COMMISSIONER OF INCOME TAX, COMPANIES-II, KARACHI VS ALLWIN ENGINEERING INDUSTRIES LTD., KARACHI
2009 P T D 1314
[Karachi High Court]
Before Mrs. Qaiser Iqbal and Arshad Siraj Memon, JJ
COMMISSIONER OF INCOME TAX, COMPANIES-II, KARACHI
Versus
Messrs ALLWIN ENGINEERING INDUSTRIES LTD., KARACHI
I.T.R. No.10 of 1997, decided on 05/06/2009.
(a) Income Tax Ordinance (XXXI of 1979)---
----Ss. 65 & 166---Income Tax Act (XI of 1922), Ss.15-BB & 34---Reassessment under S.65, Income Tax Ordinance, 1979--Limitation--Assessee-company, in the present case, enjoyed exemption from income tax under S.15-BB, Income Tax Act, 1922 for the assessment year 1971-1972---Subsequent to the completion of assessment, notice under S.65, Income Tax Ordinance, 1979 was issued by the Income Tax Officer in June, 1982, 'for the reason that the assessee had not properly utilized the reserve under S.15-BB of the Income Tax Act, 1922 and consequently, the re-assessment was framed---Record showed that no date was mentioned when the assessment under S.65, Income Tax Ordinance, 1979 was passed---Assessee being aggrieved against such action, filed appeal before the Commissioner of Income Tax (Appeals), who annulled the assessment by holding that the period during which corrective action could have been taken by the Income Tax Officer under S.15-BB, Income Tax Act, 1922, had already expired before the promulgation of Income Tax Ordinance, 1979 and that Income Tax Officer had no jurisdiction to take action under the provision of S.65 of Income Tax Ordinance, 1979 for the assessment year 1971-1972---Appellate Tribunal, on appeal, concurred with the Commissioner and referred the question of law for opinion of High Court to the effect that "whether on the facts and circumstances of the cases the learned Income Tax Appellate Tribunal was justified in holding that action under S.65, Income Tax Ordinance, 1979 was not within the time limit."--Held, since different intention appeared from the provision of S.166(2)(c) Income Tax Ordinance, 1979, and no notice under S.34, Income Tax Act, 1922 was issued within contemplated time frame, an assessment could be reopened under S.65 of the Income Tax Ordinance, 1979, however, court had to examine whether the provision of S.65 of the Ordinance, in the present case, had been correctly applied---Limitation for invocation of provision under S.65, Income Tax Ordinance, 1979 was contained in its subsection (3) which stipulated that no order under S.65(1) of the Ordinance shall be made in respect of any income after the expiration of ten years from the end of the assessment year in which the total income of the said income year was first assessable---In the present case, the total income pertained to the previous year which was first assessable to the assessment year 1971-1972, the end of such assessment was 30-6-1972, as such order of reassessment under S.65, Income Tax Ordinance, 1979 could be passed within ten years from the end of assessment year i.e. on or before 30-6-1982---Neither in the statement of the case nor in the paper book there was any mention of date when the order under S.65, Income Tax Ordinance, 1979 was made; in view of such position it was very difficult for the High Court. to answer the question referred for opinion---High Court, in circumstances, remanded the case to the Income Tax Appellate Tribunal to ascertain the date of passing order under S.65, if the order was passed before the date i.e. 30-6-1982, then the re-assessment would be deemed to have been passed within the limitation provided under S.65(3), Income Tax Ordinance, 1979; on the other hand if the said order passed after 30-6-1982, same would be deemed to have been passed beyond the limitation period as contemplated under S.65(3) of the Income Tax Ordinance, 1979---Principles.?
Mannoo Industries Ltd.; v. Commissioner of Income Tax 2001 PTD 1525; Honda Shahrah-e-Faisal Association of Persons v. Regional Commissioner of Income Tax, Karachi and 2 others 2005 PTD 1316; Eastern Federation Union Insurance Company v. Commissioner of Income Tax (1966) 14 Tax 211 and Commissioner of Income Tax v. Eastern Federal Union Insurance Company PLD 1982 SC 247 distinguished.
(b) Interpretation of statutes---
---Non obstante clause is usually used in a provision to indicate that the provision should prevail despite anything to the contrary in the provision mentioned in such non obstante clause---In case there is any inconsistency between non obstante clause and another provision, one of the objects of such a clause is to indicate that it is non obstante clause which would prevail over the other clause.?
(c) General Clauses Act (X of 1897)---
---S. 6---Repeal---Effect--When there is repeal, the consequences contained in S.6, General Clauses Act, 1897 will follow unless a different intention appears---In case of a simple repeal there would be hardly, any occasion to take contrary view, however where the repeal is followed by fresh enactment on the same subject, court has to examine the new enactment to find out and determine any different intention.?
Shakeel Ahmed holding brief of Nasrullah Awan for Applicants.
Mazhar Jafri for Respondent.
Date of hearing: 19th March, 2009.
JUDGMENT
ARSHAD SIRAJ MEMON, J.---The learned Income Tax Appellate Tribunal has referred the following question of law for the opinion of this Court under the provision of section 136(1) of the Income Tax Ordinance, 1979 (hereinafter referred to as "the Ordinance").
"Whether on the facts and circumstances of the case the learned Income Tax Appellate Tribunal was justified in holding that action under section 65 of the Income Tax Ordinance was not within the time limit?"
2. The brief and necessary facts for deciding the referred question are that the respondent-company enjoyed exemption from Income Tax under section 15-BB of the Income Tax Act, 1922, (hereafter referred as the Act) for the Assessment year 1971-72. Subsequent to the completion of assessment, notice under section 65 of `the Ordinance' was issued by the Income Tax Officer in June, 1982, for the reason that the respondent had not properly utilized the reserve under section 15-BB of `the Act', and consequently the re-assessment was framed. However, perusal of the record shows that no date is mentioned when the assessment under section 65 of `the Ordinance' was passed. The respondent being aggrieved against such action, filed appeal before the Commissioner of Income Tax (Appeals), who annulled the assessment by holding that the period during which corrective action could have been taken by the Income Tax Officer under the provision of section 15-BB of `the Act', had already expired before the promulgation of `the Ordinance'. He, therefore, held that the Income Tax Officer had no jurisdiction to take action under the provision of section 65 of `the Ordinance' for the assessment year 1971-72. The Income Tax Department being aggrieved against such finding of the Commissioner of Income Tax (Appeals), preferred an appeal before the learned Income Tax Appellate Tribunal which was decided in I.T.A. No.320-KB of 1984-85, vide order, dated 28-10-1989. The learned Income Tax Appellate Tribunal after examining the case and following its earlier decision concurred with the view of the Commissioner "of Income Tax (Appeals) and rejected the department appeal, hence this Income Tax Reference.
3. Mr. Shakeel Ahmed, advocate on behalf of Mr. Nasrullah Awan, advocate of the applicant supported the order of the Income Tax Officer and submitted that action was taken in accordance with law.
4. On the other hand, Mr. Mazhar Jafri, learned advocate for the respondent has argued that after the repeal of `the Act', there was no occasion to disturb the assessment by issuing notice under section 65, as the provisions of section 65 of `the Ordinance' could not be applied retrospectively for completed assessment. He relied on the case of Mannoo Industries Ltd., v. Commissioner of Income Tax 2001 PTD 1525, where it was held that the provisions of section 66-A of `the Ordinance' could not be retrospectively applied for the completed assessment years when such provision i.e. section 66-A was not in the field. To further substantiate his arguments, he has relied upon judgment of this Court in Honda Shahrah-e-Faisal Association of Persons v. Regional Commissioner of Income Tax, Karachi and two others 2005 PTD 1316, wherein the view taken in Mannoo's case has been reiterated with reference to the provisions of section 122(5A) of the Income Tax Ordinance, 2001.
5. At the very outset, it may be stated that in Mannoo's case in Honda-e-Shahrah-e-Faisal's case referred (supra), the Hon'ble Lahore High Court and in the later case this Court had examined the provision of repeal and savings with reference to the provisions of section 66A of `the Ordinance' and section 122(5A) of the Income Tax Ordinance, 2001. With great respect to the learned counsel for the respondent, in the judgments referred by him the provisions of sections 15-BB and 34 of `the Act' and section 65 of `the Ordinance' were not examined with reference to section 166 (Repeal and Savings) of `the Ordinance'. Secondly, we may also observe that the facts and circumstances of the present case are entirely different so there would be no need to apply the principles of Mannoo's case and Honda-e-Shahrah Faisal's case referred supra.
6. In the present case, the assessee/respondent had availed facility of exemption under the provisions of section 15-BB of `the Act'. The Income Tax Officer in June, 1982, discovered that allegedly the respondent had not utilized the reserves created under section 15-BB of `the Act' in accordance with law. Having made such alleged discovery he re-opened the assessment through issuance of Notice under section 65 of `the Ordinance' for the assessment year 1971-72 and framed the re-assessment and made the addition of unutilized reserves in the income of the respondent. To appreciate the question of law referred to this Court for its opinion, it would be advantageous to reproduce section 15-BB of `the Act' in extenso:--
15-BB. Tax holiday for new industries.---(1) Subject to the provisions of the Act, the income, profits and gains of an industrial undertaking set up in Pakistan between the first day of April, 1959, and the thirtieth day of June, 1965 (both days inclusive) shall be exempt from the income tax and super tax payable under this Act for a period of four years beginning with the month in which the undertaking is set up or the commercial production is commenced, whichever is the later:--
Provided that in the case of an industrial undertaking set up in such areas as may be specified in this behalf by the Central Government, by notification in the official Gazette, this subsection shall have effect as if for the words "four years", the words "six and eight years" were substituted.
(2) The exemption under subsection (1) shall apply to an industrial undertaking which fulfils the following conditions, namely:--
(a) that it is owned and managed by a company formed and registered under the Companies Act, 1913, or a body corporate formed in pursuance of a Central Act, having (i) its registered office in Pakistan and (ii) a subscribed and paid-up capital of not less than fifty thousand rupees;
(b) that it uses wholly or mainly raw materials produced in Pakistan;
(c) that it is an undertaking the income, profits and gains of which are liable to be computed in accordance with the rules contained in the First and Second Schedules to this Act;
(d) that as respects any previous year ending on or before the 10th day of June, 1967, not less than sixty per cent of the income profits and gains exempted under this section are set apart in a special fund for the purpose of the expansion or development of the industrial undertaking from which such income, profits and gains have been derived, whether by the capitalization of such income, profits and gains for the purpose of issue of bonus shares to the shareholders of such company or body, or otherwise, for investment Schedules issued by the Central Government from time to time, which is owned and managed by a company registered under the Companies Act, 1913, or a body corporate formed in pursuance of a Central Act;
(dd) that as respects any previous year ending after the 10th day of June, 1967;
(1) fifty per cent, of the income, profits and gains exempted under this section are set apart in a special fund for the purpose of expansion or development of the industrial undertaking from which such income, profits and gains have been derived, whether by the capitalization of such income, profits and gains for the purpose of issue of bonus shares to the shareholders of such company or body, or otherwise, or for investment in any other industry included in the Industrial Investment Schedules issued by the Central Government from time to time, which owned and is managed by a company registered under the Companies Act, 1913 (VII of 1913), or a body corporate formed in pursuance of a Central Act; and
(2) the company declares before the due date for tiling of the return laid down in subsection (1) of section 22, that it shall distribute as dividend the amount of the remaining fifty per cent of such income, profits and gains, or the amount required to distribute ten per cent dividend, to its shareholders, whichever is the less; and if any part of the said fifty per cent of income, profits and gains is left with the company after distribution of the dividend according to the declaration, such part shall be added to fifty per cent of the income, profits and gains of the next year for alike distribution of dividend:
Provided that a company shall not be required to fulfil the condition is sub-clause (2) of this clause if--
(i) the fifty per cent of its income, profits and gains is less than the amount required to distribute five per cent dividend and so much of the amount of such income, profits and gains is not distributed shall be added to the fifty per cent of the income, profits and gains of the next year for distribution of dividend; or
(ii) it is an industrial undertaking owned and managed by a company having its registered office in Pakistan and is not a public company as defined in the Companies Act, 1913 (VII of 1913), and the sum of the paid capital and free reserves of such company does not exceed five lakhs of rupees;
(c) that it is approved by the Central Board of Revenue for the purpose of this section:
Provided that the Central Government may, in any case, waive, by a general or special order, the application of the condition referred to in clause (b):
Provided further that where any exemption has been allowed under this section and subsequently it is discovered by the Income Tax Officer that any one or more of the conditions specified in this subsection or subsection (4); was or were not fulfilled, as the case may be, the exemption originally allowed shall be deemed to have been wrongly allowed and the Income Tax Officer may notwithstanding anything contained in this Act, recomputed the total income of the assessee of the relevant previous year and the provisions of section 34 shall, so far as may be, apply thereto the period of four years specified in subsection (2) of that section being reckoned from the end of the assessment year relevant to the previous year in which the infringement was discovered.
(3) The profits and gains of an industrial undertaking to which this section applies shall he computed in accordance with the provisions of section 19:
Provided that nothing contained in clauses (vi), (via), and (vii) of subsection (2) of section 10 shall apply to such profits and gains derived by the undertaking in respect of the period specified is subsection (1):
Provided further that such profits and gains shall be computed ;separately from other income, profits and gains of the assessee, if any, and where the assessee sustains a loss or profits from such undertaking, it shall be carried forward and set off against the profits and gains of the said undertaking for the following year and where it cannot be wholly so set off, the amount of the loss not so set off shall be carried forward to the next year and so on but no loss shall be carried forward beyond the period for which the income, profits and gains of the undertaking are exempt under this section;
(4) --------------------------------------------------------------?????????
(4A) -------------------------------------------------------------???????
(4AA) --------------------------------------------------------
??????????? (4B) ----------------------------------------------------------
(4C) ----------------------------------------------------------
7. The perusal of section 15-BB will show that under third proviso to subsection (2) of section 15-BB, the legislature has provided the machinery for taking action in case, it is discovered by Income Tax Officer that any one or more of the conditions specified in subsection (2) or subsection (4) was or were not fulfilled, the exemption originally allowed shall be deemed to have been wrongly allowed and the Income Tax Officer notwithstanding anything contained in `the Act', may re-compute the total income of the assessee for the relevant previous year and the provisions of section 34 shall so far, as may apply thereto and the period of four years specified in subsection (2) of section 34 would be reckoned from the end of the assessment year relevant to the previous year in which the infringement was discovered.
8. Since the third proviso to subsection (2) of section 15-BB refers to section 34, it would be also advantageous to reproduce section 34 for the convenience and for ready reference:--
"34 Income escaping assessment.---(1) If for any reason income, profits or gains chargeable to income-tax have escaped assessment in any year, or have been under assessed, or have been assessed at too low a rate, or have been the subject or excessive relief or refund under this Act, or the total income and the total world income and the tax payable has been determined under subsection (1) of section 23, the Income Tax Ordinance may, serve on the person liable to pay tax on such income, profits or gains, or, in the case of a company, on the principal officer thereof, notice containing all or any of the requirements which may be included in-notice under subsection (2) of section 22, and may proceed to asses or re-assess such income, profits or gains, and the provisions of this Act, shall, so far as may be, apply accordingly as if notice were a notice issued under that subsection:
Provided that the tax shall be charged at the rate at which it would have been charged had the income, profits or gains not escaped assessment or full assessment, as the case may be:
Provided further that except in case in which an order has been made subsection (1) of section 23 unless definite information has come into his possession the Income-tax Officer shall not initiate proceedings under this subsection without obtaining the previous approval of the Inspecting Assistant Commissioner of Income-tax in writing.
(1-A) Notice under subsection (1) may be served by the Income-Tax Officer:--
(a) in any case in which he has reason to believe that assessee or any other person on his behalf has not filed any return under subsection (1) or subsection (2) of section 22, at any time;
(b) in any case in which he has reason to believe that the assesses has for any year concealed the particulars of his income or deliberately furnished inaccurate particular thereof or omitted or failed to disclose all material facts necessary for the assessment for such year, within six years from the end of the year in which the assessment for such year was first made and where no assessment has been made, within six years from the end of the last year in which assessment for such year could be made, had clause (c) been applicable to such case:
Provided that in a case where a fresh assessment is made for any year in pursuance of an order under section 31, section 33, section 33-A or in pursuance of an order under section 31, section 33, section 33-A or section 34-A the period of six years referred to in this clause shall commence from the end of the year in which the fresh assessment is made;
(c) in any other case, within four years from the end of the year for which assessment is to be made.
(2) No order of assessment under section 23 or assessment or re-assessment under subsection (1) of this section shall be made after the expiry, except in any case in which the assessee has not filed any return under subsection (1) or subsection (2) of section 22 or concealed the particulars of his income or deliberately furnished incorrect particulars of such income or omitted or failed to disclose all material facts necessary for the assessment for that year, or two years from the end of the year in which the income, profits or gains were first assessable:
Provided that--
(i) this subsection shall have effect as if for the words "two years"
(a) in relation to the income, profits or gains which were first assessable in the year 1965-66, the words "five years" were substitute; and
(b) in relation to the income, profits or gains which were first assessable in the year, 1965-66, the words "live years" were substituted;
(c) in relation to the income, profits or gains which were first assessable in the year, 1966-67, the words "five years" were substituted where the assessment or re-assessment, as the case may be, relates to an assessee under the jurisdiction of an Income-tax Officer having his office in the Province of East Pakistan;
(ii) where a notice under subsection (1) was issued, within the time-limit specified in subsection (1-A), the assessment, or re-assessment, as the case may be, may be made in pursuance of such notice within one year from the end of the year in which such notice was served;?????
(iii) nothing contained in this section limiting the time within which any action may be taken or any order, assessment or re-assessment may be made, shall apply to an assessment or re-assessment, as the case may be, made on the assessment or any person in consequence of, or to give effect to, any finding or direction contained in an order under section 31, section 33, section 33-A, section 34-A, section 66 or section 66-A, or in the case of a firm, to an assessment made on a partner of the firm in consequence of an assessment made on the firm under this section;
(iv) nothing contained in this section limiting the time within which any action may be taken or any order; assessment or re-assessment may be made, shall apply to an assessment or re-assessment, as the case may be, made on any person in conformity with a decision of the Supreme Court in any case under section 66-A or Article 185 of the Constitution.
Explanation I.---Where by an order under section 31, 33, 33-A, 34-A, 66 or 66-A any income is excluded from the total income of the assessee for an assessment year, an assessment of such income for another assessment year shall, for purposes of this section, be deemed to be one made in consequence of or to give effect to any finding or direction contained in the said order.
Explanation II.---Where by an order under section 31, 33, 33-A, 34-A, 66 or 66-A any income is excluded from the total income of one person and held to be the income of another person, an assessment of such income on such other person, shall for purpose of this section, be deemed to be one made in consequence of , or to give effect to, any finding or direction contained in the said order.
(2-A) A notice under subsection (1) may, where the Income Tax Officer has reason to believe that assessee, or any other person on his behalf, has not filed any return under subsection (1) or subsection (2) of section 22 or concealed the particulars of his income or deliberately furnished inaccurate particulars thereof, or omitted or failed to disclose all material facts necessary for the assessment for that year, be issued at any time notwithstanding that at the time of the issue of such notice the period (specified in subsections (1), (1-A) and (2) before their) before its amendment had expired and no assessment or re-assessment made or any other proceeding taken in consequence of such notice or any assessment- or re-assessment made under subsection (2-B) or any other proceeding taken in consequence of any notice issued for that purpose shall be called in question in any Court, Tribunal or other authority merely on the ground that, at the time the notice was issued or at the time the assessment or re-assessment was made, the time, within which such notice should have been issued or the assessment or the re-assessment should have been made under this section as in force before its amendment, had expired:
Provided that no notice under subsection (1) shall be issued in respect of income, profits and gains which were received or are deemed to have been received, or which accrued or arose or are deemed to have accrued or arisen to an assessee before the fourteenth day of August, 1947.
(2-B) Notwithstanding anything in subsections (1) and (2) limiting the time within which any notice may be issued or any assessment or re-assessment made or any action taken, such notice may be issued, assessment or re-assessment made or action taken as respects the assessment (including re-assessment) for any year ending at any time between the thirty-first day of March, 1955, and the thirtieth day of June, 1965 (both days inclusive) on or before the thirtieth day of June, 1971.
(2-C) In computing the period of limitation for purposes of making an assessment or re-assessment or taking any other proceeding under this Act, the period, if any, for which such assessment, re-assessment of other proceeding has been stayed by any Court, Tribunal or any other authority shall be excluded.
(2-D) Where an assessment or re-assessment or any order has been annulled, set aside, cancelled or modified, the competent authority may start the proceedings from the stage next preceding the stage at which such annulment, setting aside, cancellation or modification took place and nothing contained in this Act shall render necessary the re-issue of any notice which has already been issued or the re-furnishing or re-filing of any return, statement, or other particulars which had already been furnished or filed, as the case may be.
9. From the perusal of third proviso to subsection (2) of section 15-BB and section 34 referred to above, it becomes clear that the assessment could be reopened by the Income Tax Officer, from the discovery of infringement and in terms of the said proviso, the reopening could have been made within the period of four years from the end of the assessment year relevant to the previous year in which such infringement was discovered. It is an admitted fact that the Assessing Officer discovered infringement of the provision of section 15-BB for the assessment year, 1971-72 in June, 1982 and in the terms of the provision of third proviso to subsection (2) of section 15-BB, the period of four years specified in subsection (2) of section 34 has to be reckoned from the end of the assessment year 1971-72. In view of the above observation, the time limit for issuing notice under section 34 expired on 30-6-1976. It would be noted that notice in the present case under section 65 of `the Ordinance' was issued in June, 1982 after the expiry of the period i.e. 30-6-1976 and it would further be noted that `the Ordinance' came into force on 1st July, 1979.
10. Since in the present case, the action was taken under section 65 of 'the Ordinance', it would be very important to examine whether such action could have been taken in view of section 166 of `the Ordinance', which speaks of repeal and savings of `the Act'. It would be advantageous to re-produce section 166.
166. Repeal and savings.---
(1) The Income-Tax Act, 1922 (XI of 1922) is hereby repealed.
(2) Notwithstanding the repeal of the Income-Tax Act, 1922 (XI of 1922) and without prejudice to the provisions of section 6 or section 24 of the General Clauses Act, 1897 (X of 1897),--
(a) where a return of income has been filed before the commencement of this Ordinance by any person or any assessment year, proceedings for the assessment of that person for that year may be taken and continued as if this Ordinance had not come into force;
(b) where a return of income is filed after the commencement of this Ordinance otherwise than in pursuance of any notice under section 34 of the repealed Act, by any person for any assessment year ending on or before the thirtieth day of June, 1979, the assessment of the person for that year shall be made in accordance with the procedure specified in this Ordinance;
(c) where in respect of any assessment year:
(i) a notice under section 34 of the repealed Act had been issued before the commencement of this Ordinance, the proceedings in pursuance of such notice may be continued and disposed of as if this Ordinance had not come into force;
(ii) any income chargeable to tax had escaped assessment, or had been under assessed or assessed at too low a rate, or had been the subject of excessive relief or refund or the total income or the total world income and the tax payable had been determined under subsection (1) of section 23 of the repealed Act and no proceedings under section 34 of the said Act in respect of any such income are pending at the commencement of this Ordinance a notice under section 65 may be issued with respect to that assessment year and all the provisions of this Ordinance shall apply accordingly;
(d) in making any assessment for any year ending on or before the thirtieth day of June, 1979, the provisions of the repealed Act relating to the computation of total income and the tax payable shall apply as if this Ordinance had not come into force;
(e) in making any assessment for the year beginning on the first day of July, 1979 the income year shall be deemed to include the period, if any, comprised the previous year, as defined in clause (11) of section 2 of the repealed Act, for which the assessment would have been made if this Ordinance had not come into force and where such income year exceeds a period of twelve months, the total income and the tax payable shall be prorated on the basis of the average income of a period of twelve months;
(f) in making any assessment for any year beginning on or before the first day of July, 1979, the provisions of section 18A and section 26A of the repealed Act shall apply as if this Ordinance had not come into force;
(g) any proceedings for the imposition of a penalty or prosecution in respect of any assessment completed before the first day of July, 1979, may be initiated and any such penalty may be imposed or prosecution proceedings continued as if this Ordinance had not cone into force;
(h) any proceeding for the imposition of a penalty or prosecution in respect of any assessment for any year ending on or before the thirtieth day of June, 1979, which is completed on or after the first day of July, 1979, may be initiated and any such penalty may be imposed or prosecution proceeding continued as if this Ordinance had not come into force;
(i) any proceeding pending on the commencement of this Ordinance before any income-tax authority, the Appellate Tribunal or any Court or Tribunal by way of appear, reference, revision or prosecution, shall be continued and dispose of as if this Ordinance had not come into force;
(j) where the period prescribed for any application, appeal, reference or revision under the repealed Act had expired on or before the commencement of this Ordinance, nothing contained in this Ordinance shall be construed as enabling any such application, appeal, reference or revision to be made under this Ordinance by reason only-of the fact that a longer period thereof is prescribed or provision is made for extension of time in suitable cases by the appropriate authority;
(k) any sum payable by way of income-tax, super-tax, interest, additional tax, surcharge, penalty or otherwise under the repealed act may be recovered under this Ordinance but without prejudice to any action already taken for the recovery of such sum under the repealed Act;
(l) where, in respect of any assessment completed before the commencement. of this Ordinance, any default is made after such commencement in the payment of any sum due under such completed assessment or any refund falls due after such commencement, the provisions of section 89 or section 102 of this Ordinance, as the case may be, shall apply;
(m) any notification issued under subsection (1) of section 60 of the repealed Act and in force immediately before the commencement of this Ordinance, shall to the extent to which provision has not been made under this Ordinance, continue in force until rescinded by the Federal Government;
(n) any election or declaration made or option exercised by an assessee under any provision of the repealed Act and in force immediately before the commencement of this Ordinance shall be deemed to have been an election or a declaration made or an option exercised tinder the corresponding provision of this Ordinance;
(o) anything done or any action taken under the repealed Act in so far as it is not inconsistent with the provisions of this Ordinance shall, without prejudice to anything already done or any action already taken, be deemed to have been done or taken under this Ordinance;
(p) any agreement entered into, appointment made, approval given, recognition granted, direction, instruction, notification, notice, order or rule issued or made under any provision of the repealed Act and in force or valid at the commencement of this Ordinance shall so far as it is not inconsistent with the corresponding provision of this Ordinance or any agreement, appointment, approval, recognition, direction, instruction, notification, notice, order or rule entered into, made, given, granted, issued or made under this Ordinance, be deemed to have been entered into, made, given, granted, or issued or made, as the case may be, under the corresponding provision aforesaid and shall, unless revoked, cancelled or replaced by, or under, this Ordinance, continue in force accordingly; and
(q) any appointment or any act of authority or other thing made or done by any authority or person and subsisting or in force at the commencement of this Ordinance which could have been made or done under any substantially corresponding provision of this Ordinance by any authority or person other than the one specified in the repealed Act, or in any manner other than that so specified, shall, continue in force and have effect as if it had been made or done under the corresponding provision of this Ordinance by the authority or person or in the manner specified in the corresponding provision as if such provision had been in force when it was made or done.
11. The significant features of section 166(2) of 'the Ordinance' are that it starts firstly with a non obstante clause viz. notwithstanding the repeal of the Income Tax Act, 1922 and secondly enabling clause viz without prejudice to the provisions of section 6 or section 24 of the General Clauses Act, 1897.
12. We would, therefore, first examine the significance of aforesaid two features. In respect of Non Obstante Clause, it is now well established principle that a non obstante is usually used in a provision to indicate that the provision should prevail despite any thing to the contrary in the provision mentioned in such non obstinate clause. In case there is any inconsistency between the non obstante clause and another p provision, one of the objects of such a clause is to indicate that it is non obstante clause which would prevail over the other clause.
13. In respect of second feature, it will be noticed that it stipulates that without prejudice to the provisions of section 6 of the General Clauses Act, 1897. It is clear that expression `without prejudice' means not effecting.
14. As it will be observed from above discussion, it will be necessary to examine the scope of section 6 of the General Clauses Act, 1897. Section 6 reads as under:--
"Section 6. Effect of Repeal.--Where this Act or any Central Act or Regulation made after the commencement of this Act, repeals any enactment hitherto made or hereinafter to be made, then, unless a different intention appears, the repeal shall not:
(a) revive anything not in force or existing at the time at which the repeal takes effect; or
(b) effect the previous operation of any enactment so repealed or anything duly done or suffered thereunder; or
(c) affect any right, privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed; or
(d) affect any penalty, forfeiture or punishment incurred in respect of any offence committed against any enactment so repealed; or
(e) affect any investment, legal proceedings or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture or punishment as aforesaid;
and any such investigation, legal proceedings or remedy may be instituted, continued or enforced and any such penalty, forfeiture or punishment may be imposed as if the repealing Act or Regulation had not been passed.
15. We may state that when there is repeal, the consequences contained in section 6 (supra) will follow unless a different intention appears. In case of a simple repeal there would be hardly any occasion to take contrary view, however where the repeal is followed by fresh enactment on the same subject, we have to examine the new enactment to find out and determine any different intention.
16. Applying the above principles on the facts of the present case, we have to fall back to the provisions of section 166 (Repeal and Savings) of `the Ordinance', to find out and determine different intention if any. Clause (b) of section 166 of `the Ordinance', stipulates that where a return of income is filed after the commencement of `the Ordinance' otherwise than in pursuance of any notice under section 34 of `the Act', by any person for any assessment year ending on or before the thirtieth day of June, 1979, the assessment of the person for that year shall be made in accordance with the procedure specified in `the Ordinance'. Clause (c) stipulates and caters to two situations in respect of any assessment year. One is that where in respect of any assessment year, a notice under section 34 of `the Act' had been issued before the commencement of `the Ordinance', the proceedings in pursuance of such notice may be continued and disposed of as if `the Ordinance' had not come into force and second situation is that any income chargeable to tax had escaped assessment, or had been under-assessed or assessed at too low a rate, or had been the subject of excessive relief or refund or the total income or the total world income and the tax payable had been determined under subsection (1) of section 23 of `the Act' and no proceedings under section 34 of `the Act' in respect of any such income are pending at the commencement of `the Ordinance', a notice under section 65 of `the Ordinance' may be issued in respect of that assessment year and all the provisions of `the Ordinance' shall apply accordingly.
17. It is, therefore, evident from above, that there exists a different intention, thus evidently, the provisions of section 65 for reopening an assessment can be invoked, as in the present case no notice under section 34 was issued within contemplated timeframe. It is, therefore, held that since different intention appears from the provisions of clause (c) of subsection (2) of section 166 of `the Ordinance', an assessment can be reopened under section 65 of `the Ordinance'. However, after holding as aforesaid, matter does not end, we have to examine whether the provision of section 65 of `the Ordinance', in the present case has been correctly applied. For such determination we have to examine the relevant provision of section 65 of `the Ordinance'. Such provision of law (as applicable at relevant time) is reproduced for convenience and ready reference:-
65. Additional assessment.---(1) If, in any year, for any reason:--
(a) any income chargeable to tax under this Ordinance has escaped assessment; or
(b) the total income of an assessment has been under-assessed, or assessed at too low a rate, or has been the subject of excessive relief for refund under this Ordinance; or
(c) the total income of an assessment or the tax payable by him has been assessed or determined under subsection (1) of section 59 and no order of assessment has subsequently been made under this section or any other provision of this Ordinance,
the Income-tax Officer may, at any time, subject to the provisions of subsections (2), (3) and (4), issue a notice to the assessee containing all or any of the requirements of a notice under section 56 and may proceed to assess or determine, by an order in writing, the total income of the assessee or the tax payable by him, as the case may be, and all the provisions of this Ordinance shall, so far as may be, apply accordingly:
Provided that the tax shall be charged at the rate or rates applicable to the assessment year for which the assessment is made.
(2) No proceedings under subsection (1) shall be initiated unless definite information has come into the possession of the Income-tax Officer or he has obtained the previous approval of the Inspecting Assistant Commissioner of Income-tax in writing to do so.
(3) No order under subsection (1) shall be made in respect of income year after the expiration of ten years from the end of the assessment year in which the total income of the said income year was first assessable.
(4) Nothing contained in subsection (2) shall apply to any such case or class of cases to which clause (c) of subsection applies as may be specified by the Central Board of Revenue.
18. It will be seen that limitation for invocation of provision under section 65 of `the Ordinance' is contained in subsection (3) which stipulates that no order under subsection (1) of section 65 shall be made in respect of any income year after the expiration of ten years from the end of the assessment year in which the total income of the said income year was first assessable. In the present case, the total income pertained to the previous year which was first assessable to the assessment year 1971 72. The end of such assessment will be 30-6-1972. As such order of Re-assessment under section 65 could be passed within ten years from the end of assessment year i.e. on or before 30-6-1982.
19. After having concluded our discussion holding that the re-assessment under section 65 could be passed within ten year from the end of assessment year in question, we have also examined the rational of the learned Income Tax Appellate Tribunal in which reliance has been placed on the judgment of Eastern Federal Union Insurance Company v. Commissioner of Income Tax (1966) 14 Tax 211 and judgment of Hon'ble Supreme Court of Pakistan in the case of Commissioner of Income Tax v. Eastern Federal Union Insurance Company PLD 1982 SC 247 we find that the reference made by the first Appellate Authority and the learned Tribunal to the said judgments was not proper as the same are distinguishable.
20. As noted in second paragraph of this judgment, unfortunately neither in the statement of the case nor in the paper book there is any mention of date when the order under section 65 of `the Ordinance' was made. In view of such difficulty it is very difficult for us to answer the question referred to us. We, therefore, deem proper to remand the case to the Income Tax Appellate Tribunal to ascertain the date of passing order under section 65. If the order is passed before the date i.e. 30-6-1982, then the re-assessment will be deemed to have been passed within the limitation provided under subsection (3) of section 65 of `the Ordinance'. On the other hand if the said order is passed after 30-6-1982, it will be deemed to have been passed beyond the limitation period as contemplated under subsection (3) of section 65 of `the Ordinance'.
21. A copy of this judgment under the seal of this Court and with the signature of the Registrar of this Court be sent to the Income Tax Appellate Tribunal for passing an appropriate order in conformity with the directions contained in this judgment.
M.B.A./C-17/K?????????????????????????????????????????????????????????????????????????????????? Order accordingly.