VS, 2008 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 1285 (2007)

Income Tax Ordinance (XXXI of 1979)---

----Ss. 52 & 86---Liability of persons failing to deduct or pay tax---Limitation---Matter being of assessment year 1993-94, the order should have been made up to 1997-98, but the Taxation Officer had passed the order on 29-6-2000---Validity---Order admittedly had been passed on 29-6-2000, which was hit by limitation, it having been made after the period of four years---Order was ab initio void and illegal but such legal fact had not been considered by the First Appellate Authority---Even otherwise, on merit, assessee filed details of all payments, wherein most of the amounts were less than Rs.25,000 but the Assessing Officer had failed to consider that fact---Order of First Appellate Authority was vacated and order passed by the Taxation Officer under Ss.52/86 of the Income Tax Ordinance, 1979 was cancelled by the Appellate Tribunal having been passed beyond the limitation period provided under the law---Miscellaneous application as well as appeal filed by the assessee were allowed.

2002 PTD 1; 2003 PTD (Trib.) 1167 and 2007 PTD (Trib.) 406 ref.

Zulfiqar Ali Sh., I.T.P. for Appellant.

Mrs. Sabiha Mujahid, D.R. for Respondent.

ORDER

Through this appeal, the appellant has objected to the impugned order of the leaned C.I.T. (A), dated 14-4-2004 the assessment year 1993-94 on the following grounds:---

(2) The Commissioner of Income Tax (Appeals) Zone-I was not justified to confirm the levy of tax under sections 52 and 86 of the repealed Ordinance on account of construction of building for a sum of Rs.538,167 in total.

(3) The Taxation Officer of Income Tax did not have the jurisdiction to proceed under section 52 in this assessment year.

Along with the said appeal, a miscellaneous application seeking permission to file the following additional grounds has also been filed by the assessee/appellant:---

(3) Without prejudice to Ground No.2 above, the Taxation Officer was not justified to take up the assessment under sections 52/86, which was hit by limitation of 4 years, under the provisions of law.

As the additional grounds filed by the assessee is a legal ground arising out of the impugned order of the learned C.I.T. (A) and the proceedings of the case, therefore, despite the objection raised by the leaned DR, additional ground is allowed to be filed, as the legal ground can be raised at any stage of the proceedings up to the apex Court of the country.

We have heard the learned representatives from both the sides and have also perused the impugned order of the learned C.I.T. (A) and the assessment order.

Original assessment in this case was finalized under sections 52/86 of the repealed Ordinance, 1979 which was set aside by the learned C.I.T. (A) vide order, dated 24-5-2001 with the direction to re-examine the facts in order to determine the default after verifying claim asserted by the assessee, but the Taxation Officer has once again vide order dated 18-6-2002 repeated the same treatment, treating the appellant as assessee in default under section 52 and has also charged additional tax under section 86. The learned C.I.T. (A) vide his impugned order has upheld the treatment meted out by the Taxation Officer with the following observations:---

"I agree that the assessing officer has to identify the payments which attract the provisions of section 50(4) of the repealed Ordinance, but at the same time primary responsibility lies upon the assessee to produce complete record and establish the reason for non-deduction of tax. Reliance is placed upon the judgment of Honourable apex Court of Pakistan reported as (2002) PTD 1.

As evident from the order the appellant did not submit supporting evidence in respect of payments made under different heads in order to establish that the payments did not attract the provisions of section 50(4) of the repealed Ordinance, 1979. Similarly, exemption certificates of companies from whom cement and iron was purchased were also not submitted before the assessing officer. These documents were also not filed before this Court. Under the circumstances levy of tax under sections 52/86 of the repealed ordinance on payments made towards construction and building is confirmed."

Mr. Zulfiqar Ali Sheikh, I.T.P. representing the appellant/ assessee has raised preliminary objection that the order passed by the Taxation Officer is barred by time, as the order should have been passed under section 52 within four years. He has contended that this Tribunal has already held that limitation to issue notice under section 52 cannot be extended beyond four years. He has, in this respect, placed reliance on the decision of this Tribunal reported as 2003 PTD (Trib.) 1167, wherein it has been held that "Proceedings under section 52 can be initiated at any time during the financial year and if the assessing officer fails to take cognizance of assessee default during the financial year from assessee statement or such other information, he can proceed after gathering information from assessee books called under section 61 for assessment and since determining of purchase in absence of statement under section 142 can only be from accounts, the assessing officer cannot go beyond period of four assessment years. The assessments for early years are clearly beyond jurisdiction of the assessing officer and beyond limitation provided for maintenance and retention of books of accounts. As the assessing officer is not permitted to call for books beyond the above period, he cannot be allowed to assess default of person beyond limitation and the limitation to issue notice under section 52 cannot be extended beyond four years". The learned counsel has contended that in this case, the matter being of assessment year 1993-94, the order, if any, in this case should have been made up to 1997-98, but the Taxation Officer in this case has admittedly passed the order on 29-6-2000. He is of the view that although the matter was agitated before the learned C.I.T. (A), who has remanded back the matter, but as the original proceedings under section 52 was void ab initio being passed without any jurisdiction due to lack of limitation, further superstructure is nullity in the eyes of law. He has, in this respect, referred the decision of this Tribunal, dated 2007 PTD (Trib.) 406, wherein in the like matter and circumstances, it has been ruled out that judicial pronouncement of a Court apply retrospectively to all pending cases and also to case which has not become past and closed transaction. In view of this legal position, the learned counsel has contended that the order passed in this case under sections 52/86 being passed beyond limitation period as pronounced by this Tribunal is nullity in the eyes of law and further superstructure and proceedings have no value.

On the merits of the case, the learned counsel has contended that on behalf of the assessee, all the details were furnished, but the assessing officer has held the assessee in default even without considering the payments made, amount of which are less than Rs.25,000 and does come within the purview of this section.

On this other hand, learned DR is supporting the impugned orders of the officers below. She has submitted that as the assessee has failed to furnish the detail, therefore, the Taxation Officer has rightly held the appellant as assessee in default, which has rightly been upheld by the learned C.I.T. (A).

After considering the submissions made from both the sides and the case law referred by the learned counsel for the appellant, we are of the view that the order in this case has admittedly been passed by the .Taxation Officer on 29-6-2000 which is hit by limitation due to be made after the period of four years, therefore, the order in this respect was ab initio void and illegal but this legal fact has not been considered by the learned C.I.T. (A).

Even otherwise, on the merits of the case, the learned counsel for the appellant has placed before us the details of all the payments, wherein most of the amounts are less than Rs.25,000 but the Taxation Officer has failed to consider this fact. The impugned order of the learned C.I.T. (A) is, therefore, vacated and the order passed by the Taxation Officer under sections 52/86 is cancelled being passed beyond the limitation period provided under the law.

The miscellaneous application as well as appeal filed by the assessee are allowed.

C.M.A./25/Tax(Trib.)Appeal accepted.