2010 P T D (Trib.) 1525
[Income-tax Appellate Tribunal Pakistan]
Before Munsif Khan Minhas, Judicial Member
I.T.A. No.412/IB of 2010, decided on 03/04/2010.
Income Tax Ordinance (XLIX of 2001)---
----S.177(4)---Audit---Tax year 2004 --- Selection of the case for audit for tax year 2004 was not sustainable on the ground that Sub-S.(4) of S.177 of the Income Tax Ordinance, 2001 was inserted in Income Tax Ordinance, 2001 through Finance Act, 2004 relevant to tax year 2005 onward and not applicable to tax year 2004---Taxpayer was to be dealt with in a tax year as per law enforceable for that tax year---Law could not be applied retrospectively ---Selection of case for tax year 2004 was nullity in the eyes of law---Departmental appeal was dismissed.
Ziaullah Khan, D.I. for Appellant.
Hafiz M. Idrees for Respondent.
ORDER
The Department has filed this appeal against the order dated 18-1-2010 passed by CIR(A-II)/Islamabad for the tax year, 2004 on the following ground:--
"That the learned CIR(A-II) was not justified in holding that selection of case for audit and order passed was illegal, without considering the facts narrated in the decision of Writ Petition No.960/2008 dated 14-7-2009 of the honourable Islamabad High Court, Islamabad and the Writ Petition No.11166 of Lahore High Court vide order dated 22-10-2009."
2. Brief facts leading to the appeal are that the assessee an individual derives income from salary and private medical practice. The return was filed declaring net profit at Rs.343,878. The case was selected for audit under section 177 of the Income Tax Ordinance, 2001 regarding which the taxpayer was duly intimated. The assessee was confronted with related issues through notices asking for various details/documents. Explanation furnished by the AR was considered unsatisfactory. For the reasons recorded in the assessment orders, assessments were amended as confronted. Being dissatisfied with the treatment given by the Taxation Officer the assessee preferred appeal before the learned CIR(A) who after considering the facts and circumstances of the case annulled the assessment order with the following observations:--
"In view of the foregoing facts and following the decision of the learned Lahore High Court quoted above it is vela that the selection of the case for audit is illegal. Therefore, assessment order is accordingly annulled. As the assessments are annulled on legal grounds, therefore other grounds of appeals taken by the AR in the memo of appeals are not adjudicated upon. Appeals stand disposed of as indicated above".
Being dissatisfied with the treatment accorded by the learned CIR(A), Department has come up in appeal before the Tribunal on the ground raised supra.
3. During argument learned DR has submitted that the taxpayers have challenged the selection of their cases for audit under section 177(4) of the Income Tax Ordinance, 2001 by taking the grounds as follows:
(i)Whether a notice was necessarily required to be issued before selecting a case for audit under section 177(4) of Income Tax Ordinance, 2001?
(ii)Whether the Commissioner could select a case for audit under section 177(4) without issuance of "audit selection criteria" by the FBR? (i.e. the interpretation of words "in addition to" appearing in the beginning of subsection (4) of section 177 of Income Tax Ordinance, 2001.
(iii)Whether mentioning of specific clause of subsection (4) of section 177 of Income Tax Ordinance, 2001 was necessarily required for the purpose of selecting a case for audit?
The AR has contended that uptill today so many judgments of Higher Appellate Courts are in the field. In the presence of these judgments what is the status of these legal issues. The backgrounds of history of section 177 and judgments are as under:--
(1) First time the selection under section 177 was made in the tax year 2003. The same was challenged in the honourable High Courts through Writ Petitions. Apart from so many other judgments a judgment in case of Muhammad Hussain v. CIT was passed by the Lahore High Court reported as 2003 PTD 152.
(2) The said judgment along with many other judgments were assailed before honourable Supreme Court of Pakistan through Civil Appeals Nos. 1962 to 2205 of 2005. The honourable Supreme Court had decided the above cited appeals vide its judgment reported as 2009 SCMR 344 + 2009 PTD 37 titled as Commissioner of Income Tax and others v. Fatima Sharif Textile, Kasur and others. A principle was laid down by the honourable Supreme Court that the issuance of notice is mandatory. Relevant portion of judgment is as under:--
"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."
(3) After Tax Year, 2003 the department had not selected the cases for audit for few years. However, 2/3 years back the selection of cases were again started. That through Finance Act, 2004 the section 177 was amended and sub sections (1), (2), (3) and (4) were introduced which are reproduced as follows:
"[177. Audit.---(1) The [Board], may lay down criteria for selection of any person for an audit of person's income tax affairs, by the Commissioner.
(2) The Commissioner shall select a person for audit in accordance with the criteria laid down by the [Board] under subsection (1).
(3) The [Board] shall keep the criteria confidential.
(4) In addition to the selection referred to in subsection (2), the Commissioner may also select a person for an audit of the person's Income Tax affairs having referred to-
a)the person's history of compliance or non-compliance with this Ordinance.
b)the amount of tax payable by the person;
c)the class of business conducted by the person; and
d)any other matter which in the opinion of Commissioner is material for determination of correct income."
(4) These current selections were challenged before various honourable High Courts throughout Pakistan. Islamabad High Court, Karachi High Court and different Benches of Lahore High Court interpreted the section 177 differently, not only the issue of show-cause notice but also other issues.
(5) That the petitioners had raised four following objections;
(a) Issuance of show-cause notice.
(b) Selection of case under subsection (4) without invoking the subsection (2).
(c) Non-mentioning of sub-clause of subsection (4) i.e. (a), (b), (c), or (d).
(d) Basis and criteria of selection.
(6) That as explained above the different High Courts interpreted the issues differently in their own way.
(7) That Islamabad High Court and Karachi High Court upheld the selection in accordance with law and rejected the writ petitions/ reference of the Taxpayers,, citation are Writ Petitions Nos.960 of 2008, 550 of 2009 and 1006 of 2009 dated 14-7-2009 (Islamabad High Court) and 2009 PTD 284.
(8) That Lahore High Court vide Writ Petition No.2663 of 2007 dated 5-3-2008. 2010 PTD 395.
Writ Petition No.20306/2009 dated 18-10-2009.
Writ Petition No. 20339/2009 dated 16-10-2009.
Writ Petition No 20340/2009 dated 16-10-2009 and
2009 PTD 1507 titled as Mohsin Raza v. Chairman F.B.R. etc. accepted the writ petitions of the taxpayer. In judgment of Mohsin Raza's case the honourable Lahore High Court, Lahore accepted all the four objections of the petitioners.
The above three issues (questions of law) have been decided after elaborate discussion in favour of either party as follows:--
(1) By Mr. Justice Irfan Qadir, Lahore High Court dated 29-6-2009 in favour of the taxpayers and against the procedure as adopted by the department.
(2) By Mr. Justice M. Munir Peracha, Islamabad High Court dated 29-6-2009 through a Writ Petition No.960 of 2008 decided in favour of the Department and against the appellants i.e. taxpayers. This judgment is absolutely in contrast to that delivered by Mr. Justice Irfan Qadir, Lahore High Court as far as in interpretation of the above three points of law are concerned.
(3) Whereas another judgment of' Lahore High Court issued by Mr. Justice Sheikh Azmat Saeed while deciding the Writ Petition No.11166 of 2009 on 22-10-2009 has also interpreted the above three questions of law" explicitly and unambiguously in favour of the department.
(iii) In this judgment the Honourable Mr. Justice Sheikh Azmat Saeed has not specifically referred to the already delivered judgment by Mr. Justice Irfan Qadir through which the above three questions of law were interpreted but said that two single Benches of this Court had struck down the notice under section 177. However all of the issues dealt in case of Mohsin Raza v. Chairman F.B.R. etc. have been thoroughly discussed and answered otherwise.
(iv) It was held that there was no requirement of Pre-selection notice for selection of case for audit under section 177(4) rather a notice under section 177(4) i.e. intimation letter communicating reason/basis of audit selection was enough.
(iii) That a case could be selected for audit under section 177(4) without any criteria by the Board under section 177(1) of Income Tax Ordinance, 2001 i.e. criteria by the Board was not essential.
(iv) The order says that mention of specific clause i.e. a, b, c or d of subsection (4) of section 177 of Income Tax Ordinance, 2001 is the jurisdiction basis, however, it has to be seen on a case to case basis after hearing each petitioner separately and granting them opportunity to produce the material to displace the case of the department.
(v) The most important point' is this judgment/order of the famous case viz. "Fatima Sharif v. C.I.T." decided by the honourable Supreme Court of Pakistan has been made as the basis and it has been discussed in detail in para 16 on page 11.
(Para 17 on page 12) mentions that the portions pertaining to pre-selection notice were expunged and the honourable Supreme Court of Pakistan observed that fresh notices be issued in terms of section 177 of Income Tax Ordinance, 2001 as it was prevalent at the relevant time.
(4) 2009 PTD 284 Muhammad Umer v. CIT (Division Bench of High Court Karachi. "that no prior notice is required before selection of case for audit."
(5) 2009 SCMR 344 = 2009 PTD 37 (CIT v. Fatima Sharif Textiles Mills, Kasur) "That the department may issue notices in terms of section 177 of Income Tax Ordinance, 2001 as it was applicable at the relevant time, disclosing criteria/reasons of selection their cases for the purposes of audit."
Further citations in favour of department's point of view are as follows:
(i) 2007 PTD 239 (H.C. Lahore). (ii) 2009 PTD 20 (H.C. Lahore) (iii) 2009 PTD 284 (H.C. Lahore), (iv) 2007 PTD 2188 (H.C. Lahore), (v) 2008 PTD 1440 (H.C. Islamabad); (vi) PLD 1963 Karachi 182; (vii) 2000 SCMR 1017; (viii) I.C.A. No.1250 of 2007 (upreported); (ix) Writ Petition No.7146 of 2008 (unreported) (x) Writ Petition No.2928 of 2008 (unreported).
INTERPRETATION OF THE WORDS "IN ADDITION TO" AND "ALSO"
(4) In case of Mohsin Raza v. Chairman F.B.R. etc. it is held that:
"33. In a nutshell, the laying down of criteria for selection of any person for his income tax affairs in terms of subsection (1) of section 177 is an essential prerequisite for the Commissioner to select a person for audit. Once the Commissioner has selected a case for audit in accordance with the criteria laid down by the Central Board of Revenue in terms of clause (I) of section 177 then additionally, the Commissioner can also select a person for an audit of the person Income Tax affairs having regard to the factors enumerated in clauses (a), (b) and (c) of subsection (4) of section 177. It would be seen that subsection (4) will come into play only when the Commissioner in the course of proceeding with the audit of a person under subsection (2) of section 177 discovers that in addition to the selection of person in sub-section (2) the Commissioner now requires to select another person for audit of Income Tax affairs. This is exactly what is envisaged in subsection (4) of section 177 wherein it is clearly mentioned that in addition to the selection referred to in subsection (2), the Commissioner may also select a person for an audit of Income Tax affairs. As such subsection (4) of section 177 is secondary in character in relation to sub-sections (1) and (2). It therefore follows that if subsection (4) is not capable of being isolated from subsections (1) and (2), then, clause (d) of subsection (4) cannot also be detached from its preceding clauses or subsections.
34. This court is therefore of the opinion that different clauses of section 177 are inter-related and the sequence or order in which these have been mentioned by the Legislature in its wisdom must be observed by the executive authorities in letter and spirit as an obligation since each clause augments the order. Clause (d) of subsection (4) of section 177 cannot be isolated from its preceding clauses or subsections in a manner; that primary part of section 177 becomes redundant in view of such isolation thereby paralyzing the main body of the provision in question in order to make the residual or secondary clause extra potent.
In case of Writ Petition No. 11166 of 2009 dated 22-10-2009 passed by Mr. Justice Sheikh Azmat Saeed, subsection (4) of section 177 of the Income Tax Ordinance, 2001 has been reproduced as follows:--
"Section 4. In addition to the selection referred to in sub-section (2), the Commissioner may also select a person (or classes of persons) for an audit of the person's income tax affairs."
Stress has been laid down on the word `also':
(22) It appears to be the case of the petitioners that phrase `in addition to' presupposes existence of criteria in terms of subsection (1) of section 177 of the Ordinance. In this behalf great emphasis has been laid on the meaning of the said phrase.
(23) Learned counsel on both sides are in agreement that phrase `in addition to' means "furthermore or moreover". However, learned counsel for the petitioners have lost sight of the word `also' which occurs in subsection (4) reproduced ibid, which as per Words & Phrases Permanent Edition means: besides, in addition thereto and too.
(24) In view of above it is clear and obvious that provisions of subsections (1) and (4) are disjunction and not conjunctive. A case can always be selected for audit on the basis of criteria as laid down by the F.B.R. besides which and in addition thereto, person can also be selected for audit by Commissioner under subsection (4) of section 177 of the Ordinance. The plain reading of subsection (4) leaves no room for any doubt that it clearly empowers the Commissioner Income Tax to issue notice on the basis of criteria spelt out in sub-clauses a, b, c and d of subsection (4) of section 177 of the Ordinance. Not only is the weight of authorities against the petitioners but also to accept the contentions of the learned counsel for the petitioners would require ignoring the word `also' from the said provision.
Unfortunately, for the petitioners they cannot wash away any word from a provision. To accept the interpretation of the petitioners would require more violence to be' done to the language of subsection (4) than this Court is prepared to do.
5. After hearing arguments of the learned counsel at length and going through cited judgments of the higher Courts, I also feel that in the judgment Mohsin Raza v. Chairman F.B.R. etc. word `also' has lost sight. The rule of literal construction is that an interpretation which renders any part of provision as surplusage is not correct. "A construction which would leave without effect any part of the language of a statute will normally be rejected". Provisions of subsections (2) and (4) are disjunctive and not conjunctive. Subsection (4) of section 177 clearly empowers the Commissioner Income Tax to issue notice on the basis of criteria spelt out in sub-clauses a,b,c and d of subsection (4) of section 177 of the Ordinance. This issue is accordingly answered in favour of the department and against the taxpayer.
PRE-SELECTION NOTICE.
6. In case of Mohsin Raza v. Chairman F.B.R. etc., it was held that selection of a case for audit in itself tantamounts to an adverse order since it undermines the sanctity of an assessment order issued by the Commissioner of Income Tax in terms of clause b of subsection (1) of section 120 of the Income Tax Ordinance, 2001. So pre-audit notice is an essential requirement since audit of person's income tax affairs resulted in prejudice being caused to the assessee, who becomes subjected to scrutiny and that the return filed by him is re-opened. It is because of this reason that honourable Supreme Court of Pakistan has always laid its utmost stress on strict observance of norms of natural justice in general and the principle of audi alteram partem is to be read in every statute and reliance in this regard was placed on PLD 2008 SC 663, 2007 SCMR 330, 2005 SCMR 678, 2005 SCMR 1814 and PLD 2004 SC 441.
7. On the other hand, Mr. Justice Sheikh Azmat Saeed is of the view that section 177 of the Income Tax Ordinance, 2001 does not provide for a pre-selection notice. In the absence of an express provision in law words cannot be added to the statute so as to employ a notice to the petitioner prior to invoking the section 177 of the Income Tax Ordinance, 2001. It is one of the arguments of the learned A.R. that under the Income Tax Ordinance, 2001 return on filing is deemed to be an assessment and to reopen the same by selection and audit constitute action adversely effecting the rights of the assessee.
8. On the other hand the learned DR states that selection of audit does not mean deemed assessment order is going to be disturbed for example, if the selection of the case is on the basis of inflated expenses and the assessee shows the documentary evidence reflecting these expenses, the Commissioner can drop the proceedings of the audit subject to his satisfaction. It is not essential that if the case has been selected for audit; deemed assessment is to be disturbed and is to be amended at each and every cost. That is why that subsection (6) of section 177 provides a mandatory provision of notice and asking for explanation of the taxpayer on all the issues raised in audit. This is a stage where assessee can challenge the objections raised in audit on legal as well as on the factual side. The general practice is that after the selection of the case for audit, department sends intimation letter regarding selection of the case then as per audit manual initial conference comprising of one or more sessions is held to debate the controversy. If required IDR (Information Documentary Request) is sent for requesting requisite document as per standard operating procedure laid down in Audit Manual. Assessee has not been deprived of his natural right of being heard. Subsection (6) of section 177 of the Ordinance, 2001 specifically provides for the said right of furnishing explanation on all issues raised in the audit. Before making the final opinion to amend the assessment the department was required to issue notice to the assessee indicating therein the basis of proposed selection to confront them with relevant material and provide due opportunity of being heard as embodies in subsection (6) of section 177 of the Income Tax Ordinance, 2001. Therefore, the interest of the taxpayers have been adequately, safeguarded despite they were not heard by the Commissioner at an early stage. The rules of natural justice are not inflexible. They yield to and change with the exigencies of different situations. They do not apply in the same manner to situations which are not alike. These rules are not cast in a rigid mould nor can they be put in a legal strait-jacket. They are not immutable but flexible. They can be adopted and modified by the Statutes. The need to act in an emergency may also exclude at least a prior hearing or where a decision affects so many people that a hearing would be impracticable. Depending upon the facts and circumstances of each case, there is no mandatory requirement of natural justice' that in every case the other side must be given a notice before preliminary steps are taken. It might suffice if reasonable opportunity of hearing is granted to a person before an adverse action or decisions taken against him. However, It is not possible to lay down an absolute rule of universal application governing all situations as to the exclusion or otherwise of, the audi alteram partem rule during the course of preliminary inquiries or investigations. In the case of Parry Jones v. Law Society and others (supra), the Court of Appeal took the view that where the only inquiry was as to whether there was prima facie evidence, natural justice did not require that the party should be given notice of it. In Christopher John Moran (Supra), the Court of Appeal observed that it was no good for the tactician to appeal to the rules of natural justice. They had no application to a preliminary inquiry of that kind. The inquiry was made with a view to seeing whether there was a charge to be made. It did not do anything which adversely affected the concerned or prejudiced him in any way. It was simply a preliminary hearing to see if there was going to be a charge. In Rees and others (supra), it was held by the Privy Council that there were many situations in which natural justice did not require that a person must be told of the complaints made against him and given a chance to answer them at the particular stage in question. Essential features leading the Courts to that conclusion had included the fact that the investigation was preliminary, that there would be a full chance adequately to deal with the complaints later, that the making of the inquiry without observing the audi alteram partem maxim was justified by urgency or administrative necessity. In Liberty Oil Mills v. Union of India (AIR 1984 SC 1271), an order of investigation was challenged on the ground of non-compliance with the principles of natural justice. The Supreme Court of India observed that procedural fairness embodying natural justice was to be implied whenever action was taken affecting the rights of parties. An opportunity to be heard might not be pre-decisional; it might necessary have to be post-decisional where the danger to be averted or an act to be prevented was imminent or where the action could break to delay. In Union of India v. Tulsi Ram Patel (AIR 1984 SC 1416), it was observed that right of prior notice could be excluded where the same would obstruct the taking of prior action. In Lewis v. Heffer and others (1978 3 All E.R. 354), the National Executive Committee of Labour Party had suspended the Constituency Officers and Committee pending inquiry without affording opportunity of hearing or issuance of show-cause notice. In Wednesbry Corporation v. Minister of Housing and Local Government (1965 1 All E.R. 186), the Minister's action to issue instructions to the Inspectors as regards scope of inquiry was held to be not subject to hearing. In Hardutt Mull Jute Mills v. State of Bihar (AIR 1957 Patna 21), a learned Division Bench of the Patna High Court with a wealth tax case held that as a matter of law it was not correct to say that the party adversely affected should be heard at each and every stage of administrative process. In the judgment of the Karachi High Court reported as 2009 99 Tax 272 (S.C. Kar.) Division Bench the issue in question has already been answered in favour of the department. If the choice is between two interpretations the one that fails to achieve the manifest purpose of the legislation shall be discarded in favour of the one that produces an effective result. A corollary of this principle is that of the two interpretations, one that produces smooth working of the system would be preferred over that which would introduce uncertainty, friction or confusion into the system. The recent judgment of the Honourable Lahore High Court in Writ Petition No.11166 of 2009 vide order dated 22-10-2009 being chronologically later in the order has to prevail in which the reported judgment of the Apex Supreme Court of Pakistan as (2006) 94 Tax 317 (S.C. Pak) in the case of Commissioner of Income Tax & others v. Fatima Sharif Textile, Kasur and others has been discussed in detail and ultimately it has been held that pre-selection notice is not essential. Undoubtedly, while sitting in the subordinate forum wisdom of the upper forum in interpretation is to dominate. This forum is not supposed to make any interpretation in contrary to that upper forum rather obey the same. Exclusion of pre-selection notice is essential for effective and smooth workability. It is not out of place to mention here that a number of writs were filed only on the legal ground enabling taxpayer keeping the court in dark on the factual side. Extraordinary jurisdiction can be invoked only on legal ground and on the mixed question of law and facts. If a brief scenario of fact90 along with legal implication is presented before the court order passed will be having complete subjective assessment of each issue. I am within my domain to refer above said fact in view of harmonious and effective workability of Income Tax Law. 'Court never intends to deprive the assessee to refute the version of the department. This right of assessee is protected in subsection (6) of section 177 as well as in section 122(9) of Income Tax Ordinance, 2001. So it is held that pre-selection notice is not necessary.
BENEFICIAL INTERPRETATION.
9. The learned counsel for the taxpayer has insisted that there are two interpretations, one favourable to the assessee is to prevail, the has referred a number of judgments of this Tribunal which were decided following the authoritative .judgment in the case of Mohsin Raza v. Chairman F.B.R. etc. reported as (2009) 100 Tax 213. Needless to mention here that Appellate Tribunal being subordinate forum has to comply the dicta of the superior Courts. At that time, the judgment of the honourable Lahore High Court in the case of Mohsin Raza v. Chairman F.B.R. etc. reported as (2009) 100 Tax 213 being the latest on the subject was in the field. The cases of the assessee falling under the jurisdiction of the honourable Lahore High Court were to be treated as per dicta laid down by the honourable Lahore High Court. Now in view of the latest judgment in Writ Petition No.11166 of 2009 vide order dated 22-10-2009, present position is that all the judgments throughout the Pakistan are in favour of the department as enumerated supra. Where the judgment of the same forum with the same strength are in contrast to each other. Then definitely the judgments being later in time is to be followed due to concept of curative philosophy.
NON-QUOTATION OF SUB CLAUSES (A) (B) (C) & (D) OF SECTION 177(4)
10. As far as the issue of non-quotation of sub-clauses (a), (b), (c) and (d) of section 177(4) is concerned, 177(4) is mother provision embodying different sub-clause learned DR contends that if intended action is confronted then non-mentioning of the sub-clause will not be fatal. The Taxpayer has tried to defeat genuine tax demand on technicalities that subsection has not been quoted. I would like to reproduce 126(2)(1)(b) as under:--
126. Evidence of assessment. (1)
(2) Any [order] of assessment or other document purporting to be made, issued, or executed under this Ordinance may not be--.
(a) quashed or deemed to be void or voidable for want of form; or
(b) affected by reason of any mistake,-defect, or omission therein,
"If it is, in substance and effect, in conformity with this Ordinance and the person assessed, or intended to be assessed or affected by the document, is designated in it according to common understanding".
As per learned DR, substance intended to be assessed has been specifically confronted to the assessee. I am not in agreement with the learned DR because the conditions and parameters set forth in sub-clauses a, b, c and d of subsection (4) of section 177 of the Ordinance are the jurisdiction basis, non-existence whereof is a sine qua non for selection of a person for audit. The existence of such jurisdictional basis must necessarily be determined before power can be exercised. This determination can only be effected after hearing the petitioners and granting them opportunity to produce the material to displace the case of the respondents, which exercise can only be undertaken on an individual case to case basis. Thus though the respondents may very well issue notice purportedly under section 177(4) of the Ordinance but whether in fact and in law respondents were. entitled to exercise the powers conferred thereby and whether such powers have in fact been exercised within the parameters prescribed by law can always be challenged by the petitioners by responding to the notice including by objecting to the jurisdiction and authority of the Commissioner to issue the same. Needless to add that any objections raised would require to be adjudicated upon through a speaking order, if the very jurisdiction to issue such notice is challenged then obviously as is settled law, the question of jurisdiction would require to be dealt with and decided first before the Commissioner can proceed further in the matter.
11. The Taxpayer's explanation on all the issues raised in the order including issue of the jurisdiction will be answered in yes or no, either the proceedings of audit are to be dropped or Commissioner can proceed to amend the assessment under subsection (1) or subsection (4) of section 122. This order can be independently passed under sub-section (6) of section 177 or objection raised by the taxpayer can be answered by discussing in detail in show-cause notice under section 122(9) of the Income Tax Ordinance, 2001. Whatsoever it is detailed discussion is to be made to refute the explanation/objections raised by the taxpayer.
12. This case was selected for audit under section 177(4). The selection of the case for audit for tax year, 2004 is not sustainable on the ground that subsection (4) of section 177 was inserted in the Income Tax Ordinance, 2001 through Finance Act, 2004 relevant to tax year, 2005 onward and not applicable to the tax year, 2004. Taxpayer is to be dealt in a tax year as per law enforceable for that tax year. Law cannot be applied retrospectively. Hence the selection of the case for tax year, 2004 is nullity in the eyes of law. Resultantly, departmental appeal hereby stands dismissed.
C.M.A./73/Tax(Trib.)Appeal dismissed.