VS, 2008 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 1146 (2008)

Income Tax Ordinance (XLIX of 2001)---

----S.221 (1-A)---Income Tax Ordinance (XXXI of 1979), S.156/87---Finance Act (I of 2003) Preamble---Rectification of mistake---Assessment year 1998-99---Limitation---Assessee's appeal succeeded being barred by limitation was contradictory to the provisions of S.87 of the Income Tax Ordinance, 1979 which dealt with charging of additional tax for failure to pay advance tax---Department contended that limitation of four years under S. 156 of the Income Tax Ordinance, 1979 had yet to expire on 18-10-2003 while the limitation was extended to five years from the date of order sought to be rectified through S.221 (1-A) of the Income Tax Ordinance, 2001 having effect from 1-7-2003; that order sought to be rectified could be rectified within five years from the date of order i.e. by 18-10-2004 whereas order under S.87 of the Income Tax Ordinance, 1979 (S.205 of the Income Tax Ordinance, 2001) was passed on 22-1-2004 i.e. within time limitation and that order was not barred by limitation of time---Validity---Enlarged limitation by the income Tax Ordinance, 2001 could not be applied in cases of those pending assessments which were to be governed by the Income Tax Ordinance, 1979 and S. 156 of the Income Tax Ordinance, 1979 provided limitation of four years which had expired before passing of the order---Contention of the department that limitation was extended by way of new legislation did not carry weight because for the year 1998-99 provisions of old laws were applicable and limitation enlarged in the Income Tax Ordinance, 2001 was not to apply---No error was found in the order passed by the Appellate Tribunal, which needed to be rectified---Miscellaneous application of the department was dismissed by the Appellate Tribunal.

Messrs Shah Jewana Textile Mills Limited v. I.T.A.T. 2003 PTD 2023; 2005 PTD 14; Messrs Sadiq Brothers Poultry v. C.I.T., Rawalpindi I.T.A. No.111/IB of 2006; Home Services Syndicate v. C.I.T. 2003 PTD 2109 and Messrs Ellahi Motors v. C.I.T. 2004 PTD 1173 ref.

Mazhar Iqbal, Legal Officer/D.R. for Applicant.

Hafiz M. Idrees for Respondent.

ORDER

By the instant Miscellaneous Application, the Revenue seeks recall of ITAT order dated 31-5-2007 recorded in assessee's appeal bearing I.T.A No. 379/IB of 2005 for the assessment year 1998-99 on the plea that conclusion of the ITAT order supra as "consequently, the assessee's appeal succeeds" being barred by limitation is contradictory to the provisions of section 87 of the Income Tax Ordinance, 1979 which deals with charging of additional tax for failure to pay advance tax. It has been contended that since, the error is floating on the surface of ITAT order supra, therefore, it needs rectification.

2. The learned DR has argued that the section 87 of the Income Tax Ordinance, 1979 deals with the charging of the additional tax for failure to pay advance tax. As per provisions of the repealed Ordinance no time limitation has been prescribed for action under the said section. Section 87 is an independent provision without any limitation. He has referred the judgment reported as 2003 PTD 2023 in case of Messrs Shah Jewana Textile Mills Limited v. I.T.A.T. that a Court cannot assume the role of legislation.

3. The order passed under section 87 is not an order under section 156/87 as the same does not denote rectification or correction of any mistake floating on the surface on record. He has further argued that in this case limitation of four under section 156 had yet to expire on 18-10-2003 while section 221(1-A) through Finance Act, 2003 was introduced having effect from 1-7-2003 wherein limitation was extended to five years from the date of order sought to be rectified. In light of the above discussion it is obvious that section 221 of the Income Tax Ordinance, 2001 was applicable in the instant case by virtue of which order sought to be rectified can be rectified within five years from the date of order i.e. by 18-10-2004 in the instant case whereas order under section 87/205 was passed on 22-1-2004 i.e. within time limitation. It is evident, in light of the above, that the order passed under section 87/205 was not barred by limitation of time and the I.T.A.T was unable to appreciate the substance of case-law reported as 2005 PTD 14, upon which relief was awarded in support of the view that limitation given in section 156 of the repealed Ordinance would govern and not that given in section 221 of the Income Tax Ordinance, 2001 would be applicable in the instant case. Incorrect interpretation of case-law, upon which reliance has been placed for annulment of additional tax levied is an error of law/facts apparent on the face of the order, which is rectifiable under section 221 of the Income Tax Ordinance, 2001. Furthermore, the determination of time limitation for action under sections 87/205, for which no limitation has been prescribed under the law amounts of legislation which is beyond the jurisdiction/scope of the Honourable I.T.A.T. as per various judicial pronouncements of higher Courts.

4. The learned AR has force fully stated that the assessment year 1998-99 pertains to the repealed Ordinance, 1979. Section 239(1) envisages that in such conditions the computation of tax liability should have been made in the manner as if the new Ordinance had not come into force. While arguing this contention he has relied on the Tribunal's unreported order dated 15-11-2007 in I.T.A. No. 111/IB/2006 etc. in case titled as Messrs Sadiq Brother Poultry, v. C.I.T. Rawalpindi. He further argues that in pending case provision of repealed law is to be applied. "Pending case does not mean physical pending but would also include within definition what is proposed to be filed within unexpired periphery of time which has happened in present case. So from this angle limitation of section 156 was applicable and not the limitation specifically extended in the new Income Tax Ordinance. He has placed reliance 2003 PTD 2109 in case titled as Home Services Syndicate v. C.I.T, and 2004 PTD 1173 in case of Messrs Ellahi Motors v. C.I.T. In the above mentioned later case it has again been held that all the pending matters at the time of promulgation of new Income' Tax Ordinance, 2001 are required to be decided in accordance with the provisions' contained in repealed Ordinance but by the Income Tax Authorities competent under Income Tax Ordinance, 2001. So the learned AR further argues that if the advance tax is required to be paid by the assessee and in the case of default additional tax payable by him is to be calculated and imposed at the time of completion of assessment. "Word Assessment" is entire set up proceedings whereby total income of an assessee is determined and on the basis thereof, the tax payable is computed and thereafter the recovery of the taxes effects. Process of determining the total income, computation of tax payable and the recovery of such tax collectively and cumulatively from the part of assessment. Additional tax is also part of such tax and assessment. So in case of the pending assessment and particularly in view of the section 87 the provision of the repealed Ordinance are to be applied.

5. We have heard the arguments advanced on behalf of the rival parties and also carefully gone through the relevant record available on file. Subsequent enlarged limitation by the new Ordinance cannot be applied in cases of those pending assessment which are to be governed by the repealed Ordinance and the section 156 of the repealed Ordinance, 1979 provides limitation of four years which was expired before passing of this impugned order. This contention of the department that limitation was already extended by way of new legislation does not carry weight because for the assessment year 1998-99 provision of old laws are applicable and limitation enlarged in the new Income Tax Ordinance, 2001 is not to apply. So there appears no error in the order passed by the Tribunal, which needs to be rectified. Resultantly, we have been left with no other alternate except to dismiss the miscellaneous application, which is accordingly dismissed.

C.M.A./35/Tax(Trib.)Application dismissed.