VS, 2009 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 145 (2006)

(a) Income Tax Ordinance (XXXI of 1979)---

----Ss. 87, 88 & 156(2)---Charge of additional tax for failure to pay advance tax---Levy of additional tax without formal order and confrontation-Set aside of such order by the First Appellate Authority---Validity---After recognition of the fact that no order was in existence, additional tax under Ss. 87 & 88 of the Income Tax Ordinance, 1979 could not be levied---Assessing Officer also committed flagrant violation of law when he proceeded to levy tax under Ss.87 & 88 of the Income Tax Ordinance, 1979 without confronting the assessee under S.156(2) of the Income Tax Ordinance, 1979---Since assessment was made in flagrant violation of law, firstly there was no formal order in the field, and secondly, the assessee was not confronted through issuance of notice under S. 156(2) of the Income Tax Ordinance, 1979---Non-issuance of requisite notice vitiated the whole proceedings---Appellate Tribunal vacated the order passed by the First Appellate Authority whereby he remanded the case of Assessing Officer and also cancelled the assessment finalized by the Assessing Officer.

(b) Income-tax---

----Remand of illegal order---Validity---Once the First Appellate Authority had come to the conclusion that assessment framed by the Assessing Officer was patently illegal, he had no legal justification to remand the case to Assessing Officer for assessment afresh---Power to remand should not be used in a routine manner, especially, to give an advantage to revenue to improve its case or to fill in the lacuna already crept in the assessment.

Irfan Ilyas, C.A. for Appellant.

Ghazanfar Ali, D.R. for Respondent.

ORDER

SYED NADEEM SAQLAIN (JUDICIAL MEMBER).---The titled two appeals for the assessment years 1996-97 and 1997-98 have been preferred at the instance of the assessee/appellant calling in question the impugned order dated 20-12-2004 passed by the learned C.I.T.(A) Zone-II, Lahore. The common ground which has been alleged at the bar is that the Assessing Officer erred in law while levying additional tax under sections 87 and 88 of the repealed Income Tax Ordinance, 1979 (hereinafter called the repealed Ordinance) and the learned C.I.T. (A) was also wrong in setting aside the impugned levy of tax for de novo proceedings.

2. The facts in brief are that the Assessing Officer levied additional tax under sections 87 and 88 of the repealed Ordinance by resorting to section 156 of the repealed Ordinance. The instant tax was levied by showing it in the calculation of IT-30 and also forming part of demand notice. Feeling aggrieved by the assessment order, the assessee approached the learned first appellate authority who vide an order dated 20-12-2004 set aside the case for de novo proceedings. The assessee in further appeal is impugning the same.

3. The learned A.R. has vehemently argued the case and contended that there was no assessment order ever passed by the Assessing Officer for the assessment year under consideration. It was contended by the learned A.R. that without passing a formal order and determination of facts and the tax leviable, no additional tax liability could be incurred. The learned A.R. further argued that imposition of tax through section 156 of the repealed Ordinance is not maintainable since additional tax was imposed without confronting the assessee under section 156 (2) of the repealed Ordinance. The learned D.R. on the other hand opposed the arguments advanced by the learned A.R.

4. There is no denying the fact that no formal order has been passed by the Assessing Officer in the instant case. It is also admitted fact that factum of non availability or passing of formal order has been duly mentioned by the learned C.I.T. (A) in his impugned order which is as under:--

"In the absence of any formal order evolving the basis for levy of impugned additional taxes, no adjudication is possible as to maintainability of the impugned levies."

5. We have no hesitation in observing that after recognition of this fact that no order was in existence, additional tax under sections 87 and 88 cannot be levied. It is also worth mentioning that the Assessing Officer committed flagrant violation of law when he proceeded to levy tax under sections 87 and 88 without confronting the assessee under section 156(2) of the repealed Ordinance. In this view of the fact, we cancel the alleged assessments framed by the Assessing Officer and also vacate the impugned appellate order whereby he set aside the case for de novo proceedings.

6. It will not be out of place to observe that once the learned C.I.T.(A) has come to the conclusion that assessment framed by the Assessing Officer was patently illegal, he had no legal justification to remand the case to the Assessing Officer for assessment afresh. It has been held time and again by the Tribunal as well as other higher legal fora that power to remand should not be used in a routine manner, especially, to give an advantage to revenue to improve its case or to fill in the lacuna already crept in the assessment.

7. For the foregoing reasons, we vacate the impugned order passed by the C.I.T.(A) whereby he remanded the case to the Assessing Officer, and also cancelled the assessment finalized by the Assessing Officer since it was made in flagrant violation of law. Firstly there was no formal order in the field, and secondly, the assessee was not confronted through issuance of notice under section 156(2) of the repealed Ordinance. Non-issuance of requisite notice vitiated 'the whole proceedings.

8. Assessee's appeals succeed as indicated above.

C.M.A./105/Tax(Trib.)Appeals succeeded.