ITR 01/2013. The Commissioner Inland Rev

Stereo. H C J D A 38.
Judgment Sheet
IN THE LAHORE HIGH COURT LAHORE
RAWALPINDI BENCH, RAWALPINDI
JUDICIAL DEPARTMENT
Case No: I.T.R. 01/2013.
The Commissioner Inland
Revenue.
Versus
Maj. Gen. (R) Dr. C.M. Anwar etc..
JUDGMENT
Date of hearing
25.03.2014.
Applicant by:
Ch. Muhammad Irshad, Advocate.
Respondents by:
Ch. Naeem-ul-Haq, Advocate on behalf of Hafiz
Muhammad Idrees, Advocate for respondent
No.1.
Shahid Jamil Khan, J:- This reference application is moved by
Department against order of Appellate Tribunal, Inland Revenue,
Islamabad Bench (“the Tribunal”) dated 01.08.2012 passed in ITA
No.431/IB/2011 relating to tax year 2004 on the following questions
of law:1)
“Whether on the facts and circumstances of the
case, the ATIR was justified to accept the appeal of
the taxpayer by ignoring CIR (Appeals) judgment
holding departmental action in line with law to
compute limitation period for amending assessment
for Tax Year 2004 within “5” years in terms of
amendment brought in sub-section (2) of section 122
of the Income Tax Ord., 2001 through Finance Act,
2009?”
2)
“Whether on the facts and circumstances of the case,
the amendment brought in sub-section (2) of the
section 122 being procedural in nature, shall not
operates retrospectively?”
3)
“Whether on the facts and circumstances of the case,
the act of the Taxation Officer to amend the
assessment for Tax Year 2004 during pendency of
audit proceeding when the amendment in subsection (2) of Section 122 was brought through the
Finance Act, 2009, is within the vires of Law,
thereby allowing the Taxation Officer to finalize the
I.T.R. No. 01/2013.
2
amendment of assessment within „Five‟ years
ending on 30.06.2010?”
2.
The facts are that income tax return filed for tax year, 2004
attained status of an assessment order by operation of law under
section 120 of the Income Tax Ordinance, 2001(“the Ordinance”) on
29.09.2004. Case of the respondent taxpayer was selected for audit
under section 177 (4) of the Ordinance on 05.01.2009. Notice under
section 122 (9) of the Ordinance was issued on 13.05.2010, proposing
amendment under section 122(1) of the Ordinance. In reply, the
taxpayer took an objection that the said notice was barred by time as
the period of five years lapsed on 28.09.2009 unde Section 122 (2) of
the Ordinance as it stood at the time. The Taxation Officer having
found the reply as unsatisfactory passed amended assessment order
under the section 122(1) of the Ordinance on 30.06.2010.
3.
Taxpayer‟s appeal could not succeed before First Appellate
Authority. The Commissioner (Appeals) while upholding the
amended assessment order observed that amendment brought in
subsection (2) of section 122 of the Ordinance, through Finance Act,
2009 was applicable retrospectively.
4.
The order of Commissioner (Appeals) dated 19.05.2011 was
challenged before the Tribunal and was contested mainly on the point
of limitation. Learned Tribunal accepted taxpayer‟s appeal and held
the amended assessment order under section 122 (1) of the Ordinance
was barred by time. Relevant excerpt from the order of the Tribunal is
reproduced to determine whether the proposed questions arise from
this order:“In view of the above discussion, factual and legal
position, it will be found that a right of amendment of
assessment of the case upto 29th September, 2009 had
accrued to the appellant consequent upon filing of
return/deemed assessment on 29.09.2004 as per law then
prevailing. The Department could, therefore, complete the
amendment upto the above date only. As against this
position, proceedings for amendment of assessment u/s
122 of the Ordinance were initiated on 13th May, 2010 by
I.T.R. No. 01/2013.
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issuance of notice u/s 122(9) i.e. after lapse of the above
stated limitation period and as such the proceedings could
not be said to be even pending on the promulgation of the
Finance Act, 2009 i.e. on 01.07.2009.
In view of the foregoing, we have no hesitation to
hold that the impugned amendment order is barred by time
and therefore, void ab initio. In consequence the appeal is
accepted.”
5.
After examining the proposed questions, in light of the facts
found and decision made by the Tribunal, we are of the opinion that
only questions No. 1 & 2 arise out of the order of the Tribunal, the
same are therefore being answered. Since the law point raised in
question No.3 was neither raised nor decided by the Tribunal
therefore we decline to answer the same. Reliance in this regard is
place on the judgment by Apex Court in Messrs Nida-i-Millat (Pvt.)
Ltd., Lahore v. Commissioner of Income-Tax, Zone No.1, Lahore
(2006 SCMR 526).
6.
Learned counsel for the applicant department has supported the
reasons given and law relied upon by the Commissioner (Appeals)
and argued that the amendment in subsection (2) of the section 122 of
the Ordinance by Finance Act, 2009 was procedural in nature,
therefore, was applicable retrospectively.
7.
Before embarking upon the discussion to answer the admitted
questions, scrutiny of the repealed and repealing provisions of section
122 (2) of the Ordinance is imperative, the same are reproduced
therefore:“(2) An assessment order shall only be amended under
subsection (1) within five years after the Commissioner
has issued or is treated as having issued the assessment
order on the taxpayer.” (Emphasis supplied)
This subsection was substituted by the following subsection (2) by
Finance Act, 2009;
“(2) No order under sub-section (1) shall be amended by
the Commissioner after the expiry of five years from the
end of the financial year in which the Commissioner has
I.T.R. No. 01/2013.
4
issued or treated to have issued the assessment order to the
taxpayer.” (Emphasis supplied)
8.
The substituted section 122 (2) of the Ordinance requires the
limitation to run after the expiry of five years from the end of the
financial year which in this case could be 01.07. 2005, i.e., from the
end of the financial year ending on 30.06.2004. As a consequence the
deemed assessment under section 120 dated 29.09.2004 shall expire
on 30.06.2010 instead of 28.09.2009 under the law before
substitution.
9.
Show Cause Notice has been issued on 13.05.2010 when
limitation under the substituted law had expired on 28.09.2009,
therefore, assessment under section 120 had attained finality under
the repealed subsection (2). Reference is made under Section 6 (1)
(c) of the General Clauses Act, 1897, which reads:“Where this Act, or any Central Act or Regulation made
after the commencement of this Act, repeals any enactment
hitherto made or hereafter to be made, then, unless a
different intention appears, the repeal shall not:
a) ____________
b) ____________
c) “Affect any right, privilege, obligation or liability
acquired, accrued or incurred under any enactment so
repealed”.
Limitation as it stood at the time of filing of the return will apply to
the case of the petitioner. Reliance is placed on Messrs Fawad
Textiles Mills Ltd. through Director, Lahore v. Pakistan through
Secretary, Ministry of Finance and 3 others (2005 PTD 14) and
Commr. of Income Tax v. Dharamchand Dalchand [1 ITC 264
(Nagpur)]
10.
It is therefore, trite law that even procedural law cannot take
away vested and existing rights by applying it retrospectively, unless
such intention of the legislature is expressed in unequivocal terms.
5
I.T.R. No. 01/2013.
11.
In light of the discussion made and law referred, answer to
question No.1 is in the affirmative and the answer to question No.2 is
in the negative. On the whole reference filed by the department is
dismissed.
12.
Office shall send a copy of this judgment under the seal of the
Court to the learned Appellate Tribunal Inland Revenue as per
Section 133 (5) of the Ordinance.
(Syed Mansoor Ali Shah)
Judge
(Shahid Jamil Khan)
Judge
*A.W.*
APPROVED FOR REPORTING.

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