version, on the basis of definite information, was found understated. Resultantly the Commissioner of Income Tax granted approval for re-opening of assessment vide letter dated 21-12-1981. A notice under section 65 of the Income Tax Ordinance, 1979 (hereinafter to be referred as "Ordinance, 1979") was issued. The Assessing Officer issued statutory notice under sections 61 and 62 and on completion of the assessment, passed assessment order under section 62/65 on 30-6-1983. The petitioner/assessee assailed the order in appeal before the Commissioner (Appeals), Zone-I, Lahore, who through a consolidated order dated 27-2-1986, upheld the assessment but reduced G.P. rate from 30 % to 25 % and deleted, the addition made under section 13 in respect of L.C. margin. The assessee as well as the department went into appeal against the order of the Commissioner (Appeals). Learned Appellate Tribunal vide order dated 10-10-1998 set aside the assessment under section 65 and remanded the case to the Income Tax Officer for decision afresh, after receiving reply to the queries from the petitioner.

2. The petitioner had challenged the notice and proceedings, under section 65 of the Ordinance, 1979, through writ petition in this Court, wherein the jurisdiction of Assessing Officer under section 65 was challenged. The writ petition was dismissed vide order dated 30-6-1983. The petitioner assailed the order dated 3-6-1983 before the apex Court, wherein order regarding maintenance of status quo was issued till 3rd of July, '1983. The case was adjourned sine-die, while the injunctive order was not extended. While hearing the reference against the decision of the Appellate Tribunal, it was observed by this Court that decision of the Tribunal that Assessing Officer was competent to make an order of assessment on 30-6-1983, was erroneous and the proceedings taken on 30-6-1987 during the currency of stay order, were held as nullity. The proceedings against the assessee/petitioner were started afresh, resultantly notice under section 61 was issued and the assessment was finalized wherein the assessment already assessed under sections 62/65 of the Ordinance, 1979 was adopted. The petitioner/assessee assailed the assessment in appeal, which was allowed, vide order dated 27-4-1998, whereby the Assessing Officer was directed to provide the petitioner, sufficient time and opportunity to satisfy the queries raised. Again the notice under section 61 was served upon the petitioner, who filed a written reply on 11-6-1999, which was found not satisfactory. The petitioner was provided another opportunity to place on record substantial material or evidence. Inspecting Additional Commissioner of Income Tax, granted approval to make addition under section 13(1)(aa) of Ordinance, 1979. Assessing Officer observed that the assessee got the case decided ex parte, wilfully and deliberately, to have the order set aside in appeal on this score. The assessment was repeated, as originally assessed, vide order dated 28-6-1999. The respondent on the basis of the above assessment sought recovery of the income tax; amounting to Rs.32,643,763, through coercive measures vide office memorandum dated 17-8-1999 and in this respect, informed WAPDA through letters dated 14-9-1999 and 24-9-1999 about recovery of amount. The petitioner has now challenged the recovery proceedings through the instant writ petition.

3. Learned counsel for the petitioner has contended that the period for re-opening of assessment is ten (10) years from the date of original assessment as envisaged in section 65(3) of Ordinance, 1979. Last assessment in the instant case took place in the year 1981 and prescribed period elapsed in year 1991. Impugned notice was issued on 24-5-1999, much beyond the period of limitation. The notice, by its perusal reflects that it is fresh notice and had not been served upon the petitioner, in continuation of earlier notice. Learned counsel submitted that when complained act is without jurisdiction or it has been taken after the period of limitation, then recourse to constitutional- jurisdiction is proper remedy to save the aggrieved person from rigour of departmental remedy, which 'is lengthy and time consuming. It was further contended that the order impugned is violative of principles of natural justice and it cannot sustain in the eyes of law. Learned counsel went on to argue that the respondents have already recovered Rs.1,66,50,000 while, falsehood of the claim of the respondents, can be ascertained from the fact that the demand raised through notice was Rs.2,87,53,213 but .through a subsequent notice it was enhanced to Rs.3,26,43,763 within short span of time. Learned counsel has vehemently submitted that remand of case for fresh assessment does not give a new life to the respondents to re-open the case as statutory period fixed by the law, cannot be extended or relaxed. Learned counsel has submitted that a case under section 65 can be reopened on the basis of definite information. Learned counsel added that notice and proceedings thereunder, reflect that the respondents were unaware of the bank accounts of the petitioner and sought information from the petitioner about bank accounts and other queries. This fact sufficiently proves that prerequisite of proceedings under section 65(ibid) i.e. definite information, was lacking. The respondent had called the petitioner for information about imports and additional income. Amounts qua the imports, are expenses and not income. Learned counsel has concluded his arguments by submitting that reopening the case of the petitioner, time and again speaks about mala fide of the respondents, who have become inimical to the petitioner as he has not acceded to their illegal demands.

4. Learned counsel for the respondents, on the other hand, has submitted the remedy of appeal against the impugned .order was available to the petitioner, which was .not availed and as such instant petition is not competent. The petitioner in the earlier round of litigation has availed the remedy of appeals before the Commissioner (Appeals) .and learned Income Tax Appellate Tribunal. By passing the relevant fora, has been held by the superior Court, fatal to maintainability of the constitutional petition. While placing reliance on the case of Income Tax Officer and another v. Messrs Chappal Builder 1993 SCMR 1108; it was submitted that the petition in hand, is incompetent and merits dismissal. Learned counsel has submitted that the petitioner has wrongly contended that the petitioner sells its transformer to WAPDA only. The petitioner has various other customers, besides WAPDA, who purchase the products/transformers of the petitioner. This fact alone is sufficient to reopen the assessment of the petitioner. Learned counsel as submitted that the impugned notice under section 62 of the Income Tax Ordinance, 1979, was issued, when matter had attained finality and no appeal against the order of Assessing Officer was filed by the petitioner.

5. Heard learned counsel for the parties and record perused.

6. This case has a chequered history. The assessment was set aside in earlier rounds of litigation. The order of re-assessment in the fourth round was not challenged by the petitioner in appeal, before the Commissioner of Income Tax (Appeals). The matter attained finality and the order of assessment, in view of availability of alternate remedy of appeal, in hierarchy of Income Tax Department, is not open to exception in writ jurisdiction. The petitioner has in earlier round of litigation, availed the remedy of appeals and the orders were set aside. Remedy of appeal is adequate and efficacious. Additionally the questions raised in the petition, except for question of limitation, are controversial questions of fact, determination whereof falls outside the ambit of constitutional jurisdiction. Writ petition, without exhausting the alternate remedy of appeals under Income Tax Ordinance, 1979 is not maintainable. Reference in this respect can be made to the cases of Messrs H.M. Abdullah v. The Income Tax Officer, Circle-V, Karachi and 2 others 1993 SCMR 1195, Income Tax Officer and another v. Messrs Chappal Builder 1993 SCMR 1108 and Ch. Samiullah v. Commissioner of Income Tax, Zone-A, Lahore and 2 others 2002 PTD 1212.

7. Reverting to the question of limitation, Additional assessment under section 65 of the late Ordinance, 1979 and notice thereunder can be issued, in the cases where such notice is issued prior to 1-7-1987, within ten years from the end of assessment year. Period prescribed for issuance of notice, under subsection (3) of section 65, however, is not applicable to the cases, where assessment under section 65 is set aside, either wholly or party, by an order under sections 132 and 135 or through an order of High Court of Supreme Court of. Pakistan, in the exercise of original or appellate jurisdiction. Section 66 of the Ordinance, 1979 is reproduced, for ready reference:---

"66. Limitation for assessment in certain cases.---(1) Notwith standing anything contained in section 64 and subsection (3) of section 65 where in consequence of or to give effect to 'any finding or direction contained in any order made under this Chapter VIII, XIII or XIV or any order made by any High Court or the Supreme Court of Pakistan in exercise of its original or appellate jurisdiction,---

(a) an assessment is to be made on any firm or a partner of any firm; or

(b) an assessment is to be made on the assessee or any other person; or

(c) an assessment has been set aside, in full or in part, by an order under section 132 of section 135, and no appeal is filed under section 134 against such order or no [appeal filed] under section 136 in respect. Thereof, as the case may be, such assessment may be made at any time within two years in any case to which clause (a) or clause (b) applies, .and within one year in any case to which clause (c) applies, from the end of the financial year in which such order is received by the [Deputy Commissioner] .

(2) Where by any such order, as is referred to in subsection (1), any income is excluded---

(i) from the total income of the assessee for, any year and held to be the income of another year,

(ii) from the total income of one person and held to be the income of another person,

the assessment of such income as income of another income year or of another person, as the case may be shall, for the purpose of the said subsection be deemed to be an assessment made in consequence of or to give effect to a finding or direction in sub order.

(3) Notwithstanding anything contained in this Ordinance, where the ownership of any property the income from which is chargeable under this Ordinance is in dispute in any Civil Court in Pakistan, the assessment on any person in respect of such income may be made at any time within one year of the end of the financial year in which the decision of such Court is brought, or otherwise comes, to the notice of the [Deputy Commissioner]."

8. Order of assessment dated 30-6-1983 was declared illegal by this Court and the respondents were directed to decide the matter afresh. Notice under section 61 of the Income Tax Ordinance, 1979 was issued on 13-6-1997, while notice under section 62 was issued on 19-6-1997 i.e. within one year of the decision of this Court. The re-assessment under section 65, was once again challenged by the petitioner before the Commissioner (Appeals), Gujranwala, who vide order dated 27-4-1998, set aside the assessment and directed fresh assessment by providing opportunity to the assessee to satisfy queries raised. Assessing Officer B issued notice under section 61 of the Income Tax Ordinance, 1979, before the end of financial year in which the order-in-appeal under section 132 was received. The notice was issued within the period of limitation, as envisaged in section 66 of the Ordinance, 1979 (Parallel provision exists in section 124 of the existing law i.e. Income Tax Ordinance, 2001). There is no force in the contention of the petitioner that notice under section 61 and consequent thereupon, reopening of the case for additional assessment, was made beyond the prescribed period of limitation. Notice as well as additional assessment was made within the period of limitation, as provided under section 66.

9. For the foregoing, this petition has no force and is accordingly, dismissed with no order as to costs.

M.H./N-92/LPetition dismissed.