1994 PLP (Trib (PTD)

4. The ITO further observed that in the instant case, original assessments were made much before 1-7-1977 and it was settled law that the assessment included reassessment, fresh assessment or set aside assessment. The ITO therefore, observed that in completing reassessment in the case of the assessee for the relevant five years, the Income Tax Ordinance, 1979 would be deemed not to have come into force. The ITO further observed that since in the instant case, it was a matter of giving effect to the orders of the relevant appellate authorities, the provisions of section 166(2)(i) of the Ordinance were also attracted. The ITO then proceeded to frame re-assessment in the status of an AOP for the year 1973-74 and as a registered firm for the remaining four years. The assessee fled appeals for the five years before the learned CIT (Appeals) and again contended that the reassessment proceedings had become time-barred. The learned CIT (Appeals) however, agreed with the observations of the ITO and also quoted the relevant provisions of subsection (2) of section 34 of the repealed Income-tax Act which did not contain any limitation on the time within which reassessments could be framed in cases set aside by the appellate authorities. During the course of hearing before the learned CIT (Appeals), certain case-law was also quoted regarding which the observations of the learned CIT(Appeals) read as under:-- "At the time of hearing, the learned AR cited the case of Bank of India v. Muhammad Ashraf and others reported as PLD 1965 (W.P.) Karachi

69. It was held that rules of limitation are prima facie rules of procedure and vested right in period of limitation cannot be claimed in absence of clear provision to the contrary. In the cited case, the suit had been filed by the plaintiff after the expiry of limitation provided in the law and within the time as per the subsequently amended law. It was held that the plaintiff was competent to bring the suit under the summary chapter under the amended provision of the Limitation Act namely Article 64-A and the objection of the defendants is, therefore, repelled. In the case of M/s. Shamim & Co. v. CIT East Pakistan, Dacca reported as 1968 PTD 401 it is held that assessment for the year 1951-52 set aside by the appellate authorities from time to time on various grounds, completed on 22-9-1960 was not hit by the bar of limitation. Under the circumstances, the appellants grievance is ill-founded and the Income Tax Officer was within his right to reassess the income for all the years set aside by the appellate authorities. These views are 1994 Appellate Tribunal Pakistan duly supported by my learned colleague who decided similar matters while disposing of Appeal No.140 etc. dated 18-2-1986." Since the assessee had not contested the quantum of income for the five years, all the five appeals were dismissed by the learned CIT (Appeals).

5. The assessee's identical grounds before this Tribunal - for the assessment years 1973-74 to 1977-78 reads as under-- (i) That the both Courts below had erred in holding the de novo assessments within time and admittedly all the orders have been passed under section 62 and not under section

23. Call notices were also issued under section 61 and not 22 of the Income Tax Act; (ii) that the law of limitation is a procedural section and applies retrospectively. The learned ITO and the learned AAC/CIT had, thus, assumed wrong interpretation of law; (iii) that the learned ITO and CIT (A) as relied upon case-law 1968 ETD 401, have failed to distinguish the facts of the case. These assessments were finalized under the Income-tax Act, 1922 and no other law was ,.., applicable while in the instant appeal, the Income Tax .`'' Ordinance, 1979 having a specific provision in respect of set aside assessments had already been introduced. The Appeal No.140 dated 18-2-1986, was neither confronted nor its details discussed in the appellate order and thus, tantamount to use of material behind the back of the appellant, and (iv) that sections 166(2) Viand 34(2) of the Act of 1922 are not applicable in the instant case as provisions governing the set aside assessments is section 66(1)(c) of the Income Tax Ordinance, 1979 under the provisions of which set aside assessments have been completed. The appeals may kindly be accepted and annulled/cancelled."

6. The learned DR has been heard with regard to the contentions raised by the assessee which in fact, have already been mostly dealt with in the order of the authorities below. After considering the assessee's contentions and arguments of the learned DR, we find ourselves in agreement with the point of view of the department. The crux of the matter is that regardless of the provisions of section 66(1) of the Income Tax Ordinance, the same Ordinance also contains a definite saving clause in section 166(2)(a) with regard to returns of income filed before the commencement of the said Ordinance. The said clause has already been reproduced above and it is obvious that in the case of any such returns, proceedings for assessment may be taken and continued as if the Income Tax Ordinance, 1979 had not come into force. If at all, there could be any doubt about the term "assessment" this has been specifically defined to include a reassessment in section 2(7) of the Income Tax Ordinance which reads as under:-- "

2. Definitions,--In this Ordinance unless the context otherwise requires,-- (7) "assessment" includes reassessment and additional assessment and the cognate expression shall be construed accordingly;"

7. It may be further pointed out that section 168-of the Ordinance makes clear distinction between the returns filed before the commencement of the Ordinance and the returns filed after its commencement (regardless of the assessment year involved). Thus section 166(2)(b) clearly specifies that where a return of income is filed after the commencement of the Ordinance (otherwise than in pursuance of a notice under section 34 of the repealed Income Tax Act) for any assessment year ending on or before the 30th day of June, 1979, the assessment shall be made in accordance with the procedure speed in the Income Tax Ordinance, 1979. Thus if any of the returns under reference had been filed after the promulgation of the Income Tax Ordinance, 1979, the limitation contained in section 66(1)(c) would have been fully applicable. Since all the returns under reference were admittedly filed before the commencement of the Ordinance, the assessments (including re assessments) had to be continued as if the Income Tax Ordinance (including its section 66(1)(c) had not come into force. This being the legal position, we do not find much relevance in the other issues raised by the assessee and the department.

8. In the light of the foregoing, the assessee's appeals for the years 1973-74 to 1977-78 stand rejected. Assessment years 1978-79 to 1980-81.

9. For the assessment years 1978-79 to 1980-81, the assessee's common objection is with regard to gross profit rate of 17.5% applied by the ITO in' the case of the assessee's receipts which were from contracts for road construction. It has been pointed out in this connection that the assessments for the years 1973-74 to 1977-78 had been set aside on the point of gross profit rate and in the reassessment, the ITO had himself applied a gross profit rate of 15%. It is thus contended that the gross profit rate for the years 1978-79 to 1980-81 should also be reduced accordingly. We find the assessee's contention to be quite valid since the ITO has himself applied a lower rate in the reassessments for the earlier years. As a result, the gross profit rate is reduced to 15 for the assessment years 1978-79 to 1980-81.

10. In the grounds of appeals for the year 1979-80, the assessee has also objected to adoption of receipts at Rs.39,79,566 as against Rs.34,99,469 declared. In the assessment order, however, it is clearly mentioned that considering various discrepancies, the learned AR of the assessee had given his consent to the adoption of receipts at the amount indicated in the assessment order. As a result this ground pertaining to the assessment year 1979-80 is found to be without any substance and is rejected.

11. As a result, the assessee's appeals for the assessment years 1973-74 to 1978-79 stand rejected while appeals for the years 1978-79 to 1980-81 succeed in the manner indicated above. M.BA/59/T.T Order accordingly.