COMMISSIONER OF INCOME TAX/WEALTH TAX, IBD. VS HI-TECH PLASTIC (PVT.) LTD.
2019 P T D 878
[Islamabad High Court]
Before Shaukat Aziz Siddiqui and Athar Minallah, JJ
COMMISSIONER OF INCOME TAX/WEALTH TAX, IBD.
Versus
Messrs HI-TECH PLASTIC (PVT.) LTD.
I.T.A. No.262 of 2000, heard on 02/11/2015.
*
. (a) Income Tax Ordinance (XXXI of 1979) [Since repealed]--
----Ss. 57, 55, 56 & 136---Revised return of total income---Question before the High Court related to the circumstances in which a revised return filed under S.57 of the Income Tax Ordinance, 1979, was to be treated at par with a return filed under S.55 of the same Ordinance---Held, that Legislature vide S.57 of the Income Tax Ordinance, 1979 had provided an opportunity to file a revised return of total income and thus correct any "omission or wrong statement" which may have been discovered after furnishing a return under S.55 of the Income Tax Ordinance, 1979 or if no return had been filed---Filing of a revised return had been circumscribed by exercising such right any time before an assessment was made on basis of return filed under S.55 or any other provision of Income Tax Ordinance, 1979---Sections 55 & 57 of the Income Tax Ordinance, 1979 were thus to be read together as the latter was in continuation of the former till such time an assessment order had been passed and after passing of an assessment order, resort could not be made to S.57 of the Income Tax Ordinance, 1979---Revised return, if competently filed, became return for purpose of makinganassessmentorderwhilereturnalreadyfiledunder S.55of the Income Tax Ordinance, 1979 to the extent of the omission / wrong statement, looses its efficacy and becomes irrelevant---Revised return, before an assessment order was made, wastobetreatedasareturnin circumstances---Reference was answered, accordingly.
(b) Words and phrases---
----"Omission", meaning explained.
Black's Law Dictionary Eighth Edition rel.
Ms. Shaheena Akbar for Appellant.
Ms. Ameena Sohail for Respondent.
Date of hearing: 2nd November, 2015.
ORDER
ATHAR MINALLAH, J.---Through the instant Tax Appeal, the applicant has proposed the following question of law for our consideration:-
"Whether on the facts and in the circumstances of the case the learned ITAT was legally justified in holding that a return filed under section 57 is at par with the return filed under section 55 and that a declaration opting out of the presumptive tax regime filed with the return under section 57 also fulfills the requirements of clause (9) of Part-IV of the Second Schedule to the Income Tax Ordinance, 1979".
2.The facts, in brief, are that the respondent is a private limited company incorporated under the provisions of the Companies Ordinance, 1984, and derives income from the manufacture and sale of high quality plastic products. The respondent is an assessee falling under the jurisdiction of the Commissioner of Income Tax/Wealth Tax, Companies Zone, Islamabad. The respondent had filed its respective returns for the assessment years 1991-92, 1992-93 and 1993-94. The respective assessment orders for three years were issued by the learned Deputy Commissioner of Income Tax and Wealth Tax. The Assessing Officer made the assessment in the case of each year under Section 80-C of the Income Tax Ordinance, 1979 (hereinafter referred to as the "Ordinance"). However, the assessee claimed that it was entitled to assessment under the normal procedure as prescribed ibid. The respondent filed an appeal before the Commissioner of Income Tax (Appeals), Islamabad (hereinafter referred to as the "CIT (A)") and the same was decided vide order dated 19-10-1995. The learned CIT(A) dismissed the appeal relating to the assessment year 1991-92 on the ground that, admittedly, no option had been filed by the respondent in writing, as provided under clause (9) of Part-IV of the Second Schedule of the Ordinance. The assessment orders relating to the assessment years 1991-92 and1992-93 were declared by the learned CIT(A) as having been rightly made under the provisions of Section 80-C of the Ordinance. However, in case of the assessment year 1993-94 it was held that the revised return was filed before as assessment order was passed, therefore, the order to the extent of the said year was set-aside with the direction to the Assessing Officer to frame the assessment under Section 62 of the Ordinance. Three appeals were preferred before the learned Tribunal, two by the assessee and one by the Department. The learned Appellate Tribunal, vide order dated 28-01-2000, upheld the order in appeal passed by the CIT(A) and consequently dismissed the three appeals. In a nutshell, the setting aside of the assessment order relating to the year 1993-1994 was upheld on the ground that a revised return under section 57 of the Ordinance had been filed before the making of the assessment. The applicant has proposed for our consideration the question of law arising out of the judgment of the learned Tribunal dated 28-01-2000.
3.The learned counsel for the applicant has contended that; the revised return under Section 57 of the Ordinance does not fulfil the requirements of clause (9) of Part-IV of the Second Schedule; the Ordinance is a fiscal statute and has to be interpreted literally and, therefore, provisions of Section 55, read with clause (9) of Part-IV of the Second Schedule, are to be construed literally; the option in writing, as required under the proviso to clause (9) of Part-IV of the Second Schedule, has to be given at the time of filing the return under Section 55; such a declaration/option cannot be given with a revised return; a return filed under Section 55 and a revised return under Section 57 of the Ordinance are distinct and separate and, therefore, cannot be treated at par.
4.On the other hand, the learned counsel for the respondent has argued that no question of law arises out of the order of the learned Tribunal, as formulated by the applicant; there is no bar in filing a revised return under Section 57 of the Ordinance in case the assessee discovers any omission or wrong statement in the return furnished under any provision of the Ordinance; Section 57 provides for an opportunity to the assessee to rectify an omission or wrong statement by filing a revised return of the total income; if the return of the total income furnished under any provision of the Ordinance is not in the form, or in the nature as required by or under any provision of the Ordinance, the same can be rectified under section 57.
5.The learned counsel have been heard and the record perused with their able assistance.
6.It is not denied that the respondent is an assessee and had filed the tax returns for the years 1991-92, 1992-93 and 1993-94 respectively. The respondent, after discovering that it had omitted to file an option in writing, as required under the first proviso to clause (9) Part-IV of the Second Schedule of the Ordinance, filed the returns of the total income under Section 57 of the Ordinance for the years 1992-93 and 1993-94. The question of law proposed for our consideration essentially relates to the interpretation of sections 55 and 57 of the Ordinance i.e. the scope of filing a revised return under section 57. Section 55, falling under Chapter VII of the Ordinance, relates to the return of the total income. It postulates that every person who meets the criteria laid down in clauses (a), (b) and (c) of subsection (1) thereof shall furnish a return of total income for the income years along with a return of wealth tax in accordance with the Wealth Tax Act, 1963. Section 57 on the other hand is reproduced as follows:-
"Revised return of total income: If any person has not furnished a return of total income as required by, or under, any provision of this Ordinance (hereafter in this section referred to as 'return'), or having furnished a return, discovers any omission or wrong statement therein, he may, without prejudice to any liability incurred by him under any provision of this Ordinance or the repealed Act, furnish a return or a revised return, as the case may be, at any time before the assessment is made."
7.It is obvious from the above that Section 55 makes it mandatory for such person or classes of persons enumerated in clauses (a) (b) and (c) of subsection (1) to furnish a return of the total income for the income year. Section 57 provides an opportunity to a person to file a revised return, if he or she has not furnished a return of total income as required by, or under, any of the provisions of the Ordinance, or having furnished a return, discovers any omission or wrong statement therein. Section 57, therefore, is attracted in two situations; firstly, when a person has not furnished a return of the total income as required by, or under, any of the provisions of the Ordinance and secondly, a person having furnished a return, discovers any omission or wrong statement in the return filed under section 55 or any other provision ibid. This statutory right can be exercised by a person who falls under one of the categories mentioned in section 57. However, filing a revised return, though permissible, is without prejudice to any liability incurred under any provision of the Ordinance. A plain reading of Section 57 unambiguously shows that the legislature, in its wisdom, has provided an opportunity to file a revised return of total income and thus correct any omission or wrong statement, which may have been discovered after furnishing the return or if no return has been filed. The filing of a revised return is, nevertheless, circumscribed by exercising the right at any time before the assessment is made, on the basis of a return filed under section 55 or any other provision of the Ordinance. The provision itself refers to a 'revised return' as a return. Sections 55 and 57 are to be read together as the latter is in continuation of the former till an assessment order has been passed. After passing of an assessment order resort cannot be made to section 57, as it creates a bar in such an eventuality. If, therefore, an assessee is able to show that a revised return has been filed, and the conditions in section 57 are met, then the assessing officer proceeds to pass an assessment order on the basis of the revised return as if it was a return filed under section 55, and the return filed earlier is no more relevant. The revised return under section 57 is treated as a return. The two provisions complement each other. Section 55 makes it mandatory for persons or classes of persons enumerated therein to file a return, while section 57 enables or vests a right in such a person to correct or rectify an omission or wrong statement made in the said return at any time before the assessment is made.
8.It is, therefore, obvious that a revised return, which has been competently filed under section 57, becomes a return for the purposes of making an assessment order, while the return already filed under section 55, to the extent of the omission or wrong statement, losses its efficacy, or in other words becomes irrelevant. We inquired from the learned counsel for the applicant whether the expression 'omission or wrong statement' excludes an option to be exercised under clause 9 Part IV of the Second Schedule of the Ordinance. The learned counsel was not able to satisfy us that any such exclusion is provided under the Ordinance, particularly in section 57. By using the expression "omission or wrong statement", the legislature intended to give an expansive scope for exercising a right of filing the revised return under Section 57 of the Ordinance. The Black's Law Dictionary Eighth Edition gives the meaning of omission as follows:--
1."A failure to do something; esp., a neglect of duty <the complaint alleged that the driver had committed various negligent acts and omissions>.
2.The act of leaving something out <the contractor's omission of the sales price rendered the contract void>.
3.The state of having been left out or of not having been done <his omission from the roster caused no harm>,
4.Something that is left out, left undone, or otherwise neglected <the many omissions from the list were unintentional>."
9.Likewise, the expression 'wrong statement' also has wide meanings and connotations. An assessee who fails or omits to submit, along with a return, an option as required under clause (9) of Part-IV of the Second Schedule can correct or rectify the said omission by filing a revised return, provided such omission is discovered after the return of the total income has been furnished under Section 55 of the Ordinance and before the appropriate officer has passed an assessment order.
10.In view of the above, the revised return filed under Section 57 of the Ordinance, before the assessment is made is, therefore, treated as a return. On our query, the learned counsel for the applicant, taking a fair stance, also conceded that a revised return filed under Section 57 of the Ordinance is also a return.
11.We, therefore, answer the question of law proposed by the applicant in the affirmative and in terms as discussed above. The learned Tribunal has correctly appreciated the law and interpreted the scope of the revised return filed under Section 57 of the Ordinance.
12.A copy of this order shall be sent under the seal of this Court and the signature of the learned Registrar to the learned Tribunal as required under subsection (6) of Section 136 of the Ordinance.
KMZ/32/Isl.Order accordingly.