NEW PROVISIONS OF "APPEALS" UNDER THE INCOME TAX ORDINANCE, 2001

NEW PROVISIONS OF "APPEALS" UNDER THE INCOME TAX ORDINANCE, 2001 <!--[if gte mso 10]> NEW PROVISIONS OF "APPEALS" UNDER THE INCOME TAX ORDINANCE, 2001 By Mr. Arshad Siraj, Advocate, Karachi Ladies and Gentlemen: We are living in an era of judicial activism But alas! we still find ourselves facing such laws, which are not compatible with the fabric of our society, our economy, our sociology and our philosophy. We find ourselves isolated, when we read that world polity is legislating statutes for economic benefits and even the Courts have changed their approach of strict interpretation rule to liberal and citizen friendly rule. Our greatest hope is still in our superior Courts, which have, time and again, interpreted the laws liberally and when in doubt, have always decided the cases in favour of the subject (1). GENERAL INTRODUCTION Be that as it may, most of us are well conversant with the provisions of Appeals as contained in the Repealed Income Tax Ordinance, 1979. However, now that a new law, the Income Tax Ordinance, 2001 has taken effect (with effect from 1st July, 2002), we shall have to start afresh and examine minutely the relevant provisions contained in the Income Tax Ordinance, 2001 as well. In the present paper, I have tried to cover the legal as well as practical aspects in respect of provisions of Appeals, its procedures and documentation etc. In fiscal statutes, there are generally three distinct types of provisions. The charging provisions, which relate to the levy or charge of the tax, which usually state that tax is to be levied on what property, goods or income and in what manner and at what rate (2). Second, the assessment provisions, which deal with the assessments, calculations or quantifications of the tax for the purposes of determining the amount of tax due and payable or which has escaped collection or has been under assessed at a lower rate or on which excessive relief or refund has been allowed (3). Third, the 'collection provisions, which relate to the mode and manner of receipt or collection of the tax (4). The fourth distinct type of provision, in my humble opinion is the appeal and its procedures, which in fact are relatable to the second category i.e. the assessment provision. APPEAL Before we proceed further, it will be beneficial to first understand what is, an appeal, as it has not been defined in the Income Tax Ordinance, 2001. The word "Appeal" is derived from the Latin word "appellate" meaning "to address". The ordinary dictionary meaning is "to make an earnest or formal request or to call attention". An appeal is an application for the judicial examination by a higher Court of the decision of any inferior Court (5). An appeal is the right of entering a Superior Court and invoking its aid and interposition to redress the error of the Court below (6). Removal of the cause or a suit from an inferior Court to a superior Judge or Court for re-examination or review (7). A complaint to a higher tribunal, in which the error or injustice is sought to be corrected or reversed (8). It will be seen from the above definitions that it is a right of invoking aid of a Superior Court. This right is granted by Statute (9). Therefore, it is a statutory right, created by statute defining its limits as well. It is settled proposition of law that if a statute doesn't confer a right of appeal it doesn't exist. It is a vested substantive right inhering in a party from commencement of an action in the Court of first instance (10). It is governed by law prevailing at that time. Such right cannot be taken away except by express provision or by necessary implication (11). Court is at liberty to consider any event subsequent to the filing of appeal which can be of fact or amendment in law and decide the case accordingly (12). In the Islamic polity and system of dispensation of justice, the importance of the right of appeal cannot be overstated. It has been held to be the natural right vesting in an individual, which cannot be taken away except by a provision in an enactment. It is ordained by the Holy Qur'an and Sunnah of Holy Prophet (Peace be upon him) that an affected person must have a right to go in appeal. Barring the right of appeal is against injunctions of Islam. Justice is not some thing which can be captured in a formula once for all. It is a process, a complex and shifting balance between many factors, including equality. As Friedrich observed "Justice is never given, it is always a task to be achieved. It is true that persons with grievances are those who raise the question of justice" (13). DISTINCTION BETWEEN APPEAL AND REVISION While an appeal is a continuation of proceedings and if it is given by statute, ordinarily it carries with it a right of oral audience, a revision is simply an examination of the matter for the purpose of seeing the propriety and legality of the orders of the subordinate authorities and it does not carry the same incidents which are peculiar to appeal. Under the Repealed Ordinance Revision was provided under section 138. However, same is not found in the present law, despite the fact that it was available in the first draft of the Income Tax Ordinance, 2001. I have been informed that our bar has sent a budgetary proposal to this effect. COMMISSIONER (APPEALS) Under the new dispensation, Appeal to Commissioner (Appeals) has been provided under section 127. Section 208 confers powers to the Central Board of Revenue to appoint as many Commissioner of Income 'tax (Appeals). Under Clause (13A) of section 2, the "Commissioner (Appeals) has been defined which reads as under: - "Commissioner (Appeals)" means a person appointed as a Commissioner of Income Tax (Appeals) under section 208". At this stage, let me submit that like the provisions of the Repealed Ordinance, no orders, instructions or directions shall be given by the Central Board of Revenue that will interfere with the discretion of the Commissioner (Appeals) in the exercise of his appellate functions. SECTION 127 - APPEAL TO THE COMMISSIONER (APPEALS) Coming back to section 127, the said section stipulates that any person dissatisfied with any order passed by Commissioner or taxation officer may prefer an appeal to the Commissioner (Appeals) against an order passed. Orders against which appeal can be preferred under various Sections are enumerated below. Under section 121 Assessment of person who have not furnished return (Assessment) Under section 122 Amendment of assessment (Assessment) Under section 143 Non-resident ship owner or charterer (Assessment) Under section 144 Non-resident aircraft owner or charterer (Assessment) Under section 170 Dissatisfaction with decision or refund application (Order) Under section 182 Penalty for failure to furnish a return or statement (Assessment) Under section 183 Penalty for non payment of tax (Assessment) Under section 184 Penalty for concealment of Income (Assessment) Under section 185 Penalty for failure to maintain records (Assessment) Under section 186 Penalty for non compliance of Notice under 116 or 176 (Assessment) Under section 187 Penalty for making false or misleading statements (Assessment) Under section 188 Penalty for failure to give notice under section 124 (Assessment) Under section 189 Penalty for obstruction in discharge of functions (Assessment) Under section 161(1) Assessee in default (Order) Under section 172(3)(f) Person treated as a representative of non-resident (Order) Under section 221 Rectification of mistake. (Assessment) It will be noted that I have classified various sections into "Assessment" and "Orders", which is necessary for the purposes of subsection (2) and (4) of section 127 which we will discuss later. I may hasten to add that statutory provisions have not classified the orders into "Assessment" and "Order". However, I have with my little understanding of law, classified them. It may be noted that I have classified section 221 (Rectification of mistake) under the classification of "Assessment", on the strength of Judgment in the case of Hasan Ali Karabhai versus Commissioner of Income Tax, where their lordships of High Court of Sindh held that " an order of the Income Tax Officer rectifying a mistake in the assessment is, in effect, an order under section 23" (14). Here I may submit that although, an appeal against an order passed imposing Additional Tax has not been provided under Sub-section (1) of section 127, but by virtue of the provisions of subsection (6) of section 205, in my humble opinion, an appeal lies before the Commissioner (Appeals). The provisions of subsection (6) of section 205 are reproduced for convenience. "(6) The provisions of Parts III & IV apply to an assessment of Additional Tax as if it were an assessment of tax". There are certain other appeals provided under various other provisions of law, which I will discuss later on. However, let me point out that an appeal lies before the Commissioner (Appeals) under Rule 218 of the Income Tax Rules, 2002 which is against a decision under Rule 211 (for approval of Non Profit Organisation), Under Rule 214 (Refusal to renewal of approval of Non Profit Organisation and against decision to withdraw an approval under Rule 217. The Form of appeal has been provided under Rule 218. In my humble opinion, Rule 218 states that an appeal may be lodged before the Commissioner (Appeals), all the conditions contained in section 127 will apply. At this stage, let me invite attention to the provisions of section 171 and subsection 7 of section 147, which have not been included in the orders which are made appealable. Section 171 pertains to Additional Payments for delayed refunds and subsection (7) of section 147 pertains to recovery of Advance tax as tax due. I respectfully suggest to the President that while sending their budget proposals, he may, if deemed fit, include proposal for amendment for inclusions of these section under section 127. Coming back to the provisions of section 127, it will be observed that under the Income Tax Ordinance, 2001, the provisions of Re-opening of assessment (Section 65 of the Repealed Ordinance) and Revision of assessment (Section 66A of the Repealed Ordinance) have been merged under section 122. Appeal has to be filed before the Commissioner (Appeals) under the provisions of section 127 of the Income Tax Ordinance, 2001, against the order passed under section 122 in case of amendment made on the basis of the view of the Commissioner, that provisions of both the Ordinances have been incorrectly applied. This is unlike the provisions of filing direct appeal to the Income Tax Appellate Tribunal against order passed under section 66A i.e., Revision of Assessment. Here, I would like to point out, a very important issue, which has created quite a concern. Question has arisen as to the effect that when an order is passed under section 62 or 66A or under section 132 of the Repealed. Income Tax Ordinance, 1979, where does an appeal lie. In my humble understanding, the draftsman has taken care of the situation under subsection (4) of section 239 which reads as under. (4) Any proceeding under the repealed Ordinance pending on the commencement of this Ordinance before any income tax authority, the Appellate Tribunal or any Court by way of appeal, reference, revision or prosecution shall be continued and disposed of as if this Ordinance has not come into force". As such if any proceedings were pending on 1-7-2002, the appeal has to be filed according to the provisions of Repealed Ordinance, 1979 and, therefore, all the rights and obligations contained in the Repealed Ordinance will be operative. Subsection (2) of section 127, stipulates conditions for filing appeal. Here I wish to point out that instead of words filing of appeal, the law makers have used the words "prefer an appeal", make the appeal", "lodge the appeal", which in my considered and humble opinion are the terms of synonymous nature. In a case of Shanta Bai Devaro Vs. CIT Banglore, (15) their lordships of Mysore High Court observed that "it is true the word `made" is a word of ambiguous import....: In our view legislature has been using the expressions "made the application" as equivalent to "presented the application". SECTION 127 (2) Under, subsection (2) of section 127, it has been provided that no appeal shall be made unless the tax payer has paid; (a) the amount of tax due under section 137(1) i.e. tax as per return. In normal usage, the admitted tax as per Return. (b) an amount equal to - (i) 15% of the amount of tax assessed as is in excess of the tax due under section 137(1) or (ii) 20% of the amount of tax assessed for immediately preceding tax year and where a person has not been assessed to tax for that year, 30% of the amount of tax mentioned in clause (a), which ever is less. Before giving the examples for calculating the mandatory payment, I would like to in fact raise a very important point. It will be observed that subsection (2) of section 127 stipulates that no appeal shall be made against order of assessment unless tax payer has been paid (a) admitted liability of tax and (b) payment of 15 % or 20% whichever is less. We have already seen the classification of the orders i.e. assessment or order. Penalty orders have been treated as assessment by virtue of subsection (6) of section 190. However, so far as, conditions of payment under clause (a) and (b) are concerned, it will be noted that they relate to admitted tax liability as per return and tax. assessed, In case of Penalties and orders passed under section 170, 161(1) and 172(3)(f), there is no admitted tax under section 137(1). Once the basic condition of payment. Under section 137(1) is not available, in my humble opinion, no conditional payment under section 127(2) is required to be made while filing or making the appeal against orders passed under sections 170, 182 to 189, 161(1), 172(3)(f) and 205. It is trite law that if the words of a taxing statute fail, then so must tax fail (16). Here, I would like to quote the principle laid down by Lord Cairns in' Charles James Partington v. The Attorney General (1869) L. R. Vol. IV H. L. 100 duly approved by our Hon'ble Supreme Court in case of Sohail Jute Mills Vs Federation of Pakistan (17). "....as I understand the principle of all fiscal legislation, it is this: If the person sought to be taxed comes within the letter of the law he must be taxed, however great hardship may appear to the judicial mind to be. On the other' hand, if the crown, seeking to recover the tax, cannot bring the subject within the letter of the law, the subject is free, however, apparently within the spirit of the law the case might otherwise appear to be". I may further state, that even otherwise, there is an ambiguity; as such same has to be resolved in favour of the subject (18). EXAMPLES Say in case of a person, tax under section 137(1) is Rs. 350,000 Say tax determined in the order appealed against is Rs. 700,000. In my humble opinion this will be gross amount of tax. Say in his case in immediate preceding tax year, demand. is Rs. 450,000 Under Clause (b) he has to pay 15% in excess of admitted tax Rs. 52,500 (Rs.. 700,000, Rs. 350,000 @ 15%) or 20% of immediate preceding tax year Rs. 90,000 (Rs. 450,000 @ 20%). Therefore, the amount under Clause (b) of subsection-2 of section 127 will be Rs. 52,500, which is lesser than Rs. 90,000. EXAMPLE II Say in case of a Person, tax under section 137(1) is Rs. 350,000 Say tax determined in the order appealed against is Rs. 700,000. In my humble opinion this will be gross amount of tax. Say person has not been assessed to tax in immediate preceding year Under Clause (b) he has to pay 15% in excess of demand under section 137(1) Rs. 52,500 (Rs.700,000 Rs.350,000 @ 15%)' or 30% of admitted tax Rs.105,000 (Rs.350,000 @ 30%), which ever is less. Therefore, 'the person has to pay Rs. 52,500, which is a lesser amount. EXAMPLE III Admitted liability 0 Last assessment 0 Say tax determined in the order appealed against is Rs. 700,000. In my humble opinion this will gross amount of tax. In this case a person has to work out its required payment by calculating 15% of Rs. 700,000 (The admitted tax being zero) which comes to Rs.105,000 (15% of Rs. 700,000). Now since he hasn't got any tax under section 137(1) nor immediate preceding year tax, the amount worked out under clause (b) would be zero. As zero is lesser than Rs.105,000, there would be no payment of tax alongwith appeal. It is my humble submission that failure to fulfill condition contained in subsection (2) can be fatal, although there are judgments from Indian and Pakistani jurisdiction that Courts have been liberal and have granted time to fulfill the said conditions (19). "Thus, although it can be said that such defect is curable, yet utmost caution should be made to avoid unnecessary problems and difficulties. In my humble understanding, an appeal cannot be dismissed on such technicalities as it has been consistently held by the Hon'ble Supreme Court of Pakistan in numerous cases that Rules and Regulations are only meant to streamline the procedure and administer the course of justice. They are not there to thwart the same. The Courts has always preferred a decision of a case on merits and technical knock outs have always been discouraged (20). SECTION 127(3)(4)(5) & (6) Under these subsections, the law provides prescribed form, fee and limitation in respect of appeal. 127(3) An appeal under subsection (1) shall‑ (a) be in the prescribed form; (b) be verified in the prescribed manner; (c) state precisely the grounds upon which the appeal is made; Rule 76 of the Income Tax Rules, 2002 prescribes the form of appeal for filing the appeal before the Commissioner (Appeals) which is almost similar to the format as provided under the Repealed Income Tax Rules, 1982. PRESCRIBED FEE In case of appeal against "assessment" Rs. 1,000 (Rupees One thousand) or ten percent of tax assessed which ever is less. In other cases Where appellant is a Company, Rs. 1,000 Persons other than Company, Rs. 200 While discussing the provisions of subsection (1) of section 127, I have already classified the orders into categories of "Assessment" and "Orders". LIMITATION TO LODGE APPEAL WITHIN 30 DAYS (a) where the appeal relates to any assessment or penalty, the date of service of the notice of demand relating to the said assessment or penalty, as the case may be; and (b) in any other case, the date on which the order to, be appealed against is served. (c) The Commissioner (Appeals) has been given powers to condone delay if there exist sufficient cause. Section 127 of Income Tax Ordinance, 2001 provides the procedure of filing of an appeal and its limitation. Every appeal shall be made in the prescribed form and shall be verified in the prescribed manner and shall be accompanied 'by a prescribed fee. Under Rule 76 of the Income Tax Rule, 2002 the form of appeal has been prescribed. As the legislature has used the words such as "An appeal shall be in the prescribed form", "shall be verified in the prescribed manner" and "the said appeal shall state precisely the grounds upon which the appeal is made", the law imposes mandatory duty upon the assessee to fulfill all the pre-requisites of form under rule 76. The word "shall" is generally imperative or Mandatory. It is a word of command and one which has always to be given or which must be given a meaning denoting obligation (21). The very important terms is "prescribed". In shorter Oxford Dictionary the word "prescribed" has been defined as "to write or lay down as a rule or direction; according to Ballantine's Law Dictionary it means "to lay down before hand as a rule; direction on a rule of action" (22). As such it can generally be said that if there is any defect left in filing of prescribed form or non fulfilling the requirements the appeal can be treated as incompetent. Although no authority has been given to Commissioner (Appeals) to condone the defect, however, Commissioner (Appeals) has inherent powers to condone it, by using his discretionary powers in the interest of justice which is not prohibited by any provision of law (23). One of the requirements under rule 76 and of the prescribed form of appeals is that appellant has to send the copy of memo of appeal to the Respondent i.e. concerned Commissioner. It may be stated that the sending of copy of appeal to the respondent has very important significance. Such provision highlights the fundamental importance of issuance of the notice to the respondent by the appellant before presentation of the appeal (24). The sending of a copy of appeal to' the respondent through Registered A/D, Courier Service or delivered to the concerned official personally to Commissioner before presentation of an appeal preferred against an order passed is obligatory and no appeal can be entertained without it (25). Almost similar opinion has been given by the Hon'ble Supreme Court of Pakistan in PLD 1983 SC 693 while examining the provision of Rule 3 of Order XLIII Civil Procedure Code. The dictum squarely applies to the filing of appeal under section 127 of Income Tax Ordinance 2001. In order to satisfy the Commissioner (Appeals) that the requirement of sending copy to the respondent has been fulfilled, a certificate to that effect should be enclosed together with appeal papers. The purpose of sending copy of the respondent seems to be to avoid taking the respondent by surprise and giving respondent a right to contest appeal, as under section 128 Commissioner (Appeals) issues notice of hearing to the respondent (26). The documents to be attached in duplicate with the form of appeal are; (a) Prescribed Form and Grounds of appeal (b) Demand Notice and assessment order (c) Challan of appeal fee (d) Certificate indicating sending of appeal to the respondent. (e) Power of Attorney or Vakalatnama Since form of appeal is prescribed, it should be filled carefully. We shall discuss the grounds of appeal later on. However, the filing of Vakalatnama or Power of Attorney needs little attention. It is emphasised that both these documents must have proper stamp affixed on them, for Vakalatnama, the required Court fee Stamp is Rs. 2 whereas for filing Power of Attorney Stamp paper of Rs. 25 is required. Under subsection (6) of section 127 of Income Tax Ordinance, 2001 the Commissioner (Appeals) has been granted power to admit an appeal after expiration of the period of 30 days specified in subsection (6) of section 127, if he is satisfied that the appellant was prevented by sufficient Cause from presenting the appeal within that period. The appellant has to file an application for condonation of delay. It is trite law that each day's delay has to be explained (27). Further, the' appellant has to satisfy Commissioner (Appeals) that he was prevented by sufficient cause. What is "sufficient cause" is not capable of connotation with exactitude and would differ from case to case. According to Chamber's Dictionary the term "sufficient" means "adequate" or "effective". According to the Oxford Dictionary, it means of a quantity, extent or scope adequate to a certain purpose or object. In Black's Law Dictionary 4th Edition word "sufficient" means, adequate, enough, as much as may be necessary' (28). Filing of appeal in a wrong Court on account of mistaken advice tendered by the counsel by itself would not attract the provisions of limitation but when the litigant and the counsel have acted with clue care and caution and their conduct does not smack of negligence, the institution of appeal in wrong forum may constitute a "sufficient cause" (29). The term "sufficient cause" includes any honest just, fair due or lawful cause which in the circumstances of given case, a Court regards as sufficient to explain the absence or default on the part of a party to the proceedings (30): Court have been lenient and have been condoning some negligence, to the extent to which it is regarded as human though they have never condoned gross negligence. The Courts have always been strict in demanding proof of sufficient cause (31). Each case is to be judged upon its own peculiar circumstances. It is a question of fact and varies from case to case and ultimately it rests on the satisfaction of the Court (32). There are numerous decisions on this point (33). SECTION 128 PROCEDURE IN APPEAL 128(1) The Commissioner (Appeals) shall give notice of the day fixed for the hearing to the appellant and to the Commissioner concerned. 128(2) The Commissioner (Appeals) given discretion to adjourn the hearing of the appeal from time to time. 128(3) The Commissioner (Appeals) given powers to entertain new ground of appeal not taken earlier before hearing of appeal if he is satisfied that omission of the said ground was not willful or unreasonable. 128(4) The Commissioner (Appeals) may, before disposing of an appeal, call for such particulars as the Commissioner (Appeals) may require respecting the matters arising in the appeal or cause further inquiry to be made by the Commissioner. Under subsection (4) of section 128 Commissioner (Appeals) has powers to call for such particular as he may require regarding matters arising in the appeal or cause further inquiry to be made by the Commissioner. It may be stated here that inquiry contemplated should be in respect of matters arising in appeal. Therefore, the scope of inquiry is limited. The phrase "or cause further inquiry to be made by the Commissioner" is conjunctive, as word "or" is inter changeable as "and": There is plethora of cases on the interpretation of word "or" and "and" (34). 128(5) The Commissioner (Appeals) shall not admit any documentary material or evidence which was not produced before the Commissioner unless the Commissioner (Appeals) is satisfied that appellant was prevented by sufficient cause from producing such material or evidence before the Commissioner. Under the provisions of subsection (5) of section 128, the legislature has made it mandatory that Commissioner (Appeals) shall not admit any documentary material or evidence, which was not produced before the Commissioner unless he is satisfied that the appellant was prevented by sufficient cause from producing such material or evidence before Commissioner. As this provision has been couched in negative language, it has to be construed as mandatory (35). Under this provision also appellant has to satisfy the Commissioner (Appeals) of sufficient cause. We have already discussed the scope of term "sufficient cause". SECTION 129 - DECISION IN APPEAL In disposing of an appeal lodged under section 127, the Commissioner (Appeals) may‑ (a) in the case at an appeal against an assessment order‑ (i) make an order to set aside the assessment order and direct the Commissioner to make a new assessment order in accordance with any direction or recommendations of the Commissioner (Appeals); or (ii) make an order to confirm, modify or annul the assessment order: or (b) in any other case, make such order as' the Commissioner (Appeals) thinks fit. In case of an order of assessment, Commissioner (Appeals) may set aside the assessment and direct the assessment to be made afresh on his directions or recommendations. The term "set aside" has not been defined in the statute. However, it has been considered by the superior Courts where its dictionary meaning has been examined. Word "set aside" means according to Lexicon Webster Dictionary Vol. II page 882 means "to put it aside; dismiss from the mind, to annul, to quash" On setting aside an assessment it is reduced to nothing. In other words for all purposes an assessment on setting aside stands cancelled (36) when original assessment having been set aside it has no validity or force in law. All the proceedings on which they are based become non-existent (37). It may be stated that when an assessment is set aside with specific directions, the assessing officer cannot in law go beyond those directions (38). The Commissioner (Appeals) normally sets aside the assessment for de novo proceedings. The term "De novo" connotes "try a matter a new as if it had not been heard before and as if no decision has been previously rendered (39). The Commissioner (Appeals) may confirm, modify or annul the assessment. It may be pertinent to note that when an order is annulled, it is reduced to nothing and no further action or proceedings can be taken after removing such defect (40). It may be submitted that it is well settled now that when an appeal is filed against an assessment, the assessment is thrown open and the appellate proceedings constitute a continuation of the assessment proceedings (41). It may also be noted that so far as clause (b) of subsection 1 of section 129 is concerned, the Commissioner (Appeals) have very wide powers. 129(2) The Commissioner (Appeals) is empowered to enhance the amount of assessment or reduce the refund subject to a notice to the appellant. It will be noted that in the Repealed Income Tax Ordinance, 1979, the powers were also available to enhance the penalty, but such power have not been conferred by express provision contained in subsection (2). 129(3) Where, as result of an appeal, any change is made in the assessment of an association of persons or a new assessment of an association of persons is ordered ton. be made, the Commissioner (Appeals) may authorize the Commissioner to amend accordingly any assessment order made on a member of the association and the time limit in subsection (2) of section 122 shall not apply to the making of such amended assessment. 129(4) As soon as practicable after deciding an appeal, the order shall be served on the appellant and the Commissioner. 129(5) Relief sought in appeal will be deemed to be accepted if appeal is not decided within 3 months from the end of the month in which said appeal was lodged. Period during which appeal is adjourned will be excluded. This limitation of passing order in 3 months is with a rider that appellant shall point out the fact personally not less than 30 days before expiry of 3 months. It is stated that the provision shall not apply unless a notice by the appellant stating that no order under 129 has been made is "personally", I repeat "personally" served by the appellant on the Commissioner (Appeals) not less than 30 days before the expiration of the period of three months. Following three conditions. have been imposed by subsection (5) of section 129, firstly no order under subsection (1) has been made before the expiration of period of three months, secondly, the notice shall be given by the appellant, Notice means notice in writing providing the date of filing of appeal and date of expiry of period of three months prescribed and thirdly the said notice shall be served on the Commissioner of Income Tax (Appeals) personally not less than thirty days before the expiration of the period of three months. These conditions are mandatory in nature (42). I may point out few points for consideration. When the assessee is not present it often happens that assessment orders are passed and the assessee is out of Country or is not traceable. In such a situation, one can file appeal if the person filing appeal is duly authorized and may file it with his own signatures and when the assessee returns or is contactable either fresh form of appeal can be filed or the assessee's signature can be taken on the appeal papers already filed. However, this would be subject to leave from the Appellate Authority. In case the appeal is being filed under the representative capacity, a formal information letter to the Appellate Court is necessary. In my humble understanding, an appeal cannot be dismissed on such technicalities as it has been consistently held by the Hon'ble Supreme Court of Pakistan in numerous cases that Rules and Regulations are only meant to streamline the procedure and administer the course of justice. They are not there to thwart the same. The Courts have always preferred a decision of a case on merits and technical knock outs have always been discouraged (43). There is another important issue which has to be kept in mind. If, as a result of an order passed in assessment or appeal, a person who is not a party to the proceeding, is saddled with a liability for any tax or other sum, he may appeal against that order before the Appellate Authority. In India there are judgments which approve the above proposition of law (44). STAY OF DEMAND AND POWER TO STAY THE DEMAND In my humble submission, it is a great injustice, not to grant automatic stay of the demand when a person fulfills all the' conditions of paying mandatory payment under subsection (2) of section 127: Despite making such payment, the assessee will be at the mercy of the Commissioner, who can recover the tax, without any difficulty. This, in my opinion, will not only create bad taste, but will be a tool to harass, or for corruption which ultimately stop economic growth. I may further add that putting conditions of payment and then not granting automatic stay, violates Article 37 (d) of the Constitution of Islamic Republic of Pakistan, 1973 which reads as under: "37. The State shall - (d) ensure inexpensive and expeditious justice." It is stated that the provision of "inexpensive" justice would imply the dispensation thereof at as less cost as possible (45). Although in the new dispensation, there is no express provision in respect of stay, it seems that it has not been expressly provided in view of well settled law that the Appellate Authority has inherent discretionary power to grant interim relief and the interim relief granted in pending appeal is ancillary to main appellate jurisdiction (46). In most recent case reported as 2002 PTD 678 in the case of Messrs Pak Saudi Fertilizers Ltd. versus Federation of Pakistan and others, their lordships of High Court of Sindh, have elaborated powers of an Appellate Authority in respect of stay. I, for the benefit and ready reference will read the relevant observations of their lordships. "In fiscal matters when an appeal is filed before the appellate or revisional authority then they must grant interim relief to the appellant because in quite number of cases huge amount is involved and after payment of the same it may cause difficulty for the assessee/appellant to get refund of the same. The amount may or may not be payable or may be highly exaggerated. In such -a situation if no interim relief is available then the organization or individual that files the appeal may undergo great inconvenience and face hardship purely on the ground that in order to get his appeal heard, he shall not get any relief, It becomes a catch 22 situation where the amount if deposited may cause hardship and yet if the appeal is not filed then the relief that the appellant is seeking shall not be available to him. It would also be very evident from the reading of the various enactments pertaining to tax where interim measures has been allowed to only in special circumstances only when the appellant has been able to satisfy the authority that the grant of interim measure would be in the interest of justice. It would not be out of place to even point out to the enactments pertaining to Narcotics and Terrorist Courts where also interim relief has been granted. The interim relief is also necessitated as immediate urgent disposal of cases may not be possible and the delay would be detrimental to the interest of the appellant. I would also observe that where the appellant is in a position to satisfy the Court that there are enough and more liquid/fixed assets then the interim relief should easily be given. Accordingly I feel that when an appeal is filed before the Commissioner of Income Tax (Appeals) and application for interim relief should always be filed. The Commissioner should in his discretion grant interim relief to the .appellant and try to dispose of the matter as early as possible". It will be noted that Hon'ble High Court has observed that it is the discretion of the Appellate Authority to grant stay. SECTION 130 APPOINTMENT OF THE APPELLATE TRIBUNAL The provisions in respect of appointment of the Appellate Tribunal are analogous to the provisions of section 133 of the Repealed Income Tax Ordinance, 1979. 130(1) There shall be established an Appellate Tribunal to exercise the functions conferred on the Tribunal by this Ordinance. . 130(2) The Appellate Tribunal shall consist of a chairperson and such other judicial and' accountant members as are appointed by the Federal Government having regard to the, needs of the Tribunal. 130(3) a person may be appointed as a judicial member of the, Appellate Tribunal if the person‑ (a) has exercised the powers of a District judge and is qualified to be a Judge of 'a High Court; or (b) is or has been an advocate of a High Court and is qualified to be a Judge of the High Court. 130(4) A person may be appointed as an accountant member of the Appellate Tribunal if the person is an officer of group equivalent in rank to that of a Regional Commissioner of Income Tax. 130(5) The Federal Government shall appoint a member of the Appellate Tribunal as Chairperson of the Tribunal and; except in special circumstances, the person appointed should be a judicial member. 130(6) The powers and functions of the Appellate Tribunal shall be exercised and discharged by Benches constituted from members of the Tribunal by the Chairperson of the Tribunal. 130(7) Subject to subsection (8), a Bench shall consist of not less than two members of the Appellate Tribunal and shall be constituted so as to contain an equal number of judicial and accountant members, or so that the number of members of one class does not exceed the number of members of the other class by more than one. 130(8) The Federal Government may direct that all or any of the powers of the Appellate Tribunal shall be exercised by‑ (a) any one member; or (b) more members than one, jointly or severally. 130(9) Subject to subsection (10), if the members of a Bench differ in opinion on any point, the point shall be decided according to the opinion of the majority. 130(10) If the members of a Bench are equally divided on a point, they shall state the point on which they differ and the case shall be referred by the Chairperson for hearing on the point by one or more other members of the Appellate Tribunal, and the point shall be decided according to the opinion of the majority of the members of the Tribunal who have heard the case including those who first heard it. 130(11) If there are an equal number of members of the Appellate Tribunal, the Federal Government may appoint an additional member for the purpose of deciding the case on which there is a difference of opinion. 130(12) Subject to this Ordinance, the Appellate Tribunal shall have the power to regulate its own procedure, and the procedure of Benches of the Tribunal in all matters arising out of the discharge of its function including the places at which the Benches shall hold their sittings, SECTION 131 - APPEAL TO THE APPELLATE TRIBUNAL 131(1) Where, the taxpayer or the Commissioner objects to an order passed by the Commissioner (Appeals), the taxpayer or Commissioner may appeal to the Appellate Tribunal against such order. PRESCRIBED MANNER Sub section (2) stipulates that an appeal under subsection (1) shall be; (a) in the prescribed form; (b) verified in the prescribed manner; Rule 77 Prescribes the Form for Appeal to the Appellate Tribunal, format of which is almost similar to the Form prescribed under the Repealed Income Tax Rules, 1982. So far as prescribed manner is concerned, by virtue of provisions of section 239 (Saving Clause), in my humble opinion the Rules of Hon'ble Tribunal are still operative subject to their being inconformity with the new provisions of this Ordinance. Under the said rules, an appeal shall be filed or presented in triplicate before the Registrar or an officer duly authorized by him, in the prescribed form alongwith grounds of appeal, assessment order, grounds of appeal filed before the Commissioner (Appeals), Original Appellate Order, certificate mentioning the service of copy of appeal to the Respondent, Challan of appeal fee and affidavit in case depending on the circumstances of each case. A Tax Payer may send an appeal to the Registrar through registered post; however it has to be kept in mind that the said presentation shall be deemed to have been presented to the Registrar or the Officer, as the case may be, on the date on which it is received in the office of the Appellate Tribunal. There shall be endorsement in every appeal, the date on which it has been presented and shall be signed by the Registrar or the Officer, as the case may be. The person who has passed the impugned order i.e., the Commissioner/Taxation Officer/Deputy Commissioner as the case may be shall be made respondent. Where an appeal is filed against the order passed under section 66A of the Repealed Income Tax Ordinance, 1979 and the proceedings were pending on 1.7.2002, the concerned Inspecting Additional Commissioner shall be the Respondent. The grounds of appeal shall be set forth concisely and under distinct heads without any arguments or narrative and all the grounds shall be numbered consecutively. It should be made sure that all the documents are legible and grounds of appeal are typed on ledger paper (green paper). The said rules also provide that appellant shall not except with the leave of the Tribunal i.e., the permission of the Tribunal urge or to be heard in support of any ground not set forth in the grounds of appeal but the Appellate Tribunal deciding the appeal shall not be confined to the grounds set forth in memorandum of appeal or taken by leave of the Appellate Tribunal. So far as the procedure for filing of the additional grounds of appeal are concerned, it is submitted that an application may be filed before the Appellate Tribunal giving reasons that such grounds goes to the very root of the matter or that it was inadvertently omitted. In such, case an affidavit should be filed as a precaution. Such application should be filed in triplicate and if the application is granted by the Appellate Tribunal, the memo of appeal may be amended and the copy of the same be supplied to the Respondent. PRESCRIBED FEE (c) The prescribed fee for tax payer will be (a) in the case of an appeal in relation to an assessment order, the lesser of two thousand five hundred rupees or ten percent of the tax assessed, or (b) in any other case - (i) where the appellant is a company, two thousand rupees; or (ii) where the appellant is not a company, five hundred rupees. In my considered opinion, the classification between an Assessment and an Order has to be kept in mind, which we have already discussed. LIMITATION TO FILE APPEAL (c) An Appeal shall be preferred to the Appellate Tribunal within sixty days from the date of service of order of the Commissioner (Appeals) on the taxpayer or Commissioner. 131(4) Power given to condone the delay in filing appeal, if the Appellate Tribunal is satisfied that delay was due to sufficient cause. I have already made submissions on importance of prescribed method, manner, sufficient cause etc., which shall squarely apply to these provisions. SECTION 132 DISPOSAL OF APPEALS BY THE APPELLATE TRIBUNAL 132(1) The Appellate Tribunal may, before disposing of an appeal, call for such particulars as it may require' in respect of the matters arising on the appeal or cause further inquiry to be made by the Commissioner. 132(2) The Appellate Tribunal shall afford an opportunity of being heard to the parties to the appeal and, in case of default by any of the party on the date of hearing, the Tribunal may, if it deems fit, dismiss the appeal in-default, or may proceed ex-parte to decide the appeal on the basis of the available record. In this regard, there is a very important issue which I want to point out. Rule 20(2) and (3) of the Income Tax Appellate Tribunal Rules, 1981 provides that in case of non-appearance of appellant or respondent, the Tribunal may proceed ex-parse and decide the appeal on merits. However, under subsection (2) of section 132 the Appellate Tribunal can dismiss an appeal on non prosecution, without going into the merits of the case. There was no such statutory mandate in the repealed Ordinance, 1979. As now it has been made part of main section, it will override the Rules. Secondly as the Rule to this extent becomes contrary to the provisions of this Ordinance, even otherwise, they have lost there value. However, justice demands that provisions as contained in Rule 20(2) may be made part of the main Section. 132(3) Where, the appeal relates to an assessment order, the Appellate Tribunal may, without prejudice to the powers specified in subsection (2), make an order to‑ (a) affirm, modify or annul the assessment order; or (b) set aside the assessment order and direct the Commissioner to make a new assessment order in accordance with the directions or recommendations of the Tribunal; or (c) remand the case to the Commissioner or the Commissioner (Appeals) for making such inquiry or taking such action as the Tribunal may direct. (d) where the appeal relates to a decision other than in respect of an assessment, the Appellate Tribunal may make an order to affirm, vary or annul the decision, and issue such consequential directions as the case may require. 132(4) The Appellate Tribunal empowered to enhance the amount of assessment or reduce the refund subject to the notice to the appellant. 132(5) Where, as the result of an appeal, any change is made in the assessment of an association of persons or a new assessment of an association of persons is ordered to be made, the Appellate Tribunal may authorise the Commissioner to amend accordingly any assessment order made on a member of the association and the time limit in subsection (2) of section 122 shall not apply to the making of such amended assessment. 132(7) The Appellate Tribunal shall communicate its order to the taxpayer and the Commissioner. 132(10) Save as provided in section 133, the decision of the Appellate Tribunal on an appeal shall be final. GENERAL POINTS Before I discuss the practical aspects of the matters relating to appeal, I would like to point out certain important paints which are very necessary to be raised at the time of assessment. The first and most important is challenge to the jurisdiction. There is a plethora of judgments on the issue that the challenge can be made at any stage even before the Hon'ble Supreme Court of Pakistan and there are decisions to the effect that consent does not confer jurisdiction (47). Further to be on a safer side, preliminary objection in respect of jurisdiction should be raised. Secondly, it has been observed through experience that while challenge is thrown on the point of jurisdiction or limitation of assessment, the evidence sought by the Department is not furnished on the plea that since the Assessing Officer has no jurisdiction or his action is barred by limitation the evidence is not being filed. I may, with utmost humility under my command submit that, in the case challenge to the jurisdiction or limitation fails, case can be made by the Assessing Officer on the default of evidence. As we are aware that no fresh evidence is entertained by the Appellate Authorities if the same is not produced during the course of assessment proceedings, the non-filing of evidence could be fatal. Similar is the position of challenging the authority on the point of personal bias. Very recently the Hon'ble Supreme Court has examined the point of bias in famous case of Asif Ali Zardari and other v. The State and other cases (48). Here I would like to refer to a very recent case decided by the learned Income Tax Appellate Tribunal, Karachi Bench in I.T.A. No. 146/K of 2002 dated 26-3-2003, in which incidentally, I had the honor to assist the Hon'ble Tribunal. I would like to share for information and better understanding the observations of the learned Division Bench. It has been observed in Para.4 as under: "We have found that the learned CIT(A) after pointing out specific discrepancies in the assessment order has set aside the same for denovo consideration. We have further found that during the course of assessment proceedings, the assessee in the case has filed complaints against the Assessing Officer before the learned RCIT and Chairman, CBR on 2.5.2000 but the Assessing Officer on 3.5.2000 has made the assessment order. We are of the view that when objection has been raised on the personal bias, the authorities should be more careful in the matter for the sake of integrity of the department so that the confidence of the public at large on the authorities regarding fair trial and justice could be established as justice cannot only be done but it must also appear to have been done." GENERAL PRINCIPLES OF PREPARING, CONDUCTING AND ARGUING THE APPEAL Before tiling the appeal and preparing the grounds of appeal, the facts should be thoroughly and minutely examined. One should read and re-read the facts contained in the brief and highlight the important facts, figures, statements, evidence, deficiencies and errors of facts and law. It is advisable to maintain a note book and write the relevant facts and mark the specifics lines which need special attention. It is stated that there should be complete command over facts. Here I may mention that in the field of command over facts, I have great admiration for my seniors namely Mr. Iqbal Naeem Pasha, Mr. Rehan Hasan Naqvi and my father Mr. Sirajul Haque from whom I have learned a lot. It is axiomatic that the fate of given case depends on the knowledge of facts. Here I want to share a quotable quote, which I read in an interview of Mr. Lanny Davis, former spokesman and Counsel of President Clinton. I quote "when a lawyer has bad facts, he argues the law. When he has bad law, he argues the facts. When he has bad facts and bad law, then he pounds the table" (49). It is submitted that deciding disputes involve three kinds of knowledge. Knowing the facts, knowing the 'law applicable to the facts and knowing the just way of applying the law to them. Knowing the law involves how to find it in the judicial precedents and statutes (50). There should be clarity in respect of the issues involved and relevant provision of law, under examination. It can be safely said that apart from the taxing statutes, one should have fair knowledge of other statutes of other statutes also such as Constitutions Civil and Criminal Procedures. Transfer of Property Act, Companies Ordinance, Banking laws including Foreign Exchange Regulation, Insurance Law, Property Tax, Octroi Law, Accounting Principles etc. One should also have fair knowledge of principles of jurisprudence, interpretation of statutes and legal Maxims. These three subjects are foundations for necessary understanding of law. I may submit that the term "law" is not confined to statute - law alone but it is used in its generic sense as connoting all that is treated as law including even the judicial principles laid down from time to time by the Superior Courts (51). It is essential to have fair working knowledge of the nature and process of business pertaining to the appeal. One should acquire first hand knowledge of the conduct of business, commercial procedures and market conditions of the business. In some cases, even a visit to the business premises or a factory might help in arriving at rational analysis of its complexities of a particular business. It is of course essential to have knowledge of the development of case law on the subject. One should trace the development of the precedents which would prove to be a great advantage preparing as well as arguing the grounds of appeal. Here also, it is advisable to make a note book. The reliance should be placed only on relevant case law which applies and is on all fours. The proper course for relying on any precedent is that its facts should be examined and ratio decidendi he ground of judicial' decision should be highlighted by reproducing the relevant passages in the case of written arguments or by reading when arguing case before the Tribunal. Simple reliance on citation some times loses the importance of that decision. It is also advisable to submit the copy of cited case to the relevant appellate forum. However, it is neither safe nor desirable to cite a dictum merely by reference to Head Notes. The head notes preceding a report are not part of the judgment but are merely edited passages of the judgment by editors of the law reports to facilitate quick scanning. It is a matter of common knowledge that the head notes at time are misleading and contrary to the text of judgment (52). It is also advisable to submit the copy of cited case. It is stated that presumptions in the order should be highlighted and properly rebutted. Here I am reminded of beautiful words of a judge explaining the presumptions in a poetic language and I wish to share those' words. "Presumptions... may be looked on as the bats of law, flitting in the twilight, but disappearing in the sunshine of facts". A case that is well presented with documentary evidence where-ever possible and with the authorities cited, is far more likely to produce a favourable and well reasoned judgment than a case in which Court has to ascertain the facts and look up the precedents for itself. It is to be remembered that it is the duty of a Counsel or representative to assist the Court to arrive at fair and judicious decision. GROUNDS OF APPEAL The memorandum of appeal contains the grounds on which the judicial examination is invited (53). Preliminary objections such as limitation, jurisdiction and statutes should be given first priority. If the assessment order or any order has merged with the appellate order, point of merger should be raised with clarity keeping in view the judgment of Hon'ble Supreme Court in the case of Messrs Glaxo Laboratories Ltd. v. LAC (54). Great care should be taken in drafting the grounds of appeal. The grounds of appeal should be precise, comprehensive and not argumentative, without citing decisions. Legal as well as factual challenges should be made in clear terms. Inaccurate observation and improper insinuations contained in the impugned order should be specifically controverted. Misdirection of fact, perverseness and omitting to take into consideration relevant evidence and material made available on the factual aspect of the issue should be specifically incorporated in the grounds of appeals. It may be supported by duly sworn affidavit if need arises. Prayer Clause should be made in the end, craving permission to add, amend or vary/alter the grounds of appeal at the time of hearing. PRESENTATION OF ARGUMENTS BEFORE COMMISSIONER OF INCOME TAX (APPEALS) It is advisable to submit the written arguments before the Commissioner of Income Tax (Appeals). The preamble of the arguments should disclose what issues are under consideration and what aspect of returned version has been accepted. The expressions used should have clarity of the view canvassed either on facts or law. It is essential that language used should be polite, courteous and respectful. The historical back ground of the' case should be incorporated and various issues should be discussed by firstly mentioning the reasons taken by the. Assessing Officer and then controverting the same with the facts of the case and with relevant law. Preliminary objections such as limitation, jurisdiction and statutes should be given first priority. The contradictions in the order should be highlighted by underlining the relevant sentences. All the relevant correspondence made in the assessment proceedings should be brought to the notice of the Appellate Authority. If in a given case, it is necessary to controvert the grounds of impugned action, the Commissioner of Income Tax (Appeals) may be requested to examine the record of the case and the relevant books of account, evidence and documents. The copies of relevant evidence should be submitted. Relevant proposition of law be discussed in the written arguments with interpretation of precedents and statutes. Quotation of relevant sections and passages of statutes and precedents should be reproduced at relevant places. The copies of decisions should be attached. It should be highlighted that it is the duty of Assessing Officer and Court to apply law correctly (55). Separate paragraphs should be drafted for distinguishing any precedent or statute used by the Assessing Officer. PRESENTATION OF ARGUMENTS BEFORE INCOME TAX APPELLATE TRIBUNAL At this stage, let me confess that I am still a novice and acknowledge my gratitude to my seniors and others who have been my teachers and guides. Please, forgive me if some of my ideas may appear to be pompous or arrogant. (a) Personal appearance: authorised representative must dress according' to the dress prescribed under Rule 16 of the Income Tax Appellate Tribunal Rules, 1981. Accordingly the dress for authorised representative other than Advocates i.e., Accountants, Company Secretary, Income Tax Practitioners, Cost and Management Accountants and Chartered Accountants is Sherwani, Coat and Tie or Lounge Suit. The Advocates are required to wear cloths according to the dress prescribed under the provisions of Pakistan Bar Council Act. The dress for an Advocate is Black Sherwani, or Black Jacket with bands or a Black Tie on White Shirt. (b) It is advisable to start the arguments when the Court grants permission. (c) All the relevant statute books should be brought with copies of judgments and documents to be relied upon. (d) Facts should be narrated first in a concise manner. The places where the relevant findings of Deputy Commissioner of Income Tax and Commissioner of Income Tax are mentioned should be pointed out in the order giving page and paragraph numbers. (e) After giving the facts, arguments on law point should be submitted. (f) Preliminary objection if any should be pointed out at the earliest possible opportunity. (g) One should always give full attention to the points and questions put by the Presiding Officer. The comments or queries should not be considered as negative and should be heard with careful attention, and one should never try to interrupt the Court. What direction the Court is taking should be followed and arguments should immediately be made which are necessary to persuade the Court in favour of the appellant. (h) If there is a difference of opinion on a fact it should be pointed out and expressed with utmost humility and respect. (i) Always reply and show respect to the counsel of the other side by addressing him "my learned fried or learned DR or learned Counsel". (j) At the end of the argument express thanks for the indulgence of the Court. STAY APPLICATIONS As discussed in the preceding para, it is well settled proposition of law the grant of stay is inherent in the appellate Court. It is, therefore, submitted that a proper application should be filed before the Commissioner (Appeals) with a prayer to stay the impugned demand in appeal. In order to obtain an interim relief, i.e. stay of demand, existence of prima facie case, likelihood of irreparable loss or injury for non grant of temporary stay and balance of convenience, the three essential ingredients, should be available and co-exist and should be spelled out in the stay application. In the case of filing of stay application before the Appellate Tribunal, the requirement of Rule 30 of Income Tax Appellate Tribunal Rules, 1981 should be fulfilled. Even application either filed before the Commissioner of Income Tax (Appeals) or Appellate Tribunal must be supported with sworn affidavit. Here I may remind the members, that neither the Commissioner (Appeals) nor the Appellate Tribunal ha power, of review. There is distinction between Rectification and Review. FILING OF MISCELLANEOUS APPLICATION FOR RECTIFICATION BEFORE COMMISSIONER (APPEALS) OR APPELLATE TRIBUNAL The assessee can file application for rectification of order before the Commissioner or Appellate Tribunal if there is some mistake apparent from record. The precise mistake should be highlighted in the application by reproducing the relevant passage from the order. The reasons and arguments precisely should be given, as to why the applicant thinks that the mistake is apparent from record and how the appellant is aggrieved against such finding. Such Application should be filed separately enclosing the impugned judgment together with duly sworn affidavit. Here, I may remained the members, that neither the Commissioner (Appeals) nor Appellate Tribunal has powers to review. There is distinction between rectification and review. MISCELLANEOUS APPLICATION FOR RECALL OF ORDER If in the event any case is decided ex-parte for either default of non-appearance or for wrong service of notice of hearing or for any other reason, an application can be filed before the Income Tax Appellate Tribunal under section 221 ready with Rule 20 assigning reasons for not attending the hearing on the fixed date or showing to the Appellate Court that service of notice was not properly served in accordance with law. Such an application can be filed within 30 days of communication of the order of the Tribunal. Here it may be stated that communication also includes the date of knowledge of the order. The application should be filed in proper manner assigning reason and prayer for recall of order and should be accompanied by sworn affidavit. POWER TO STAY THE DEMAND I have already made my submissions in the preceding paras which Mutatis Mutandis apply to the provisions of Stay before the Appellate Tribunal. SECTION 133 - REFERENCE TO HIGH COURT These provisions are analogous to the provisions of section 136 of the Income Tax Ordinance, 1979. Reference Application to be filed by a taxpayer or Commissioner against an order on an appeal under section 132 requiring the Appellate Tribunal to refer any question of law arising out of such order to the High Court. LIMITATION Application is to be filed within 90 days from, the date of service of order of Appellate Tribunal. The Tribunal, if satisfies, that the question of law arises shall within 90 days of receipt of the application draw-up, the statement of the case and refer it to the High Court. PRESCRIBED FORM Rule 78 prescribes the Form of Reference Application to be filed before the Appellate Tribunal. LIMITATION IN CASE OF REFUSAL BY APPELLATE TRIBUNAL In case, the Appellate Tribunal refuses to state the case on the ground that no question of law arises, a taxpayer or Commissioner may file reference for framing question of laws within 120 days of receipt of order of refusal. If, the application under section 133(1) is rejected on the ground, of being time barred, a taxpayer or Commissioner can file application within 90 days of such receipt of the order of rejection and; If the High Court is not satisfied with the correctness of Appellate Tribunal's decision, the Court may require the Appellate Tribunal to treat the application as made within time allowed. Reference to High Court shall be heard by a Bench of not less then two Judges of the High Court and the provisions of section 98 of CPC will apply. The High Court upon hearing reference, shall decide the question of law and deliver the judgment thereon containing the grounds on which such decision has been founded. Copy of the judgment of High Court shall be sent with the Seal of the Court and signature of the Registrar to Appellate Tribunal which shall pass order thereon as necessary in conformity with such judgment. STAY OF DEMAND High Court has the power to stay the demand, otherwise tax due relating to assessment shall be payable. The provisions of section 5 of Limitation shall apply to application under subsection (1). There are sufficient material/judgments that no reference lies from the rectification orders (56). IMPORTANT PRINCIPLES Some important principles in respect of filing of Reference before the Appellate Tribunal and Hon'ble High Court are detailed below. (a) The Application before the Appellate Tribunal should be filed in triplicate. (b) The condition of filling prescribed form and prescribed fee should be fulfilled. Necessary affidavit in support of Application should be filed. (c) Statement of case should be drafted carefully, narrating all the necessary facts beginning from filing of Return of income to the decision of Appellate Tribunal. If need arises, to annex relevant documentary evidence which support the claim. (d) Questions of law should be framed very carefully. Only such questions should be drafted which arise out of the order the Appellate Tribunal. (e) Question should challenge the perverseness of order or where evidence has been ignored, ' same should be specifically challenged in the form of question. (f) Questions in respect of interpretation of statutory provisions should be framed very carefully, without; any argument or quoting any judgment. (g) In case, application is rejected, Reference under section 133 (2) has 'to be filed within 120 day of the receipt of the order of the Tribunal in the High Court. (h) Questions framed in application under section 133(1) cannot be changed in any manner whatsoever. (i) Condition of proper Court fee and affidavit in support of application should be fulfilled. (j) Copy of Statement of case alongwith all the annexures should be annexed: For the convenience of members, I have given the list of important decisions in respect of Reference and in respect of question of law or fact, which I hope will be helpful for detailed study (57) APPEAL TO SUPREME COURT An appeal shall lied to Supreme Court from any judgment of the High Court delivered on reference tirade or question of law framed under section 133 in any case which High Court 'certifies to be, fit one for Appeal to the Supreme Court. The provisions of CPC relating to Appeal to Supreme Court shall apply. In this regard reference is placed on a very recent judgment of Hon'ble Supreme Court of Pakistan reported as (2002) 85 Tax 509 (S.C. Pak). Where the judgment of High Court is varied or reserved in appeal, effect be given under the provisions as provided under section 98 of CPC and provisions of subsection (11)(12) & (13) of section 133 shall apply in the same manner. OTHER APPEALS UNDER THE ORDINANCE (a) Appeal under Rule 12 of Part I of Sixth Schedule for objection to an order of Commissioner refusing to recognize, or an order withdrawing recognition from Provident Fund. It has to be filed by employer to the Central Board of Revenue with in 60 days of the making of the order by the Commissioner. The form of appeal and its prescribed fee has been given in Rule 94 of the Income Tax Rules, 2002. (b) Appeal Under Rule 10 of Part II of Sixth Schedule for objection to an order of Commissioner refusing to accord approval, or an order withdrawing approval for approved Superannuation Fund. It has to be filed by employer to the Central Board of Revenue with in 60 days of the making of the order by the Commissioner. The form of appeal and its prescribed fee has been given in Rule 114 of the Income Tax Rules, 2002. (c) Appeal Under Rule 9 of Part III of Sixth Schedule for objection to an order of Commissioner refusing to accord approval, or an order withdrawing approval for approved Gratuity Fund. It has to be filed by employer to the Central Board of Revenue with in 60 days of the making of the order by the Commissioner. The form of appeal and its prescribed fee has been given in Rule 91 of the Income Tax Rules, 2002. (d) Appeal against action taken for Recovery of taxes under Rules 122 to 193 and 195 to 209 of the Income Tax Rules, 2002 have been provided under Rule 194, which reads as under. "194 - Appeal.---(1) An Appeal from any order passed by the Commissioner or taxation officer under these rules shall lie to the Regional Commissioner where Commissioner himself acts to "execute the purpose of this Chapter and to the Commissioner if under delegated powers any taxation officer or authority acts and executes the purpose of this part." I have strong reservation in respect of Appeal to the Commissioner because, since taxation officer acts on his delegation, the Appeal should be provided to lie before the Regional Commissioner. (e) Appeal in the case of authorized representative is provided under subsection (7) of section 223 and in case of registration of Income Tax Practitioner is provided under Rule 9G of the Income Tax Rules, 2002. (f) A review has been provided to resolve disputes in respect of Tax Year under subsection 11 of section 74. The review lies before Central Board of Revenue. SECTION 136 - BURDEN OF PROOF A new concept has been brought in through section 136 in relation to provisions relating to appeals namely "Burden of Proof" according to which the burden shall be on the taxpayer to prove on the balance of probabilities in the following situation. (a) In the case of an assessment order, to extent to which order does not correctly reflect the taxpayers tax liability for the tax year, or (b) In the case of another decision that the decision is erroneous. In this provision of law, the Lawmaker has used the work Balance of Probabilities. Since the term has not been defined under the new Ordinance, ordinary dictionary meaning has to be taken. The Balance of Probabilities as per Words and Phrases (Permanent Edition) defines the term as under: "Balance of Probabilities as used in instructions that the burden of proof was on the Plaintiff and that the burden would be sustained, if on the whole proof, there was pre-ponderance of evidence that it to say of balance of probabilities of the case in his favour as no well settled or clearly defined meaning. It is not equivalent to the words pre-ponderance to proof". OTHER RELEVANT PROVISIONS SECTION 124 - ASSESSMENT GIVING EFFECT TO AN ORDER This section covers the arena of passing orders to give effect to the orders passed under the relevant provisions of Ordinance. It provides limitation to make an order in compliance of orders of the Commissioner (Appeals), Income Tax Appellate Tribunal, Hon'ble High Court and Supreme Court. Where direct relief is provided under section 129 or 132 Within 2 months of the date of the order is served on the Commissioner Where in consequence of or to give effect to any findings or directions in any order passed by Commissioner (Appeals), Income Tax Appellate Tribunal, Hon'ble High Court and Supreme Court Within 2 years from the end of financial year in which order is served on the Commissioner Where an assessment is Set aside by the Commissioner (Appeals), Income Tax Appellate Tribunal, Hon'ble High Court and Supreme Court for making New order to be made with one year from the end of the financial year in which the Commissioner is served with the order. assessment Where by an order of the Commissioner (Appeals), Income Tax Appellate Tribunal, Hon'ble High Court and Supreme Court, any income is excluded to some other assessee Within 2 years from the end of financial year in which order is served on the Commissioner. SECTION 124A - POWER OF TAX AUTHORITIES TO MODIFY ORDERS, ETC (1) Where a question of law has been decided by a High Court or the Appellate Tribunal in the case of an assessee, on or after first day of July 2002, the' Commissioner may, notwithstanding that he has preferred an appeal against the decision of the High Court or made an application for reference against the order of the Appellate Tribunal, as the case may be, follow the said decision in the case of the said assessee in so far as it applies to said question of law arising in any assessment pending before the Commissioner until the decision of the High Court or of the Appellate Tribunal is reversed or modified. (2) In case the decision of High Court or the' Appellate Tribunal, referred to in subsection (1), is reversed or modified, the Commissioner may, notwithstanding the expiry of period of limitation prescribed for making any assessment or order, within a period of one year from the date of receipt of decision, modify the assessment or order in which the said decision was applied so that it conforms to the final decision. SECTION 218 - SERVICE OF NOTICES AND OTHER DOCUMENTS This section gives the method and manner of service of any notice, order or requisition required to be served on any person. SECTION 223 -- APPEARANCE BY AUTHORISED REPRESENTA TIVES Gives the description of persons entitled or required to attend before the Commissioner, Commissioner (Appeals) or the Appellate Tribunal. SECTION 224 - JUDICIAL PROCEEDINGS The proceedings under the Ordinance, before the Commissioner, Commissioner (Appeals) or Appellate Tribunal shall be treated as judicial proceedings within the meaning of section 193, 196 and 228 of Pakistan Penal Code. SECTION 226 - COMPUTATION OF LIMITATION PERIOD In computing the period of limitation, there shall be excluded - In case of an Appeal or an application under this Ordinance, the day on which the order complained was served and if the taxpayer was not furnished with a copy of the order when the notice of the order was served on the taxpayer, the time requisite for obtaining a copy of such order. In case of an assessment or other proceedings, the time period if any for which such proceedings were stayed by any Court, Tribunal or any other authority. SECTION 227 - BAR OF SUITS IN CIVIL COURTS No suit or other legal proceedings shall be brought in any Civil Court against any order made under this Ordinance and no prosecution, suit or other proceedings shall be made against any person for any thing done in good "faith or intended to be done under this Ordinance or any rules or order made there under. Let me make a confession that without the help and guidance of Mr. Rehan Hasan Naqvi, Advocate Supreme Court, Mr. Sirajul Haque, Advocate Supreme Court and Mr. Mohammad Ather Saeed, Advocate Supreme Court, Mr. Ali A Rahim and Mr. Jawaid Zakaria Advocate, it was nearly, impossible for me to prepare this Paper on Appeals and Other related matters, what ever worth it may have. I will always remain extremely grateful to these gentlemen. I humbly hope that this little contribution will be found helpful. I wish to express my gratitude to the CPE Committee for the honour they have bestowed by calling me to present my paper. BIBLIOGRAPHY 1. 1993 PTD 69 SC 2. PLD 1989 Lah. 337 3. Ibid 4. Ibid 5. Dictionary of Law, 4th Edition, Oxford University Press 6. II ER XHLC 703 Approved in PLD 1963 SC 147 @ 149 7. Oxford Dictionary, Approved in PLD 1991 Kar. 1 @ 112 8. Blacks Law Dictionary, 6th Edition 9. PLD 1966 Lah. 684 10. PLD 1965 SC 339 11. PLD 1995 SC 418 12. PLD 1975 Lah. 445 13. Dias Jurisprudence, 5th Edition, Butterworths 14. PLD 1974 Kar. 473 15. (1963) 7 Tax 97 16. (1960) 40 ITR 142 SC 17. PTCL 1991 CL 388 SC Pak 18. 1993 PTD 69 19. 2002 PTD (Trib.) 2192, 39 Tax 51 (Trib.) 20. PLD 2002 SC 491; PLD 1975 SC 678 and PLD 2002 SC 1100; 21. PLD 1993 SC 473 22. Meaning Approved in PLD 1966 Kar. 683 23. 1999 SCMR 39 24. PLD 1983 SC 693 25. Ibid 26. Ibid 27. PLD 1995 SC 396 28. PLD 1982 Kar. 260 29. 1995 SCMR 584 30. 1990 CLC. 206 31. PLD 1964 SC'236 32. PLD 1983 SC (AJ&K) 25, PLD 1985 Lah. 327 33. PLD 1982 Kar. 260, PLD BJ 8, PLD 1958 Lah. 959 and PLD 1981 Kar. 373 34. PLD 1994 SC 514 35. 1993 PTD 332 Lah. And 1995 SCMR 1249 36. 1987 PTD (Trib.) 424 37. (1967) 16 Tax 34 High Court Kar. 38. 1992 PTD 902 High Court Kar. 39. 1999 SCMR 34 @ 37 & 38 40. 1962 PTD (Trib.) 235 41. 1993 SCMR 39 42. 1996 PTD 279 @ 282 43. PLD 2002 C 491, PLD 1975 SC 678 and PLD 2002 SC 1100. 44. (1957) 32 ITR 762 45. PLD 1966 SC 639, PLD 1976 Lah. 1268 and PLD 1991 Kar. 178 46. PLD 1975 SC 32, PLD 176 SC 625 and 2002 PTD 678 High Court Kar. 47. 1999 PTD 4037 High Court, 1995 PTD (Trib.) 1100 and 2002 PTD (Trio.) 2528 48. PLD 2001 SC 568 and 2003 SCMR 104 49. The News International 26th July, 1999. 50. Dias Jurisprudence 5th Edition, Butteworths 51. PLD 1964 SC 14 @ 31 52. PL1 1997 Kar. 204 53. AIR 1968 SC 488 54. 1992 PTD 932 SC 55. 2002 SCMR 134 and PLD 1969 SC 278 56. 2002 PTD 570 High Court Kar. and 2002 PTD 1878 57. 1990 PTD 404, 1989 PTD 124, 2002 'PTD 990, (1984) 49 Tax 161, 1988 PTD 111, 1970 SCMR 872, 1990 PTD 788, 1979 PTD 538, 2001 PTD 999, 2002 PTD 467, 2002 PTD 1874, 2003 PTD 589 and 2002 PTD 777.