2010 P T D (Trib.) 557
[Income-tax Appellate Tribunal Pakistan]
Before Jawaid Masood Tahir Bhatti, Judicial Member and Amjad Ikram Ali, Accountant Member
I.T.As. 1058/LB to 1063/LB of 2008, decided on 23/10/2009.
Income Tax Ordinance (XLIX of 2001)---
----Ss.221 & 131---Rectification of mistake---Application for---Appeal to Appellate Tribunal---Assessee/respondent filed applications requesting for rectification in the original assessment order on the ground that income or loss had not been determined while passing orders under S.62 of late Income Tax Ordinance, 1979---Said applications were rejected by the Assessing Officer against which the assessee filed appeal before Commissioner Income Tax (Appeals) who set aside the assessment for all the years under review---Appellant Department did not file any second appeal against said order of Commissioner Income Tax (Appeals), but the Assessing Officer while complying with order of the Commissioner Income Tax (Appeals), had again rejected the rectification applications of the assessee for the reason that said applications were barred by time---Assessing Officer while finalizing the reassessment should have to restrict himself to the directions made by Commissioner Income Tax (Appeals), while setting aside the order---Department by not filing second appeal against order of Commissioner Income Tax (Appeals), was bound to accept the direction made in the order---Assessing Officer in the present case had fallen in. error which had always been viewed very seriously and could entail into an appropriate action---Assessing Officer while rejecting the applications of the assessee, did not consider the fact that Commissioner Income Tax (Appeals), in his order had specifically stated that the orders passed by the Assessing Officer was violative of the Ordinance and could be rectified as the original assessment order was passed hastily in, a summary manner without going into the merits of the case---Commissioner Income Tax (Appeals) in the second round of appeal had rightly found that orders passed under review suffered from the mistakes which were apparently floating on the face of the order; and no basis had been given by the Assessing Officer for assessing the income of the assessee---Appellate Tribunal upheld the view of the Commissioner of Income Tax (Appeals) that the original orders under review should be rectified under S.221 of Income Tax Ordinance, 2001 and directed that the rectification applications of the assessee be accepted and the income of the assessee be computed accordingly.
Mrs. Sabiha Mujahid, D.R. for Appellant.
Muhammad Iqbal Hashmi for Respondent.
ORDER
The department through these six appeals has objected to the impugned order of the learned C.I.T.(A) dated 4-3-2008 for the assessment years 1994-95 to 1999-2000 on the following common grounds:
"(2) That the learned C.I.T.(A) was not justified to hold that the order passed under section 62 are violative of the provisions of the Ordinance and are void.
(3) That the learned C.I.T.(A) was not justified in directing to accept the rectification application of the taxpayer and to compute income accordingly without bringing any material evidence on record as the rectification application is hit by limitation and no mistake is floating on the surface of record."
We have heard arguments from both the sides and have also perused the impugned order of the learned C.I.T.(A) and assessment order passed by the Taxation Officer for all the years under review and other relevant record of the case.
We have found that the assessee in this case is a public limited company deriving income from running a spinning unit. The assessee filed application under section 156 of the late Ordinance, 1979 requesting for rectification in the original assessment orders passed under section 62 of the late Ordinance, 1979 for all the years under review on the ground that income or loss had not been determined while passing orders under section 62 of the Income Tax Ordinance, 1979. The said applications were rejected by the assessing officer. Against which the assessee filed appeal before the learned C.I.T.(A) who vide his order dated 3-5-2009 set aside the assessment for all the years under review with the following observations:
"Furthermore the contention of the A.R. of the appellant has also force, profit and gain of the assessee have to be computed on some basis and in some manner. Some method has to be adopted to arrive to correct income of, the appellant. The assessing officer is not authorized to assess the income without. any basis and in any manner. These two ingredients are missing in the assessment order sought to be rectified; hence the order under section 62 suffers from mistake liable to be rectified.
I am of the considered opinion that the orders under section 62 having been passed violative of provisions of the Ordinance, are void and relief to the appellant cannot be refused on the ground of limitation."
The department did not file any second appeal against the above referred order of the learned C.I.T.(A) but the Assessing Officer while complying with the order of the learned C.I.T.(A) under section 156/132 of the late Ordinance, 1979 has again rejected the rectification applications of the assessee for the reasons that these applications were barred by time and the matter sought to be rectified was not covered under section 156 of the late Ordinance, 1979. The observations of the Taxation Officer in this regard are reproduced hereunder:
"Since the contents of the rectification application tantamounted to reassessment under section 62 of the Income Tax Ordinance, 1979 for the assessment years 1994-95 to 1999-2000, hence these did not fall within the ambit/scope of the section 156 of the Income Tax Ordinance, 1979, especially when the assessing officer, gave considered and categorical finding in assessment orders that loss is ignored and income is assessed at NIL in the light of the examination of books..
Thirdly, it is also worth noting that the taxpayer filed rectification application after the lapse of the time limit given in Income Tax Ordinance, 1979 for filing of appeals/revision applications etc. If the assessments framed under section 62 of the Income Tax Ordinance, 1979 were not as per law, then the taxpayer had the recourse available under the law by way of filing appeals before C.I.T.(A) or revision before the concerned zonal commissioner. Thus the rectification application was filed as an "afterthought" as substitute to the appeals. Law does not allow to use the rectification provisions as substitute to the appeal. An appealable 'matter is to be raised before C.I.T.(A) and it cannot be raised through rectification application. Thus making rectification under section 156, under the given circumstances shall tantamount to adding premium to the taxpayers omission vis-a-vis filing of appeals."
We have noted that the Taxation Officer in the above referred order has mentioned that "learned C.I.T.(A) overlooked the fact that the application filed under section 156 of the Income Tax Ordinance, 1979 was rejected not only on the basis of limitation but also on merits." On behalf of the assessee it has been contended that the Taxation Officer has not issued any notice to the assessee regarding the above referred reassessment proceedings and no opportunity to represent his case has been afforded. He has pleaded that in fact the cases had become time barred on 30th June, 2006 and the assessing officer had entered the case in a back date and served the assessee with the order. This fact has been seriously contended/confronted by the learned representative of the appellant/department. He has contended that due to the tax management system in operation L.T.U. It was technically impossible to enter the cases in previous dates. We therefore, find no merit in the arguments of - the learned counsel in this respect. We, however, find force in the contention made by the learned counsel for the assessee that the assessing officer while finalizing the assessment should have to restrict himself to the directions made by the learned C.I.T.(A) while setting aside the order. Learned C.I.T.(A) has held in his order dated 3-5-2005 while setting aside the assessment categorically that the original orders passed under section 62 having been violative of the provision of the Ordinance are void and the relief to assessee cannot be refused on the grounds of limitation. We are therefore, of the view that the department by not filing second appeal against that order of the learned C.I.T.(A) is now bound to accept the directions made in that order. We have in so many cases deprecated the tendency of ignoring or bypassing the directions of the superior authorities on the part of the Revenue Officers. This tendency needs to be cured for better administration of justice, observance of discipline and maintaining rule of consistency and law. The Taxation Officer in this case having scanty knowledge of the dispensation of justice and interpretation of statute has tried to demonstrate that he knows the law and the legal proceedings better than his superior officers and he may right in thinking so but while acting as a Judicial/Qausi Judicial Officer he should have to follow the, norms of law. In this case he has fallen in error which have always been viewed very seriously and may entail into an appropriate action which however, we do not propose to take in this case. We have further noted that the assessing officer while rejecting the application has observed that there was no mistake apparent on the face of the order hence the rectification sought by the assessee was not covered under section 156 of the late Ordinance, 1979 or section 221 of the Ordinance 2001, without considering the facts that the learned C.I.T.(A) in the above referred order had specifically stated that the order passed by the assessing officer was violative of the Ordinance and could be rectified under section 156 as the original assessment order passed hastily in a summary manner without going into the merits of the case and discussing the basis on which the assessment was made at nill income. It visibly suffered from the mistakes which were apparently floating on the face of the order and could be rectified under section 156 of the late Ordinance, 1979. On behalf of the assessee in this regard the decisions of the Tribunal were also referred before the learned C.I.T.(A) wherein it has been held that reassessment completed without any basis can be rectified under section 156 of the late Ordinance, 1979. After considering all these facts and circumstances of the case we are of the view that the learned C.I.T.(A) in the second round of appeal has rightly held that the orders passed for all the years under review suffered from the mistake which were apparently floating on the face of the order and as no basis has been given by the assessing officer for assessing the income of the assessee, therefore, uphold the view of the learned C.I.T.(A)that the original orders for all the years under review passed under section 62 should be rectified under section 221 of the late Ordinance, 2001. It is, therefore, directed that the rectification application of the assessee be accepted and the income of the assessee be computed accordingly as has already been directed by the learned C.I.T.(A). Taxation Officer is directed to afford reasonable opportunity of being heard to the assessee in accordance with law.
All the six appeals filed by the department are therefore, dismissed.
H.B.T./198/Tax (Trib.)Appeals dismissed.