COMMISSIONER OF INCOME TAX VS FATIMA SHARIF TEXTILE, KASUR
2009 P T D 37
[Supreme Court of Pakistan]
Present Iftikhar Muhammad Chaudhry, C.J., Faqir Muhammad Khokhar and Mian Shakirullah Jan, JJ
COMMISSIONER OF INCOME TAX and others
Versus
FATIMA SHARIF TEXTILE, KASUR and others
Civil Appeals Nos. 1962 to 2205 of 2005, decided on 01/03/2006.
(On appeal from judgment and order of the Lahore High Court, Lahore, dated 21-7-2004 and 4-10-2004 in Writ Petitions 7800, 8047, 8121, 8294, 8398, 8410, 8481, 8483, 8494, 8516, 8614, 8616, 8623, 8627, 8662, 8682, 8688, 8710, 8736, to 8739, 8743, 8751, 8758, 8759, 8761, 8777, 8797, 8822, 8830, 8838, 8840, 8841, 8895, 8898, 8923, 8930, 8935, 8938, 8940, 8959, 8983, 9001, 9023 to 9026, 9036, 9037, 9042, 9048, to 9053, 9064, 9065, 9075, 9080, 9114, 9135, 9151, 9152, 9166, 9171, 9173, 9174, 9187, 9188, 9193, 9194, 9202 to 9204, 9208, 9209, 9926, 10056 to 10059, 10104, 10108, 10124, 10126, 10148 to 10150, 10238, 10498, 10502, 10503, 10577 to 10579, 10591 to 10601, 10667, to 10676, 10875, 10876, 10878, 10686, 10874, 10925, 10927, 10929, 11032, 11082 to 11084, 11091 to 11107, 11123, 11255 to 11270, 11348 to 11350, 11354 to 11366, 11373, 11374, 11381 to 11383, 11432, 11562, 11726 to 11731, 11799, 11800, 12053, 12056, 12066 to 12070, 12279, 12081 to 12083, 12159, 12280, 12493 to 12498, 12590, 12627, 12635, 12720, 12927 to 12930, 13807, 13851, 13852, 13854 to 13868, 14252, 15022 and 15027 of 2004).
(a) Income Tax Ordinance (XLIX of 2001)---
----S. 177---C.B.R. Circular No. 1(1)S(ITAS)/2004---Filing of return under self assessment scheme---Reopening of assessment---Absence of specific provision in Income Tax Ordinance, 2001 requiring issuance of notice to assessee before proceedings against him---Effect---Law provided that such return filed by assessee would amount to an assessment order---General audit of assessment would result in prejudice to assessee making him subject to scrutiny---No one could be condemned unheard---Provision of notice to a person against whom department proposed to proceed would be read in every statute irrespective of absence of such provision therein---Notice to assessee would be given before proceedings against him inspite of absence of its provision in Income Tax Ordinance, 2001---Principles.
Mst. Sattan and others v. Group Captain Masroor Hussain. Officer Commanding, P.A.F. Station Sargodha Cant. PLD 1962 Lah. 151; Abdul Rashid v. Government of the Punjab through the Chief Conservator of Forests Lahore and 2 others 1985 CLC 199; Mst. Abeda Begum v. Government of Pakistan and others 1985 CLC 2859; Muhammad Tufail v. Government of Punjab (1990) Law Notes Lah. 138; Gul Muhammad and 8 others v. Buxal and 2 others 1991 CLC 229; Messrs Murree Brewery Company Limited v. Director-General, Excise and Taxation and 3 others 1991 MLD 267; Fateh Muhammad v. Mushtaq Ahmad and 9 others 1981 SCMR 1061 and Mst. Zahida Sattar and others v. Federation of Pakistan an others PLD 2002 SC 408 rel.
(b) Income tax---
----Press-release issued by Federal Board of Revenue subsequent to filing of return by assessee---Validity---Such could not work retrospectively and would be of no legal consequence for same not being in knowledge of assessee while filing return.
Sadiq Brothers Poultry, Rawalpindi v. Appellate Additional Commissioner I.T./W.T. Rawalpindi 2003 PTD 1780 and 2004 PTD 122 rel.
Makhdoom Ali Khan, Attorney General of Pakistan Raja Muhammad Irshad D.A.G., Muhammad Zafar Iqbal, Advocate-on-Record, Sh. Shaukat Ali, C.I.T., LTU, Lahore for Appellants.
Muhammad Naeem Shah, Latif Ahmad Qureshi, Shahbaz Butt, Dr. Ilyas Zafar, Shahzad Shaukat, Muhammad Iqbal Hashmi, Mian Ashiq Hussain, Zaeem ul Farooq, Siraj-ud-Din Khalid, Advocate Supreme Court, for Respondents.
Dates of hearing: 28th February and 1st March, 2006.
JUDGMENT
IFTIKHAR MUHAMMAD CHAUDHRY, C.J.---Above appeals are by leave, of the Court against judgments description whereof has been given in the title of judgment, passed by the Lahore High Court, Lahore.
2. We have heard the parties counsel and have gone through the impugned judgment carefully.
3. The learned Attorney General for Pakistan under instructions stated that C.B.R. or its authorized representatives are ready to abide by the observations made by the High Court in the impugned judgment in respect of issuing fresh notices to the respondents but the learned High Court has made certain observations which are detrimental both in the interests of the C.B.R. as well as the respondents, therefore, if the same are set aside or expunged then it would be convenient for both the sides to agitate their claims according to the terms of section 177 of the Income Tax Ordinance, 2001, as it stood at the relevant time. He pointed out following observations from the impugned judgment:--
"against the assessee because his assessment order is to be reopened and declaration in the return to be scrutinized which is an order adverse to the provisions of section 120 of the Ordinance (ibid)."
(8) Learned counsel for the respondents attempted to negate the assertions of the petitioners by urging that no notice is needed before proceeding under section 177 of the Ordinance, because by the exercise of audit, no prejudice is caused to the assessee. Though this contention has no substance in it and cannot be accepted even on its face value because general audit of a person does result in prejudice to the assessee as he becomes subject to scrutiny even regarding his meals and wearing yet the law itself provided that the return filed by the assessee would amount to an assessment order and when the department opts to reopen the case for scrutiny/audit/detailed analysis, a notice to the assessee has to be given before proceeding adverse to his interest, in spite of absence of specific provision of notice, in the said law. Law regarding notice to the concerned party is settled by this time and the superior judiciary of country is consistent on the question of giving notice to the concerned persons before proceedings against him, besides the applicability of principles of natural justice whereunder no one is to be condemned unheard. The Hon'ble Supreme Court of this country has very graciously mandated that provision of notice to the person against you propose to proceed, has to be read in every statute irrespective of the fact that no such provision is incorporated therein. Reference in this behalf can be conveniently made to a chain of judgments, a few of those are in the cases of Mst. Sattan and others v. Group Captain Masroor Hussain, Officer Commanding, P.A.F. Station Sargodha Cantt. (PLD 1962 Lah. 151), Abdul Rashid v. Government of the Punjab through the Chief Conservator of Forests Lahore and 2 others (1985 CLC 199), Mst. Abeda Begum v. Government of Pakistan and others (1985 CLC 2859). Muhammad Tufail v. Government of Punjab (1990) Law Notes (Lahore 138), Gul Muhammad and 8 others v. Buxal and 2 others (1991 CLC 229), Messrs Murree Brewery Company Limited v. Director General, Excise and Taxation and 3 others (1991 MLD 267), Fateh Muhammad v. Mushtaq Ahmad and 9 others (1981 SCMR 1061) and Mst. Zahida Sattar and others v. Federation of Pakistan and others (PLD 2002 SC 408).
The press release, dated 13-5-2004 issued by the Central Board of Revenue subsequent to the filing of the returns by the assessee is of no legal consequence as it could not work retrospectively, as those were not in the knowledge of the assessee the time of filing of their returns. Reference in this behalf can be made to the judgments of this Court in the cases of Sadiq Brothers Poultry, Rawalpindi v. Appellate Additional Commissioner. I.T./W.T. Rawalpindi 2004 PTD 122 and 2003 PTD 1780. In both these cases, the circular issued by the Central Board of Revenue specifying certain categories of the assessees whose cases were selected for special audit for the assessment year, 1998-99 were held to be unjustified and it was ruled that all the categories of assessees should have been given information well before filing of their returns under the "Self Assessment Scheme" with an added finding that such circular after filing of self assessment returns are illegal exercise of discretion vesting in the revenue authorities.
Learned counsel appearing for the respondents stated that they have no objection if above observations are expunged or set aside and appeals are disposed of in terms that appellants may issue notices to the respondents in terms of section 177 of Income Tax Ordinance, 2001, as it was applicable at the relevant time, disclosing criteria/reasons of selecting their cases for the purposes of audit. It is also pointed out that in' some of the cases the C.B.R. had issued Circular No. 1(1)S(ITAS)/2004, under which returns have been revised and payment of tax was made, therefore, in such cases observation for issuance of fresh notices will be issued.
4. The learned Attorney-General raised no objection and stated that in those cases no further proceedings under section 177 of the Ordinance, shall be initiated against them.
5. In view of the above arrangement between the parties, the appeals are disposed of with consent, consequently, the portions of impugned judgment reproduced hereinabove are deleted with the observation that let appellants issue fresh notices to the respondents in terms of section 177 of the Ordinance, as it was prevailing at the relevant time, disclosing criteria/reasons for selecting their cases for purpose of audit. As far as the cases in respect whereof observations have been made hereinabove relating to Circular C. No.1(1)S(ITAS)/ 2004 or otherwise if the returns have been revised and payment has been made by the assessees no further action shall be taken against them. The parties are left to bear their own costs.
S.A.K./C-16/SCOrder accordingly.