VS, 2008 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 403 (2007)

(a) Income Tax Ordinance (XLIX of 2001)---

----S. 122---Income Tax Ordinance (XXXI of 1979), S. 62---Amendment of assessment--Amended assessment was cancelled by the First Appellate Authority as the provisions of S.122 of the Income Tax Ordinance 2001 were not applicable to the orders passed prior to its enforcement---Validity---Assessment was completed under S. 62 of the Income Tax Ordinance, 1971---Case having been decided in the light of judgment of High Court, was not interfered by the Appellate Tribunal.

2001 PTD 1525 rel.

(b) Income Tax Ordinance (XLIX of 2001)---

----S.122---Income Tax Ordinance (XXXI of 1979), S.62---Amendment of assessment---Assessment was finalized before 1-7-2003---Amendment of such assessment---Assessment was set aside by the First Appellate Authority--- Validity---Re-assessment proceedings under S.122 of the Income Tax Ordinance 2001 were initiated by issuance of notice on 15-4-2004 and completed on 25-5-2004---Assessments in question already stood completed under S.62 of the Income Tax Ordinance, 1979 meaning thereby that nothing was pending before promulgation of Income Tax Ordinance 2001---Assessments finalized before 1-3-2003 could not be reopened revised/amended in exercise of jurisdiction under the provision of law---First Appellate Authority was not justified in setting aside the case---Order of First Appellate Authority was vacated and amended assessment order under S.122 of the Income Tax Ordinance, 2001 were annulled.

2005 PTD1316; 2006 PTD 734 and 2006 SCMR 109 rel.

Ghazanfer Hussain D.R. for Appellant (in I.T.As.Nos.6475/LB, 6476/LB of 2004 and 502/LB of 2006).

Siraj Khalid for Respondent (in I.T.As. Nos.6475/LB, 6476/LB of 2004 and 502/LB of 2006).

Siraj Khalid for Appellant (in I.T.As. Nos.2313/LB and 2314/LB of 2005).

Ghazanfer Hussain D.R. for Respondent (in I.T. As. Nos.2313/LB and 2314/LB of 2005).

ORDER

The assessee as well as the Revenue are in cross-appeal for the assessment years 2001-2002 and 2002-2003 against the combined impugned order, dated 2-8-2004 passed by the learned CIT(A) Bahawalpur. The Revenue has objected to the setting aside of the case for de novo proceedings while the assessee has contested that the learned CIT(A) was not justified in setting aside the case, rather the same should have been cancelled. For the assessment year 2000-2001 the revenue has also come up in appeal against the cancellation of order passed under section 122(1) of the Income Tax Ordinance, 2001.

2. Briefly stated the facts of the case are that assessee in an AOP deriving income from general store, electronic items and supplies. For the assessment year 2000-2001, original assessment in the present case was finalized under section 62 of the repealed Income Tax Ordinance, 1979 (hereinafter called the repealed Ordinance). Later on, an information was received that the assessee is maintaining two bank accounts which showed huge credit entries. Statutory notices under section 122 of the Ordinance were issued which were complied with. Explanation offered by the Assessing Officer was rejected and assessment was amended under section 122 of the Ordinance. The assessee preferred appeal before the learned First Appellate Authority whereby it was contended that Income Tax Ordinance, 2001 was made effective w.e.f. 1-7-2002 whereas assessment in the present case was finalized on 29-6-2002 under the late Ordinance. In support thereof judgment of honourable Lahore High Court reported as 2001 PTD 1525 was cited at the bar. Following the above cited case-law, the learned First Appellate Authority observed that provisions of section 122 of the Income Tax Ordinance, 2001 are not applicable to the orders passed prior to its enforcement. He accordingly cancelled the amended assessment order passed under section 122 of the Income Tax Ordinance, 2001. Hence the instant appeal.

3. We have heard both the parties and have gone through the relevant orders. Admittedly, the assessment in the present case was completed under section 62 of the repealed Ordinance on 29-6-2002 i.e. before the promulgation of new Income Tax Ordinance, 2001. The case was decided in the light of judgment of the Lahore High Court cited supra, hence we are not inclined to interfere in the impugned order which is hereby maintained.

4. With regard to cross-appeals pertaining to the assessment years 2001-2002 and 2002-2003 the learned A.R. at the very outset produced copies of the reported judgments of the Karachi High Court cited as 2005 PTD 1316 and 2006 PTD 734 (H.C. Karachi) wherein it has been held that the assessments finalized before 1-7-2003 cannot be reopened/amen ded in exercise of jurisdiction under the provisions of section 122(5A) of the Income Tax Ordinance, 2001. For the sake of convenience the extract from the reported judgment cited as 2005 PTD 1316 is reproduced as under:--

"The facts and circumstances in the present petitions being squarely similar, we are persuaded to agree with the contention of Mr. Mansoorul Arfin, learned counsel for the petitioners that the provision contained in subsection (5-A) of section 122 of the Income Tax Ordinance, 2001 inserted with effect from 1-7-2003, is not retrospective in operation. Consequently, the assessments finalized before 1-7-2003 cannot be reopened/revised/amended in exercise of jurisdiction under the above provision."

In an other judgment reported as 2006 PTD 734 (H.C. Kar) it has been held:--

"Consequent to the above discussion and findings, the petition is allowed in the following terms:-

"(1) The notices issued by the Respondent No. 12, under section 122-(5A) for the Assessment years 2000-2001 and 2001-2002 are without jurisdiction which are hereby quashed in pursuance of our earlier judgment in the case of Honda Shahrahe Faisal v. Regional Commissioner, C.P.D. 643 of 2004.

(2) The notices issued by the Respondent No.1, under section 122 (5A) for the tax years, 2003 and 2004 are also declared to be without jurisdiction and are hereby quashed for the reasons, stated in the judgment.

(3) Proceedings if any, in pursuance of the above notices are also quashed."

5. It is also not out of place to mention here that the Honourable Supreme Court of Pakistan vide reported judgment cited as 2006 SCMR 109 confirmed the judgment of the Karachi High Court, reported as 2005 PTD 1316 cited supra.

6. Admittedly, in the present case, re-assessment proceedings under section 122 were initiated by issuance of notice on 15-4-2004 and completed on 25-5-2004. The assessments already stood completed under section 62 of the repealed Ordinance meaning thereby that nothing was pending before promulgation of new Income Tax Ordinance, 2001. As per pronouncements by the higher legal fora, the assessments finalized before 1-7-2003 cannot be reopened/revised/amended in exercise of jurisdiction under the above provision of law. In view of the above facts, we are of the opinion that the learned CIT(A) was not justified in setting aside the case. The order of the learned CIT(A) is vacated and amended assessment orders under section 122 are hereby annulled.

7. Since we have vacated the impugned order and annulled the assessments framed under section 122 of the Income Tax Ordinance, 2001, the appeals of the Revenue have become infructuous, stand dismissed.

8. It is ordered accordingly.

C.M.A./182/Tax (Trib.)Order accordingly.