VS, 2009 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 2209 (2009)

Income Tax Ordinance (XLIX of 2001)---

----Ss.131, 154 & 162---Export of goods---Short deduction of tax---Appeal to Appellate Tribunal---Appellant/Taxpayer who was exporter of dry dates, being aggrieved by the order passed by the Taxation Officer under S.162 of Income Tax Ordinance, 2001, contested order of Taxation Officer in appeal before Commissioner Income Tax (Appeals)--Commissioner cancelled the order passed by the Taxation Officer on the ground of improper service of show-cause notice---Both the Taxpayer and Income Tax Department filed appeals before Appellate Tribunal against order passed by the Commissioner Income Tax (Appeals)---Contention of counsel for. Taxpayer was that Commissioner had not passed speaking order and that Commissioner should have annulled the order of the Taxation Officer instead of cancelling same---Departmental Representative had contended that Commissioner was not justified to cancel order of Taxation Officer because show-cause notice was served on the person who had been receiving almost all other correspondence made by the Taxation Officer---Commissioner Income Tax (Appeals) had cancelled order passed by the Taxation Officer on the ground that show-cause notice issued by the Assessing Officer was not properly served on the Taxpayer; but he had not elaborated the facts as to how he came to the conclusion that the show-cause notice was not properly served on the Taxpayer---Departmental Representative who had contended that the show-cause notice was served on the person who had been receiving almost all other correspondence made by the Taxation Officer, had not even identified the said person and had not produced any relevant evidence in support of his defence---Validity---In order to meet the ends of justice, case was remanded to the Taxation Officer for proper service of show-cause notice affording reasonable opportunity of being heard to the Taxpayer and finalization of case as per law---Order passed by the Commissioner Income Tax (Appeals) was vacated and case was remanded accordingly for de novo proceedings.

PLD 1993 SC 1049; 2006 PTD 1542 and 2009 SCMR 344 = 2009 PTD 37 ref.

Gohar Ali, D.R. for Applicant.

Abdul Tahir, I.T.P. for Respondent.

Date of hearing: 28th August, 2009.

ORDER

Through this order, the cross appeals filed by the taxpayer and department against the decision of the learned CIT(A) vide his order No.CIT/A/Hyd/207/206-207 dated 25-11-2006 are intended to be disposed of.

2. On the date of hearing Mr. Abdul Tahir Ansari ITP attended on the behest of the taxpayer and Mr. Gohar Ali represented the Department as departmental representative.

3. Both the representatives were heard at length and the case record has been perused.

4. Brief facts of the case are that the taxpayer is exporter of Dry Dates and aggrieved by the order passed under section 162 of the Income Tax Ordinance, 2001 by the Taxation Officer contested in appeal before the learned CIT(A) the application of tax deduction rate as per Part-III of Seventh Schedule @ 1.25% as against declared rate @ 0.75%

5. The learned CIT(A) cancelled the order passed by the taxation officer under section 162 on the ground of improper service of show-cause notice with the following observations:--

"The arguments advanced by the AR of the appellant are considered from perusal of case record, it transpires that the Assessing Officer treated the taxpayer in default for recovery of short deduction of tax Which was deductible under section 154 of the Income Tax Ordinance, 2001. The Assessing Officer issued show-cause letter required the taxpayer to pay short deduction as the rate of tax applicable on Export of Dry Dates was @ 1.25% as against deduction made at 1% of total export proceeds, which were not properly served on the appellant. However in the absence of proper service of show-cause notice the order passed under section 162 cannot stand in the test of appeal. The action of the Assessing Officer to finalize the assessment without affording opportunity of being heard to the appellant is not sustainable in the eyes of law. Thus the orders passed are therefore cancelled."

It is against the above order of the learned CIT(A) that the taxpayer has filed appeal in the learned ITAT with the following grounds of appeal:--

(1) That the learned Commissioner Income Tax (A) Hyderabad passed the order under section 162 of the Income Tax Ordinance, 2001 which is bad in law unjustified and without merits.

(2) That the appellant being an Exporter of Dry Dates, Being aggrieved by the orders passed under section 162 of the Income Tax Ordinance, 2001 for the Tax year, 2005 by the Taxation Officer of Income Tax , Enforcement-VII. Khairpur has filed this appeal and contests the application of tax deduction rate as per Part-III of Seventh Schedule @ 1.25% as against declared rate @ 0.75% on the following grounds of appeals:-

(3) That the impugned order passed is a mechanical and stereotyped order by filling in few blank columns, without proper and conscious application of mind. It is therefore not sustainable in the eyes of law..

(4) That the show-cause notice was not served upon the assessee, before passing the order, therefore the assessee, remained condemned .unheard.

(5) That the learned Commissioner of Income Tahc (A) Hyderabad has not passed any speaking order` under section 2-A of General Clauses Act, 1897.

(6) That .the order sheet is silent regarding the issuance of notice to assessee before passing the order.

(7) That the attested copy of notice dated 1-8-2006 did not mention any date of hearing and the same has not been served upon the assessee.

(8) That the assessee has been deprived of his legitimate right of his hearing which is against the principle of natural justice.

(9) That the Taxation Officer has failed to accept the plea that the deemed assessment stands finalized and he was not empowered to invoke the section 162 after the completion of the assessment.

(10) That the apex Court has held in its decision reported as 1993 SC 1049 that the C.B.R.'s interpretation of the provision of law cannot be termed as judicial interpretation and also 2006 PTD 1542.

(11) That when the show-cause notice has not been served upon the assessee, nor the date of hearing is mentioned in the said purported notice therefore the order should not be cancelled but it should be annulled as per law.

(12) That according to the principles laid down by the Honourable Court in case reported in 2009 SCMR 344 2009 PTD 37 according to which when the Department opts to reopen the case for scrutiny audit detailed analysis, a notice to the assessee has to be given before proceedings adverse to his interest.

PRAYER

It is, therefore, prayed that the order may declared to be annulled."

7. Learned counsel for the taxpayer contended that learned CIT(A) has not passed a speaking order and reasonable opportunity of being heard was not afforded to the taxpayer as the show-cause notice issued by Taxation Officer was not properly served. It was further contended that learned CIT(A) should have annulled the order of the Taxation Officer instead of cancelling it.

8. Now we take up the appeal filed by the Department. The department has filed the appeal against the order of the learned CIT(A) quoted supra on the following grounds:-

"1. That the order passed by the learned Commissioner of Income Tax (Appeals) Hyderabad is bad in law and on facts.

(2) That the CIT(A) was not justified to cancel the assessment order passed under section 162 of the Income Tax Ordinance, 2001 treating service of show-cause as improper.

(3) That the CIT(A) was not justified to cancel the order whereas the show-cause . notice was served on the person who had been receiving almost all other correspondence made by the Taxation Officer.

(4) That the appellant craves permission to add, amend or alter the grounds of appeal at the time of hearing.

9. Learned DR has contended that the CIT(A) was not justified to cancel the order because the show-cause notice was served on the person who had been recording almost all other correspondence made by the Taxation Officer.

10. We have heard both the representatives of the taxpayer and from the department and have' perused the case record. The learned CIT(A) has cancelled the order on the ground that the show-cause notice issued by the Assessing Officer was not properly served on the taxpayer. He has not elaborated the facts as to how he came to the conclusion that the show-cause notice was not properly served on the taxpayer. Learned DR has argued on the other hand that the show-cause notice was served on the person who has been receiving almost all other correspondence made by the Taxation Officer. Even the learned DR has not identified the said person and has not produced any relevant evidence in support of his defence.

11. Keeping in view the above discussion and perusal of case record we are of -the opinion that in order to meet the ends of justice, the case should be remanded back to the Taxation Officer for proper service of show-cause notice affording reasonable opportunity of being heard to the taxpayer and finalize the case as per law.

12. Accordingly the order of the learned CIT(A) quoted supra is vacated and the case is remanded back to the Taxation Officer concerned for de novo proceedings indicated above.

H.B.T./133/Tax (Trib.)Case remanded.