AMENDMENT RECTIFICATION AND REVISION OF ASSESSMENT

AMENDMENT, RECTIFICATION AND REVISION OF AMENDMENT, RECTIFICATION AND REVISION OF ASSESSMENT By Zahid-Ur-Rehman, Chartered Accountant, Peshawar In a recent judgment reported as 2005 PTD 1621, the Honorable Lahore High Court Lahore on the issue of amendment of orders under section 122 of the Income Tax Ordinance, 2001, passed under the provision of repealed Income tax Ordinance, 1979, prior to 1-7-2002, held as under: "A comparison of the relevant section of the repealed law and section 123 of the present law shows a difference. Whereas, under sections 65 & 66A of the previous Ordinance, a lower grade official could re-open the assessment, whereas, the new law has totally vested the powers in the Commissioner. Its section 122 (2) reveals that the amendment to be made within the period prescribed is confined to a taxpayer. The taxpayer is defined in section 2 (66) of the Ordinance and is confined to an assessee who can be assessed income tax under the new Ordinance, whereas, the petitioners-assessee could only be assessed under the previous Ordinance and not the present Ordinance." In the above judgment the Honourable Court has focused on the wording Tax Payer used in the aforesaid section and defined in section 2(66) of the Ordinance, which according to the honourable Court, is only confined to an assessee, who can be assessed under the new Ordinance. The reading of section 122 of Income Tax Ordinance, 2001, beside the wording Tax Payer also reveals some other issues in relation to assessment order passed under the provisions of repealed Ordinance 1979, prior to 1-7-2002, i.e. the date of implementation of the new Ordinance, which I have tried to explain as under: Under the provisions of subsection (1) of section 122, the Commissioner may amend an assessment order treated as issued under section 120 or issued under section 121 of the Income Tax Ordinance, 2001 or issued under sections 59, 59-A, 62, 63 or 65 of the repealed Ordinance by making such alteration or addition as the Commissioner considers necessary. According to subsection (2) of the said section, 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. In the above provisions of subsection (2) of 122 the phrase "Commissioner has issued" and "or is treated as having issued" is of significant importance which means that the Commissioner can only amend those orders which have been issued by him or by Taxation Officer under the power delegated by him, or is treated to have been issued by him and not those orders issued by the Deputy Commissioner/ Assistant commissioner or Additional Commissioner under the repealed Income Tax Ordinance. In this section as mentioned in subsection (1) thereof, the order "treated as issued" is with reference to section 120 and "issued" is with reference to section 121, of the Income Tax Ordinance, 2001, and section 59, 59-A, 62, 63 or 65 of the repealed Income Tax Ordinance, 1979 and not to orders issued under any other provision of law. For example there is no mention of section 122A and section 221 of Income Tax Ordinance, 2001 and sections 156, 66A and 138 of the repealed Ordinance, in subsection (1) of section 122, thereby means that the Commissioner cannot amend orders passed by him or by Taxation Officer under section 122-A and section 221 of the Income Tax Ordinance, 2001 or by the Deputy Commissioner or Taxation Officer or Additional Commissioner or Commissioner under sections 156, 66A and 138 respectively of the repealed Ordinance 1979. According to subsection (2) of section 122, the Commissioner can amend only those orders which have been issued by him, and not by any other officer. In this context the assessment orders issued by the Deputy Commissioner of Income Tax under the provision of the repealed Ordinance prior to 1-7-2002 are not open to Commissioner for amendment under section 122 of the Income Tax Ordinance 2001, except those orders which have been issued by the Commissioner or by the Taxation Officer under the power delegated by Commissioner under the provisions of the repealed Ordinance after the date of implementation of new Ordinance i.e. 1-7-2002. This contention is also supported by the phrase "Order Passed by Taxation Officer" used in subsection (1) of section 122A. According to subsection (1) of section I22A, the commissioner may call for the record of any proceeding under this Ordinance or under the repealed Ordinance in which an order has been passed by any taxation officer, thereby means that the Commissioner cannot amend orders passed by the Deputy Commissioner under the provisions of the repealed Ordinance. In contrast to the provision of section 122, the Legislature by inserting subsection (1A) in section 221 of the new Ordinance has authorized the Commissioner to amend, by an order in writing, any " order passed under the repealed Ordinance by the Deputy Commissioner or an Income Tax Panel, as defined in section 2 of the repealed Ordinance, to rectify any mistake apparent from the record on his own motion or any mistake brought to his notice by a taxpayer. The non-insertion of similar provision in section 122 clearly indicates the intention of legislature and leaves no ambiguity in the contention mentioned hereinabove. Under subsection (5A) of section 122, the Commissioner may amend, or further amend, an assessment order, if he considers that the assessment order is erroneous in so far it is prejudicial to the interest of revenue. According to subsection (513), any amended assessment order under subsection (5A) may be passed within the time limit specified in subsection (2) or subsection (4) as the case may be. In subsection (2) and subsection (4), the Legislature has used the words issued and treated as having issued, which as already explained supra pertains to the orders passed under section 120 or section 121 of the Income Tax Ordinance, 2001 or under-section 59, 59 A, 62 or 65 of the repealed Ordinance passed by the Commissioner or by the Taxation Officer under the power delegated by the Commissioner after 1-7-2002, and not the orders passed by the Deputy Commissioner or Assistant Commissioner of income tax under the provisions of repealed Income Tax Ordinance, 1979, prior to 1-7-2002, in the context of over all provisions of section 122 of the Income Tax Ordinance, 2001. So far as, the effective date of the provisions of subsection (5A) is concerned the same is inserted in section 122 by Finance Act, 2003, and being substantive provision of law is prospective in its operation i.e. from 1-7-2003.Thus only those orders are amendable under subsection (5A) of sectionl22 which are passed after 1-7-2003 and not those orders passed prior to 1-7-2003. Under the provisions of section 121-A of the Income Tax Ordinance, 2001, the Commissioner has the power to revise the orders passed under the provisions of Income Tax Ordinance, 2001 or order passed by the Taxation Officer other than the Commissioner (Appeals) under the provisions of the repealed Ordinance. The nutshell of the above discussions together with the use of wording "tax payer" in section 122 and the interpretation thereof made by the honourable Court, is that: 1. Under section 122 of the Income Tax Ordinance 2001, the Commissioner; (a) can amend only those orders passed under this Ordinance or orders passed by the Taxation Officer after 1-7-2002 under the provision of the repealed Ordinance and not the orders passed by an officer other than Taxation Officer prior to 1-7-2002, the date of implementation of Income Tax Ordinance, 2001. (b) cannot amend orders passed under sections 122A and 221 of the Income Tax Ordinance, 2001 or passed by Commissioner or Inspecting Additional Commissioner or Deputy Commissioner or by the Taxation Officer under the provisions of sections 138, 661A and 156 respectively of the repealed Income Tax Ordinance, 1979. 2. Commissioner under section 221 can rectify the order: (a) Treated to be issued under section 122 or issued under section 121 under the Income Tax Ordinance, 2001 or issued under section 59, 59-A, 62, 63 or 65 of the repealed Ordinance by the Commissioner or Taxation Officer under the delegated powers of the Commissioner. (b) Any order passed under the repealed Ordinance by Deputy Commissioner or an Income Tax Panel as defined in section 2 of the repealed Ordinance. 3. The Commissioner under section 122A can revise orders: (a) Passed under the provision of Income Tax Ordinance, 2001. (b) Passed by the Taxation Officer, other than Commissioner (Appeals) under the provisions of repealed Ordinance, and not the order passed by an officer other than Taxation Officer under the provisions of repealed Income Tax Ordinance, 1979. 4. Under subsection (5A), in the context of over all provisions of section 122 of the Income Tax Ordinance, 2001, without considering the effective date thereof, the Commissioner; (a) can amend orders passed under the provisions of Income Tax Ordinance, 2001. (b) can amend the orders passed by the Commissioner or by Taxation Officer under the power delegated by Commissioner under the provisions of Income Tax Ordinance 1979, after 1-7-2002. (c) Cannot amend the orders passed under the provisions of Income Tax Ordinance, 1979, prior to 1-7-2002, by Officer other than Commissioner or Taxation Officer under the power delegated by the Commissioner i.e. by the Deputy Commissioner or Assistant Commissioner of income tax. 5. Subsection (5A) was inserted in section 122 by Finance Act, 2003, and as stated hereinabove is substantive provision of law, therefore is prospective in its operation, hence orders passed prior to 1-7-2003, are not amendable under this subsection of section 122 of the Income Tax Ordinance, 2001. ***