2010 P T D (Trib.) 48
[Income Tax Tribunal Pakistan]
Before Abdul Rauf, Accountant Member and Jawaid Masood Tahir Bhatti, Judicial Member
I.T.As. Nos. 1175/LB of 2008 and 867/LB of 2008, decided on 01/10/2009.
(a) Income Tax Ordinance (XLIX of 2001)---
----Ss. 205, 221 & 131---Liability to pay additional income tax---Rectification of mistake---Appeal to Appellate Tribunal---Appellant/ taxpayer vide its letter had intimated the Taxation Officer that at the time of filing of return for the tax year 2000-01 appellant-company had available refunds of Rs.18,08,012 for the charge years 1990-91 to 1999-2000 out of which amount of Rs.338,841 be adjusted against his tax liability for the year under consideration---Taxation Officer, however found that refund of Rs.4,28,875 became due to appellant/ taxpayer for the assessment year 1999-2000 as a consequence of order passed under S.62 of the Ordinance, 1979 and that no further refund was due to the appellant---Issuance of refund of Rs.10,47,120 to the appellant-company on 30-6-2000 had proved beyond any shadow of doubt that substantial refund was due to the appellant---Taxation Officer's observation that no amount other than the refund of Rs.428,875, was due to appellant, in circumstances was factually incorrect---Record of the appellant was not carefully examined by the Taxation Officer at the time of charging additional tax under S.205 of Income Tax Ordinance, 2001---Order of the Taxation Officer was set aside and case was remanded to the Taxation Officer with the direction to examine the record of appellant carefully and if sufficient amount of refund to cover the tax liability of the appellant was found to be due to it, additional tax under S.205 of Income Tax Ordinance, 2001 should not be charged.
2002 PTD (Trib.) 166 and 2002 PTD (Trib.) 1666 ref.
(b) Income Tax Ordinance (XLIX of 2001)---
----Ss.221 & 131---Rectification of assessment---Appeal to Appellate Tribunal---Appellant/department had assailed the order of Commissioner Income Tax (Appeals) whereby she had cancelled the order of the Taxation .Officer passed under S.221 of Income Tax Ordinance, 2001, holding that assessment finalized under the repealed Ordinance, 1979 could not be rectified under the provisions of Income Tax Ordinance, 2001---Original assessment in the case of appellant was finalized under. S.62 of said Ordinance, 1979 on 12-3-2003 and period of limitation of four years as laid down under S.156 of late Ordinance, 1979 for the purpose of rectification of mistake was to expire on 11-3-2007---By 30-6-2003 the period of rectification of four years had not expired and on 1-7-2003 the provisions of S.221-(A) of Income Tax Ordinance, 2001 came into force by way of insertion through the Finance Act, 2001---Provisions of S.221 of the Income Tax Ordinance, 2001, were squarely applicable to the case of appellant because assessment for the assessment year 2002-03 had not become a past and closed transaction by 30-6-2003 so far as applicability of S.156 of the late Ordinance, 1979 was concerned---Order of the Commissioner Income Tax (Appeals) was vacated and that of Taxation Officer was restored.
Asif Hashmi for Appellant in I.T.A. No.1175/LB of 2008.
Muhammad Asif, D.R. for Respondent in I.T.A. No.1175 of 2008.
Muhammad Asif, D.R. for Appellant in I.T.A. No.867/LB of 2008.
Asif Hashmi for Respondent in I.T.A. No 867 of 2008.
ORDER
These two appeals for the assessment years 2000-01 and 2002-03 have been filed by the taxpayer and the revenue, respectively. In the year 2000-01 the taxpayer feels aggrieved by the order dated 29-3-2008 recorded by the learned C.I.T.(Appeals) upholding the levy of additional tax under section 205 of the Income Tax Ordinance, 2001 whereas in the year 2002-03 the department has assailed the cancellation of the order passed under section 221 of the Income Tax Ordinance, 2001 by the learned C.I.T. (Appeals).
2. The facts giving rise to the appeal for the years 2000-01 are that the admitted tax liability under section 80D of the late Ordinance of 1979 was short paid by the appellant to the extent of Rs.237,064 against which an amount of Rs.206,109 was adjusted out of the refund for the tax year 2002-03 and the balance amount of Rs.30,955 was paid by the appellant on 10-6-2005. A show cause notice was, therefore, issued to the appellant company whereby it was required to explain as to why additional tax may not be charged under section 205 of the Income Tax Ordinance, 2001 for late payment of the tax due under section 54 of the late Ordinance of 1979. The appellant vide its letter dated 8-2-2008 intimated the taxation officer that at the time of filing of return of the tax year 2000-01, it had intimated the taxation officer that it had available refunds of Rs.18,08,012 for the charge years 1990-91 to 1999-2000 out of which amount of Rs.338,841 be adjusted against the tax liability for the year under consideration. However, on examination of assessment A record the taxation officer found that the refund of Rs.428,875 which became due to the taxpayer for the assessment year 1999-2000 as a consequence of order passed under section 62 of the late Ordinance of 1979 on 28-4-2000 was issued to the taxpayer on 30-6-2000 and no further refund was due to the appellant. Finding the contention of the taxpayer regarding the availability of refund of Rs.18,08,012 unsub stantiated, he charged additional tax of Rs.99,155 under section 205 of the Income Tax Ordinance, 2001. Feeling aggrieved the appellant filed appeal before the learned C.I.T.(Appeals) RTO, Lahore, who vide her order dated 29-3-2008 upheld the order of the taxation officer. This has brought the appellant in further appeal before this Tribunal.
3. During the course of hearing of appeal Mr. Muhammad Asif Hashmi, the learned AR of the appellant contended that the observation of the taxation officer that no refund other than the amount of Rs.428,5875 was due to the appellant is patently incorrect. He pleaded that the availability of refund of Rs.18,08,012 as intimated to the taxation officer stands confirmed by the fact that refund of Rs.10,47,120 for the years 1990-91, 1993-94 to 1997-98 and 1999-2000 was issued to the appellant company vide refund voucher No.35 dated 30-6-2000. He also filed a copy of the said refund voucher to substantiate his assertion and vehemently pleaded that in the presence of refund with the department, additional tax under section 205 could not be charged in the light of ratio settled in the case reported as 2002 PTD (Trib.) 166. The learned DR on the other hand, supported the orders of the authorities below.
4. We have given due consideration to the arguments of both the sides and also examined the orders passed by the authorities below. Issuance of refund of Rs.10,47,120 to the appellant company on 30-6-2000 proves beyond any shadow of doubt that substantial refund was due to the appellant out of which an amount of Rs.10,47,120 was issued on 30-6-2000. The taxation officer's observation that no amount other than the refund of Rs.428,875 was due to the appellant is thus factually incorrect. It appears that the record of the taxpayer was not carefully examined by the taxation officer at the time of charging additional tax under section 205 of the Income Tax Ordinance, 2001. We, therefore, deem it appropriate to set aside the order passed under section 205 of the Income Tax Ordinance, 2001 and remand the case to the taxation officer with the direction to examine the record of the appellant carefully and if sufficient amount of refund to cover the tax liability of the appellant is found to be due to it, additional tax under section 205 of the Income Tax Ordinance, 2001 should not be charged in the light of ratio of the judgment reported as 2002 PTD (Trib.) 166.
5. As far as the appeal for the tax year 2002-03 is concerned, the department has assailed the order of the C.I.T. (Appeals) whereby she cancelled the order of the taxation officer passed under section 221 of the Income Tax Ordinance, 2001, holding that the assessment finalized under the repealed Ordinance, 1979 could not be rectified under the provisions of Ordinance of 2001. Reliance in this context was placed on the Judgment of the I.T.A.T reported as 2006 PTD 1768. The learned DR appearing on behalf of the department contended that the learned C.I.T. (Appeals) has not appreciated the facts of the reported judgment wherein the Honourable Bench also touched upon the impact of insertion of subsection (IA) of section 221 through Finance Act, 2003. The Honourable Bench dilating upon the effect of subsection (IA) of section 221 observed as under:---
"Since, amendment in section 221 of the Income Tax Ordinance has been brought on Statute Book on June 17, by virtue of the Finance Act, 2003, therefore, we-hold that subsection (1A) would start its voyage from the said date i.e. June 17, 2003. Thus if any order passed by the Deputy Commissioner of Income Tax or the Income Tax Panels is rectified by the Commissioner prior to the date of insertion of subsection (1A) of section 221 of the Income Tax Ordinance, 2001, that would be made in absence of having any legal sanctity behind it."
The learned DR also referred to the judgment of the High Court Karachi reported as 2009 PTD 712 wherein the impact of insertion of section 221(1A) was examined by the Honourable Court. Elaborating his contention in the light of the judgment of the High Court, the learned DR contended that section 221(A) was brought on the statute book to empower the Commissioner to rectify the mistakes in the orders passed under the late Ordinance of 1979 if limitation provided in section 156 of the late Ordinance of 1979 had not expired by 30-6-2003, He explained that subsection (1-A) of section 221, as held by the Honourable Court, as a procedural provision because it provides a mechanism, both to the advantage and disadvantage of the taxpayers, for altering the tax liability of a person, if it has not been correctly worked out. He further argued that it is a settled proposition that a procedural enactment applies to all the pending matters which had not become past and closed transactions before the said enactment came into force.
6. Perusal of the record reveals that the original assessment in the case of appellant was finalized under section 62 of the late Ordinance of 1979 on 12-3-2003 and the period of limitation of four years as laid down section 156 of the late Ordinance of 1979 for the purpose of rectification of mistake was to expire on 11-3-2007. It is thus obvious that by 30-6-2003 the period of rectification of four years had not expired and on 1-7-2003 the provisions of section 221(A) of the Income Tax Ordinance 2001 came into force by way of insertion through the Finance Act 2001. In the light of ratio of the judgment of Karachi High Court quoted supra we are of the considered opinion that the provisions of section 221 of the Income Tax Ordinance, 2001 were squarely applicable to the case of the appellant because assessment fug the assessment year 2002-03 had not become a past and closed transactions by 30-6-2003 as far as applicability of section 156 of the late Ordinance of 1979 was concerned. We, therefore, vacate the order of the learned C.I.T. (Appeals) and restore the order of the taxation officer. We would also like to clarify that the -appellant is free to approach the taxation officer in respect of calculation of tax if it is not found to have been determined in accordance with law.
7. Both the appeals are disposed of in the manner discussed above.
H.B.T./147/Tax(Trib.)Order accordingly.