HAMEEDA INDUSTRIES (PVT.) LTD. through Director VS ADDITIONAL COMMISSIONER OF INCOME TAX/ WEALTH TAX, SIALKOT, 2009 PTD-LAHORE-HIGH-COURT-LAHORE 1503 (2009)

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

----S. 80DD---Provision of S.80DD, Income Tax Ordinance, 1979 is independent---Tax withheld at the time of import shall be minimum amount payable---If subsequently on making assessment of the said importer the tax calculated exceeds amount of the said deduction, the same shall be allowed only as an adjustment---Said adjustment does not create any bar or gives any right of separate charge.

2009 PTD (Trib.) 782 and Rima Cooking Oil, Industries (Pvt.) Ltd. v. Federation of Pakistan and others 2002 PTD 1023 ref.

(b) Income Tax Ordinance (XLIX of 2001)---

----S. 122---Constitution of Pakistan (1973), Art.199---Constitutional petition---Maintainability---Amendment of assessment---Constitutional jurisdiction of High Court would be exerciseable where the matter related to exercise of jurisdiction under S.122 of the Income Tax Ordinance, 2001.

Baluchistan Textile Mills Ltd. Central Board of Revenue and others NLR 1983 Tax 153 and Syed Allah Dost v. Haji Muhammad Alam and others PLD 1987 Quetta 235 ref.

Mian Ashiq Hussain for Petitioner.

Muhammad Ilyas Khan for Respondent.

Date of hearing: 29th May, 2009.

JUDGMENT

KHAWAJA FAROOQ SAEED, J.---In this writ petition the petitioner has challenged the issuance of notices under section 122.

2. The brief facts of the case are that the respondent issued a show-cause notice under section 122(5-A) of the Income Tax Ordinance, 2001. Through the said notice the intention to charge surcharge @ 5 % on the tax payable under section 8ODD of the Income Tax Ordinance, 1979 (repealed) was proposed. It was also inter alia proposed that Workers Welfare Funds for the assessment year 2000-2001 @ 2 % shall be charged in addition to the other charges.

3. The petitioner challenged, the action and subsequently filed writ petition before this court inter alia on the basis of following arguments:--

(i) that the assessment year involved in this case is 2000-2001 which being a subject matter covered by Income Tax Ordinance, 1979, the provision of Income Tax Ordinance, 2001, are in-applicable;

(ii) that the notice has been issued on the strength of a judgment of I.T.A.T which has subsequently been over-ruled by a judgment of Full Bench of the same court and is reported as (2009 PTD (Trib.) 782), the effect of which obviously is that, no benefit can accrue to the respondents through the said notice;

(iii) that the tax charged under section 80DD is full are final discharge, though it has been created under the garb of minimum tax, hence, application of surcharge thereon is not within the mandate of law.

4. Learned Legal Advisor from the department, however, said that so far as the first argument of the learned counsel is concerned, undoubtedly there are number of judgments of this court in field. However, same having been challenged before, the Hon'ble Supreme Court of Pakistan, the department claim remains that the notice under the provisions of section 122 can be issued in-respect of all years prior to the operation of the Income Tax Ordinance, 2001. His claim remains that the provision in relation to limitation provides for a time period for issuance of notices under the various provisions of the said Ordinance of 2001, within which action under said Ordinance can be taken.

5. The provision under discussion i.e. 122 can be applied on the assessment covered under sections 122(5) and (5-A) read with sections 122(2)(4)(a) and (b). However, the same can be invoked within the period prescribed therein.

6. It is further argued that even if there is a judgment by the Full Bench of the Income Tax Appellate Tribunal one can still argue the issue on the basis of language of law which gives a different impression. Further learned Sindh High Court has held in its judgment reported as 2002 PTD 1023 re: "Rima. Cooking Oil, Industries (Pvt.) Ltd. v. Federation of Pakistan and others" that sections 80D and 80C are separate and independent provisions. The charge of section 80D requires filing of return, issuance of notice and consequent assessment; of the income of a person and if the tax calculated on assessment falls less than half per cent of total turn over of an assessee the provision of section 80D applies.

7. On the same analogy section 8ODD also is independent. The tax withheld at the time of import of the edible oil shall be minimum amount payable. If subsequently on making assessment of the said importer the tax calculated exceeds amount of the said deduction, the same shall be allowed only as an adjustment and further tax can be calculated on the basis of said assessment. The said adjustment does not create any bar or gives any right of a separate charge.

8. So far as the issue of surcharge on section 80DD is concerned, this court leaves this for some other case. However, for the time being since the orders in field respect of the earlier proceedings are not in favour of the revenue, as for example the famous case on (Idrees Cloth House) reported as 2008 PTD 1420, no exception can be taken.

9. Further the notice having been issued on the basis of the judgment which has statedly been overruled, obviously loses its ground. Further, whether on the basis of a subsequent judgment a case can be reopened or a rectification of a mistake can be carried out also requires further discussion.

10. Apparently, the respondent's counsel claim that on the date when the notice was issued the order in field was the one which was referred therein and a subsequent order which overrules the said order cannot make the notice as illegal is also an arguable issue. However, since these arguments have not been taken before this court, the petitioner's case is allowed only in respect of the legality of notice under section 122.

11. This is where the argument of the respondent regarding maintainability requires adjudication. The matter being that of exercise of jurisdiction under the provisions of Income Tax Ordinance, 2001. through its section 122, there cannot be any doubt that writ jurisdiction is definitely exerciseable. In this regard one can refer (NLR 1983 Tax 153) "Baluchistan Textile Mills Ltd v. Central Board of Revenue etc". In the said judgment Hon'ble Supreme Court of Pakistan has categorically held that alternate remedy is no bar in exercise of writ jurisdiction when the same has been found to be as illusory in nature. PLD 1987 Quetta 235, re: "Syed Allah Post v. Haji Muhammad Alam etc.," has also supported the view that if the order appears to be as autocratic or capricious or tends to defy the mandatory condition for exercise of authority it would be open to interference despite availability of alternate remedy.

12. The result of the above discussion, therefore, is obvious. Since it is a case of illegal exercise of jurisdiction not available to the income tax authorities, the writ petition is allowed. The notice issued and consequent proceedings initiated on the basis thereof are held to be as illegal and are set aside.

M.B.A./H-17/LPetition allowed.