VS, 2008 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 1219 (2007)

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

----Ss. 64 & 62---Limitation for assessment---Passing of order as on 30-6-2005---Assessee wrote two letters one directly to Taxation Officer and other reminder was sent to department through Commissioner but despite these two letters no assessment orders were conveyed to the assessee---Apparent facts of the case were that had there been any assessment order passed on 30-6-2005, it would have definitely been sent to the assessee specially in view of two letters submitted by the assessee to revenue---such events lead to the conclusion that no assessment order was available with the department on 30-6-2005 otherwise the same could have been dispatched to the assessee immediately or at least after the receipt of two letters from the assessee---First Appellate Authority though annulled the assessment on different basis, Appellate Tribunal upheld the finding recorded by the First Appellate Authority not for the reason that assessment orders were dispatched belatedly but for the reason that the same had become time-barred having been passed after 30-6-2005.

I.T.A. No.6288/LB of 1999 distinguished.

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

----S.62---Assessment on production of accounts, evidence etc.---Re assessment framed by the Taxation Officer was not sustainable in the eye of law for the additional reason that no notice under S.62 of the Income Tax Ordinance, 1979 was issued by the Taxation Officer which was mandatory requirement of law and failure to adhere to the same entailed cancellation of assessments.

Ghazanfar Hussain, D.R. for Appellant.

Zaeem-ul-Farooq for Respondent.

ORDER

Revenue has come up in appeal for the assessment years 1998-99 and 1999-2000 assailing the combined order, dated 28-11-2005 passed by the learned C.I.T. (A), Zone-I, Lahore. It has been agitated by the department that the learned C.I.T. (A) was not justified in annulling the assessment order, dated 30-6-2005 without any cogent reason.

2. The brief facts culminating in filing the instant appeal are that the assessee is a Private Limited Company deriving income from manufacturing and sale of wires and cables. Original assessment for the assessment years under consideration was finalized under section 62 of the repealed Income Tax Ordinance, 1979 (hereinafter called the repealed Ordinance) at net income of Rs,15,303,999 and Rs.12,549,420 respectively. Being aggrieved with the said assessment orders the assessee approached the learned first appellate authority who vide an order, dated 1-7-2003 set aside the case for de novo consideration with the observations given in the assessment orders. In pursuance of the appellate orders, dated 1-7-2003 two fresh assessment orders were made by the Taxation Officer, L.T.U. dated 30-6-2005 in which impugned add-backs were repeated on the ground that on due date no response and not details as requested were submitted for rectification".

3. The assessee once again feeling dissatisfaction with the re-assessment orders challenged the same before the learned first appellate authority who while agreeing with the assertions of the assessee deleted the additions made by the Taxation Officer. Hence the instant appeals at the behest of the department.

4. Both the parties have been heard and relevant order perused. The learned A.R. has vehemently argued the case and contended that in the instant case a number of issues are involved. He submitted that re-assessment orders allegedly passed on 30-6-2005 were communicated to the assessee on 31-10-2005. He stated that a notice under section 61 of the repealed Ordinance was issued by the department for compliance on 18-5-2005. Responding to the above said notice under section 61, the assessee filed reply along with entire record on 25-5-2005 as per demand of the Taxation Officer. It was further. submitted that no further communication by the department in terms of section 62 of the repealed Ordinance was made which was mandatory requirement as envisaged under the law. While continuing his assertions the learned A.R. also informed the Bench that no letter or any kind of assessment order/ demand notice/IT-30 form was delivered to the assessee after 30-6-2005 which could show that re-assessment proceedings have already been completed. The learned A.R. contended that the assessee was well aware of the situation prevailing in the department, therefore, he wrote a letter to the department on 6-7-2005 inquiring about the passing of any order against the assessee. The assessee waited for another month; and after failing to receive any intimation from the department, sent reminder to the department vide a letter dated 26-8-2005. It was stated that nothing happened for two months but suddenly the assessee received re-assessment order, dated 30-10-2005 on 31-10-2005. While continuing arguments at the bar the learned A.R. emphasized that it was not a case which only involved issue of delayed communication of assessment order. It was elaborated by the learned A.R. that in the instant case, facts are entirely different since the assessee himself wrote letter asking for completion of assessment proceedings, the fact which is very much apparent from the record as well as observations made by the learned C.I.T. (A) in his appellate order. The learned A.R. averred that no re-assessment orders were in existence on 30-6-2005 as claimed by the department. Had there been any order, the same could have been sent to the assessee in response to his first letter, dated 6-7-2005 or in response to the reminder sent on 26-8-2005. The learned A.R. vociferously entreated that no order had been passed on or before 30-6-2005 but the department only became anxious when the reminder notice was got received by the department through Commissioner, L.T.U. It was only after receipt of said reminder and at the asking of the Commissioner that department was got awakened from the slumber which led to the passing of re-assessment orders belatedly, but the date on orders were got mentioned as 30-6-2005 to circumvent the time limit as well as to hoodwink the assessee. While summing up, the learned A.R. stated that the assessment framed by the Taxation Officer were null and void not for the reason that the assessment was communicated on 31-10-2005 but the same were made after 30-6-2005.

5. On the second issue the learned A.R. submitted the perusal of the assessment order shows that no notice under section 62 of the repealed Ordinance was issued. It was contended that this was done despite the fact that the assessee is a Private Limited Company and maintaining full books of account which were produced before the Assessing Officer for re-appraisal in response to notice under section 61 before 30-6-2005 i.e. 25-5-2005. He pleaded that even on this score the assessment framed by the Assessing Officer was nullity in the eye of law, therefore, the annulment by the learned first appellate authority was quite justified and in consonance with the law. The learned A.R. submitted that even on merit the assessee's case warranted annulment for the reason that the learned first appellate authority had dealt with the issues quite elaborately keeping in view the facts obtaining on the record.

6. Conversely, the learned D.R. has tried to oppose the arguments addressed by the learned A.R. at the bar. It was strenuously argued that re-assessment framed by the Assessing Officer was in accordance with the law. It was further argued that there was nothing wrong if an order is passed on 30th of June of the year because it is incumbent upon the Assessing Officer to keep in view the time limitation available under the law.

7. We have heard the learned counsel for both the parties and have also gone through the relevant orders passed by both the lower officers. After listening to the rival arguments advanced by the learned counsel appearing for the respective parties, we are constrained to observe that the learned D.R. has not been able to make out his case in favour of the revenue while the learned A.R. through his assertions made at the bar has successfully rebutted the stance taken by the revenue. In this regard we must observe that there is no denying the fact that the assessments were allegedly framed on 30-6-2005 while the same was communicated to the assessee on 31-10-2005. However, from the perusal of grounds of appeal taken by the revenue, it seems that the learned C.I.T. (A) annulled the assessments on the basis of judgment passed by the Tribunal vide I.T.A. No.6288/LB/99, dated 19-2-2000. In this regard we would like to add that the facts of the present case are quite distinct from the facts of the case relied upon by the department. Since in the present case the assessee wrote two letters one directly to the Taxation Officer and the other reminder which was sent to the department through Commissioner, L.T.U., but despite these two notices no assessment orders were conveyed to the assessee. It is very much apparent from the facts of the case that had there been any assessment order passed on 30-6-2005 it would have definitely been sent to the assessee specially in view of the two letters submitted by the assessee to the revenue. This fact is also very much obvious from the observations made by the learned C.I.T. (A) in his impugned order which is as under:---

"On the other hand the departmental representative who appeared on the date of hearing namely Mr. Mirza Imtiaz Ahmad, D.C.I.T., L.T.U.-Audit and Mr. Gillani, Legal Adviser of L.T.U. submitted that as per sections 66 of the Income Tax Ordinance, 1979 and 124 of the Income Tax Ordinance, 2001 it was obligatory upon the department to pass the re-assessment order within the period of one year before the end of the financial year in which the order is passed which was done so by the department and the delay in communicating the said order was not relevant. They, however, did not have any answer to the enquiry raised by the learned A.R. on the stance of the Taxation Officer on or before 25-5-2005. They also could not deny the fact that the office of the Taxation Officer did not receive the notices, dated 5 and 6-7-2005 and the reminder issued by the assessee to the Taxation Officer, dated 26-8-2005 and a copy of the same sent to the Commissioner, L.T.U. as also the acknowledgment receipt placed by the assessee/appellant of the said notice/reminder on record. Further it was submitted by the D.C.I.T., L.T.U. during the course of hearing that he did receive a covering letter of the reply dated 25-5-2005."

8. If we go through the corollary of events as reproduced by the learned C.I.T. (A) in his impugned order, we are left with no option but to observe that no assessment order was available with the department on 30-6-2005 otherwise the same could have been dispatched to the assessee immediately or at least after the receipt of two letters from the assessee. In this view of the fact, we are constrained to observe that though the learned C.I.T. (A) annulled the assessment on different basis, we also uphold the finding recorded by the learned C.I.T. (A) not for the reason that assessment orders were dispatched belatedly but for the reason that the same have become time-barred having been passed after 30-6-2005.

9. We would also like to observe that re-assessment framed by the Taxation Officer was not sustainable in the eye of law for the additional reason that no notice under section 62 of the repealed Ordinance was issued by the Taxation Officer which is mandatory requirement of law and failure to the adhere to the same entails cancellation of assessments.

10. As a result of above discussion appeals of the revenue stand dismissed being devoid of any merit.

C.M.A./36/Tax (Trib.)Order accordingly.