CASTROL PAKISTAN (PVT.) LTD. VS ADDITIONAL COMMISSIONER INLAND REVENUE, 2015 PTD-KARACHI-HIGH-COURT-SINDH 2467 (2015)

Income Tax Ordinance (XLIX of 2001)---

----S.122---Constitution of Pakistan, Art.199---Constitutional petition---Amended assessment order---Show cause notice, assailing of---Principle---Assessee was aggrieved of amended assessment orders passed by authorities---Validity---Assessee challenged issuance of show cause notice as well as assessment orders, directly before High Court, under Art. 199 of the Constitution, either without exhausting statutory remedies available under law or even after filing of statutory appeals before appellate forums, merely on the ground that assessing officer had either wrongly applied law or had failed to appreciate true spirit of law while invoking such provisions, without there being any objection with regard to assessing officers' jurisdictional authority or error in such notices or orders---High Court depreciated and disapproved such tendency in tax payers, as on the one hand law had not provided for any such challenge of order directly under Constitutional jurisdiction before High Court, except when such order on the face of it was without any lawful authority or jurisdiction and secondly, it amounted to bypassing departmental authorities without any justification or cause merely for sake of convenience or for early disposal of the matter---Petitioner did not have any cause of action which could require indulgence from High Court---Petitioner itself chosen to seek and avail alternate remedy as provided under law by filing appeals against amended assessment orders, which were to be decided strictly in accordance with law---Petition was dismissed in circumstances.

Commissioner of Income Tax v. Hamdard Dawakhana (Waqf) KHI PLD 1992 SC 847; Arshad Hussain v. Collector of Customs and 2 others 2010 PTD 104; Messrs Pak Saudi Fertilizers Ltd., v. Federation, of Pakistan 2002 PTD 679; Bulk Shipping and Trading (Pvt.) Limited v. Collector of Customs 2004 PTD 509 and BP Pakistan Exploration and Production Inc. Karachi v. Additional Commissioner Inland Revenue 2011 PTD 647 rel.

Naveed A. Andrabi for Petitioner.

Sarfraz Ali Matlo for Respondents.

Dilawar Hussain, Standing Counsel

Date of hearing: 12th February, 2015.

JUDGMENT

MUHAMMAD JUNAID GHAFFAR, J.---Through instant petitions, the petitioner has impugned amended assessment orders for tax years, 2009 and 2010 passed under section 122(5A) of the Income Tax Ordinance, 2001 ("the Ordinance").

2. Briefly stated, facts of the case are that the petitioner had filed its income tax returns for the years, 2009 and 2010 which, under section 120 of the Ordinance, were to be treated as Statutory Assessment Orders for the said years. Thereafter, the respondents issued show-cause notices under section 122(9) of the Ordinance to the petitioner as, according to the respondents, the said Assessment Orders were erroneous and prejudicial to the interest of Revenue, hence required amendment of the assessment under section 122(5A) of the Ordinance. The Notices, issued under section 122(9) of the Ordinance, were impugned by the petitioner by filing Constitutional Petitions bearing C.Ps. Nos. D-2545 of 2013 and 2546 of 2013, which were disposed of by this Court vide a common order dated 9-9-2014 with directions to the petitioner to submit its reply to the Show Cause Notices, whereafter, the respondent were required to pass a well-reasoned and speaking order strictly in accordance with law and keeping in view the applicable laws as well as the case-law on the said controversy. Thereafter, the respondents issued fresh, Show-Cause Notices dated 22-9-2014, under section 122(9) of the Ordinance read with section 122(5A) thereof, to the petitioner which were replied by the petitioner vide its letters dated 15-10-2014 and 12-11-2014, whereafter, the respondents have passed amended assessment orders under section 122(5A) of the Ordinance and being aggrieved by the said orders the petitioner has once again filed instant petitions, whereby, amended assessment orders for the tax years, 2009 and 2010 have been impugned.

3. Mr. Naveed A. Andrabi, learned counsel for the petitioner, has contended that the amended assessment orders are without any lawful authority and jurisdiction, whereas, the respondents have violated the directions of this Court as contained in the order dated 9-9-2014, whereby the respondents were directed to pass a well-reasoned and speaking order after taking into consideration the objections raised by the petitioner. Learned counsel further contended that the respondents have failed to appreciate that until and unless the two pre-requisite conditions for amending an assessment order under section 122(5A) of the Ordinance i.e. that the assessment order is erroneous and prejudicial to the interest of Revenue, exists, the assessment order cannot be amended under section 122(5A) of the Ordinance. Learned counsel further submits that in the instant case the respondents, without having examined this aspect of the case, amended the assessment orders, therefore, per learned counsel, the amended assessment orders have been passed without any lawful authority.

4. Conversely, Mr. Sarfraz Ali Metlo, learned counsel for the respondents, contended that the impugned orders are appealable under the Income Tax Ordinance, 2001, hence, the same cannot be challenged through instant petitions as the petitioner has to avail the alternate remedy, therefore, instant petitions are not maintainable and are liable to be dismissed. Learned counsel further contended that the impugned orders have been passed after taking into consideration the directions of this Court as contained in the order dated 9-9-2014, and the respondents have not flouted such directions of this Court.

5. We have heard the learned counsel for the parties and have perused the record.

6. At the very outset, the leaned counsel for the petitioner was confronted as to whether the petitioner has challenged the amended assessment orders passed under section 122(5A) of the Ordinance by availing departmental remedy before the appellate authorities as provided under law, to which the learned counsel candidly admitted that the said orders have also been challenged by filing appeals in accordance with the Income Tax Ordinance, 2001.

7. We have noticed that lately, the tax-payers have been challenging the issuance of Show Cause Notices as well as assessment orders, directly before this Court under Article 199 of the Constitution of Pakistan, 1973, either, without exhausting the statutory remedies available under the law, or even after filing of statutory appeals before the appellant forums, merely on the ground that the assessing officer has either wrongly applied the law, or has failed to appreciate the true spirit of law while invoking such provisions, without there being any objection with regard to the assessing officers' jurisdictional authority or error in such notices or orders. Such tendency on the part of the tax payers cannot be appreciated and rather must be disapproved, as on the one hand the law does not provide for any such challenge of an order directly under the Constitutional jurisdiction before this Court, except when such order on the face of it is without any lawful authority or jurisdiction, and, secondly, it amounts to bypassing the departmental authorities without any justification or cause merely for the sake of convenience or for early disposal of the matter. The departmental authorities have been conferred with certain powers by the legislature in its wisdom to amend a tax payers return filed under Section 120 of the Ordinance, which is also a deemed assessment order. This exercise by the assessing officer is carried out after examining the contents of the return and the information as is available with him, which inter alia requires examining and ascertainment of certain facts, after which the amended assessment order is passed in terms of section 122(5A) of the Ordinance. It must be kept in mind that such ascertainment of facts cannot be done by this Court under Article 199 of the Constitution of Pakistan, 1973. It is also important to note that the amended assessment order can be appealed before the Commissioner Appeals, and if aggrieved, the same can be assailed before the Inland Revenue Tribunal and finally before this Court under its reference jurisdiction.

8. In the instant matter, the petitioner, in the first round of litigation, had impugned Show Cause Notices issued under section 122(9) of the Ordinance on the ground that such notices do not fall within the contemplation of section 122(5A) of the Income Tax Ordinance as neither the statutory assessment orders were prejudicial to the interest of the Revenue nor were erroneous. This Court, vide order dated 9-9-2014, passed in C.Ps. Nos. 2545 of 2013 and 2546 of 2013, had disposed of the petitions filed by the petitioner, whereby, the respondents as well as the petitioner were given certain directions. It would be advantageous to refer to order dated 9-9-2014 passed in aforesaid petitions, which reads as under:--

"After hearing both the learned counsel for the parties at some length, both the petitions are being disposed of with the common order with directions to the petitioner to continue to attend the proceedings before the respondent initiated under Section 122(9) read with section 122(5A) for the tax years 2009 and 2010 and submit their reply to the show cause notice and raise all such objections as have been raised through instant petition including the legality of the impugned show cause notice, whereas, the respondent is directed to provide complete opportunity of being heard to the petitioner and if the explanation offered by the petitioner and the legal objections raised by the petitioner are convincing and depict correct legal position, the impugned show cause notice (s) may be withdrawn or the proceedings may be dropped. However, in case such explanation does not find favour with the concerned officer, he may pass a well-reasoned and speaking order, strictly in accordance with law, keeping in view the applicable law and the case-law on the subject controversy.

Both the petitions stand disposed of in the above terms along with listed application."

9. From perusal of the above order, the contention of the learned Counsel for the petitioner does not seem to be correct that the respondents have flouted the orders dated 9-9-2014 as aforesaid, as it does not appear that any such directions were issued to the respondents, whereby, the petitioner could now be aggrieved after passing of the amended assessment orders and seek indulgence of this Court under its Constitutional jurisdiction by challenging the said amended assessment orders on the ground that the directions as contained in the order dated 9-9-2014 have not been complied with. The petitioner was directed to reply to the show cause notices and raise all such objections as have been raised through the said petitions, including the legality of the impugned show cause notices, whereas, the respondents were required to provide full opportunity of hearing to the petitioner and after considering the explanation offered by the petitioner, and legal objections raised therein, the respondents were required to pass necessary orders. The respondents were further directed that, if convinced by the contention of the petitioner, either to withdraw the Show Cause Notices or drop the proceedings against it. However, it was further directed that if the explanation offered by the petitioner, did not find favour with the respondents, then the respondent was at liberty to pass a well-reasoned and speaking order in accordance with law. It appears that the respondents have passed the impugned orders after following the directions of this Court as contained in the order dated 9-9-2014 as it is not the case of the petitioner that opportunity of hearing was not provided to it.

10. We have been informed by the learned counsel for the petitioner that the petitioner has already filed appeals against the amended assessment orders which have also been impugned through instant petitions, therefore, we are of the view that, after passing of the above amended assessment orders, the petitioner cannot simultaneously impugn the same before this Court by filing instant petitions, as well as before the appellate forum by invoking the statutory remedy of appeal as provided under the law. Such tendency on the part of the tax payers has already been deprecated by the Hon'ble Supreme Court. Reliance in this regard may be placed on the case of Commissioner of Income Tax v. Hamdard Dawakhana (Waqf) KHI, (PLD 1992 SC 847) in which it has been observed that in case where any party resorts to statutory remedy against an order, then the same could not be abandoned or by passed without any valid and reasonable cause and the tax payer cannot file Constitution petition challenging the same action. The Hon'ble Supreme Court has further held that such practice; in case when statute provides alternate and efficacious remedy up to the High Court could not be approved or encouraged. In the case of Arshad Hussain v. Collector of Customs and 2 others, reported in 2010 PTD 104, a Division Bench of this court has expressed the same view and has observed that the petitioner at his own sweet will and whims cannot be allowed to impugn the same cause of action in a writ petition filed before the Court and at the same time pursue the remedies available under the relevant law. The same view has been following in the cases of Messrs Pak Saudi Fertilizers Ltd. v. Federation of Pakistan (2002 PTD 679), Bulk Shipping and Trading (Pvt.) Limited v. Collector of Customs (2004 PTD 509) and so also in the case of BP Pakistan Exploration and Production Inc. Karachi v. Additional Commissioner Inland Revenue (2011 PTD 647).

11. Further, this Court, in its Constitutional jurisdiction, cannot examine such facts that as to whether the amended assessment orders fulfill the requirement of section 122(5A) of the Income Tax Ordinance, 200l or not, by examining the statutory assessment orders passed under section 120 of the Ordinance, as to whether, the same are erroneous and/ or prejudicial to the interest of Revenue or not. Such determination requires a detailed examination of facts of the case which can only be carried out under the hierarchy provided under the Income Tax Ordinance, 2001 and the petitioner would be in a better position to raise all such objections before the appropriate assessing officer which, the petitioner has already done; and the appellate authorities, including the Commissioner (Appeals), and the Inland Revenue Tribunal. It must be kept in mind that in each and every assessment order, the question that the same is erroneous or prejudicial to the interest of revenue or not, cannot be answered by any yardstick nor any hard and fast rule can be applied, until and unless a detailed scrutiny of the facts of each assessment order is made and such ascertainment is to be made in each case individually to come and arrive at a conclusion that whether the same is erroneous or prejudicial to the interest to revenue. This in our view is not permissible under the Constitutional jurisdiction of this Court and can only be ascertained and examined before the departmental hierarchy.

12. In view of the above discussion, we are of the view that instant petitions are not maintainable as they have been filed without there being any cause of action which could require indulgence from this Court, whereas the petitioner, as observed hereinabove, has itself chosen to seek and avail the alternate remedy as provided under law, by filing appeals against the amended assessment orders, which needless to mention, are to be decided in strictly accordance with law.

13. Accordingly, instant petitions being misconceived in fact and law were dismissed by us vide short order dated 12-2-2015, and the above are the reasons for the short order.

MH/C-3/SindhPetition dismissed.