2009 P T D (Trib.) 173
[Income-tax Appellate Tribunal Pakistan]
Before Jawaid Masood Tahir Bhatti, Judicial Member
I.T.As. Nos.1262/LB to 1266/LB of 2007, decided on 01/09/2008.
(a) Income Tax Ordinance (XLIX of 2001)---
----S.221---General Clauses Act (X of 1897), S.21(6)---Rectification of mistake---Application for recall of assessment order---Rejection of---Filing of appeal against order of rejection of recall application moved under S.221 of the Income Tax Ordinance, 2001 read with S.21(6) of the General Clauses Act, 1897---Validity---First Appellate Authority had rightly admitted the appeals for hearing as the appeals had been filed on receipt of rejection order of recall application.
ITAT vide No. 5077/LB/2001; (1987) 56 Tax 130 and I.T.A. No.1266/LB of 2006 rel.
(b) Income Tax Ordinance (XLIX of 2001)---
----Ss.122A & 122(5A)---Revision by the Commissioner---Jurisdiction---Correspondence between Additional Commissioner and the Commissioner of Income Tax---Suo motu order passed under S.122A of the Income Tax Ordinance, 2001 by the Commissioner of Income Tax was against the very spirit of provisions of the said section as stipulation to invoke jurisdiction under the said section was suo motu calling for record of any proceeding under the Income Tax Ordinance, 2001 or under the Income Tax Ordinance, 1979 in which an order had been passed by any Taxation Officer other than the Commissioner (Appeals) while in the present case exchange of correspondence between the Additional Commissioner and the Commissioner of Income Tax vividly and abundantly witnessed of first stressing and directing by the Commissioner to the Additional Commissioner to pass amendment order under S.122(5A) of the Income Tax Ordinance, 2001 and on refusal to do so by the Additional Commissioner by long drawn communication and requesting to the Commissioner to invoke the provisions of S.122A of the Income Tax Ordinance, 2001, the Commissioner of Income Tax cancelled the refund order passed under Ss. 99(3)/170 of the Income Tax Ordinance, 2001 through revisional order made under S.122A of the Income Tax Ordinance, 2001 which could not be termed as suo motu.
1993 SCMR 2071 and 1993 PTD 1629 rel.
(c) Income Tax Ordinance (XLIX of 2001)---
----S.122A---Finance Act (I of 2003), preamble---Revision by Commissioner---Retrospective effect---Section 122A of the Income Tax Ordinance, 2001 was inserted by the Finance Act, 2003 which could not be operated retrospectively until and unless specifically provided to be so applied.
2008 PTD (Trib.) 1226 and (2007) 95 Tax 67 (Trib.) (sic.) rel.
(d) Income Tax Ordinance (XLIX of 2001)---
----S.143-B---Statement regarding certain assessees---No bar to file return after filing statement---If assessee was not obliged to file statement under S.143-B of the Income Tax Ordinance, 1979 and even if he filed the same wrongly, he could furnish the return---No bar to file return even if statement was filed earlier.
2005 PTD 1607 rel.
2002 PTD (Trib.) 228; I.T.A. No.1883/KB of 1999-2000 and 2007 PTD (Trib.) 1680 ref.
(e) Income Tax Ordinance (XLIX of 2001)---
----Ss.122A & 122(5A)---Revision by Commissioner---Order under S.122A of the Income Tax Ordinance, 2001 contained all the contents/intentions/ingredients of an amendment order under S.122(5A) of the Income Tax Ordinance, 2001---By merely writing and stating the same as an order under S.122A of the Income Tax Ordinance, 2001, did not make it a revisional order---For making a revision order under S.122A of the Income Tax Ordinance, 2001, it must be tailored according to the provisions and stipulations as mentioned in the said section.
Tax Forum-2007 (57) ref.
PLD 1976 Kar. 600 rel.
(f) Income Tax Ordinance (XLIX of 2001)---
----Ss. 122(5) & 122(5A)---Revision by Commissioner---If the Commissioner of Income Tax intended to reduce the refund or create a liability, the provisions of the Income Tax Ordinance, 2001 did not bar him to proceed himself under S.122(5) or 122(5A) of the Income Tax Ordinance, 2001 as warranted by the facts of the case.
(g) Income Tax Ordinance (XLIX of 2001)---
----Ss.122A & 122(5A)---Revision by Commissioner---Initiation of proceedings on the suggestion of Additional Commissioner of Income Tax by the Commissioner of Income Tax---Validity---Additional Commissioner was not justified to suspend/freeze the proceedings initiated under S.122(5A) of the Income Tax Ordinance, 2001 unattended which he was competent to do so and the Commissioner of Income Tax was not legally right in invoking the proceedings on the suggestion of Additional Commissioner of Income Tax instead of suo motu and passing the order under S.122A of the Income Tax Ordinance, 2001 which was entirely against the very spirit of the provisions contained in the said section---Order under S.122A of the Income Tax Ordinance, 2001 was not tenable in the eye of law in circumstances.
1965 PTD 321 and 1993 PTD 1629 SC Pak ref.
PLD 1975 SC 331 distinguished.
(h) Income Tax Ordinance (XLIX of 2001)---
----Ss.127 & 122A---Appeal to Commissioner (Appeals)---Order passed by Commissioner under S.122A of the Income Tax Ordinance, 2001 having the effect of enhancing the assessment or reducing or refunding or otherwise increasing the liability of the assessee" due to unambiguous provisions of law is appealable before the Commissioner under S.127 of the Income Tax Ordinance, 2001.
1999 PTD 4061 and 2001 SCMR 777 rel.
Mrs. Sabiha Mujahid, D.R., Ghulam Kazim Hussain IAC (MN) and Akram Khan ITO (MN) for Appellants.
Niaz Ahmed for Respondent.
ORDER
JAWAID MASOOD TAHIR BHATTI (JUDICIAL MEMBER).---Through these five appeals the appellant department has objected against the consolidated impugned order of the learned CIT(A), dated 11-9-2007 for the assessment years 1998-99 to 2002-2003 on the following common grounds:--
That the order of the learned CIT(A) is contrary to law and facts of the case.
That the order of the learned CIT(A) erred in assuming jurisdiction under section 127 of the Income Tax Ordinance, 2001 to adjudicate Revision Order under section 122A of the said Ordinance. Reliance is placed on:--
1965 PTD 321.
1993 PTD 1629 SC PAK
That the order of the learned CIT(A) was also not justified to entertain a time barred appeal.
That learned CIT(A) was not justified to ignore the provisions of sections 211(2) and 213 of the Income Tax Ordinance, 2001.
That the order of the learned CIT(A) was not justified to hold that provisions of section 122A cannot be invoked where proceedings under section 122(5A) are pending.
That the order of the learned CIT(A) was not justified to adjudicate beyond the grounds of appeal in respect of section 122(5A) of the Ordinance.
That the order of the learned CIT(A) was not justified to ignore Article 24(1) of the Constitution of Pakistan.
That the order of the learned CIT(A) was justified to rely upon irrelevant case-law for assumption of his jurisdiction.
That the learned CIT(A) was not justified to ignore that the appeal was filed to avoid repayment of refund received through fraud.
That the order of the learned CIT(A) erred to ignore the fact that taxpayer was a commercial importer as per history of the case.
That the order of the learned CIT(A) erred to ignore the fact of tampering the record with the connivance of staff.
That the order of the learned CIT(A) has incorrectly presumed that ratio of Honourable Supreme Court's decision cited as PLD 1975 SC 331 does not apply to the present case.
That the order of the learned CIT(A) was not justified to ignore the hierarchical relationship between the Commissioner and subordinate offices.
I have heard the learned representatives for both the sides and also perused the consolidated impugned order of the learned CIT(A), the consolidated Revision Order passed under section 122A of the Ordinance, 2001 by the Commissioner of Income Tax, the laws reproduced from both the sides and other relevant record of the case.
3. Facts leading to the instant appeals are that the assessee in this case is an individual, deriving income from publishing a Newspaper namely Daily "Sang-e-Meal" Multan since last more than four decades. The assessee statedly imports paper for consumption for his own business i.e. publication of Daily "Sang-e-Meal". As per the version of the department instead of filing of the statements under section 143 of the late Ordinance, 1979, the returns for all the five years under review were filed as mentioned in the body of the order passed under section 122A of the Ordinance, 2001. The department did not issue the refund voucher of excess income tax deducted on the import of papers for the years under appeal. Being aggrieved the assessee filed a complaint before the Federal Tax Ombudsman. The appellant department in the meanwhile passed order under sections 99(3)/170 wherein refund for the assessment years 1996-97 and 1998-99 were refused being hit by limitation. But the FTO directed the respondent department to grant relief to the complainant vide C. No. 734/2004 by invoking the provision under section 122A of the Ordinance, 2001, it was further directed to issue refund voucher for the assessment years under review i.e. 1998-99 to 2002-2003 within thirty days from receipt of the findings/directions made by the FTO. As per-the impugned order of the learned CIT(A) the Taxation Officer again rejected the claim of refund for the assessment years 1996-97 and 1997-98 but the assessee has not filed appeals for these two years. He however again moved application before the FTO. In this regard an enquiry for facts finding was got conducted at unit level and the Range Additional Commissioner and Additional Commissioner Audit also tried their best to enquire the factual position. Later on the assessment record was called for by the Commissioner, who giving his observation that the assessee has made some tampering in the assessment record by placing returns against the already filed statement under section 143B of the late Ordinance, 1979. On the basis of above facts the Commissioner issued a show-cause notice under section 122A, dated 9-9-2006 directing the assessee to explain his position regarding earlier filed statement under section 143B and later replacing the source with return of income. In para. 6 of the notice Commissioner however admitted that the assessee filed Income Tax Returns for the assessment years 1999-2000 to 20Q2-2003 which were treated as statement under section 143B. The commissioner in that notice intended to cancel all the orders passed which becomes the basis of issuance of alleged illegal refund to the assessee. It is also mentioned in the impugned order that earlier a show-cause notice under' section 122(5A) of the Ordinance, 2001 was issued by the Additional Commissioner (Audit) against which the assessee filed a complaint before FTO but his complaint was not accepted however the proceedings initiated under section 122(5A) were dropped for the reason that the source were not in accordance with law.
Against the show-cause notice issued by the Commissioner the assessee moved an application to the Member Tax (CT) C.B.R. requesting to drop the proceedings initiated under section 122A and to issue refund and compensation but as the C.B.R. has already directed the Commissioner to comply with the directs of the FTO no response to the application was given. The Commissioner cancelled the refund order under section 99(3)/170 vide order, dated 16-9-2004 against which assessee filed appeal before the learned CIT(A). The learned CIT(A) has vacated the consolidated order passed by the Commissioner for all the years under review under section 122A being ab initio void and illegal, hence these appeals by the department.
4. Regarding the issue of limitation learned CIT(A) has allowed the appeals to be filed before him within time with the following observations:--
"the contention of the learned A.R. is that the appeal has been filed against the order of rejection of recall application, dated 10-5-2007 which was received on 2-6-2007 and appeal was filed on 13-6-2007. A question was posted to the learned A.R. under which 'section recall application was moved. Upon this, he argued that recall application was moved under section 221 of the Income Tax Ordinance, 2001 read with section 21(6) of the General Clauses Act, 1897 though by clerical mistake section was omitted to be mentioned. On the limitation, the A.R. referred to an unreported case of the Honourable ITAT vide No.5077/LB/2001 (Asstt. Year 2000-2001), dated 10-5-2002 in which it is observed as under:--
It is consensus judicial opinion that where any order has been passed by an authority in excess of its jurisdiction, or suffered from want of jurisdiction no finality can be affixed to such order and that should be ignored for all practical purposes. Even limitation to file appeal against the order which has been passed without lawful jurisdiction would cease to run meaning thereby appeal against such order can be instituted at any time."
The departmental contention that appeal being late is required to be dismissed on point of limitation has not been proved to the hilt. Even if the same is considered, the findings of the Indian Supreme Court cited as (1987) 56 Tax 130 relied in an unreported judgment of the honourable ITAT vide I.T.A. No. 1266/LfB of 2006 (Asstt. Year 2001-2002), dated 6-7-2007 do not support the departmental contention. It was observed by Honourable M.P. Thakkar J that
(i) Ordinarily, a litigant does not stand to benefit by lodging an appeal late.
(ii) Refusing to condone delay can result in a meritorious matter being thrown out at very threshold and cause of justice being defeated. As against this, when delay is condoned, the highest that can happen is that a case would be decided on merits after hearing the parties.
(iii) Every day's delay must be explained "does not mean that a pedantic approach should be made. Why not every hour's delay, every second's delay? The doctrine must be applied in a rational, common sense and pragmatic manner.
(iv) When substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserves to be preferred for other side cannot claim to have vested right in justice being done because of a non deliberate delay.
(v) There is no presumption that delay is occasioned deliberately or on account of culpable negligence or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact, he runs a serious risk.
(vi) It must be grasped that that judiciary is respected not on account of his power to legalize injustice on technical grounds but because it is capable of removing injustice and is expected to do so.
To the above list, we added our own views expressed that in revenue matter prayer for condonation by an assessee/citizen should all the more be considered sympathetically.
It is explained that in fact, there is no delay in filing of appeal as the same has been filed after rejection of the recall application. However, for the sake of academic discussion, if limitation is taken from the original order, it cannot be counted in view of the above cited case-law. Thus it is stressed that the appeal filed after service of rejection of recall application within time.
In view of above discussion, the appeal having been filed on receipt of rejection order of the recall application is found to be within time and the same is admitted for hearing.
After careful consideration of the above observation I am of the view that the learned CIT(A) has rightly admitted the appeals for hearing as the appeals have been filed on receipt of rejection order of the recall application.
5. Coming to the merits of the case I have found that the assessee in this case is importer-cum-manufacturer as he is consuming the imported material/news papers in his own publication of newspaper namely "The Daily Sang-e-Meel, Multan". To this effect, a certificate from Director Public Relations, Government of the Punjab, Multan Region, Multan hearing No.PR(MN)-2006/1230, dated 5-1-2006 and a certificate from the President, Multan Press Club Multan vide No. MPC/15011, dated 25-9-2005 were furnished before both the officers below and have also been placed before the Bench. The said certificates are available on record on pages Nos.94 and 95 of the Miscellaneous. Cove. For the sake of ready reference, the contents of the same are reproduced as under:--
"TO WHOM IT MAY CONCERN
Urdu Dail Sang-e-Meel, Multan is being published from last 38 years regularly from Multan Daily Sang-e-Meel is prominent and popular Urdu Newspaper in Southern Punjab and other cities of the Province of Punjab.
The above mentioned daily is being printed from Roohani Printing Press w.e.f. 1980 which is owned by Mr. M.R. Roohani. It is further stated that Mr. M.R. Roohani had remained publisher and owner of daily Sang-e-Meel till 27-5-2004.
The whole set up of this Newspaper and Printing Press is functioning in the premises at Faizi Road. Laakar Mandi Gali "Arayean Wali" Multan, Daily Sang-e-Meel is A.B.C. certified and qualified for Advertisement of Government Sector.
(Sd.)
Director Public Relation,
Government of the Punjab
Multan Region, Multan.
CERTIFICATE
It is certified Daily Sang-e-Meel, Multan is popular newspaper of Southern Multan which is being published from the last 38 years regularly. Mr. M.R. Roohani had been its publisher (owner) till 27-5-2004. This newspaper has been published and issued from its own press namely Roohani Printing Press which is owned by the said person.
(Sd.)
Rana Pervaiz Hameed, President,
Multan Press Club, Multan"
I have noted that the Commissioner under section 122A of the Ordinance, 2001 has passed the order on whims and surmises which is utterly against the prevailing factual position of the case. Learned CIT(A) has mentioned in the impugned order that under section 88(3)/170 of Old/New Income Tax Ordinance were passed perfectly in accordance with law with active participation of the staff members of Income Tax Unit and the S.O. of the concerned Unit who gave certificate of the refund to be bona fide after thrashing out the record. It would not be out of place to reproduce the certificate issued by the concerned Unit Vide No.397, dated 1-1-2005 through the IAC addressed to the CIT, Multan Zone, Multan for the purpose of issuance of the CIT's administrative approval which runs as under:--
"Kindly refer to the subject cited above.
The requisite certificate is submitted as under:--
(1) That the refund created is totally bona fide and is not at all prejudicial to the interest of revenue.
(2) That no proposal for action under section 103 of the Income Tax Ordinance, 1979 is under contemplation.
(3) That original certificates of payment of tax have been obtained and placed on file.
(4) That no arrears are outstanding in the name of the assessee.
(5) That no action on the basis of Internal or External Survey, regular and special Inspection is pending in this case.
Assessment record in (four) Vol. Is submitted for your kind perusal and administrative approval."
On receipt of the above record, the concerned IAC and his Inspector verified the bona fides of the claim after consulting the record thoroughly and forwarded the case with his recommendation to the CIT, Multan Zone, Multan where after thorough verification, the concerned staff and S.A. to CIT submitted the case to the CIT for administrative approval which was granted by the CIT vide letter No. 2784, dated 1/2-10-2004 and the IAC countersigned the voucher of refund and the refund claimed was issued.
6. Learned CIT in the impugned order has discussed in detail the proceedings of the department in this case which is reproduced hereunder:--
"Record as maintained by the concerned Additional Commissioner, Range-III, Multan further goes to reveal that a show-cause notice under section 122 of the Income Tax Ordinance, 2001 vide No.IAC-III/05-06/Action-122(29)/5002, dated 15th June, 2005 for the assessment year 1998-99 was issued. Thereafter, a further show-cause notice under section 122(5A) vide No.5027, dated 20th June, 2005 was issued pertaining to the assessment years 1999-2000 to 2002-2003 confronting illegal issuance of refund wrongly dubbing the appellant as a commercial importer of newspaper and requiring explanation by 28-6-2000. Adjournments were requested for 15-7-2005. But the Addl. Commissioner refixed the case for compliance on 29-6-2005. A request was made by the appellant to adjourn the case after 15-7-2005 which was accepted and on the due date the assessee did not attend the proceedings. Thereafter, show-cause notice under section 122 bearing No.89, dated 17-9-2005 for 1998-99 and notice under section 122(5A) for 1999-2000 and 2002-2003 vide No.88, dated 17-9-2005 were issued for compliance on 10-10-2005. The appellant filed written reply, dated 7-10-2005 on ' 10-10-2005. The Additional Commissioner addressed a letter to the CIT vide No.127, dated 20-10-2005 seeking for permission under section 176 to obtain information from BC, Multan which was granted vide letter No.3293, dated 2nd November, 2005. A communication bearing No.159, dated 8-11-2005 was made to the Deputy Director PID, Radio Pakistan Building, Multan. A reminder, dated 28-12-2005 was issued to the said department. In the meanwhile, the Additional Commissioner wrote a letter bearing No.843, dated 9-5-2006 recommending registering of case against the appellant before the concerned Federal Government Agencies/Courts. In continuation of the above letter, a further communication bearing No.872, dated 16-5-2006 was made. The CIT, Multan Zone, Multan addressed a letter bearing No.9204, dated 15th May, 2006 to the RCIT on prompt of the concerned Addl. Commissioner that action under section 122(5A) is not feasible and required. He further suggested that the CIT may take a action under section 122A. Then the Additional Commissioner suggested to the CIT through letter No.923, dated 26-5-2006 as under:--
"In order to retrieve the issued refund, as earlier reported, vide No.854, dated 12-5-2006, action under section 122A of Income Tax Ordinance, 2001 is required which is to be taken by your good self. "
Upon receipt of above suggestion, the CI though his SA directed the Additional Commissioner vide letter No.9651, dated 29th May, 2006 as under: --
"I am directed to refer to your letter No.923, dated 26-5-2006 on the above subject and to state that the proceedings already initiated under section 122(5A) of the Income Tax Ordinance, 2001 for the assessment years 1998-99 to 2002-2003 are in accordance with the law and keeping in view the facts of the case. Therefore, your proposal for initiation of proceedings under section 122A is not well founded. You are directed to finalize/complete the pending proceedings under section 122(5A) on top "priority and furnish a copy of order for onwards transmission to the Higher Authorities within a week."
In response to the said letter, the Additional Commissioner (Audit) vide letter No.938, dated 30-5-2006 required one week time for making compliance in the following manner:--
"The time of one week allowed for completion of pending proceedings under section 122(5A) in the above cited case is quite insufficient. Keeping in view the nature and complexity of the above, the finalization of the assessment would take more than a month. Anyhow proceedings are being initiated and utmost efforts would be made to complete the proceedings within the shortest possible time.''
Partially acceding to .this request the CIT through his SA conveyed vide letter No. 9738, dated 1st June, 2006 to finalize the proceedings by 15-6-2006 under all circumstances. On this, the Additional Commissioner vide letter No.979, dated 8-6-2006 repeatedly requested to take action under section 122A. Now the CIT vide letter No.10024, -dated 10th June, 2006 wrote to furnish final compliance with a week as directed earlier in the following fashion:--
"Notice under section 122(5A) of the Income Tax Ordinance, 2001 was issued in this case by the then AC on 15-6-2005 to retrieve the loss of revenue occurred due to illegal issuance of refund. After transfer of Mian Khadim Hussain the then AC, you have been holding the charge of the C Audit (After lapse of about one year), your first report vide No.923, dated 26-5-2006 in the matter was received in this office on 26-5-2006 whereby you suggested that action under section 122(5A) is not feasible and action under section 122A may be taken by the CIT in response to your letter this office vide letter No.9651, dated 29-5-2006 directed to complete the pending proceedings under section 122(5A) as your proposal was not well founded.
Now, vide letter No.979, dated 8-6-2006, at the fag end of the Financial Year, despite furnishing compliance report, you again repeated almost the same suggestion.
You are, therefore, required to furnish final compliance within a week as directed earlier."
Thus a reminder No.CIT-MN/1/323, dated 12th July, 2006 was issued to the Addl. Commissioner to furnish .final compliance report now positively by 14-7-2006. In response to the said letter, the Addl. Commissioner hands up through his letter bearing No. 31, dated 15-7-2006. It would not be out of interest to go through the contents of the same which are quoted as below:--
Kindly refer to your office No. CIT-MN/I and F/323, dated 12-7-2006 and earlier correspondence to the subject.
In order to finalize the case according to your direction issued vide letter No.CIT-MN/I and E/9651, dated 29-5-2006 and subsequent letter No.10024, dated 10-6-2006, the legal provisions viz-a-viz the fact of the case were revisited very carefully. In my opinion, the proceedings started on the lines to apply section 122(5A) of the Income Tax Ordinance, 2001 to retrieve the loss of revenue occurred due to illegal issuance of refund on the strength of order under section 170 of the said Ordinance was not a correct course of action as:--
(1) Section 122 deals with amendment of assessment finalized under sections 120 and 121 of the new Ordinance and 59, 59A, 62 or 65 of the old Ordinance. There is no mention of sections 221 and 170 of new Ordinance or 156 and 99 of old Ordinance whereas the case in hand is with respect to section 470 of new law and 99 of old law.
(2) A section of law is normally taken as a whole and not in part. The subsection only regulate the provisions of main section and do not work as independent provisions different from the main section. Therefore, subsection (5A) of section 122 of said Ordinance would be applicable for the assessments finalized under the sections mentioned in serial No.1 above.
(3) In case subsection (5A) of section 122 is taken in isolation even that it takes case of an assessment order only. The order passed under section 170 to issue refund is not an assessment order by any means as it only deals with the over payment of tax and its due credit to the taxpayer. There is nothing to assess under section 170. It is also pointed out that the practice being followed by the departmental officers to pass order under section 170 for issuance of refund is not the requirement of law. This may be for office use and maintenance of proper record.
(4) As far as the provisions of subsection (4) of section 170 are concerned, the same pertains to such situation where the request of the taxpayer for issuance of refund is not entertained. In other words, the order under section 170(4) must be against the request of the taxpayer and not in favour of the taxpayer.
In the light of above, it is submitted that the order passed under section 170 is not an assessment order. It is only a regulatory step for arrangement of over paid tax. So it cannot be made basis for action under section 122(5A) of the Income Tax Ordinance, 2001.
If your good self do not agree to above submissions, please accord your gracious instructions and guidance so that the matter may be disposed of according to the provisions."
On 17th July, 2006 vide letter No.436, the Additional Commissioner was advised to furnish final compliance report by 18-7-2006 positively. In the meantime, the CIT, Multan Zone vide letter No.597, dated 21st July, 2006 communicated latest position to the case reiterating that action under section 122(5) is suitable in this case. Further a letter bearing No.596, dated 21st July, 2006 was issued stressing that the situation is covered in subsection (5)(ii) of section 122 of the Income Tax Ordinance, 2001 and to proceed under the law of above, dilate and report in this regard by 31-7-2006. On this, the Additional Commissioner (Audit) vide letter No: 120, dated 9-8-2006 submitted to the CIT, Multan Zone as follows:--
"Kindly refer to your office letter No.CIT-MN/I&E/1213, dated 8-8-2006 and it is submitted that the case was discussed with your good self and it was decided that a notice under section 122A of the Income Tax Ordinance, 2001 will be issued with your signatures. In this contest and on verbal directions, a notice covering all the facts of the case was submitted for your kind perusal and further action.
Now the final report in this matter will be submitted after adjournment of the case by your goodself under section 122A of the Income Tax Ordinance, 2001."
Now the CIT on surrendering the weapons by the Additional Commissioner, himself issued a show-cause notice bearing No.2374, dated 9-6-2006 proposing action under section 122A of the Income Tax Ordinance, 2001, the contents of which has been reproduced in the body of the impugned order on pages (2) to (4), Reminders were also issued. On due date i.e. 22-1-2007, written reply was furnished. Main point of the said reply has been quoted in the impugned order. The reply was found without force. By recording reasons in the body of the impugned order, the order under section 122A of the Income Tax Ordinance was passed on 29-3-2007 by cancelling refund orders under section 99(3)/170, dated 16-9-2004 and issued on 3-4-2007 as per notice of demand under section 137(2) signed by the Taxation Officer. On receipt of the said order, an application to recall the revisional order, dated 29-3-2007 was filed. The said application was rejected by advising the taxpayer to pay the demand of Rs.31,13,901 into Govt. Exchequer drawn as refund."
7. After considering the above detail of the proceedings by the department I find force in the contention made by the learned A.R. that the order under section 122A of the Income Tax Ordinance, 2001 passed by the Commissioner of Income Tax, Multan is against the very spirit of the provisions of the said section as stipulation to invoke jurisdiction under the said section is suo motu calling for record of any proceeding under this Ordinance or under the repealed Ordinance in which an order has been passed by any Taxation Officer other than the Commissioner (Appeals) But in this case exchange of correspondence between the Additional Commissioner and the Commissioner of Income Tax, Multan Zone, Multan as reproduced above is vividly and abundantly witness of first stressing and directing by the Commissioner to the Additional Commissioner to pass amendment order under section 122(5A) and on refusal to do so by the Additional Commissioner by long drawn communication and requesting to the Commissioner to invoke the provisions of section 122A, the CIT cancelled the refund order passed under section 99(3)/170 through revision order made under section 122A of the Income Tax Ordinance, 2001 which cannot be termed as suo motu. In this respect a judgment of the Hon'ble Supreme Court of Pakistan reported as 1993 SCMR 2071 = 1993 PTD 1629 has been referred wherein it has been held that:--
"Section 138 of the Income Tax Ordinance, 1979 authorizes the Commissioner to call for the record of any proceeding in which order has been passed by any authority subordinate to him, suo motu or on an application by an assessee and pass order subject to the provisions of the Ordinance with the limitation that no order shall be passed which is prejudicial to the assessee. Any action taken by the Commissioner under section 138, be it suo motu or on application by the assessee, the order in no case should be prejudicial to the assessee. Only such orders can be passed in such proceedings which are in favour of the assessee and do not adversely affect its interest, business or any tangible or intangible right. The words "not being an order prejudicial to the assessee" supply the guiding rule for interpreting section 138. The word "prejudicial" means:--
Detrimental, injurious, harmful damaging, hostile, antagonistic and inimical.
In the scheme of the Ordinance and phraseology used "prejudicial" means adverse, not beneficial, damaging or an order which adversely affects rights and obligations of an assessee".
8. I also agreed with the contention made by the learned representative of the assessee that section 122A was inserted by the Finance Act, 2003 which cannot be operated retrospectively until and unless specifically provided to be applied retrospectively. In this regard reliance is placed on a judgment of the Tribunal report as 2007 PTD (Trib.) 1226 in which subsection (5A) of section 122 of the Income Tax Ordinance, 2001 being substantive piece of legislation was held to be not operative retrospectively until and unless specifically provided to be applied. So, it would not be out of place to mention here that section 122A was also inserted by the Finance Act, 2002. Another case has been referred cited as (2007) 95 Tax 67 (Trib.) (sic.) in which the predecessor Commissioner granted exemption to the assessee and the successor Commissioner cancelled the same which was not approved of by their lordship of the Hon'ble Peshawar High Court with the following observation:--
(B) Department cannot trespass beyond the established principles of dispensation of justice, the taxpayer cannot be placed merely at the mercy of the Assessing Officer that he should be exempted by one of them and, after lapse of so many years, another one withdraws the tax exemption or amends the earlier assessment, once a decision is made on the basis of detailed examination of facts and circumstances placed on the record and no further remedy is availed to challenge the same or get it rectified, it attains finality despite the facts that the views of the authority concerned may be legally or factually incorrect.
9. On behalf of the assessee another issue has been raised that when the CIT with collaboration of the subordinate officers has granted administrative approval for issuance of refund, he should not cancel the refund order by way of revision under section 122A. To solidify his contention, attention of this forum was drawn to a judgment of the Hon'ble Sindh High Court, Karachi reported as (2004) 89 Tax 252 (H.C. Kar.) = 2004 PTD 330 in which it has been held that:--
"Whether when IAC on account of his collaboration with Assessing Officer, scrutinizing and examining case, had more or less acted as Assessing Officer, then in respect of such assessment would not be allowed to exercise powers of revision under section 66A-Held yes-Whether even Commissioner could not have exercised those powers as he also had been associated with assessment of petitioner and had scrutinized, examined and issued directions to Assessing Officer for finalizing assessment-Held yes-Whether both IAC, and Commissioner, therefore, were stripped off powers to exercise jurisdiction under section 66A and impugned notice was not issued in lawful exercise of jurisdiction--Held yes--"
10. I have further noted that fraud and misrepresentation as alleged by the department was never proved against the assessee. One of the allegations by the department against the assessee is that for the assessment year 1998-99, first statement under section 143B was filed which has tampered with and the return of income was inserted which allegation according to assessee is absolutely wrong as there is no need to do so in the light of a judgment of this Tribunal reported as 2002 PTD (Trib.) 228 in which it was decided that even if assessee had filed statement under section 143B and income was not properly chargeable under section 80C proper course for Assessing Officer was to summon return under section 56 and then to make assessment under normal law. An unreported order of the Tribunal in ITA No.1883/KB of 1999-2000 (Asstt. Year 1999-2000), dated 14-6-2001 has also been relied upon in this regard. On behalf of the assessee the decisions of the Hon'ble Karachi High Court cited as 2005 PTD 1607 and 2007 PTD (Trib.) 1680 have also been referred in which it is decided that law gave unfettered right to assessee to opt in or out of presumptive tax regime under section 80C and unless such option was exercised, assessee would continue to be taxed under normal law.
It has been contended on behalf of the assessee that the assessee in this case has never filed written option required to opt PTR in any of the preceding assessment years or for the assessment years under consideration. Mere filing of statements under section 143B of the repealed Income Tax Ordinance, 1979 cannot be termed as option to opt PTR. For the sake of academic discussion I may say that if the assessee was not obliged to file statement under section 143B and even if he filed the same wrongly, he can furnish the return. Then what was the necessity of playing with the record as alleged which is categorically denied to have ever committed by the assessee. There is no bar to file return even if statement was filed earlier in the light of the judgments of the higher appellate forums as relied and cited supra, especially in view of the judgment of the Honourable Karachi High Court cited as (2005) 92 Tax 93 (H.C. Karachi) = 2005 PTD 1607 in which it is held:--
" ..Whether law gave unfettered right to assessee to opt in or out of presumptive tax regime under section 80C and unless such option was exercised, assessee would continue to be taxed under normal law. Held yes."
11. For the assessment years i.e. 1999-2000 and onward, arguments of the learned A.R. are that the assessee filed returns of income which were wrongly treated as statement under section 143-B of the repealed Income Tax Ordinance, 1979. Emphasis of the learned A.R. is that there is no provision of law which may allow to convert returns filed into statement without first establishing ultra vires of it and confirming nature of actual business either he is commercial importer or importer cum manufacturer. Authenticity of the certificates as mentioned above issued by the President Multan Press Club and Director Public Relations, were never confirmed from the concerned Authorities without which to draw a contrary conclusion is against justice, equity and fair-play, especially when a drastic action is being taken. Attention of this forum in this regard was drawn toward a case published in Tax Forum 2007 (57).
"The charge should not be beyond the requirement of law, rules, justice and fair-play. It is a requirement in all walks of life but, however, while performing a legal duty one is legally bound to be judicious and well reasoned. In this regard section 24A of the General Clauses (X of 1897) provides the guidelines which speaks as follows:--
"Section 24A exercises of power under enactment.---(1) Where, by or under any enactment a power to make any order or give any direction is conferred on any authority, office or person such power shall be exercised reasonably, fairly, justly and for the advancement of the purposes of the enactment."
Above provision of law is of binding nature and Income Tax Officer as well as all other in hierarchy of the tax administration are found to be fair just, reasonable and to work for the advancement of the purpose of enactment."
12. It may be added here that the impugned order under) section 122A contains all the contents/intentions/ingredients of an amendment order under section 122(5A). By merely writing and stating the same as an order as under section 122A does not make it a revisional order. For making a revision order under section 122A, it must be tailored according to the provisions and stipulations as mentioned in the said section reproduced above which are totally missing and specifically when the proceedings were not initiated suo motu. This view finds support from a judgment reported as PLD 1976 Karachi 600 in which the principle has been laid down that there is no room for any intendment, equity or presumption about a tax, for the letter of law must be looked into in the cases of fiscal legislation. I am of the view that if the CIT intended to reduce the refund or create a liability, the provisions of the Ordinance do not bar him to proceed himself under section 122(5) or 122(5A) as warranted by the facts of the case. In fact by invoking provisions of section 122A the CIT has tried to escape the ordeal of scrutiny of the higher appellate judicial forums on the issue in hand.
13. The Department has relied upon a judgment of Hon'ble Supreme Court of Pakistan reported as PLD 1975 Supreme Court 331 which is not on fours with the fact of present case being distinguishable as under:--
(i) In that decision of the Hon'ble Supreme Court the matter was regarding government land by misrepresenting of proof of ownership of land while in this case the assessee has not done so.
(ii) In that case the documentary evidence furnished proved letter on bogus but in the instant case no evidence furnished proved to be bogus.
(iii) In that case legally the respondent was not entitled to get claim of the land, but in this case the assessee was legally entitled to claim refund being importer-cum-manufacture.
(iv) In that case fraud proved but in this case no fraud proved.
(v) In that case the matter pertains to land. Title was subsequently not proved through any valid documentary evidence, but the instant case pertains to tax already deducted at source under section 50(5) on import stage which is verifiable through Bills of entry.
(vi) In that case the matter was unearth by the Martial Law Authority but in the present case the matter was scrutinized before issuance of refund by the same authority.
(vii) In that case full verification was not made but here full verification of the documents was made from rank and file to high ups.
(viii) In that case the question of entitlement in land is different but question of tax deducted and refunded in fiscal matter is on different footings.
(ix) In that case there was doubt about claim of ownership of piece of land but there is no doubt about its nature of business, tax deducted and tax chargeable and balance refundable in the instant case. It would not be out of place to reproduce here concluding paras of the said judgment which runs as under:-
"However, we have no intention of deciding the case ourselves on merits. We have found that as fraud vitiates all proceedings, even a tribunal of limited jurisdiction has the power to suo motu recall or rescind an order obtained from it by fraud, even though it may have no such power to treat as a nullity, in collateral proceedings orders obtained by fraud from other authorities or tribunals. As a result, although the Officer on Special Duty could not cancel the order of verification obtained by the respondent from the Claims Commissioner, yet the latter was himself fully competent to reopen the matter and examine the allegations made against the respondent by the Director of Enforcement. Our examination of the relevant provisions of the Registration of Claims (Displaced Persons) Act, 1956, as well as of Martial Law Regulation 89 has led us to the conclusion that there was no statutory bar in the way of the Claims Commissioner undertaking this scrutiny, and the learned Claims Commissioner was, therefore, in error in thinking that he could not examine the matter in view of the provisions contained in Paragraph 5 of Martial, Law Regulation 89. What he had been called upon to examine was the rectification order obtained from the Claims Organization and not the entitlement certificate issued under the aforesaid Paragraph 5 of the Regulation. The learned Claims Commissioner, therefore, erroneously refused to exercise jurisdiction vesting in him, and for that reason the reference made by the Enforcement Directorate against the respondent must be deemed to be still pending.
In the circumstances, it is necessary that this reference should be examined on merits by the learned Claims Commissioner. We would accordingly set aside the impugned order of the High Court, the order made by the Claims Commissioner on 31-10-1962, and also the made by the Officer on Special Duty on the 10th of March, 1965, and remit the case to the learned Claims Commissioner for decision on merits. He shall afford due opportunity to both the sides to substantiate their respective position."
It is observed here that case-law cited and conclusion drawn by the department from the judgment of the Hon'ble apex Court, no where appears in the concluding paras.
14. I have observed after considering the facts of the case, that the Additional Commissioner was not justified to suspend/freeze the proceedings, initiated under section 122(5A) unattended as per ratio decided in the judgment of the Hon'ble Supreme Court just cited above which he was competent to do so and the CIT, Multan Zone was not legally right in invoking the proceedings on the suggestion of Addl. CIT instead of suo motu and passing the so-called order under section 122A which is entirely against the very spirit of the provisions contained in the said section. In view of the above discussion and case laws cited above, the so-called impugned order under section 122A is not found to be tenable in the eyes of law.
15. Regarding issue of maintainability of the appeal filed by the assessee before the learned CIT(A) it has been contended by the representative of appellant department that the learned CIT(A) has held that the appeals are maintainable against the order by the Commissioner under section 122A of the Ordinance, 2001 placing reliance on the judgment of the Hon'ble High Court Sindh reported as 1999 PTD 4061 which has already been upheld by the Hon'ble Supreme Court of Pakistan vide decision reported as 2001 SCMR 777 holding that:--
"The right of appeal is a creature of statute and there can be no right of appeal unless it is conferred by the statute. Perusal of section 129 of Ordinance, 1979 would show that the legislature has purposely not mentioned section 53 of the Ordinance, 1979 in respect of payment of adverse income tax so as not to make it appealable."
I am of the view that in the instant case the above referred decision of the Hon'ble Supreme Court is not applicable for the reason that the issue before the Hon'ble Supreme Court was regarding appeal in respect of section 53 of the repealed Ordinance, 1979 in respect of payment of advance income tax but in the instant case the action of Commissioner under section 122A of the Income Tax Ordinance, 2001 has been challenged before the learned CIT(A) on the ground that the said section being inserted in statute by Finance Act, 2003, dated June, 17, 2003 and the words "suo motu" were inserted by Finance Act, 2004 w.e.f. July, 2004 and according to the assessee this section is not applicable in the case of assessee and even the corresponding section 138 of the repealed Ordinance, 1979 is not applicable. But the above said provisions are applicable before the learned CIT(A) due to the specific words provided in the relevant section 127 of the Income Tax Ordinance, 2001 and r29 of the repealed Ordinance, 1979 regarding appeals against order having the effect of enhancing the assessment or reducing refund or otherwise increasing the liability of the person."
In section 138 of the repealed Ordinance, 1979 and in the corresponding section 122A of the Income Tax Ordinance, 1979 the Review by the Commissioner has been restricted in case of an appeal against the order lies to the CIT(A) for the time within which such appeal may be made has not expired. Likewise section 170 of the Ordinance, 2001 is appealable under section 127 of the Ordinance, 2001 while the corresponding section 96 of the repealed Ordinance has not been mentioned in section 129 of the repealed Ordinance, 1979. I am therefore, of the view after considering all these sections that the order passed by the commissioner under section 122A having the effect of enhancing the assessment or reducing or refund or otherwise increasing the liability of the assessee due to unambiguous provisions of law is appealable before the Commissioner under section 127 of the Income Tax Ordinance, 2001 and the above referred decision of the Hon'ble Supreme Court is not applicable in this case.
16. After considering the facts, legal position and the case-law discussed above I am of the view that the learned CIT(A) has rightly annulled the order passed by the Commissioner under section 122A of the Ordinance, 2001 for all the five years under review.
All the appeals filed by the department are therefore, dismissed.
C.M.A./109/Tax(Trib.)Appeals dismissed.