RANA ASHFAQ RICE MILLS, NAROWAL through Managing Partner VS DIRECTOR-GENERAL OF INCOME-TAX, SIALKOT
2009 P T D 2159
[Lahore High Court]
Before Khawaja Farooq Saeed, J
Messrs RANA ASHFAQ RICE MILLS, NAROWAL through Managing Partner
Versus
DIRECTOR-GENERAL OF INCOME-TAX, SIALKOT and 2 others
Writ Petitions Nos.5681, 5485, 5523, 5628, 5207, 5753 and 5172 of 2009, heard on 19/06/2009.
(a) Income Tax Ordinance (XLIX of 2001)---
----Ss.120, 122(3)(a)(b) & 177---Constitution of Pakistan (1973), Art.199---Constitutional petition---Agreement between parties for making assessment at a particular figure after earlier deemed assessment order was modified---Filing of revised return on basis of such agreement---Denial of Revenue to treat revised return a normal assessment and carry forward losses earlier approved by Revenue---Issuance of notice under S.177 of Income Tax Ordinance,.2001 to determine income of assessee as per law and rules---Validity---Parties once having agreed would morally be bound to follow same---Such agreement, though not provided by law, was supported by factum of creation of alternate resolution committees in fiscal laws---Such agreement had not barred carrying forward such losses, which being mandatory could not be ignored after determination of income---Agreement of income would not bind Revenue, if some other information came to its knowledge regarding under assessment or concealment---Revenue under normal circumstances could not be allowed to review such agreement as same would be against principle of consistency and requirements provided for further audit---Repeated audit was not barred, but such agreement showed an element of satisfaction, which could not be allowed to be revisited under garb of claim that same had not generated revenue to satisfaction of department---High Court set aside impugned notice in circumstances.
(b) Interpretation of documents---
----Principle of interpretation of an agreement more or less is the same as are in respect of interpretation of statutes.
Cantonment Board, Sialkot Cantonment through Executive Officer, Cantonment Board, Sialkot Cantonment v. Sheikh Nazir Ahmad PLD 1953 Lah. 400; Gulzar Khan v. Shahzad Bibi and another PLD 1974 SC 204; Amanullah and 2 others v. Muhammad Hassan and 3 others PLD 1994 Pesh. 211 and Zarqa Haq v. Government of Baluchistan through Secretary, Health, Quetta and 2 others PLD 1994 Quetta 47 rel.
(c) Interpretation of documents---
----Document would be considered in its plain and simple language without paying any premium to achieve an object for which no provision had been laid down.
Cantonment Board, Sialkot Cantonment through Executive Officer, Cantonment Board, Sialkot Cantonment v. Sheikh Nazir Ahmad PLD 1953 Lah. 400; Gulzar Khan v. Shahzad Bibi and another PLD 1974 SC 204; Amanullah and 2 others v. Muhammad Hassan and 3 others PLD 1994 Pesh. 211 and Zarqa Haq v. Government of Baluchistan through Secretary, Health, Quetta and 2 others PLD 1994 Quetta 47 rel.
Syed Ali Imran Rizvi for Petitioner.
Muhammad Ilyas Khan for Respondent.
Date of hearing: 19th June, 2009.
JUDGMENT
KHAWAJA FAROOQ SAEED, J.---This judgment will dispose of Writ Petitions Nos.5681, 5485, 5523, 5628, 5207, 5753 and 5172 of 2009 as the common question of law and facts are involved in these writ petitions.
2. Through this writ petition the notice under section 177(4) under the particular circumstances of the present case are challenged to be as illegal and without lawful authority.
3. The brief facts of the case are that the return filed by the petitioner, a deemed assessment order by virtue of section 120, was subsequently proposed to be modified. through an earlier notice under section 177. After due proceedings as well as agreement between Tax Bar Association and D.G. RTO, Sialkot, an agreement was arrived at between them. As a result of this the assessment of the petitioner was agreed to be made at a particular figure between the two parties.
4. In continuation to the said agreement the petitioner filed revised return which again by virtue of section 122(3)(a)(b) is a deemed assessment. The petitioner after the said agreement requested for carry forward of earlier loses which was denied under the claim that the agreement was arrived at for the reason of getting taxes and the same was not a normal assessment. The respondent-department, therefore, issued the present notice in which it has inter alia been stated that in case of non-compliance, the income of the petitioner shall be determined as per law and rules.
5. The petitioner's argument before this Court now are:-
(i) that it is a case of an agreement between the parties which was only for income and there are no exceptions provided therein with regard to non-allowance of carry forward of loses etc;
(ii) that the exceptions agreed have been made part of the agreement;
(iii) that the revised return by virtue of said Ordinance having become a deemed assessment order, the department can only further proceed if the notice fulfil the parameters of section 177 or otherwise some concealment or error is found in it.
6. The case of the respondent as argued through learned counsel is that it is a writ petition against the notice which should not be allowed. Further the agreement was obviously for the purpose of generating revenue otherwise income of the assessee is much higher than the income agreed. The learned counsel added that the petitioner has a number of alternate remedies, hence, writ jurisdiction should not be entertained at this preliminary stage.
7. So far as the claim of the petitioner and arguments of the department side is concerned, this Court does not have any doubt in its mind that once having agreed there is a moral binding on the parties concerned to follow the same. This Court is fully conscious that generally law does not provide for any agreement of the kind as have been arrived at. However, recent developments in fiscal laws in terms of alternate dispute resolution committees etc. create the impression that such agreement also now requires support from all quarters.
8. Another aspect of the case which would require discussion is that the principle of interpretation of an agreement for a document more or less is the same as is in respect of the interpretation of Statute. In this regard one can refer with advantage re: Cantonment Board, Sialkot Cantonment, through Executive Officer, Cantonment Board, Sialkot Cantonment v. Sheikh Nazir Ahmad PLD 1953 Lah. 400, Gulzar Khan v. Shahzad Bibi and another PLD 1974 SC 204; Amanullah and 2 others v. Muhammad Hassan and 3 others PLD 1994 Pesh. 211, Zarqa Haq v. Government of Baluchistan through Secretary, Health, Quetta and 2 others PLD 1994 Quetta 47.
9. In all the above referred judgments the august Court as well as other superior Courts of the country have directed to consider the documents in its plain 'and simple language without paying any premium to achieve an object for which no provision have been laid down. The above language applies in full on the present agreement. The agreement does not bear any restriction with regard to non-allowance of the losses earlier approved by the revenue. The provision with regard to carry forward losses is a mandatory one and cannot be ignored after determination of the income.
10. It is correct that the agreement of income would not bind the department if some other information comes to the knowledge with regard to the under-assessment or concealment. However, under normal circumstances the department cannot be allowed to review the said agreement as the same shall be against the principle of consistency as well as requirements provided .for further audit. The Court is also conscious that there is no bar in repeated audits but the agreement shows an element of satisfaction which cannot be allowed to be revisited under the garb of the claim that the same has not generated revenue to the satisfaction of the department.
11. The writ petition, therefore, is allowed and the impugned notice is set aside.
S.A.K./R-68/LPetition accepted.