VS, 2010 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 1174 (2010)

Income Tax Ordinance (XLIX of 2001)---

---Ss. 121, 114(4), 111(1)(6) & 239(1)---Best judgment assessment---Limitation---Assessment year 2002-2003---Assessee contended that assessment for the assessment year 2002-2003 should be made under Income Tax Ordinance, 1979 as had been provided in saving clause under S.239(1) of the Income Tax Ordinance, 2001 but order had been made under S.121 of the Income Tax Ordinance, 2001 after issuing notices under Ss.114(4) and 111(1)(b) of the Income Tax Ordinance, 2001 which was nullity in the eyes of law---Appeal was rejected by the First Appellate Authority being barred by limitation---Validity---Limitation to file appeal against the order which had been passed without lawful jurisdiction would cease to run----Appeal against such order could be instituted at any time---Taxation Officer had passed an order under S.121 of the Income Tax Ordinance, 2001 without having jurisdiction and against the clear provision of law---First Appellate Authority had dismissed the appeal filed by the assessee without any justification---Order of First Appellate Authority was vacated and the order passed by the Taxation Officer under S.121 of the Income Tax Ordinance, 2001 was cancelled by the Appellate Tribunal.

2009 PTD 1392; 2000 PTD 2407; 2002 PTD 506; (2002) 85 Tax 98 (Lah.); 2002 PTD 1035; PLD 1969 Lah. 1039; PLD 1970 Lah. 6 and 2004 PTD (Trib.) 838 rel.

Rana Munir Hussain for Appellant.

Mrs. Sabiha Mujahid, D.R. for the Respondent.

ORDER

JAWAID MASOOD TAHIR BHATTI (JUDICIAL MEMBER).--The appellant through this appeal has objected to the impugned order of the learned CIT(A) dated 27-05-2009 on the following grounds:

"(2) That dismissal of appeal by the CIT(A) in limine being out of time is illegal, arbitrary having no legal effect.

(3) That since the order in appeal before the Commissioner of Income Tax (Appeals) was a void order; the question of limitation in respect of filing of appeal was not applicable in the case of the appellant.

(4) That the order passed by the Taxation Officer under section 121 of the Income Tax Ordinance, 2001 was without jurisdiction as the provisions of said ordinance had no retrospective effect.

(5) That the appellants are neither resident nor conducting any business whatsoever under the jurisdiction of Gujranwala. Assumption of jurisdiction by the Taxation Officer Gujranwala was patently illegal.

(6) That issuance of notice under section 114(4) and show-cause notice under section 111(1)(b) of the Income Tax Ordinance, 2001 was illegal and out of jurisdiction.

(7) That the assessment framed under the status of individual is illegal and void ab initio.

(8) That the addition made under section, 111(1)(b) on account of property purchased by two persons in single hand is illegal and void ab initio.

(9) That the rejection of appeal on score of limitation by the CIT(A) without considering the pronouncements of High Courts is illegal.

(10) That presumption of the CIT(A) regarding issuance of demand notice on the ground that same was sent through Registered Post was not based on true facts as the same was returned back by the Postal Authorities to the Taxation officer because of incomplete address."

I have heard the learned representatives from both the sides and have also perused the impugned order of the learned CIT(A), the assessment order and other relevant record of the case.

The Taxation Officer in this case has passed order under section 121 of the Ordinance, 2001 on 29-6-2007 for the assessment year 2002-2003. The proceedings were initiated by the Taxation Officer on the basis of information that the above titled assessee has purchased a property which is agricultural land measuring 16 Kanals and 15 Marlas for the value of Rs.18,52,500 on 30-7-2001. Since the assessee/ purchaser according to the Taxation Officer was not existing taxpayer, the notice under section 114(4) for filing of return was issued on 15-11-2003 through registered post. A show-cause notice under section 111(1)(b) was issued on 14-6-2007 requiring the assessee to explain the sources of investment made on purchase of property. As no compliance of the above notices was made by the assessee, the Taxation Officer including 5% incidental charges on the above referred transaction has assessed the net income at Rs.19,45,125. The assessee agitated the above matter before the learned CIT(A) who has dismissed the appeal in limine being barred by time. Learned counsel representing the assessee has agitated the matter on the legal grounds. He has contended that the assessee is the resident of Chak No.2 RB, Tehsil Safdar Abad District Sheikhupura and his brother who also resides with him at the above referred address being a practising lawyer, also have his office at Bhatti Park Icchra Lahore. He has contended that the land was admittedly purchased at Hafizabad on 30-7-2001 at the consideration of Rs.18,52,500. He has contended that the Taxation Officer of Gujranwala without having jurisdiction regarding the assessment in respect of the appellant has passed the order without any justification. Learned counsel has contended that both the above referred notices has been sent mentioning the address of the assessee as Gujranwala Road Hafizabad therefore as per the record of the department both the letters were received back with the note from the Postal Department that the addresses of the assessee are not correct: He has contended that the assessee/appellant in this case has come to know about the above referred order passed by the Taxation Officer under section 121 of the Ordinance, 2001 when the Inspector of the Department had informed about the order and the assessee without wasting any time after obtaining the order from the office of the Taxation Officer has filed appeal before the learned CIT(A) who has dismissed the appeal in limine without any justification. Learned counsel has contended that the assessment for the year under review i.e. assessment year 2002-03 should be made under the repealed Income Tax Ordinance, 1979 as has been provided in the saving clause under subsection (1) of section under section 239 of the Ordinance, 2001 that "in making any assessment in respect of any income year ending on or before 30th June 2002, the provisions of repealed Ordinance in so far as these relate to computation of total income and tax payable thereon shall apply as if this Ordinance had not come into force." In subsection (2) it has further been said that "The assessment, referred to in subsection (1) shall be made by an income tax authority which is competent under this Ordinance to make an assessment in respect of tax year ending on any date after the 30th June 2002 and in accordance with the procedure specified in sections 59, 59(A) or 61 or 62 or 63, as the case may be, of the repealed Ordinance." But in this case the order has been made under section 121 of the Ordinance, 2001 after issuing notices under sections 114(4) and 111(1)(b) of the Ordinance, 2001 which is a nullity in the eyes of law as has already been held upto the Hon'ble Supreme Court of Pakistan. The decision made by the Hon'ble Supreme Court of Pakistan reported as 2009 PTD 1392 (Supreme Court of Pakistan) in this regard has been referred. The learned counsel has also placed before us the copy of National Identity Card showing the address of assessee at Chak No.2 RB, Jhaiawali, Tehsil Safdar Abad District Sheikhupura and Hussain Centre, Bhatti Park Icchra. The copies of National Identity Card of his brother Mehmood Aslam Bhatti along with the card issued by the Punjab Bar Council as an Advocate has also been placed before this bench. The learned counsel has also placed before us the copies of the judgments reported as 2000 PTD 2407 (Karachi High Court) wherein it has been held that "the order in contravention of mandatory provisions of law were a nullity in the eyes of law and no limitation would run against such orders". In another decision reported as 2002 PTD 506 wherein it has been held that "unless an assessee was contumacious a prayer for condonation of delay in filing the appeals should be considered objectively. Particularly for the reason that by delaying in appeal the assessee does not stand to gain anything nor a delay on his part gives rise to or creates a valuable right in favour of the Revenue." In other decisions reported as (2002) 85 Tax 98 (High Court Lahore), 2002 PTD 1035 PLD 1969 Lahore High Court, 1039, PLD 1970 Lahore High Court Page 6, the similar observations have been made by the Hon'ble High Court that "if an order is without jurisdiction and void, then it need not be formally set aside, and no question would, therefore, arise out of holding that the matter cannot be considered on merits on account of any bar of limitation." This Tribunal in its order reported as 2004 PTD (Trib.) 838 has also held that the limitation to file appeal against the order which has been passed without lawful jurisdiction would cease to run, meaning thereby that an appeal against such order can be instituted at any time." After considering the above case law, I am of the view of that the Taxation Officer has passed an order under section 121 without having jurisdiction and against the clear provision of law and the learned CIT(A) has dismissed the appeal filed by the assessee without any justification. In view of the above legal position the impugned order of the learned CIT(A) is vacated and the order passed by the Taxation Officer under section 121 is cancelled. The appeal filed by the assessee is allowed.

C.M.A./35/Tax(Trib.)Appeal accepted.