COMMISSIONER INLAND REVENUE VS MUHAMMAD SHAFIQUE
2015 P T D 1823
[Lahore High Court]
Before Abid Aziz Sheikh and Shahid Karim, JJ
COMMISSIONER INLAND REVENUE
versus
MUHAMMAD SHAFIQUE
P.T.R. No.291 of 2012, heard on 09/03/2015.
(a) Income Tax Ordinance (XLIX of 2001)---
----Ss. 111 & 133---Unexplained income or assets---Interpretation of S.111(2) of the Income Tax Ordinance, 2001 as it stood prior to its amendment by the Finance Act, 2010-----Word "discovered", meaning and connotation in terms of S. 111(2) of the Income Tax Ordinance, 2001 as it stood prior to its amendment by the Finance Act, 2010---Distinction between "discovery" and "opinion" in context of S. 111(2) of the Income Tax Ordinance, 2001---Procedure to be adopted under S.111 of the Income Tax Ordinance, 2001---Scope---Question before the High Court related to the meaning and impact of the word "discovered" used in S. 111(2) of the Income Tax Ordinance, 2001 and its distinction from the word "opinion" used in the same section---Held, that it was fallacious to use the term "opinion" and "discovery" interchangeably and without distinction or without regard to the intention of the Legislature to have used these words in different context in S. 111 of the Income Tax Ordinance, 2001---Perusal of the word "discovery" would lead to the ineluctable conclusion that the term signifies a stage prior to the formation of an opinion and conclusion by an authority and was an act or process of finding or learning about something that was previously unknown and which led to the formation of an opinion and was not an opinion itself; and referred to the pretrial stage of any proceedings and assistance in the administration of the process which culminated into a finding or conclusion---In broader and general sense, the term "discovered" referred to getting knowledge of anything which not known to the discoverer and which already existed but was not perceived or known and it was therefore, a step in the formation of an opinion and should not be confused with the actual formation of an opinion----Section 111 of the Income Tax Ordinance, 2001 had three distinct and clearly defined stages---First stage related to information, second stage related to discovery and the third stage was the formation of the opinion by the Commissioner---Although it was not clearly mentioned that notice should be served upon the person/ taxpayer in terms of S.111 of the Income Tax Ordinance, 2001 yet the same could be culled from the reading of the provision---Section 111(1) of the Income Tax Ordinance, 2001 related to the part where information came to the knowledge of the Commissioner as the first step and then came the stage of discovery by the Commissioner relating to the amount referred to in S.111(1) of the Income Tax Ordinance, 2001---Such discovery could only be on basis of tangible evidence and material which came in hands of the Commissioner and on the basis of which a notice seeking an explanation form the person shall be issued---Words "the person offered no explanation or the explanation offered by the person was not in the Commissioner's opinion satisfactory" showed that for an explanation to be offered by the person, he must have been issued a show-cause notice by the Commissioner as without a show-cause notice there could be no explanation offered by the person and therefore, a show-cause notice was envisaged by S.111 of the Income Tax Ordinance, 2001---High Court observed that show-cause notice would be the stage which would be deemed to be within the meeting of the term "discovered by the Commissioner" and the said notice must be based on information and belief of the Commissioner that the case was one which fell under the heads specified in S.111(1) of the Income Tax Ordinance, 2001---High Court further observed that "discovery" was an intermediate stage between the Commissioner getting the information and forming an opinion and that in the context of limitation, the point when it was "discovered" by the Commissioner became terminus a quo for the period of limitation in respect of various provisions of the Income Tax Ordinance, 2001 since issuance of show-cause notice under S.111 of the Income Tax Ordinance, 2001 was the point when it would be deemed to have been discovered by the Commissioner---Reference was answered, accordingly.
Commissioner of Income Tax v. Messrs Eli Lilly Pakistan (Pvt.) Ltd. 2009 SCMR 1279; Black's Law Dictionary Ninth Edition; American Jurisprudence Second Edition Vol.23; Corpus Juris Secundum Vol. Twenty Seven; Words and Phrases Vol.12A; A.N. Lakshman Shenoy v. Income-Tax Officer, Ernakulam, and another (1958) 34 ITR 275; (Stroud's Judicial Dictionary of Words and Phrases) Sixth Edition Vol. 2; KJ Aiyar Judicial Dictionary 16th Edition and Mian Muhammad Nawaz Sharif v. Federation of Pakistan and others PLD 1993 SC 473 rel.
(b) Words and phrases----
----"Discovery"---Meaning---Meanings ascribed to the word "discovery" in various dictionaries and treatise stated.
Black's Law Dictionary Ninth Edition; American Jurisprudence Second Edition Vol. 23; Corpus Juris Secundum Vol. Twenty Seven and Words and Phrases Vol. 12A rel.
(c) Words and phrases---
----"Opinion"---Meaning---Meanings ascribed to the word "opinion" in various dictionaries stated.
(Stroud's Judicial Dictionary of Words and Phrases) Sixth Edition, Vol.2; Black's Law Dictionary Ninth Edition and KJ Aiyar Judicial Dictionary 16th Edition rel.
(d) Words and phrases----
----"Discovery"---"Opinion"---Distinction---Legal distinction between the terms "discovery" and "opinion"---Perusal of the word "discovery" would lead to the ineluctable conclusion that the term signifies a stage prior to the formation of an opinion and conclusion by an authority and was an act or process of finding or learning about something that was previously unknown and which led to the formation of an opinion and was not an opinion itself; and referred to the pre-trial stage of any proceedings and assistance in the administration of the process which culminated into a finding or conclusion---In broader and general sense, the term "discovered" referred to getting knowledge of anything which not known to the discoverer and which already existed but was not perceived or known and it was therefore, a step in the formation of an opinion and should not be confused with the actual formation of an opinion---Term "opinion" was more akin to a decision or a judgment and it was a definite conclusion drawn by an authority based on cogency and rationality and formation of an opinion concluded the matter in the hands of that authority and nothing more was required to be done.
A.N. Lakshman Shenoy v. Income-Tax Officer, Ernakulam and another (1958) 34 ITR 275; (Stroud's Judicial Dictionary of Words and Phrases) Sixth Edition Vol.2; Black's Law Dictionary Ninth Edition; KJ Aiyar Judicial Dictionary 16th Edition and Mian Muhammad Nawaz Sharif v. Federation of Pakistan and others PLD 1993 SC 473 rel.
Raja Sikandar Khan Khadim Hussain Zahid, Saeed-ur-Rehman Dogar, Imran Rasool and Ch. Muhammad Shakil for Applicant.
Shehbaz Butt, Muhammad Tahir Butt Saleh, Abdul Ghafoor Khokhar, Faisal Ghaffor Khokhar and Syed Abid Raza Kazmi for Respondent.
Date of hearing: 9th March, 2015.
JUDGMENT
SHAHID KARIM, J.---This is an application under section 133 of the Income Tax Ordinance, 2001 (Ordinance) by way of reference against the order dated 2-11-2011, passed by the Appellate Tribunal, Inland Revenue, Lahore (Tribunal).
2.This reference application is being decided together with a number of other reference applications, a list of which is given as Schedule 'A' to this judgment. These reference applications are being dealt with and decided together as a common question of law arises for an opinion of this Court. The only difference is in the dates of the orders which are also specified in Schedule 'A'. All the impugned orders follow a single pattern and are premised on the same source and authority.
3.The following question of law has been urged to arise from the order of the Tribunal:--
"Whether on the fact and circumstances of the case, the Tribunal was justified to hold that year of discovery was that in which notice under section 111(1)(b) of the Income Tax Ordinance, 2001 was issued and not the year in which information with regard to purchase of property was received by the Department?"
4.It is not essential to narrate the facts of each individual reference application since a common question of law is being decided, which should determine the outcome of the reference applications.
5.The instant case relates to the interpretation of the term "immediately preceding the financial year in which it was discovered by the Commissioner". These words occurred in subsection (2) of section 111 of the Ordinance as it stood before the amendment brought about by Finance Act, 2010 by which amendment these words were deleted and were substituted by the words "to which such amount relates".
6.Raja Sikandar Khan, Advocate led the arguments on behalf of the applicant department and he made the following submissions:--
(i)The word 'discovered' mentioned in subsection (2) of section 111 of the Ordinance has not been defined but is definitely distinct from the word 'opinion' used in section 111.
(ii)The reliance of the Tribunal in the impugned orders upon the judgment of the Full Bench of the Tribunal in I.T.A. No.75/LB/ 2009 titled "Pak Kuwait Textile Mills v. Taxation Officer Audit-04, LTU, Lahore (Full Bench judgment) is misplaced and since in these referenq applications the Tribunal has followed the judgment of the Full Bench, therefore, the impugned orders are ultra vires and unlawful.
(iii)The judgment of the Full Bench dated 30-4-2010 referred to above has misconstrued the provisions of section 111 of the Ordinance and has thus committed an error of law. Any reliance, therefore, on that judgment in the impugned orders suffers from the same legal defect.
7.Mr. Muhammad Shakil, Advocate appearing for some of the applicants relied upon the meaning of the word "discovery" as interpreted in various dictionaries to which a reference shall be made in the latter part of our judgment. He submits that the interpretation of the term "discovered" as used in subsection (2) of the section 111 of the Ordinance has assumed importance on account of the period of limitation which gets triggered from the point from which the discovery is made.
8.Mr. Shehbaz Butt, Advocate appeared for some of the respondents and primarily argued the matter from the respondents' side. His submissions can be formulated as follows:--
(i)The term "discovered" cannot be read in isolation and has to be read in the context of subsections (1) and (3) of section 111 of the Ordinance.
(ii)Information is not sufficient for invoking section 111 of the Ordinance and there should be something more to bring it within the ambit of the term "discovered".
(iii)Section 111 of the Ordinance uses the word "person" and not "taxpayer" and this, according to him, is deliberate and is designed to achieve a certain purpose. According to him, a show-cause notice was important to be issued and in terms of which an explanation is to be sought from the person and which explanation shall be considered by the Commissioner to discover the amount referred to in subsection (1) of section 111 of the Ordinance and thus to form an opinion.
(iv)Mr. Shehbaz Butt Advocate drew a distinction between a taxpayer and a person (who is not a taxpayer) in the context of subsection (3) of section 111 of the Ordinance and submitted on the basis thereof that the point of discovery for the two was different inasmuch as it was the show-cause notice in the case of a person and in the case of a taxpayer it was the date on which the proceedings were concluded in the show-cause notice.
9.Mr. Muhammad Tahir Butt Saleh Advocate, learned counsel for the respondent in PTR No.42 of 2011 relied on Commissioner of Income Tax v. Messrs Eli Lilly Pakistan (Pvt.) Ltd. (2009 SCMR 1279) (Eli Lilly Case) and otherwise adopted the arguments advanced by Mr. Shehbaz Butt, Advocate.
10.Mr. Faisal Ghafoor Khokhar, Advocate appearing for respondents in PTR Nos.107/2012 and 151/2012 also adopted the arguments put forth by Mr. Shehbaz Butt, Advocate.
11.As pointed out above, this case involves the interpretation of subsection (2) of section 111 of the Ordinance and more particularly the term "discovered" as used in that provision.
12.Before we proceed further, the relevant portion of section 111 of the Ordinance is being reproduced for the purpose of facility as under:
111. Unexplained income or assets.---
(1)Where ---
(a)any amount is credited in a person's books of account;
(b)a person has made any investment or is the owner of any money or valuable article;
(c)a person has incurred any expenditure 1[; or]
[(d) any person has concealed income or furnished inaccurate particulars of income including ---
(i)the suppression of any production, sales or any amount chargeable to tax; or
(ii)the suppression of any item of receipt liable to tax in whole or in part,]
and the person offers no explanation about the nature and source of the amount credited or the investment, money, valuable article, or funds from which the expenditure was made [suppression of any production, sales, any amount chargeable to tax and of any item of receipt liable to tax] or the explanation offered by the person is not, in the Commissioner's opinion, satisfactory, the amount credited, value of the investment, money, value of the article, or amount of expenditure [suppressed amount of production, sales or any amount chargeable to tax or of any item of receipt liable to tax] shall be included in the person's income chargeable to tax under head -Income from [Other Sources] to the extent it is not adequately explained
(2)The amount referred to in subsection (1) shall be included in the person's income chargeable to tax in the tax year [immediately preceding the financial year] in which it was discovered by the Commissioner" by the Finance Act, 2010 (XVI of 2010), reported as PTD 2010 Statute 288."
(The above provision is based on the form of subsection (2) prior to its amendment by Finance Act, 2010 since that is the provision which is relevant in these cases).
13.The learned counsel for the applicant, Raja Sikandar Khan, Advocate has primarily attacked the judgment of the Full Bench of the Tribunal, referred to above and which judgment has been followed by the Tribunal while passing the impugned orders. The Full Bench judgment then assumes importance as the wellhead from which the other judgments of the Tribunal have flowed. By extension, therefore, we shall be analysing the vires and competence of the findings returned by the Full Bench, necessarily. It would be pertinent to mention here that the question referred to the Full Bench and formulated for its opinion was the following:--
"Determine the meanings and impact of the word 'discovery' as used in Section 111(2) of the Income Tax Ordinance, 2001".
14.Thus, it is evident that the question referred to the Full Bench was precisely regarding the true construction of the meaning of the word 'discovery'. It was on this basis that the Full Bench proceeded to render an opinion with regard thereof. In order to fully comprehend the import of the judgment of the Full Bench, it would be relevant to reproduce the conclusion drawn by Full Bench, which is to the following effect:--
"Since no material to support such belief existed prior to the writing of letter dated 12-9-2008 and receipt of the reply on 27-9-2008 against notice under section 111, hence in our considered view "Discovery" could not have been said to be made prior to 27-9-2008 or at the most 12-9-2008. Because "Discovery" does not mean an information received by the Department but after having received the said information, the Taxation Officer is bound to issue a notice to the taxpayer and seek his explanation with regard to the information mentioned in section 111(1)(a,b,c). And if in sequel thereto, no explanation is offered with regard to the unexplained income or the explanation offered is not found satisfactory then the resultant opinion formed by the Taxation Officer would be considered as "Discovery".
.
21. Critical analysis of afore-produced meanings of the word "Discovery" has one thing in common i.e. compulsory disclosure of facts or information on which a party, against whom that fact or information is to be used. In our considered opinion, it has the same connotation as envisaged by section 111 of the Ordinance, since in both the situations information received could only be used for the purpose of "Discovery" when the same has been confronted to the person against whom said information is going to be used.
22. In the light of above discussion, we are constrained to observe that the term "Discovery" does not mean receipt of information but it signifies complete package which is purportedly to be attained after due process having been completed as provided under section 111(1)(2) of the Ordinance.
23. In view of what has been said above, we hold that "Discovery" in the instant case came into existence on 27-9-2008 when the explanation by the taxpayer stood furnished and the taxation officer proceeded to make addition after having come to the conclusion of the issue of unexplained income. It is further held that since discovery was made on 27-9-2008 which falls in the tax year, 2009 hence addition, if any, was to be made in the tax year, 2008, being immediately the preceding financial year in which it was discovered. Therefore, addition under section 111 of the Ordinance, made in the tax year, 2007 not being the immediately preceding financial year, is not in consonance with law, entails deletion."
15.It is evident upon a reading of the extract of the judgment of the Full Bench of the Tribunal that the Tribunal in the said judgment has taken the words discovery and opinion as synonymous and not distinct from one another. The Tribunal has drawn the conclusion that "discovery" would connote that in pursuance of a show-cause notice and an explanation furnished by the taxpayer, the Commissioner should form an opinion regarding the matter and this in the opinion of the Tribunal would constitute "discovery". The Tribunal has failed to draw a distinction between formation of the opinion by the Commissioner and the discovery made by him regarding the amount referred to in subsection (1) of section 111 of the Ordinance. This failure on the part of the Full Bench of the Tribunal has, in our opinion, led to an error of law. It would be fallacious to use the term "opinion" and "discovery" interchangeably and without distinction or without regard to the intention of the legislature to have used these words in different context in the provisions of section 111 of the Ordinance.
16.Before we proceed further in our discussion of the true construction of the term "discovered" we will refer to the meanings ascribed to the term "discovery" in the various dictionaries and treaties and a reference to which was made by Mr. Muhammad Shakil, Advocate. They are reproduced as under:--
"discovery, n. (16c) 1. The act or process of finding or learning something that was previously unknown <after making the discovery, the inventor immediately applied for a patent> .
4. The pretrial phase of a lawsuit during which depositions, interrogatories, and other forms of discovery are conducted. -discover, vb. -discoverable, adj.
(Black's Law Dictionary) Ninth Edition."
"Generally speaking, the purpose of modern discovery is to assist the administration of justice, to aid a party in preparing and presenting his case or his defense, by enabling a party to narrow and clarify the basic issues between the parties, and to ascertain the facts, or information as to the existence or whereabouts of facts, relative to those issues. The discovery rules simply advance the state at which disclosure can be compelled from the time of trial to the period preceding it, thus reducing the possibility of surprise, and the need to conduct a trial in the dark or blindly. Discovery should expedite the disposition of the litigation, by educating the parties in advance of trial of the real value of their claims and defenses, which may encourage settlements and assure that judgments rest upon the real merits of causes and not upon the skill and maneuvering of counsel, although it has been recognized that under certain circumstances liberal discovery provisions can be abused. Formal discovery is not the sole means of obtaining information, and its availability does not affect an attorney's ability to interview witnesses while preparing for trial.
It has been broadly stated that statutes or procedural rules relating to discovery procedures should be liberally construed in favour of disclosure in order to accomplish the various purposes of discovery. However, this rule of liberal construction does not justify clearly improper discovery requests that exceed the normal bounds of discovery, are unduly burdensome or oppressive, touch on the irrelevant, or encroach on a recognized privilege.
(American Jurisprudence) Second Edition, Vol. 23"
"While in the abstract the word "discover" may have a well-defined meaning, nevertheless its meaning may very with its contextual use, and in common acceptation it denotes the ascertainment of actual existence. It is defined as meaning generally to uncover or discover that which was hid, concealed, or unknown; to find; to remove or lift (any covering); to lay open to view; to reveal; to make unknown; to show (what has been secret, unseen or unknown); to manifest; to show; exhibit; betray; to explore; examine, reconnoiter; to find out; to ascertain; espy; detect; descry.
"Discover is further defined to mean to get first sight or knowledge of; to get knowledge of what has existed but has not theretofore been known to the discover; to obtain for the first time knowledge of, as of a thing existing already but not perceived or known. The term implies in the abstract that the hidden subject is concealed from or unknown to everyone, and, under particular circumstances, from a designated person.
It has been said that the essential nature of the word involves, not a facile observation, but rather a detection as the result of preliminary measures by way of uncovering, revealing, and laying open to view.
In a particular connection, it has been held that the term may not imply production.
It has been held that "discover" is not synonymous with "observe" or "see."
DISCOVERY. In particular connections, the word has been construed to mean actual knowledge, or knowledge of facts which, in the exercise of due diligence, would have led to an actual discovery; to obtain for the first time knowledge of; to be aware of, to find out, to have ascertained, or to know. It has been said to imply knowledge of the fact or a sincere belief in its existence, derived from known facts or reasonable inferences of fact creating something more than mere suspicion.
In other connections, "discovery" has been distinguished from "knowledge".
(Corpus Juris Seeundum) Vol. Twenty Seven"
"The word "discover" means to get first sight or knowledge of; to get knowledge of what has existed but has not theretofore been known to the discoverer....
The word "discover", while having a well- defined meaning in the abstract, meaning to uncover or discover that which was hid, concealed, or unknown from everyone, make nevertheless vary in accordance with its contextual use.
The "discovery" connotes the acquisition of knowledge of previously existing but -at least to discoverer -unknown facts. In re Mangan's Will, 83 N.Y.S.2d 393, 400.
"Discovery", is merely a means of procuring evidence to aid right or title of party requesting it in some other pending or contemplated suit or action in another court.
"Discovery" means "to obtain for the first time knowledge of," "to know," "to have ascertained," "to be aware of," or "to find out."
A motion for "discovery" is a part of pretrial procedure which enables the parties to marshal the facts and documents necessary to the trial of a cause, before the trial begins, and therefore such a motion may be granted, if ever as of right, only before the trial of a cause has begun.
"Discovery" means something more than mere suspicion, it implies a certain degree of knowledge on the part of the person to be charged with the consequences of such discovery."
The word "discovery" when used in reference to past transactions or omission, cannot have the same literal meaning as when applied to the discovery of a new continent, or a principle in physics. Fraud in a past and consummated transaction cannot be the subject of direct "discovery" or knowledge. The "discovery", then, of which the statute speaks, is of evidence or evidential facts leading to a belief in the fraud, and by which its existence or perpetration may be established, and not of the fraud itself as an existing entry."
(Words and Phrases) Vol. 12A."
17.The perusal of the meaning of the term "discovery" as brought forth above would lead to the ineluctable conclusion that the term signifies a stage prior to the formation of an opinion and a conclusion by an authority. It is an act or process of finding or learning about something that was previously unknown and which leads to the formation of an opinion and is not an opinion in itself. It refers to the pretrial stage of any proceedings and assistance in the administration of the process which culminates into a finding or a conclusion. In broader and general sense the term "discovered" refers to the getting of knowledge of anything which was not known to the discoverer and which already existed but was not perceived or known. It is, therefore, a step in the formation of an opinion and should not be confused with the actual formation of opinion.
18.A consideration of section 111 of the Ordinance in its entirety and holistically would clearly bring forth the fact that the section has three distinct and clearly defined stages. The first stage relates to information; the second is as regards discovery and the third is the formation of opinion by the Commissioner. Although it is not clearly mentioned that a notice should be served upon the person in terms of section 111 of the Ordinance yet this can be culled out from a bare reading of the provisions thereof. Subsections (1)(a,b,c) relates to the part where information comes to the knowledge of the Commissioner as a first step. This information could be relating to either any amount being credited in a person's books of account, a person having made any investment or being the owner of any money or valuable article or a person having incurred any expenditure. Then comes the stage of discovery by the Commissioner relating to the amount referred to in subsection (1). This discovery can only be on the basis of tangible evidence and material which comes in the hands of the Commissioner and on the basis of which a notice seeking an explanation from the person shall be issued. The words "the person offers no explanation . or the explanation offered by the person is not, in the Commissioner's opinion, satisfactory" would show that for an explanation to be offered by the person he must have been issued a show-cause notice by the Commissioner. For, without a show-cause notice there can be no explanation to be offered by the person. This leads to the conclusion that a show-cause notice is envisaged by section 111 of the Ordinance. In our opinion, the stage at which the notice is issued is the stage which will be deemed to be within the meaning of the term "discovered by the Commissioner" as used in subsection (2) of section 111 of the Ordinance. The said notice must be based on the information and on the belief of the Commissioner that the case is one which falls under any of the heads specified in subsection (1) of section 111 of the Ordinance. We are firmly of the opinion that discovery is an intermediate stage between the Commissioner getting the information and forming an opinion.
19.Raja Sikandar Khan, Advocate relied upon a judgment of the Indian Supreme Court which is on all fours with the cases in hand. It is reported as A.N. Lakshman Shenoy v. Income-Tax Officer, Ernakulam, and another (1958) 34 ITR 275. In that judgment, section 47 of the Cochin Income Tax Act was the subject of interpretation by the Supreme Court of India. The said provision is almost similar to section 111 of the Ordinance. In the said judgment, the Supreme Court of India proceeded to put an interpretation on the term "discovery" as used in that provision and observed as follows:--
"But "discovery" in the context of section 34 of the Indian Income-tax Act (or the corresponding provisions in the Cochin and Travancore Act) does not mean a conclusion of certainty at the stage of notice. What is necessary at that stage is that the Income-tax officer should have formed an honest belief upon materials which reasonably support such belief
There is a distinction between receipt of definite information as a consequence of which a discovery is made and a notice is issued and the final determination as to the liability or extent of liability for escaped assessment."
20.It is also clear from the judgment of the Indian Supreme Court reproduced above that a clear distinction has been drawn between the word 'discovery" and the final determination on the basis thereof. In that judgment too, three stages viz information, discovery and final determination, have been clearly distinguished and separately dealt with.
21.In order to bring home the distinction between the word "discovery" and "opinion", the term "opinion" as elucidated and defined by various authoritative dictionaries, is being referred to. For reference, they are reproduced as under:
OPINION. "In the opinion of the court or a judge" (Judicature Act, 1873 (c.66), s.57) meant according to the judgment of the court or judge, which judgment was subjected to appeal (ormerod v. Todmorden Co., 8 Q.B.D. 664).
(Stroud's Judicial Dictionary of Words and Phrases) Sixth Edition, Volume 2."
________
opinion. (14c) 1. A court's written statement explaining its decision in a given case, usu. including the statement of facts, points of law, rationale, and dicta.
(Black's Law Dictionary) Ninth Edition."
________
Opinion. 'Opinion' means 'something more than mere retaining of gossip or of hearsay; it means judgment or belief, that is a belief or a conviction resulting from what one thinks on a particular question).
(KJ Aiyar Judicial Dictionary) 16th Edition."
22.Further, the Supreme Court of Pakistan in its judgment titled Mian Muhammad Nawaz Sharif v. Federation of Pakistan and others (PLD 1993 Supreme Court 473) at page 811 has had the occasion to dilate upon the term 'opinion' and its import vis- -vis Article 58 (2)(b) of the Constitution of Islamic Republic of Pakistan, 1973 in the following words:--
"...The President is empowered to dissolve the National Assembly if he forms an opinion that the Government cannot be run in accordance with the Constitution. This power is not absolute or unfettered. The President has first to form an opinion, an objective opinion on the basis of the material before him to come to the conclusion that the Government cannot be carried on in accordance with the Constitution. The formation of opinion being objective in nature can be judicially examined and reviewed by the Courts..."
23.It falls to be noted that the term 'opinion' is more akin to a decision or a judgment. It is a definite conclusion drawn by an authority based on cogency and rationality. In our estimation, formation of an opinion concludes the matter in the hands of that authority and nothing more is required to be done.
24.Mr. Shehbaz Butt, Advocate attempted to draw a subtle distinction between the persons who were not already taxpayers and taxpayers themselves to submit that the stage of discovery for the two is distinct and separate. The learned counsel conceded that the stage of discovery for the persons who were not already taxpayers would definitely be the stage when the show-cause notice is issued. However, he went on to submit that in the case of already registered taxpayers, the stage of discovery could only be completed when upon consideration of the explanation an opinion was formed by the Commissioner. We are not persuaded to agree with the distinction sought to be drawn by the learned counsel as clearly section 111 of the Ordinance does not make any such distinction. Also in view of our findings above, the said distinction is not tenable in law. We have already stated that the three stages contemplated by section 111 of the Ordinance are separate and one should not be confused with the other. The stage at which the Commissioner is deemed to have discovered the amount referred to in subsection (1) is the stage when upon credible belief a proper show-cause notice is issued by the Commissioner to solicit an explanation from the person in respect of whom the information has come in his hands.
25.What construction is to be put on the word 'discovered' assumes importance in the context of limitation. The point when it is discovered by the Commissioner becomes terminus a quo for the period of limitation in respect of various provisions of the Ordinance. We have no hesitation in holding that the issuance of a show-cause notice under section 111 of the Ordinance is the point when it would be deemed to have been discovered by the Commissioner.
26.There is an interesting aspect of the impugned orders in the instant reference applications. The Tribunal in all these matters seems to follow the Full Bench judgment, yet has drawn a conclusion which runs counter to what that judgment lays down. In fact the findings of the Tribunal in the impugned orders is in consonance with the findings rendered by us. The issuance of the notice and its date has been assumed as the point of discovery by the Tribunal. We uphold the findings of the Tribunal in this regard. The question of law is thus answered in the affirmative and the reference applications are dismissed.
A copy of this judgment shall be sent to the Tribunal under seal of the Court.
(Schedule 'A')
LIST OF CASES
| Sr. No. | PTR Nos. | Title | Impugned Order (Dated) |
| 1. | 42 of 2011 | Commissioner Inland Revenue v. Messrs Naseer Autos | 6-10-2010 |
| 2. | 80 of 2012 | Commissioner Inland Revenue v. Muhammad Aftab Hameed | 29-9-2011 |
| 3. | 81 of 2012 | Commissioner Inland Revenue v. Mst. Ubaida Sultana | 13-10-2011 |
| 4. | 88 of 2012 | Commissioner of Income Tax v. Mst. Maqsooda Afzal | 6-10-2011 |
| 5. | 107 of 2012 | Commissioner Inland Revenue v. Muhammad Hussain | 1-10-2011 |
| 6. | 108 of 2012 | Commissioner Inland Revenue v. Malik Abdul Hayee | 1-10-2011 |
| 7. | 109 of 2012 | Commissioner Inland Revenue v. Shah Nasir Ali | 13-10-2011 |
| 8. | 130 of 2012 | Commissioner Inland Revenue v. Muhammad Yaqoob | 7-12-2011 |
| 9. | 131 of 2012 | -do- | -do- |
| 10. | 150 of 2012 | Commissioner Inland Revenue v. Muhammad Ashfaq | 12-1-2012 |
| 11. | 151 of 2012 | Commissioner Inland Revenue v. Muhammad Hussain | 12-1-2012 |
| 12. | 191 of 2014 | Commissioner Inland Revenue v. Humayun Mughal | 25-3-2014 |
| 13. | 225 of 2009 | Commissioner of Income Tax v. Shah Muhammad Anwar | 7-2-2009 |
| 14. | 240 of 2011 | Commissioner of Income Tax v. Mst. Nasreen Zafar | 9-8-2011 |
| 15. | 263 of 2011 | Commissioner Inland Revenue v. Ansar Javed | 22-9-2011 |
| 16. | 359 of 2009 | Commissioner Inland Revenue v. Malik Khalid Mehmood | 21-8-2009 |
| 17. | 626 of 2008 | Commissioner of Income Tax v. Naeem Raza | 1-7-2008 |
| 18. | 782 of 2007 | Commissioner of Income Tax v. Mian Abid Javed | 2-6-2007 |
KMZ/C-12/LOrder accordingly.