2009 P T D (Trib.) 1536
[Income-tax Appellate Tribunal Pakistan]
Before Jawaid Masood Tahir Bhatti, Judicial Member and Masood Ali Jamshed, Accountant Member
I.T.As. Nos.35/LB and 36/LB of 2009, decided on 09/05/2009.
(a) Income Tax Ordinance (XLIX of 2001)---
----S.122(5A), 120, 221, 170(4) & 124(4)---Amendment of assessment--Orders under S.170(4) of the Income Tax Ordinance, 2001 were passed but no refunds were issued---Subsequently, such orders were cancelled by passing order under S.221 of the Income Tax Ordinance, 2001---Appellate Tribunal found that the returns filed by the taxpayer and order passed under S.170 of the Income Tax Ordinance, 2001 were in accordance with law---No appeal effect order was issued as provided under S.124(4) of the Income Tax Ordinance, 2001---Instead of making compliance of the appellate orders of the Appellate Tribunal, Additional Commissioner initiated proceedings under S.122(5A) of the Income Tax Ordinance, 2001 and amended the order by treating the declared sales/supplies under Presumptive Tax Regime---Validity---First Appellate Authority maintained the orders passed under S.221 of the Income Tax Ordinance, 2001 amending the orders treated to have been passed under S.120 of the Income Tax Ordinance, 2001---Assessee filed appeal before Appellate Tribunal which was decided in favour of the assessee/taxpayer by holding that the order passed under S.170 of the Income Tax Ordinance, 2001 was in accordance with law---Such position indicated that the order treated to have been passed under S.120 of the Income Tax Ordinance, 2001, the order passed under. S.221 of the Income Tax Ordinance, 2001 amending the order passed under S.120, the appellate order of First Appellate Authority had merged into the order of Appellate Tribunal--Original order treated to have been passed under S.120 of the Income Tax Ordinance, 2001 ceased to exist and was absorbed into the appellate order---Additional Commissioner did not have jurisdiction to amend the order of Appellate Tribunal which had already come up before the Appellate Tribunal---Order passed by the Taxation Officer/Additional Commissioner under S.122(5A) of the Income Tax Ordinance, 2001 had been passed without having jurisdiction and the First Appellate Authority had maintained the order without any justification---Order of First Appellate Authority was vacated and the order passed by the Additional Commissioner/Taxation Officer under S.122(5A) of the Income Tax Ordinance, 2001 were cancelled by tile Appellate Tribunal---Consequently, order already passed by the Taxation Officer under Ss.170(4)/120 of the Income Tax Ordinance, 2001 were restored.
2008 PTD (Trib.) 929 ref. 2008 PTD 1525 rel.
(b) Income Tax Ordinance (XLIX of 2001)---
----S.122(5A)---Amendment of assessment---Once the matter had come up to the Appellate Tribunal and the Appellate Tribunal had given specific observations regarding the assessment by holding that the orders passed by the Taxation Officer were in accordance with law, no order could be passed on the same issues by the Taxation Office by amending the orders regarding those observations which had already been made.
Imran Rashid for Appellant.
Ch. Safdar Hussain, D.R. for Respondent.
ORDER
Through these two appeals the consolidated impugned order of the learned CIT(A), dated 16-10-2008 for the tax years, 2004 and 2005 has been objected by the appellant on the following common grounds:--
(1) "That the amended order passed under section 122(5A) by the Additional Commissioner considering the assessment order passed under section 120 as erroneous and prejudice to the interest of Revenue was illegal as no such power of consideration was held by him and the First Appellate Authority, ignoring the binding decisions of the ITAT relied upon by the appellant, was not justified to confirm the said amended orders.
(2) That the First Appellate Authority was not justified to confirm the amendment made under section 122(5A) in the order passed under section 120 which was neither erroneous nor prejudicial to the interest of revenue.'
(3) That the First Appellate Authority erred to confirm the order of amendment passed without jurisdiction by the Additional Commissioner Audit-B as the jurisdiction over the case was assigned to Additional Commissioner Audit-A by the Commissioner, Audit Division vide his jurisdiction Order No.336, dated 7-6-2007.
(4) That the First Appellate Authority was not justified to confirm the action of the amending authority who unlike the facts available on record gave findings that the status of the taxpayer as manufacture was doubtful.
(5) That the amending authority erred to amend the order on the basis of statement filed under section 115(4) for the tax year, 2003 and First Appellate Authority also erred to confirm the said amended order.
(6) That the order passed under section 120 rectified under section 221 was merged with the order of the Honourable ITAT and further amendment by the Additional Commissioner under section 122(5A) and confirmation by the First Appellate Authority have no legal sanctity."
The taxpayer/appellant in this case is deriving income from manufacturing and supply of poly packing bags and is registered as a manufacturer under the Sales Tax Act, 1990 vide Registration No.08-03-3900-008-73. As per the contention of the taxpayer he has made sales of its products to various prescribed persons who has deducted income tax under the relevant provisions of law. The returns for both the years under review were filed by due dates and the refund of excess deductions/collections were applied through applications. The claim of refund for both the years was accepted and the order in this respect was passed under section 170(4) of the Ordinance, 2001 on 24-9-2005 and 11-11-2006 respectively. As per the contention of the learned counsel for the taxpayer although the orders under section 170(4) were passed determining refund of Rs.154,053 and Rs.618,714 respectively for the two years but no refund vouchers were issued. Subsequently vide orders, dated 14-6-2007 passed under section 221 the Taxation officer has cancelled the orders passed under section 170(4) of the Income Tax Ordinance, 2001. The taxpayer filed appeal before the learned CIT(A) and subsequently second appeal before this Tribunal which was accepted and it was held by this Tribunal that "after considering the above referred provision of law we are of the view that the returns filed by the taxpayer for the two tax years under review i.e. 2004 and 2005 and the order passed under section 170 by the Taxation Officer were in accordance with law". The learned counsel has contended that on behalf of the taxpayer in spite of repeated requests, the Taxation Officer did not pass any order and even did not issue appeal effect order as provided under section 124(4) of the Ordinance, 2001. Instead of making compliance of the appellate orders of this Tribunal, the Additional Commissioner Audit-B initiated proceedings under section 122(5A) and amended the orders by treating the declared sales/supplies under Presumptive Tax Regime vide orders, dated 31-5-2008. The Taxpayer has again challenged the order before the learned CIT(A) who has dismissed the appeal filed by the taxpayer. The learned counsel representing the appellant has contended that section 122(5A) provides two conditions to amend already completed assessment which are, that the order should be erroneous and the second condition is that the order should also be prejudicial to the interest of Revenue. It has been contended that once this Tribunal vide order, dated 4-2-2008 has held that the returns filed by the assessee are in accordance with law, the Additional Commissioner has no jurisdiction to hold that the order is erroneous and prejudicial to the interest of Revenue. While perusal of the order of this Tribunal, dated 4-2-2008 we have found that the detailed order has been passed and at page 8 to 10 after considering all the facts of the assessment it has been held that the orders passed under section 170 by the Taxation Officer were in accordance with law. We are therefore of the view that once the matter has come up to this Tribunal and this Tribunal has given specific observations regarding the assessment by holding that the orders passed by the Taxation Officer are in accordance with law, no order can be passed on the same issues by the Taxation Officer by amending the orders regarding those observations which have already been made.
The learned counsel has also raised another legal issue that the jurisdiction over the case of the taxpayer was assigned (by name) to the Additional Commissioner (Audit-A) vide jurisdiction order No.336, dated 7-6-2007. It has been contended on behalf of the taxpayer that another jurisdiction order was issued vide Order No.414, dated 27-11-2007 without disturbing the jurisdiction order specifying the order of jurisdiction and the jurisdiction over the case which is the subject matter of the present appeal remained' still with the Additional Commissioner (Audit-A) and the order under section 122(5A) passed by the Additional Commissioner was without any jurisdiction, as order in this case has been passed by Additional Commissioner (Audit-B).
On behalf of the department learned DR has contended that the case was transferred and specific order in this regard was passed and the order has been passed by the Additional Commissioner which was having the jurisdiction in this respect. However no evidence in this regard has been placed before this Bench despite the fact that the learned DR is also the author of the order passed under section 122(5A) in this case. We therefore find force in the contentions made by the learned counsel for the taxpayer. We are, of the view that the order has been passed by Taxation Officer who was not having the jurisdiction in this regard.
The counsel for the taxpayer has contended the impugned orders on the merits of the case also. In this regard it has been contended that the Taxation Officer has ignored the facts and the taxpayer is a manufacturer and the status in this regard has been accepted by the Sales Tax Department as the taxpayer is registered in the Sales Tax Department as manufacturer. The learned counsel in this regard has also referred report of the Inspector on this issue and subsequently visited by the DCIT and Inspector who have confirmed that the status of taxpayer is as manufacturer. It has been contended by the learned counsel of the appellant that the Taxation Officer/Additional Commissioner himself has held the taxpayer as not manufacturer on the basis of presumption as is evident as observed in the last para of his order under section 122(5A). He has mentioned that the status of the taxpayer as manufacturer is doubtful which clearly shows that Taxation Officer was not himself confirmed regarding the status of the assessee and has passed the order no the basis of presumption and surmises. The learned counsel has further contended that no declaration was furnished opting for presumptive tax regime and the Additional Commissioner who has amended order under section 122(5A) was not justified to amend the order on the basis of the statement filed for the preceding year as this Tribunal has already disapproved such action in the decision reported as 2008 PTD (Trib.) 929. We have further noted that the original assessment order treated to have been passed under section 120 was amended under section 221 of the Ordinance, 2001 vide order, dated 14-6-2007. The relevant portion of the amended order in respect of both the years is reproduced hereunder:-
"In view of the above facts the returns have wrongly been filed instead of filing of statement under section 115(4) for both the year under consideration. Hence order passed under section 120 of the Income Tax Ordinance, 2001 mistakenly been passed which are liable to be rectified under section 221 of the Income Tax Ordinance, 2001.
Assessments for both the years i.e. Tax years, 2004 and 2005 are hereby rectified under section 221 of the Income Tax Ordinance, 2001 .."
We have noted that the learned Commissioner (Appeals) maintained the orders passed by the Taxation Officer under section 221 amending the orders treated to have been passed under section 120. The taxpayer has filed appeal before this Tribunal and this Tribunal has decided this appeal in favour of the taxpayer vide order, dated 4-2-2008 in ITAs Nos. 1125 and 1126/LB/2007 holding therein that the order passed under section 170 by the Taxation Officer were in accordance with law. We are therefore of the view that the above referred position clearly indicates that the order treated to have been passed under section 120, the order passed under section 221 amending the order passed under section 120, the appellate order of the CIT(A) have merged into the above referred order of this Tribunal, dated 4-2-2008 in ITAs Nos.1125 and 1126/LB/2007 and in such circumstances the original order treated to have been passed under section 120 ceased to exist and has absorbed into the appellate order. We are of the view that the Additional Commissioner in this case did not have jurisdiction to amend the order of the Tribunal which have already come up before this Tribunal. We in this respect seeks strength from the decision of the Honourable Lahore High Court reported as 2008 PTD 1525 wherein, it has been held that the IAC was not competent to reopen the assessment which had merged into the appellate order.
Considering all the facts and circumstances of the case we are of the view that the order passed by the Taxation Officer/Additional Commissioner under section 122(5A) of the Ordinance, 2001 have been passed without having jurisdiction and the learned CIT(A) has maintained the order without any justification. The impugned order of the learned CIT(A) in this regard is therefore vacated and the order passed by the Additional Commissioner/Taxation Officer under section 122(5A) for both the tax years under review i.e. 2004 and 2005 are cancelled. Consequently, the order already passed by the Taxation Officer under sections 170(4)/120 are restored.
Both the appeals filed by the assessee are allowed.
C.M.A./74/Tax (Trib.)Appeal accepted.