2008 P T D (Trib.) 278
[Income-tax Appellate Tribunal Pakistan]
Before Ehsan ur Rehman, Judicial Member and Naseer Ahmad, Accountant Member
I.T.A. No.893/LB of 2006, decided on 11/07/2007.
(a) Income Tax Ordinance (XLIX of 2001)----
----S. 122(5A)-Income Tax Ordinance (XXXI of 1979), S.66-A---General Clauses Act (X of 1897), S.6---Amendment of assessment---Issuance of corrigendum that while passing the order, the section under which the assessment was modified was inadvertently mentioned as S.122(5A) of the Income Tax Ordinance, 2001---Said order was passed under S.66-A of the Income Tax Ordinance, 1979 read with S.6 of the General Clauses Act, 1897 and S.122(1) of the Income Tax Ordinance, 2001---Order was annulled by the First Appellate Authority---Department, on the strength of corrigendum contended that order was in fact passed under S.66A of the Income Tax Ordinance, 1979 and since right of appeal against such an order lay with Appellate Tribunal the First Appellate Authority erred in assuming jurisdiction in respect of such order/appeal---Validity---No provision of law existed which authorized issuance of a corrigendum after an assessment was finalized---Once an assessment was finalized, the only way an Assessing Officer could modify the earlier order was by resorting to provisions relating to `rectification of mistakes' and for which a statutory notice was a mandatory requirement---No concept of issuance of corrigendum existed and as such rectification without a mandatory notice was null and void and without any legal force---Record including notice and order clearly showed that the entire proceedings were undertaken under S.122(5A) of the Income Tax Ordinance, 2001 and such entire proceedings could not be said to have been undertaken under S.66A of the Income Tax Ordinance, 1979 through issuance of subsequent corrigendum---Issuance of corrigendum was clearly an afterthought---Corrigendum being illegal, same could not, in any way, change the fate of order under S.122(5A) of the Income Tax Ordinance, 2001-First Appellate Authority was right in assuming the appellate jurisdiction---First Appellate Authority, though made a reference to the corrigendum but had rightly disregarded same while deciding the matter as it was a nullity in the eyes of law from the very beginning---Objection raised by the Department in respect of jurisdiction of First Appellate Authority was devoid of any merit and was rejected by the Appellate Tribunal.
(b) Income Tax Ordinance (XXXI of 1979)---
----S.80C(5A)---Income Tax Ordinance (XXXI of 1979), S.122(5A)---Tax on income of certain contractors and importers---Assessment year 2000-2001---Provisions of S.80C (5A) of the Income Tax Ordinance, 1979 were not applicable for assessment year 2000-2001---Invoking the provisions of S.122(5A) of the Income Tax Ordinance, 2001 was clearly illegal---No interference was called for in the order of First Appellate Authority by the Appellate Tribunal.
I.T.A. No.6374/LB of 2003 and 2005 PTD 1316 rel.
Muhammad Asif D.R. for Appellant.
Asim Zulfiqar Ali, A.C.A. for Respondent.
ORDER
NASEER AHMAD, (ACCOUNTANT MEMBER).---The present appeal has been filed by an unlisted public limited company and has been preferred by the Commissioner of Income Tax, Legal Division, LTU, Lahore against appellate order, dated 7-11-2005 on the following grounds:
(1)That the order of the learned Commissioner of Income Tax (Appeals), Zone-I, Lahore is bad in law and against the facts of the case.
(2) That the learned CIT(A) is not justified in annulling the order under section 122(5A) of the Income Tax Ordinance, 2001, holding to be based on change of opinion without any cogent reason.
2. The case was fixed for 5-9-2007 on which date the department was represented by. Mr. Muhammad Asif, IAC, whereas the respondent assessee was represented by Mr. Asim Zulfiqar Ali, ACA and Mr. Humza Ashraf, ACA. During the proceedings, the learned D.R., at the outset, sought permission to file following additional ground of appeal:
That the order passed by the learned Commissioner of Income Tax (Appeals) is without jurisdiction.
3. Consequent upon the aforesaid request, the learned DR was advised to file the said ground of appeal with the Registrar and a copy thereof should be forwarded to the respondent assessee. The case adjourned for 10-10-2007.
4. On 10-10-2007, the learned DR opened the arguments on the additional ground of appeal, however, his attention was drawn to the fact that no such additional ground of appeal had been received in the Tribunal. The learned DR., however, submitted that he had already forwarded a copy of the said additional ground of appeal to the respondent assessee's AR, therefore, he should be allowed to present his arguments in support thereof as in his view the matter raised through additional ground of appeal goes into the roots of the case and hence could be raised at any stage. The AR was questioned that as to whether he had any objection if the learned DR was allowed to present his case on the additional ground to which he did not raise any objection and hence in order to meet the ends of the justice, the DR was allowed to proceed on additional ground as well as the merits of the case.
5. Facts in brief are that a notice, dated 18-5-2005 was issued to the respondent assessee in the body of which the proceedings were stated to have been .initiated under section 122(5A) of the Income Tax Ordinance, 2001 though the caption of the notice besides referring to section 122(5A) also made a secondary reference to section 66A of the repealed Income Tax Ordinance, 1979 and section 66A of the General Clauses Act. In the notice intentions were shown to invoke the provisions of section 80C(5A) of the repealed Income Tax Ordinance, 1979 to the income relevant to assessment year 2000-2001. The notice was responded to, however, feeling not convinced with the said response, the Assessing Officer proceeded on to pass the amended order on 7-6-2005 on the lines indicated in the show-cause notice referred to as order under section 122(5A) of the Income Tax Ordinance, 2001.
6.3 This order was then followed by a corrigendum, dated 13-6-2005 stating as under:--
"CORRIGENDUM"
The assessment in the subject case was modified vide order, dated 7-6-2005. Prior to finalization of assessment a show-cause notice was issued to the assessee company on 18-5-2005 vide No. LTU/Audit/AC-A/2145 under section 122(5A) of the Income Tax Ordinance, 2001 read with section 66A of the repealed Income Tax Ordinance, 1979 and section 6 of General Clause Act. However, while passing the above-referred. order, the section under which the assessment was modified was inadvertently mentioned as 122(5A). The said order was passed under section 66A of the Income Tax Ordinance, 1979 read with section 6 of the General Clauses Act and section 122(1) of the Income Tax Ordinance, 2001.
This will form integrate part of the order, dated 7-6-2005 as mentioned above."
7. The respondent assessee preferred appeal before the first appellate authority who for detailed reasons recorded in the impugned order annulled the amendment order and it is this action that has brought the department into further appeal before us.
8. On the strength of the corrigendum, the learned DR argued that the order was in fact passed under section 66A of the repealed Income Tax Ordinance, 1979 and since right of appeal against such an order under the repealed Ordinance lied with the Appellate Tribunal, therefore, not only the assessee erred in filing appeal before the CIT(A), but also the first appellate authority erred in assuming jurisdiction in respect of such order/appeal.
9. The learned AR on the other hand argued that the appeal was correctly filed in the office of the worthy CIT(A) and the first appellate authority rightly assumed the jurisdiction for deciding the appeal as the notice and the order were all issued under section 122(5A) of the Income Tax Ordinance, 2001 and a corrigendum cannot be said to have changed the fate of the case and the entire underlying proceedings/records. The text of the notice and the order, particularly the footnote apprising the assessee that the appeal would lie before CIT(A), if so desired by the assessee, are patently clear facts highlighting that the order was cautiously, deliberately and intentionally passed under section 122(5A) and the corrigendum was clearly an afterthought and an attempt to legalize the proceedings which were otherwise illegal in the light of facts and appellate pronouncements. On the merits, both the rival parties reiterated their respective earlier stances embodied in the orders of the authorities below and at length dealt with in the impugned order.
10. We have considered the rival arguments and have gone through the documents particularly the show-cause notice, amendment order and the corrigendum referred to supra. We have not been able to identify any provision of law which authorizes issuance of a corrigendum after an assessment is finalized. Once an assessment is finalized, the only way an Assessing Officer could modify the earlier order is by resorting to provisions relating to rectification of mistakes and for which a statutory notice is a mandatory requirement. There is no concept of issuance of corrigendum and as such rectification without a mandatory notice is null and void and without any legal force. Even otherwise, the learned AR is correct in pointing out that underlying record including notice and order clearly show that the entire proceedings were undertaken vis-a-vis section 122(5A) of the Income Tax Ordinance, 2001 and such entire proceedings cannot, by any means, be said to have undertaken under section, 66A of the repealed Income Tax Ordinance, 1979 through issuance of subsequent corrigendum. It is clearly an afterthought. The corrigendum is illegal and it cannot, in any way; change the fate of the order under section 122(5A).
11. The learned CIT(A) was right in assuming the appellate jurisdiction as it was an order under section 122(5A). The CIT(A), though made a reference to the corrigendum but has rightly disregarded it while deciding the matter as it was a nullity in the eyes of law from the very beginning. Resultantly, the objection raised by learned DR in respect of jurisdiction of first appellate authority is devoid of any merit and is hence rejected.
12. On the merits of the case, we are in full agreement with the elaborated findings of the first appellate authority and hold that provisions of section 80C(5A) of the repealed Income Tax Ordinance, 1979 were not applicable for assessment year 2000-2001. The reliance of D the respondent assessee on reported judgment, referred to in the impugned order is well placed. In concluding that these provisions were not applicable to assessment year 2000-2001, we are further fortified by our decision in I.T.A. No.6374/LB of 2003, dated 20-2-2006 in almost similar situation. Furthermore, in the light of decision of Honourable Sindh High Court in 2005 PTD 1316, invoking the provisions of section 122(5A), in the present case was illegal, hence no interference is called for in the impugned appellate order for this reason also.
13. Consequently, the departmental appeal being devoid of any merit fails and the order of first appellate authority is upheld.
C.M.A./180/Tax(Trib.)Appeal dismissed.