VS, 2008 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 701 (2007)

Income Tax Ordinance (XXXI of 1979)---

----Ss. 66, 63/66A, 62 & 64---Limitation for assessment in certain cases---Order had been made under S.66A of the Income Tax Ordinance, 1979 on 15-2-2001 and Taxation Officer had made the order in consequence of giving effect to that order on 14-2-2005, which should have been made at any time within two years from the end of financial year in which such order was received---Admittedly, order under S.66A of the Income Tax Ordinance, 1979 cancelling the original assessment had been made on 15-2-2001 and in compliance with that order, the assessment order under Ss.66A/63 or 62 of the Income Tax Ordinance, 1979 had to be made on or before 30-6-2003, but the Taxation Officer had made the order on 14-6-2005, which was barred by time---If otherwise appeal filed by the assessee before the Appellate Tribunal was also given consideration, even then, the appellate Tribunal had decided the matter on 17-10-2003 while assessment had to be made within one year from the end of the financial year in which the said order was received by the Assessing Officer---First Appellate Authority had mentioned in its order that order of Appellate Tribunal was received on 30-11-2003 and assessment had to be made within one year from the end of the financial year in which the said order was received, but the order had been passed on 14-6-2005, which was barred by time limitation---Order passed by the Taxation Officer under Ss.63/66A dated 14-6-2005 being passed after the period of limitation, was void ab initio and illegal and was cancelled---Declared return was restored and appeal filed by the assessee was allowed by the Appellate Tribunal.

2000 PTD (Trib.) 3377 ref.

Nadeem Munawar for Appellant.

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

ORDER

JAWAID MASOOD TAHIR BHATTI (JUDICIAL MEMBER).---Through this appeal, the appellant has objected to the impugned order of the learned C.I.T. (A), dated 17-1-2006 for the assessment year 1995-96 on the following grounds:--

(2) That the assessment order passed under sections 63/66A of the repealed Income Tax Ordinance, 1979 is barred by time limitation as mentioned in section 66 of the repealed Income Tax Ordinance, 1979 and the worthy C.I.T. (A) was not justified in holding that this ground is not valid.

(3) That both the authorities below were not justified in holding that the show-cause notice under section 62 of the repealed Income Tax Ordinance, 1979 was properly served.

(4) That the estimation of alleged concealed/suppressed receipts of. Rs.292,274 as confirmed by the worthy C.I.T. (A) is unjustified, highly excessive and based on surmises and. conjectures.

(5) That the alleged concealed/suppressed receipts and added in the total income of the assessee/appellant without mentioning any specific head of income and the worthy C.I.T. (A) was not justified in leaving this ground.

Mr. Nadeem Munawar, Advocates has appeared on behalf of the appellant and has contended that the appellant in this case is an A.O.P. deriving income from running merely husking, which has wrongly been mentioned in the assessment order as well as in the impugned order of the learned C.I.T. (A) as rice mill. He has contended that return for the year under review i.e. 1995-96 was filed declaring net income at Rs.68,500 with receipts of Rs. 300,614 that were accepted under section 59(1) of the repealed Ordinance, 1979. Inspecting Additional Commissioner of Income Tax cancelled the assessment vide order, dated 15-2-2001 with the direction to the Taxation Officer for reassessment. Against that order, the appellant preferred appeal before this Tribunal, which was dismissed in non-prosecution/defective vide order, dated 17-10-2003 in I.T.A. No.1441/LB of 2001. The Taxation Officer has passed the order in compliance of the order under section 66A of the repealed Ordinance, 1979 on 14-6-2005 which according to the learned counsel for the appellant is barred by time limitation. He has in this respect referred section 66, which is regarding limitation for assessment in certain cases and for the facility of the judgment is reproduced hereunder: ---

"Limitation for assessment in certain cases:--

(1) Notwithstanding anything contained in section 64 and sub-section (3) of section 65, where in consequence of, or to give effect to, any finding or direction contained in any order made under this Chapter or Chapters VIII, XIII or XIV or any order made by any High Court for the Supreme Court of Pakistan in exercise of its original appellate jurisdiction,--

(a) an assessment is to be made on any firm or a partner of any firm; or

(b) any assessment is to be made on the assessee or any other person; or

(c) an assessment has been set aside, in full or in part, by an order under section 132 or section 135 and no appeal is filed under section 134 against such order or no appeal filed under section 136 in respect thereof, as the case may be, such, assessment may be made at any time within two years in any case to which clause (a) or clause (b) applies, and within one year in any case to which clause (c) applies, from the end of the financial year in which such order is received by the Deputy Commissioner.

(2) Where, by any such order, as is referred to in subsection, (1), any income is excluded:---

(i) from the total income of the assessee for any year and held to be the income of another year;

(ii) from the total income of one person and held to be income of another persons,

(iii) the assessment of such income as income of another income year or of another person, as the case may be, shall, for the purposes of the said subsection, be deemed to be an assessment made inconsequence of, or to give effect to, a finding or direction contained in such order.

(3) Notwithstanding anything contained in this Ordinance, were the ownership of any property the income from which is chargeable under this Ordinance is in dispute in any Civil Court in Pakistan, the assessment on any person in respect of such income may be made at anytime within one year of the end of the financial year in which the decision of such Court is brought, or otherwise comes, to the notice of the Deputy Commissioner."

According to learned counsel, in view of the above provisions of law, assessment in consequence of section 66A of the repealed Ordinance, 1979 should have been completed on or before 30-6-2003 while the Taxation Officer has made the order under sections 63/66A of the repealed Ordinance, 1979 on 14-6-2005. He has contended that in the case of the present assessee, clause (b) of subsection (1) of section 66 is applicable, as assessment in this case has been made on the assessee which may be any other person. He has contended that at the most, sub-clause (c) of subsection (1) of section 66 may apply in the case of assessee, if it is presumed that the matter was agitated before the Tribunal by the assessee, but in that case also, present assessment under review will be barred by time limitation, as in that situation also, assessment will be made within one year in any case in which clause (c) applies. The learned counsel has contended that the observations made by the leaned C.I.T. (A) at page 2 is not correct, as he has observed that "as the order of the learned ITAT was received on 3-11-2003 whereas assessment was made on 14-6-2003 that was served 8-8-2005". The learned counsel for the appellant to strengthen his view point on the issue of limitation has placed reliance on the decision of this Tribunal reported as 2000 PTD (Trib.) 3377 wherein this legal issue has been discussed in para.4, which is reproduced hereunder:---

"We have given anxious consideration to the arguments of the learned counsel for the assessee on the point of limitation and feel that he has unnecessary plunged into deep waters, without touching the bottom of the ocean, in an attempt to find out whether or not there was any limitation, prescribed for making fresh assessment after the cancellation of original assessment by the I.A.C. under section 66A of the Ordinance. If he were to remain firm, on the ground and not to plunge into the water, he would have known that the provisions of, the Ordinance are very much there in respect of limitation for the assessment to be made in consequence of or to give effect to any finding or direction contained in any order made under section 66A of the Ordinance. It is very clearly provided in section 66(1) of the Ordinance that assessment in such a case can be made at any time within two years from the end of the financial year in which order of the I.A.C. made under section 66A (which falls under Chapter VII) is received by the Assessing Officer. In this case, the I.A.C. made order under section 66A on 16-4-1995 and the fresh assessment was finalized on 10-5-1997 by the Special Officer in consequence of I.A.C's. order which was before the period of limitation of two years prescribed under section 66(1) of the Ordinance."

On the other hand, learned DR is supporting the orders of the Officers below.

I have heard the learned representatives from both the sides and have also perused the impugned order of the learned C.I.T. (A), the assessment order, case law referred by the learned counsel and the provisions of law referred supra.

I am of the view that late Ordinance, 1979 has provided certain limitation regarding assessment and reopening of the case. Section 64 of the late Ordinance, 1979 is regarding limitation for assessment, wherein it has been specifically mentioned that "No assessment under section 59A, section 62, or section 63 shall be made after expiration of two years from the end of the assessment year in which total income was first assessable". Under subsection (2) of this section where return of total income has been filed after the end of financial year in which the last date of filing of such return specified in section 55 falls, no assessment order under section 59A, section 62 or section 63 shall be made after the expiration of two years from the end of the financial year in which the said return is filed. Likewise, under subsection (3) of this section, where for any income year, the assessee has failed to furnish return of total income, no assessment under section 62 or 63 shall be made after the expiration of two years from the end of the financial year in which notice under section 56, subsection (3) of section 72, or subsection (3) of section 81, as the case may be was served. Likewise, under section 65, specific limitation regarding issuance of notices has been provided.

Through section 66, which has been referred in the arguments of the learned counsel for the appellant in the above paras of this order, it has been specifically mentioned that "Notwithstanding anything contained in section 64 and subsection (3) of section 65 where in consequence of or to give. effect, to any finding or direction contained in any order made' under this Chapter or Chapters VIII, XIII,, or XIV or any order made by any High Court or the Supreme Court of Pakistan in exercise of its original appellate jurisdiction ", "the period of limitation will be two years from the end of the financial year in which such order is received by the Deputy Commissioner". In the present case order has been made under section 66A by the Inspecting Additional Commissioner on 15-2-2001 and Taxation Officer has made the order in consequence of giving effect to that order in the case of the present assessee on 14-2-2005 which should have been made at any time within two years from the end of financial year in which such order is received. Admittedly, the order in this case under section 66A cancelling the original assessment has been made on 15-2-2001 and in compliance to this order, the assessment order under section 66A/63 or 62 of the repealed Ordinance should have to be made on or before 30-6-2003 but the Taxation Officer has made the order on 14-6-2005 which is barred by time in any case. Even otherwise, if appeal filed by the assessee before this Tribunal is also given consideration, though it is not relevant, even then, the Tribunal has decided the matter on 17-10-2003 and this case also, assessment has to be made within one yea from the end of the financial year in which the said order is received by the D.C.I.T. The learned C.I.T.(A) in the impugned order has mentioned that the order of this Tribunal was received on 30-11-2003. In that case also, assessment has to be made within one year from the end of the financial year in which the said order was received, but the order has been passed on 14-6-2005 which is barred by time limitation.

After considering all these provisions of law, I am of the considered view that the order passed by the Taxation. Officer under sections 63/66A, dated 14-6-2005 being passed after the period of limitation is void ab initio and illegal and is, therefore, cancelled. The declared return in this case is, therefore, restored and the appeal filed by the assessee is allowed.

C.M.A./13/Tax(Trib.)Appeal accepted.