ROYAL EDU CARE through Proprietor VS ASSISTANT COMMISSIONER OF INCOME TAX/TAXATION OFFICER, LAHORE, 2008 PTD-LAHORE-HIGH-COURT-LAHORE 1998 (2008)

Income Tax Ordinance (XXXI of 1979)---

----Ss. 136 & 66---Reference/appeal---Limitation---Legislative amend ments of Ss.136 & 66, Income Tax Ordinance, 1979---Impact---Intention of law (as amended) was that there was no "Appeal" provided under S.136, Income Tax Ordinance, 1979 w.e.f. 2000 and the same had been replaced by "Reference"---When in the earlier round there was a continuation of the proceedings in terms of "appeal" or "reference" the limitation provided in S.66 of the Income 'Tax Ordinance, 1979 for setting aside an order could. not be applied---Where, while mentioning the term "appeal" words filed under 5.136, Income Tax Ordinance, 1979 having also been mentioned, one should not have any doubt in his mind that it was either `appeal' or `reference' filed under S.136 which provided an exception for ignoring the limitation provided under S.66(1)(c) of the Income Tax Ordinance, 1979---Principles.

The legislature has not amended the law advisedly. The provisions of section 136 of Income Tax Ordinance, 1979 were earlier amended in 1997 when the "reference" under the subsection was converted into "Appeal". The corresponding additions were made in connecting sections including 66(1)(c) of the Ordinance. Later when the legislature in its wisdom again converted the appeal under section 136 to `Reference' through Finance Ordinance, 2000, corresponding word in other sections with special reference to section 66(I)(c) was not amended. This omission has created anomaly. The intention of the law, however, is very clear. There is no appeal provided under section 136 w.e.f. 2000 and the same has been replaced by `Reference'.

Redundancy or superfluity cannot be attributed to the legislature. No word in law is inserted without purpose. It is only an ignorance on the part of the people who hurriedly pushed amendments in law for short term purposes without realizing, the long term effects. When there is no `appeal' provided under section 136 keeping the word `Appeal' in section 66(1)(c) is nothing but negligence on the part of the draftsman and it cannot be understood to be the intention of the legislature. When in 1997, the said section had provided an appeal against the order of Income Tax Appellate Tribunal, the word `Appeal' filed were added in the corresponding S.66(1), as a result of which the limitation provided for reassessment on a remand order became inapplicable. The same should have been replaced by the words "Reference filed" after the amendment in section 136 by providing reference to High Court as against the appeal to High Court. Therefore, omission of the Draftsman is to be ignored in the presence of the facts.

When in the earlier round there was a continuation of the proceedings in terms of `Appeal or Reference' the limitation provided in section 66 for a set aside order could not be applied. The connotation `Appeal filed' would become redundant, if the same was not understood to be as `Reference' filed under the peculiar circumstances. Further since while mentioning the term `Appeal' words filed under section 136 have also been mentioned, one should not have any doubt in mind that it is either appeal or reference filed under section 136 which provides an exception for ignoring the limitation provided under section 66(1)(c).

Muhammad Inayatullah Cheema v. Sardar Ali Raza Masood Qazilbash 2002 PTD 1195 and Mst. Inayat Begum v. Commissioner of Income Tax, Zone-B, Lahore 1985 PTD 375 ref.

Latif Ahmad Qureshi for Petitioner.

Jan Muhammad Chaudhary for Respondent.

Date of hearing: 30th July, 2008.

JUDGMENT

KH. FAROOQ SAEED, J.---The instant petition has been filed impugning the order of the Assistant Commissioner of Income Tax, Taxation Officer, Unit-04, Audit Division-II, Regional Tax Office, Lahore.

2. The reason for challenging the order is that in the earlier round of litigation, the matter is still pending before the High Court wherein a reference application has been filed against the order of the Income Tax Appellate Tribunal. In compliance to the notice issued for reassessment after remand the present petitioner informed vide this reply dated 14-6-2008 that the case is pending for final adjudication before the Honourable High Court. Further on the mandate of the judgment reported as "Muhammad Inayatullah Cheema v. Sardar Ali Raza Masood Qazilbash" 2002 PTD 1195, wherein it has held by the Lahore High Court that where the matter is pending at the higher forum, the lower forum does not have jurisdiction to make reassessment, he requested the Assessing Officer to keep the reassessment proceedings pending. The Assessing Officer did not accept the request. It was observed that section 66(I) of the Income Tax Ordinance, 1979 imposes restriction and the case becomes time barred if not decided within the period prescribed therein. He was very specific in respect of the language used therein and his emphasis was on section 66(I) (c) that reads as follows:-

"Limitation for assessment in certain cases----(I) Notwith standing anything contained in section 64 and subsection (65) wherein consequence of, or to give effect to, any finding or direction contained in any order made under this chapter or chapter VII, XIII or XIV or any order made by any High Court or the Supreme Court of Pakistan in exercise of its original or appellate jurisdiction,----

(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 in which such order is received by the (Deputy Commissioner)."

3. He therefore, by way of strict interpretation of language of law held that he was unable to accept the request and contained with the proceedings. The result of which is the impugned order of the Assessing Officer which has been challenged through the instant writ petition.

4. The learned counsel now challenges the same by relying upon the judgment "Mst Inayat Begum v. Commissioner Income Tax, Zone-B, Lahore" 1985 PTD 375, wherein this Court has directed not to reassess a set aside order in a case, where the Tribunal has simultaneously referred the case to the High Court through a reference application. He also referred "Muhammad Inayatullah Cheema v. Sardar Ali Raza Masood Qazilbash" 2002 PTD 1195.

5. The learned Legal Advisor of the department however, resisted the invocation of the very writ petition. He said that the petitioner having an efficacious and prompt remedy in terms of appeal, should not have invoked the Special Jurisdiction of the Honourable Court. He further supporting the action stated that the department is bound by the language of law. The Law provides for an exception to reassessment if an "appeal" is pending while in the present, the petitioner had filed 'a reference application'. The Law of interpretation of fiscal statutes is very clear and leaves no doubt that it is the language of law, which is persist as it is not a case of doubt. The legislature having used the language "appeal" and the present petitioner having filed a "reference" there was no option before the Assessing Officer but to go with the assessment. He finally concluded by saying that if the petitioner had filed an appeal before the High Court, there was obviously an option for the Assessing Officer. He further said that the Assessing Officer being placed at the lowest tier of the judicial hierarchy, if an assessment becomes time barred by his inaction, he would be hanged by his Senior Officers.

6. Unfortunately, the legislature has not amended the law advisedly. The provisions of section 136 were earlier amended in 1997 when the "Reference" under the subsection was converted into "Appeal". The corresponding additions were made in connecting sections including 66(1)(c) mentioned above. Later when the legislature in its wisdom again converted the appeal under section 136 to `Reference' through Finance Ordinance, 2000, corresponding word in other sections with special reference to section 66(1)(c) was not amended. This omission has created anomaly. The intention of the law, however, is very clear. There is no appeal provided under section 136 w.e.f, 2000 and the same has been replaced by `Reference'.

7. The word "Appeal" obtaining in the said section becomes redundant, if interpreted in the manner, the Assessing Officer, wants us to. It is a settled principle of law that redundancy or superfluity cannot be attributed to the legislature. No word in law is inserted without purpose. It is only an ignorance on the part of the people who hurriedly pushed amendments in law for short term purposes without realization, the long term effects. When there is no `appeal' provided under section 136 keeping the word `Appeal' in section 66(1)(c) is nothing beyond negligence on the part of the draftsman and it cannot be understood to be the intention of the legislature. When in 1997, the said section had provided an appeal against the order of Income Tax Appellate Tribunal, the words `Appeal filed' were added in the corresponding S.66(1), as a result of which the limitation provided for reassessment of a remand order became inapplicable. The same should have been replaced by the words "Reference filed" after the amendment in section 136 by providing reference to High Court as against the appeal to High Court. Therefore, omission of the Draftsman is to be ignored in the presence of the facts. The judgment which is direct on the issue is "Mst Inayat Begum v. Commissioner Income Tax, Zone-B, Lahore" 1985 PTD 375 the relevant para of which is as follows:

"The learned counsel for the petitioner has argued that the assessment once made does not come to an end until the proceedings with regard to the Assessment have finally been concluded and since the matter of first assessment is still pending in the High Court, the second assessment order is illegal. Reliance is placed on the judgment on the Privy Council in the case of Commissioner Ram Das (1938) VI. ITR 414. The learned counsel for the respondent on the other hand has argued that the first assessment having been set aside. The, Income Tax Authorities are not prevented from passing a fresh assessment order, but he fails to notice that the appellate Tribunal did not simply set aside the first assessment order, but referred the matter to the High Court to seek its opinion on the question "whether the learned Tribunal was right in setting aside the order instead of cancellation". While this, reference is pending it is not open to the Income Tax authorities to treat the assessment order as simply set aside or even cancelled. They have no choice but to wait for the answer to the reference."

8. Above para. is direct on the issue. There is no doubt that when it} the earlier round there is a continuation of the proceedings in terms of `Appeal or Reference' the limitation provided in section 66 for a set aside order cannot be applied. The connotation `Appeal filed' would become redundant, if the same is not understood to be as `Reference' filed under the peculiar circumstances as already discussed above. Further since while mentioning the term `Appeal' words filed under section 136 have also been mentioned, one should not have any doubt in mind that it is either appeal or reference filed under section 136 which provides an exception for ignoring the limitation provided under section 66(1)(c).

9. The judgment reported as "Muhammad Inayatullah Cheema v. Sardar Ali Raza Masood Qazibash 2002 PTD 1195, is also relevant on the issue. The relevant para from the same is as follows:

"To my mind, the said judgment in the said case does not support the present petitioner inasmuch as the matter of first assessment is still pending before the Appellate Tribunal and the respondent having been duly intimated of the said fact ought to have waited for the decision of the appeal the writ petition is accordingly allowed with the observations that the respondent shall wait for the decision of the Income Tax Appellate Tribunal in the appeal of the petitioner and proceed further in the matter, in accordance with the decision of the said Tribunal."

10. This is where the exercise of the jurisdiction of this Court also needs reference. The judgment referred in terms of "Mst. Inayat Begum v. Commissioner of Income Tax, Zone-B, Lahore" 1985 PTD 375 directly applies on this part also. In the said case, the circumstances were identical and this Court exercised its writ jurisdiction, on the same set of circumstances. In view thereof, the objection of the learned Legal Advisor on this point also fails.

11. The result of above discussion is obvious. The counsel having informed that a reference is pending in this case the Assessing Officer should not have insisted on reassessment. Such an exercise after a subsequent finding by the High Court in the earlier round of litigation would become a wastage of time. His action of making reassessment being against the mandate of law and the judgments referred supra, therefore, is hereby disapproved and the assessment is cancelled.

M.B.A./R-43/LOrder accordingly.