1990 PLP 260 (PTD)

A.A. ZUBERI (ACCOUNTANT MEMBER).‑‑This appeal has been filed at the instance of an `individual' to impugn order dated 31‑3‑1986 passed by the learned CIT (Appeals), Zone 2, Lahore in respect of assessment year 1980 -81.

2. The facts (in brief) are that assessment came to be framed ex parte under section 63 of the Income‑tax Ordinance on 30‑5‑1985 determining Total Income at Rs. 225,

000. It appears that no return of income was filed. However, the assessing officer came to have the information that the Appellant had purchased a godown situated on a plot of 22 marlas, 1‑15 sq. ft. bearing Khasra No. 4227/2 on 1‑8‑1979 for a consideration of Rs. 2,00,000 which was paid in cash. Proceedings were then initiated and through issuance of notices under sections 61, 62, 58(1) and 148 were also issued. The above godown was said to have been let out for Rs. 1,000 per month to one Sh. Mohammad Jahangir. As the investment made in the purchase of property remained unexplained the assessing officer invoked clause `aa' of subsection (1) of section 13 of Income‑tax Ordinance to deem the investment at Rs. 225,000 (price Rs. 200,000 plus incidental charges Rs. 25,000) as unexplained income to include in the total income. Before the first appellate authority it was canvassed that ex parte action under section 63 was not warranted. This plea could not win favour of the first appellate authority who noted that the statutory notices under sections 56, 58, 61 and 62 of the Income‑tax Ordinance, 1979 (hereinafter called the Ordinance) remained un-complied inasmuch as neither a return was filed nor the queries replied (or explanation submitted) tendering any evidence in support of the investment and its sources. The learned Commissioner further held that the notices were served on the Appellant himself, and therefore, the default stood committed which justified ex parte assessment under section 63 of the Ordinance. The addition made by resort to section 13 of the Ordinance was also confirmed by the learned Commissioner who refused to admit fresh evidence to the effect that a loan was obtained by the Appellant from his brother in Kuwait. The learned Commissioner held the view that only a sum of Rs. 30,000 was received by the Appellant from his brother in Kuwait and that at the appellate stage he was debarred from introducing fresh evidence to the effect that loan was obtained from some persons in Tehsil Okara moreso when notices by the assessing officer were ignored whereby the Appellant was specifically required to explain the source of investment in the property but no evidence whatsoever was tendered.

3. Before us the main forte of Mr. Siraj‑ud‑Din Khalid, the learned counsel for the Appellant, was the validity of initiation of proceedings through issuance of notices (on 13‑3‑1985) under section 56 of the Ordinance which, according to him, were beset with illegality from the very beginning and were ab initio void. It was asserted that assessment for the year 1980‑81, could at best be completed on (or before) 30‑6‑1983. As proceedings were not taken up during the assessment year it was incumbent on the assessing officer to issue notice under section 65 for the reason that legally the income stood `escaped' on 30‑6‑1981. The learned counsel heavily relied on this Tribunal's decisions reported as 1987 P T D (Trib.) 314, 1987 P T D (Trib.) 1, 1987 P T D (Trib.) 314 and 1987 P T D (Trib) 325, wherein it has been held that under section 56 of the Ordinance only a return for the current year can be called from an assessee while under section 65 of the Ordinance an assessee can be asked to file returns of income if for any reason, any income chargeable to tax has escaped assessment or is assessed at too low a rate or has been subjected to excessive relief or refund or the total income of the assessee or the tax payable by him has been assessed or determined under subsection (1) of section 59 and no order of assessment has subsequently been made under this section or any other provision of this Ordinance. It was submitted that besides this judgment by a Single‑Member Bench, the issue had come up before a Division Bench also and was adjudicated on ITA Nos. 6159/LB of 1985‑86 dated 30‑10‑1986 (1988 P T D (Trib) 88) wherein the conclusion was that section 56 applies only to current income year and in regard to the escapement of the income for past years, section 65 of the Ordinance is the relevant section. The learned counsel did not argue the case at length and confined to adopt all the arguments which are recorded in the above‑cited consolidated order dated 30‑1‑1986 as also in a Full Bench decision by the Tribunal which has recently been reported as 1988 P T D (Trib.) 437.

4. The learned counsel (Mr. Ilyas Khan) appearing for the Respondent Department on his turn analysed the above decision by the Tribunal. He attempted to distinguish the facts and to illucidate on other aspects on which that decision was based. It, therefore, appears appropriate to consider the points adjudicated in decision-dated 30‑10‑1986. The concluding paragraph 15 of that order contained a summary of conclusions which are as under:‑‑ (1) Section 56 of the Income‑tax Ordinance applies only to the current income year corresponding to that assessment year. (2) Section 65 of the Ordinance is the relevant section in regard to escapement of income for the past years. (3) If the assessing officer finds any escapement of income he is to issue notice under section 65 of the Ordinance containing all (or any) of the requirements of a notice under section 56 of the Ordinance.

5. The learned Legal Adviser for the Department dilated on each of the above points in a rather detailed discourse, as under: Section 65 of the Ordinance is the relevant section in re and to escapement of income for the past years

6. First of all the learned Legal Adviser referred to para 6 of the Tribunal's order dated 30‑10‑1986 in which it was discussed that the title of section is not part of section nor it can control the words used in that section. The learned Adviser observed that in older times laws passed by the Parliament did not contain punctuation or marginal notes or headlines etc. After a law was passed by the legislature, these were applied by his Majesty's Stationery Office. Since these headings were not part of the law, as passed by the legislature, the Courts were justified in not treating these as part of the law. In the present legislation a glaring distinction was available as headings are part of the law as passed by the Legislature hence these carry the authority of the framers of law and hence cannot be ignored. Attention was drawn by the learned counsel to Maxwell's Interpretation of Statutes (Twelfth Edition) which at page 11, contains the following observation: "The headings preferred to section in some modern statutes are recorded as preambles to these sections. They cannot control the plain words of the statutes but they may explain ambiguous words." Mr. Ilyas Khan endeavoured to emphasize, with all the force at his command, that the extract from Maxwell, as contained in the order by the Tribunal, related to "marginal notes" and not to headings. It was submitted that section 56 in the Ordinance had the head "Notice for furnishing return of total income" and for section 65 the heading is `additional assessment'. It was canvassed that obviously the necessity of calling upon a person to furnish a return of total income would arise only when no return is voluntarily filed by him with the result that no assessment is made on him. On the other hand an 'additional assessment' is possible only when an assessment already exists, may be under section 59, 59A, 62 or

63. The additional assessment would then merge with the first assessment already made. Therefore: to frame this first assessment on a person he is first of all to be called upon to furnish a return by issuing a notice under section 56 but once such an assessment is made and, due to escapement under assessment etc. some income is to be added to the total income already assessed for which additional assessment is envisaged, proceedings are to be initiated through issuance of notices under section

65. It is true that the notice under section 65 is to contain all or any of the requirements of notice under section 56 but obviously it is not a notice under section

56. On the existing legal position, the learned Adviser continued, initiation of proceedings in the present case through in of notice under section 56 was thoroughly valid.

7. Mr. Ilyas Khan then referred to paragraphs 9 and 10 of the Tribunal's order dated 30‑10‑1986 containing observation that section 65 in clause `a', has the expression "any income year" while clauses `b' and `c' of subsection (1) used the words "total income". The affect due to this different terminology, in the opinion of the Tribunal, was that clause `a' became applicable where the income is yet to be computed and, therefore, the word `total income' was avoided by the legislature because the term `total income' is relatable to the computation of income for the purposes of tax: On the other hand in a situation where some amount of `income' has been assessed earlier, clauses `b' and `c' became applicable hence in those clauses the word "total income" was used as some `total income.' already stands determined and computed with the result the reassessments can be made only by invoking clauses `b' and `c' while clause `a' comes into operation where income has not been computed with the result that reassessments can be made only by invoking clauses `b' and `c' while clause `a' comes into operation where income has not been computed with the result that it cannot be called "total income". Furthermore, the Tribunal had reached the conclusion that in cases where clause `a' is applicable 'since the total income is not determined earlier, the word `income' has been employed which indicates that it applies to the total escapement of income which has not been assessed earlier. Mr. Ilyas Khan, the learned Legal Adviser for the Department, observed that the term "income" in clause `a' and "total income" in clauses `b' and `c' create a distinction inasmuch as in the case of total escapement (i.e. where no return is filed and no assessment is made) it is the `total income' which escapes assessment and not the mere `income'. On this reasoning clause `a' would be applicable to a case where an assessment has been made but income from a certain source or head has escaped assessment. This, the learned LA submitted is the pith and substance of the stand by the Department. According to the learned LA it was futile to draw a distinction between `income' and `total income' in the context of section 65 for the concept of these terms is the same as obtaining in the Income tax Act, 1922 since repealed. In section 34 of the repealed Act, the term was "income" (not `total income') which may have escaped assessment in any year or have been under assessed or have been assessed at too lower rate (etc.). The use of the term `total income' in the Ordinance is therefore, of little consequence or of distinction. It does not make a material change warranting a new interpretation different from those obtaining in respect of section 34 of the repealed Act.

8. The learned Legal Adviser then took us to para 11 of the Tribunal's order dated 30‑10‑1986 where it was highlighted that in clause `a' of subsection (1) of section 65, the word "Assessee" is conspicuous by its absence while clauses `b' and `c' of the same section used that word. The learned LA attempted to explain that escapement of income has been held by the Courts to cover two situations, viz "(a) where no return is filed and no assessment has been made. This situation may be called `total escapement'; and (b) where income from a particular source or head of income has escaped assessment. This situation may be called `partial escapement'." The absence of this word, in the opinion of the learned Legal Adviser did not imply that the provision of law applies to a person who has not so far been assessed to tax. The learned LA endeavoured to elaborate his arguments by submitting that there could be a situation when a person may be assessed to tax for a number of years yet he may not file return in a particular assessment year. Such a person is undoubtedly an `Assessee' although he has not filed return for a particular assessment year. His status as an `assessee' cannot remain in a fluid situation depending upon whether he filed the return or failed to file the same. The learned LA drew the conclusion that the words `assessee' and `person' were inter‑changeable in so far as the provisions of section 65 are concerned. It was emphasized that section 34 of the repealed Act covered the cases of total escapement, partial escapement, under assessment etc. but the term Assessee was not used at all, instead the word in that section was `person'. Therefore, any reasoning based on distinction between `Assessee' and `person' or the mention or omission of these words was not relevant for interpreting the provisions of section 65 of the Income Tax Ordinance. Section 56 applied only to the current income gear corresponding to that assessment year.

9. Mr. Ilyas Khan, the learned Legal Adviser, read from paragraph 12 of Tribunal's order dated 30‑10‑1986 where it is held that section 56 is completely silent as to what could be the rate of tax on the income of the past years while provisions of section 65 specifically mentions that tax is to be charged at the rate applicable to the assessment year for which the assessment is made. It was averred by the learned Legal Adviser that it is a general principle of law that all substantive provisions are applicable as they existed during the relevant assessment year and all the machinery provisions are applicable as they exist at the time of the assessment, thus there was no necessity of having a similar provision in section 56 of the same impact as in section

65. Moreover, that provision relates to rates of tax only and does not deal with exemptions, allowances and rebates etc. all of which are similarly applicable as they prevailed in the relevant assessment year. The particular mention in section 65 of the applicable rates for charge of tax would not deprive an Assessee from benefit of exemption, allowance and rebates if these were allowable in the assessment year for which the assessment is made under section

65. The same position prevails in section 56, as well.

10. The learned counsel built up another argument by submitting that section 57 of the Ordinance permits an Assessee to file a belated return. He can do so at any time before the assessment is made. It was illustrated by the learned LA that assessment for 1977‑78 can be made up to 30‑6‑1980 as per section 64(1). The assessee may, however, file his return, say on 1‑1‑1990 i.e. during the assessment year 1980‑

81. An assessment based on this return can be made without recourse to section 65 and the rates of taxes, allowances, exemptions and rebates i.e. all rights and obligations applicable would be available for the relevant assessment year. After all, the learned LA continued, there is no difference between a return under section 57 filed after the end of the relevant assessment year, and a return filed in compliance of notice issued under section 56 after the end of the relevant assessment year. In either situation, the assessment shall be completed according to the provisions relevant to the corresponding assessment year.

11. The learned LA for the Department then turned to this Tribunal's finding in para 13 of the order dated 30‑10‑1986 where it was held that section 56 had to be read as a corollary to section 55 of the Ordinance because if the scheme of these sections is kept in mind it emerges that section 55 is applicable to current assessment years for which return has to be filed. It was further held by this Tribunal that if section 56 is interpreted to apply to all past income years as well, the same interpretation would have to be placed on section 55 where also the words used are "for any income year" with the result that subsection 2 of section 55 which contains certain limitations for filing of returns would become redundant. The learned LA pleaded that no such relation between the two sections exists because if that was so section 56 would have contained the words; "issued before the end of the assessment year" as are obtaining in section 139(2) of the Income‑tax Act which is parallel to section 55 of the Ordinance. If such words were considered necessary for confining the issuance of notice within the relevant assessment year, these were all the more necessary in the Pakistan Law where section 56 is an independent section. The learned LA here also tried to explain his stand by reference to example. It was submitted that if section 56 is held applicable to a current assessment year only, then by implication section 65 would have to confine to past years alone. But that is not so, section 65 also relates to current assessment year. Suppose an assessment for say 1987‑88 is made within the assessment year (say by 31‑12‑1987). Now, on (say) 1‑4‑1988, necessity arises to reopen this assessment when the assessment year is not yet over. Obviously, a notice under section 65 and not under section 56 is to be issued which leads to the conclusion that neither section 56 is confined to the current assessment alone nor section 65 pertains to past assessment years only. The true relationship is that section 56 is applicable to all those cases (past or present) where no return has been filed and no assessment has been made. On the other hand section 65 comes into operation where an assessment has once been made both in respect of the current assessment year and also for the past assessment years. While dealing with this issue the learned LA referred to the expression "for any income year" used in section 56 which, according to him, led to the conclusion that this section does not apply to current assessments alone but also to preceding assessment years where no return may have been filed and no assessment may have been made. Mr. Ilyas Khan recalled that the repealed Act was dependant upon the passing of the Finance Act. Therefore, where for any year the Finance Act imposed Income‑tax, a return could be called under subsection (2) of section

22. The necessity of using the word "any income year" was not necessary in the repealed Act. In the present situation, charge of Income‑tax has been placed on permanent footing by the enactment of a schedule in the Ordinance. Consequently the provisions of section 56 had to mention the word "any income year". Section 65 is to be pressed into service when escapement of income is to be remedied.

12. The learned Legal Adviser then adverted to the observation by this Tribunal in para 14 of the order dated 30‑10‑1986 where it was observed that in order to safeguard the citizens from the whims of the assessing officer, the legislature placed certain limitations for action under section 65 while there was no such restriction under section 56 with the result that citizens would be placed at the mercy of the assessing officer. The learned Legal Adviser agreed that the citizens could not be left unprotected and need protection from a fluid situation of uncertainty. However, it was necessary to make distinction between those who offer compliance by filing returns and those who affront the law with impunity by not filing the returns. Obviously, where a citizen has offered to be assessed for a particular year, the anxiety of the legislature is understandable in protecting him by placing limitation under section 65 but the legislature quite justifiably had no sympathy for those who had taxable income but did not file any return during the relevant assessment year. Moreover, if the legislature permits the assessing officer to issue notice to such persons during the relevant assessment year, there was no reason to forbid him from doing so after the end of such year. The learned LA narrated that before the promulgation of the Income‑tax Ordinance, 1979 there was no limit of time during which a notice could be issued to non‑filer. Now, if such non‑filers are to be protected by limitations imposed by section 65, one would be imputing over‑indulgence on the part of the framers of the Ordinance showing favour to delinquents, hence it is perspicuous that sanctity attached to it cannot be extended to those who filed no return and on whom no assessment is made.

13. After a careful consideration of the arguments advanced by the learned counsel from the two sides and after a painstaking study of the law (as also the case‑law) I have formed the view that Section 65 of the Ordinance, among other contingencies refers to `escapement'. It is, therefore, essential first of all to understand as to what actually is an `escapement' of income. The term `escapement' has not been formally defined but the superior Courts have explained it to mean to evade or to elude, or an accidental or inadvertent omission. In case, escapement (partial or total) is possible in the scheme of the Ordinance, as it was in the Income‑tax Act, 1922 (hereinafter called the repealed Act) then the controversy will be settled merely by a comparison of the relevant provisions in the two enactments. However, if the treatment of total (or partial) escapement has been differentiated in the two statutes, it will have to be seen what changes have been made and what is the affect thereof Historical background and change in law.

14. A glance on the history of the amendments in the repealed Act especially Section 22 thereof, brings out that initially only those persons were to file returns of income who were served specific notices to do so. A subsequent change made it possible for the assessing officer to publish a public notice (or to issue individual notices) calling upon all those persons who had taxable income, to file their returns of income. Vide Finance Ordinance 1959 (effective from 1‑4‑1959) the voluntary filing of the return was made obligatory for all those persons who had taxable income in the `previous year' relevant to the assessment year. In all the aforementioned situations, the return was to be filed (or called for) in respect of income earned "during the previous year". Furthermore, under the provisions of the repealed Act, Income‑tax was an annual levy which‑got activated only on the passing of the annual Finance Act, and the Income‑tax Act remained dormant till the passing of the annual Finance Act specifying the rates of tax for income earned "during the previous year'. As a necessary corollary, if assessment was not made in the assessment year of the income earned in the previous year, "escapement" was said to have occurred. This conclusion is based on findings reported as (1960) 40 ITR 407 (Allahabad), (1969) 35 ITR 1 (SC) etc. Once `total escapement' had taken place, may be as a result of non‑filing of return, recourse could not be taken to the provisions of section 22 which dealt with the issuance of notice in respect of the `previous year' only, and it was necessary to invoke section 34 of the repealed Act which vested the assessing officer with the jurisdiction to summon return of income in respect of "income, profits or gains chargeable to Income‑tax" which `escaped assessment in any year'. It is pertinent that section 34 related to 'income escaped assessment in any year' while section 22(2) was confined to income in the `previous year' only.

15. The concept in the Ordinance is markedly different inasmuch as the levy of tax is now a permanent part of the enactment in the shape of the First Schedule. Therefore, the reference to the `previous year', in the context of the notice for furnishing return of total income, has become totally irrelevant because with the elapse of the assessment year, non‑filing of the return does not result in `escapement' (more precisely, total escapement). The perennial character which was previously conferred on section 34 of the repealed Act is now grafted in section 56 of the Ordinance which reads as under:‑‑‑ "The ITO may at any time require any person who chargeable to tax for any income year to furnish a return furnish a return for such year ..as may be specified in such notice. .." It clearly emerges that a situation of total escape of an assessee from assessment which occurred when return was not filed during the assessment year relevant to the previous year, is not now possible because a notice under section 56 can be issued at "any time", no matter whether such notice is issued during the relevant assessment year or at any time (soon or long) thereafter. This is so because: (1) Section 56 of the Ordinance encapsulates the scope of both section 22(2) and section 34(IA)(a) of the repealed Act. (2) Section 56 allows the assessing officer to issue a notice for "any D income year" and "at any time". (3) The Ordinance prescribes a different time limit for assessments on returns obtained under section 56 (" ..before expiration of ..the financial year in which notice was served = subsection 3 of section 64). In other cases this limit is .two years from the said return is filed (subsections (1) & (2) of Section 64) In the case of Section 65 returns, the limit is prescribed in section 65(3A). Obviously, if notice under section 56 could be issued only during the relevant assessment, there was no occasion to make additional provision as per section 64(3), specifying limit for completion of assessment, as the matter was well looked after by section 64(1) of the Ordinance.

16. With that in mind, I find that the statutory limits in clause `c' of subsection (2) of section 166 of the Ordinance visualise two situations viz: (i) where proceedings for escapement etc. were already in hand as on 1‑7‑1979; and (ii) where assessment had already been made but no proceedings for escaped assessment etc. were in hand as on 1‑7‑1979. A third situation may, however, still arise where no assessment was made because no return of income was filed, hence no proceedings for escaped assessment stood initiated as on 1‑7‑1979. This situation is not saved by section 166(2) of the Ordinance precisely for the reason that the Legislature already made it possible to call for the returns of income through issuance of notice under section 56 of the Ordinance for all past years where returns were not filed.

17. I may here refer to a decision of Supreme Court of Pakistan reported as P L D 1974 S C 310 (Dada Limited) on which I chanced to lay my hands. The facts which came up for consideration by the learned Judges were: For the chargeable accounting period ending on 30‑6‑1956, a notice under section 11(1) of the Business Profits Tax Act was served on 9‑6‑1959 i.e. long after chargeable accounting period. Appeal challenging the validity of the assessment then came before the Income‑tax Appellate Tribunal, inter alia, on the ground that notice under section 11(1) of the BPT Act having not been issued (or served) within the financial year next following the end of chargeable accounting period, it became a case of escapement for which assessment could be made only after a notice under section 34 of the Income‑tax Act (which had been adopted for the BPT Act) had been served on the assessee. As no such notice was admittedly served on the assessee, it was canvassed that the assessment was invalid. The Tribunal rejected the contention, dismissed the appeal and held that it was not a case of `escapement' because a notice under section 11(1) of the BPT Act could be served at `any time' as no limitation was prescribed to serve such a notice. In these circumstances, the question of law as it finally came before the Supreme Court was: "Whether in the facts and in the circumstances of the case the Tribunal is right in holding that for the purpose of BPT notice under section 11(1) can be issued at any time without any notice under section 34 of the Income‑tax Act read with section 19 of the BPT Act." The answer to this question was returned in the affirmative. To appreciate the perspicuity of the decision by the Supreme Court of Pakistan it would be of advantage to refresh to memory the provisions of subsection (2) of section 22 of the Act and subsection (1) of section 11 of the Business Profits Tax Act which are: Section 2221 1.T. Act: "In the case of any person Income‑tax Officer may serve a notice upon him requiring him to furnish ..a return setting forth his total income and total world income during the previous ,year." Section 11(1), BPT Act: "The Income‑tax Officer may .require any person ..to furnish a return with respect to Any Chargeable accounting period specified in the notice " While confirming the subtlety in section 11(1) of the BPT Act vis‑a‑vis section 22(2) of the Act, the learned Judges of the Supreme Court affirmed their own pronouncement in an earlier decision reported as P L D 1961 S C 375 (Hossein Kassam Dada) where it was held that the effect of the words "during the previous year" in section 22 of the repealed Act was that a notice under this subsection could be valid only if given within the immediately following year but the same was not true in respect of subsection (1) of section 11 of BPT Act because of the corresponding words "any chargeable accounting period'.". The interpretation placed by the High Court, which the learned Judges of the Supreme Court confirmed, was that the words "any" and "specified in the notice" were important and worthy of consideration in contrast to the definite article "the" and the words "previous year" which were used in subsection (2) of section 22 of the Act.

18. It may be worthwhile to note that the terminology used in section 56 of the Ordinance is very much similar to the one employed in section 11(1) of the BPT Act e.g. "chargeable to tax for any income year" vis‑a‑vis `any chargeable accounting period'; and "specified in such notice" vis‑a‑vis `specified in the notice'. Furthermore, sections 56 and 65 of the Ordinance are quite identical to sections 11(1) and 14 of BPT Act (the latter read with section 34 of the repealed Income tax Act which was adopted by amendment in section 19 of the BPT Act). This is so because section 56 of the Ordinance authorises issuance of notice `at any time' in respect of "any income year" while section 65 can be invoked only when income has escaped assessment or is under assessed, or is assessed at too low a rate or has been the subject of excessive relief or refund.

19. Fortunately for us, the highest judicial authority of the land has expressed a perspicacious opinion on a comparable situation in two identical fiscal statutes which fully covers the controversy before us. The Supreme Court reached the conclusion, more than once, that the Legislature having not felt the necessity of fixing any period during which the assessment proceedings can be initiated, these would be valid if notice for furnishing return was issued under the relevant section even after the expiry of the chargeable accounting (or income) year. I, therefore, OPT TO respectfully FOLLOW the interpretation placed by the Supreme Court which settles the matter as respects issuance of notice under section 56 for any past year where return of income is not furnished.

20. Coming to the time limit for issuance of notice under section 56, I find that in its judgment reported as P L D 1961 SC 375 (in re: Hoesin Kassam Dada), the Supreme Court suggested the restriction that notice for furnishing return should be "issued within a reasonable time after the termination of the accounting year and that this reasonable period should not extend beyond the period specified under section 34 of the Income‑tax Act". After this judgment, the legislature thought it necessary to insert section 34(IA) in the repealed Act, clause `a' whereof contained the words "at any time" in the context of issuance of notice in any case in which the assessee failed to file return either under subsection (1) or subsection (2) of Section 22 of the repealed Act. Before subsection (IA) was inserted by Ordinance of 1969, these very provisions formed part of subsection (1) of section 34 before its amendment in 1959. The Finance Ordinance of 1960 and the Finance Act, 1963 added two categories of cases where the bar of limitation did not apply for initiation of proceedings for escapements etc. First: where the assessee had not filed return of income under subsection (1) or subsection (2) of section 22; and Second: where the assessee omitted or failed to disclose all material facts necessary for the assessment of that year. At that time the CBR issued circular C. No. 1(3)‑TL/60 dated 12‑8‑1960 = (1960) 2‑Tax‑85 (Statutes) containing instructions on the amendment which, in respect of section 34(2), read as under:‑‑ "Back assessment; Section 34(2) as now amended enables an ITO to make an assessment of the income of an assessee right upto the date of Independence where it is found that he had not filed any return under subsection (1) or subsection (2) of section

22. Previously he could do so only when an assessee had concealed the particulars of his income or deliberately furnished inaccurate particulars of such income." The Finance Act, 1969 (effective 1‑1‑1970) deleted the aforementioned provisions in subsection (1) of section 34 and (instead) enacted subsection (1A) of which clause `a' had the following effect as has been explained by the learned author (the late Mr. S.M. Raza Naqvi) on page 1171 of his book: The Law & Practice of Income‑tax in Pakistan: "Where the ITO has reason to believe that the assessee, or any other person on his behalf, has not filed any return under section 22(1) or under section 22(2), notice under section 34(1) could be served on the assessee at any time without any bar of limitation."

21. It may not be out of context to refer to the corresponding situation in the Indian Income‑tax Act, where a Taxation Enquiry Committee, appointed by the Government of India under the President-ship of Mr. Nahavir Tyagi, made the following recommendation: "(xix) Section 34, Income‑tax Act: The present position regarding the time within which action for catching up with escaped income should continue. Thus where action can be taken without limit of time at present the ITO will not be hound to a time limit

See: (1961) 3‑Tax‑1 (Part 1‑B).

22. I am of the view that the Legislature in its wisdom has combined the provisions of section 22(2) and section 34 (IA)(a) of the repealed Act and placed these in section 56 of the Ordinance.

23. It is of significance that despite the aforementioned change brought about in the repealed Act the Supreme Court still held in P L D 1974 SC 310 (Dada Limited) that a notice for furnishing a return should be issued within a reasonable time after the termination of the chargeable accounting year The anxiety of the learned Judges not to vest an unfettered power which may be arbitrarily used, speaks of their judicial acumen to lay down a judicious law. It is true the judgment of the Supreme Court pertains to assessment year which related to a period prior to the insertion of section 34(IA) on the statutes book. At the same time the intent of the Legislature is manifest from the scheme in the Ordinance inasmuch as even at the time of a fresh legislation in 1979 no limit of time is prescribed in respect of those who failed to discharge the legal obligation to file returns as against those who complied with the law but their income escaped assessment; somehow or the other. Quite logically, there is a limit for initiation of proceedings in the case of the latter but none in the case of former. Assigning any other meaning to the sections in the Ordinance would produce anomalous results and it is difficult to impute such iniquitous intention to the Legislature. That said: the conclusion is inescapable that notice under section 56 can be issued for furnishing return of total income to `airy person' for `any income year' and `at any time'. However, this Tribunal in its decision reported as 1984 P T D (Trib.) 147 has already held that the scope of section 56 cannot be stretched beyond the inception of the Ordinance (i.e. 1‑7‑1979). That decision has since been followed by several Benches (both Single Member and Division). I am therefore, of the view that these decisions achieve a harmonious interpretation in consonance with the intent of the Legislature (as discussed above) as well as the anxiety of the Supreme Court to authenticate summoning of returns only within a reasonable period of time. I therefore, CONCUR with that view. .

24. As regards the tax payable in respect of assessment for earlier years, as may be reopened, the same is taken care of by clause (d) of section 166(2) of the Ordinance which is to the effect that for all assessment years ending on (or before) 30‑10‑79, the provisions of the repealed Act relating to the computation of total income and tax payable thereon shall apply. There is thus no chance of any difficulty on this score.

25. For the reasons spelled out hereinabove I have reached a conclusion which is in respectful disagreement with the earlier findings reported as 1988 P T D (Trib.) 88, 1987 P T D (Trib) 314 and 19&S P T D (Trib)

432. It appears, the judgments by the superior Courts (as examined now) which clinch the issue, were not cited at the Bar thus depriving the learned Members (who then constituted the Bench), the benefit of the opinion so unequivocally expressed by the supreme judicial forum of the realm.

26. The upshot of the foregoing discussion is that the guidance provided to us by the Supreme Court of Pakistan by decisions reported as P L D 1974 S C 310 (Dada Ltd.); P L D 1974 SC 284 (Kohinoor Textile Ltd.); and P L D 19(A S C 375 (Hossain Kassam Dada); the Legislative intent as expressed by amendments over the years; and the interpretation as placed by this Tribunal in decision reported as 1984 P T D (Trib.) 147 leads me to see no hazard to hold: (a) It is not mandatory to initiate proceedings through issuance of notice under section 65 of the Ordinance in those cases where returns were not filed for so long that the assessment year relevant to the income year has elapsed. . (b) A notice under section 56 can be issued at `any time' for `any income year' to `any person' who in the opinion of the ITO, is chargeable to tax but had not furnished a return of income. (c) It is not necessary that a notice under section 56 be issued only during the course of assessment year relevant to the income year, and not thereafter; and (d) A notice under section 56 can be issued only for such assessment years as are covered by the Income‑tax Ordinance (i.e. 1979 80 onwards). The above findings result in the REJECTION of the appeal and settle the matter referred to the Full Bench on the legal issues relating to the scope of section 56 and section 65 of the Ordinance.

27. As the merits of the quantum of additions made towards total income were not argued by any side, nor referred to the Full Bench, the appeal shall go back to the Division Bench for adjudication thereon.

28. ABRAR HUSSAIN NAQVI (JUDICIAL MEMBER).‑‑I have carefully gone through the elaborate judgment of my learned brother, the Accountant Member. However, I could not persuade myself to agree with the reasoning and conclusion arrived at by him. The precise question involved in this case is as to whether a case of an escaped or under assessed income could be reopened and assessed by issuing a notice under section 56 of the Income‑tax Ordinance or for that purpose it is necessary to issue a notice under section 65 of the I.T. Ordinance. The conclusion of my learned brother is that section 56 of the I.T.O. Ordinance applies not only to the current year but also to the past years. The main plank of the argument of my learned brother is that under section 56, an Income‑tax Officer is empowered to issue a notice for filing the return of income "at any time", to "any person" and for any year. My learned brother is of the view that section 65 of the Ordinance is applicable only in regard to those cases where some kind of assessment had already been made. This view is based on two grounds: (i) The title of the section 65 is "Additional assessment". (ii) In section 65(1)(a) the words "escaped assessment" mean partial escapement and not the total escapement of income.

29. Another basis of the arguments of my learned brother is the comparison of section 34 and section 22(2) of the Repealed Income‑tax Act with sections 56 and 65 of the I.T. Ordinance. It has been reasoned out that Legislature has made changes in law and a new concept has been introduced so as to empower the I.T.O to require from any person to file return in respect of any assessment year and this is provided in section

56. It has been argued that the Legislature has shown leniency in regard to the persons who had filed the return and had been assessed and it is for this reason that in section 65 of the Ordinance certain limitations have been imposed on the powers of the Income‑tax Officer.

30. I have very carefully gone through the relevant provisions. To my mind to make comparison of any provision of the Repealed Income‑tax Act with the provisions of the Income‑tax Ordinance would be completely irrelevant. Because of various confusions and lot of amendments and for other reasons the Income tax Act has been repealed. The Income‑tax Ordinance has been promulgated in the year 1979 with complete rearrangement of various provisions. This subject wise rearrangement of sections has to be kept in view while interpreting the various provisions of the I.T. Ordinance. Now Chapter VII is in regard to the assessment and starts with section 55 which is for the voluntary filing of the return. This is the starting point. This section provides that every person who has total income is assessable under the Ordinance or a person who has been charged to tax for any of the four income years immediately preceding the said income year has to file a voluntary return. There is no dispute that section 55 of the Ordinance applies to current year as is evident from various dates given in subsection (2) before which the returns have to be filed. Next comes section 50 which provides that I.T.O. may require any person who is chargeable to tax for any of the income years to furnish a return of total income. If we read these two sections together it would be clear that a person is required to file return voluntarily before a particular date every year. If he hails to do so then the I.T.O. U has been empowered to ask him to file the return under section

56. Section 56 does not go beyond this. It only contains the power of the I.T.O to call upon a person to file a return which was otherwise required to be filed voluntarily and had not been filed. In order to make a comparison it would be convenient to reproduce section 56 and section 65 which are as under:‑‑ "Section

56. Notice for furnishing return of total income. The Income‑tax officer may, at any time by notice in writing, require any person who, in his opinion, is chargeable to tax for any income year to furnish a return of total income for such year within thirty days from the date of service of such notice or such longer or shorter period as may be specified in such notice or as the Income‑tax Officer may allow. Section

65. Additional assessment.‑‑(1) if, in any year for any reasons,‑ (a) any income chargeable to tax under this Ordinance has escaped assessment; or (b) the total income of an assessee has been under assessed, or assessed at too low a rate, or has been the subject of excessive relief or refund under this Ordinance; or (c) the total income of an assessee or the tax payable by him has been (assessed or) determined under subsection (1) of section 59 and no order of assessment has subsequently been made under this section or any other provision of this Ordinance; the Income‑tax Officer may, at any time, subject to the provisions of subsections (1), (3) and (4), issue a notice to the assessee containing all or any of the requirements of a notice under section 56 and may proceed to assess or determine, by an order in writing, the total income of the assessee or the tax payable by him, as the case may be, and all the provisions of this Ordinance shall, so far as may be, apply accordingly: Provided that the tax shall be charged at the rate or rates applicable to the assessment year for which the assessment is made. (2) No proceedings under subsection (1) shall be initiated unless definite information has come into the possession of the Income‑tax Officer or he has obtained the previous approval of the Inspecting Assistant Commissioner of Income‑tax in writing to do so. (3) Notice under subsection (1) in respect of any income year, may be issued within ten years from the end of the assessment year in which the total income of the said income year was first assessable. (3‑A) Where a notice under subsection (1) is issued on or after the first day of July, 1982 no order under the said subsection shall be made after the expiration of one year from the end of the financial year .in which such notice was served. (4) Nothing contained in subsection (2) shall apply to any such case or class of cases to which clause (c) of subsection (1) applies as may be specified by the Central Board of Revenue:"

31. Now section 56 has to be read in the context in which this section has been placed. It has been placed immediately after section 55 which requires for P filing of the voluntary return and it is in this context it has been provided that if an assessee does not file a voluntary return then the I.T.O. is empowered to call for such a return under section

56. As stated above, admittedly section 55 applies for the current year but at the same time in that section as well the words "for any income year" have been used.

32. It therefore follows that the words "any income year" used in section 56 of the Ordinance do not mean all the past income years. These words only are referable to the current income year as the same meanings have to be given to these words as have been given in section 55.

33. The question to be examined is as to whether section 56 is an all embracing section so as to empower the I.T.O. to issue a notice for filing the returns for the past assessment years and to make the assessment on the basis of these returns. From the bare perusal of section 56 it is obvious that this section only empowers the I.T.O. to call for a return of income and this goes no further. Assuming that an assessing officer had the power to call for a return of earlier income years under section 56 of the Ordinance then following questions arise: (1) Under what section of the Ordinance the I.T.O. would be making the assessment on the basis of return so received. (2) What would be the rate of tax charged if an assessment is made on the returns received for the earlier years. (3) How the benefits, allowances, rebates etc. would be allowed to the assessee in respect of a particular past year which vary from year to year.

34. There is no answer to these questions. My learned brother has stated that the same rate of tax would be applicable as was prevalent in a particular assessment year and the same benefits and allowances would be allowable which are available in a particular year. I fail to appreciate this reasoning. When there is no provision in section 56 of the Ordinance as to how the return is to be processed and in the absence of the specific provision as to the rate of tax and other benefits, allowances etc., how and on what principle of law, the rate of taxes and benefits and allowances etc. could be applied in the respective past assessment year. Unless such a provision is specifically made in section 56 of the Ordinance this rate of taxes, benefits/allowances etc. cannot be made to apply as were available in a particular past year. This is evident from the similar provisions, in other sections of the Ordinance where the legislature has intended to allow the I.T.O. to make assessment for the past assessment years and in those sections specific provisions in this regard have been made; by the Legislature. In proviso to subsection (1) of section 65 it has been provided that tax would be charged at the rate or rates applicable in the assessment year for which the assessment is made. Under section 65 it has also been provided that the I.T.O. could issue a notice to the assessee containing all or any of the requirements under section 56 and may proceed to assess or determine the total income of the assessee and the tax payable by him and "all the provisions of this Ordinance shall so far as may be apply accordingly". Similar provisions have been made in sections 72 and 81 of the Ordinance in regard to the rate of taxes as well as the application of the other provisions of the Ordinance. No such corresponding provision has been made in section 56 of the Ordinance.

35. It is therefore obvious that section 56 of the Ordinance is only in regard to the calling for a return of income in cases where the` voluntary return had not been filed by a person under section 55 of the Ordinance. It is not an all embracing section under which the I.T.O. could call for a return, process it, make an assessment, and determine the tax payable by a person. On the other hand section 65 of the Ordinance is a complete provision of law under which an I.T.O. has been empowered not only to call for the return of income for the past assessment years but also to make an assessment and to determine the tax payable by an assessee. It is for this reason that in section 65 it has also been specifically provided that the tax would be charged at the rate or rates applicable to the assessment year for which the assessment is made and it has also been provided that while making an assessment and determining the tax payable by an assessee, all the provisions of the Ordinance shall be applied accordingly.

36. We have seen that section 56 of the Ordinance is not complete provision of law and is applicable only to current year and the corresponding power for making an assessment is provided in sections 62 and 63 of the Ordinance. Admittedly section 62 is applicable in regard to the current year where the assessee filed the return under section 55 of the Ordinance or if he fails to do so, the assessing officer has been empowered to call for a return under section 56 of the Ordinance and then the assessment for the current year is to be made under section 62 of the Ordinance. If it is discovered in the circumstances given in section 65 that the assessee's income for the past assessment year had either escaped assessment or the total income had been under assessed etc. the Legislature has given a complete code in section 65 empowering the I.T.O. not only to call for the return but also to process it, make the assessment and to determine the tax payable by such an assessee. It has been argued that section 65 only applies to class of cases where some kind of assessment had already been made. This conclusion is drawn only because the title of the section is `Additional assessment'. It has been consistently held in numerous cases that the title of section is not part of the law and for obvious reasons. Firstly, title of section is I normally given by the Draftsman who drafts the law and is never a subject of discussion by the Legislature. Secondly, the body of section, which is the real law, continues to undergo changes by way of amendments while the title remains the same. An instance may be quoted from the Income‑tax Ordinance itself. In section 19 the head note given is "income from house property". It is common knowledge and we all know and understand the word house has a meaning of a residence and it does not normally include the commercial premises. However, no body can interpret section 19 to say that in this head of income is included only the house property and not a shop or a commercial premises. As a matter of fact under subsection (2) of section 19 the word `house property' has been defined as "buildings or lands appurtenant thereto of which the assessee is the owner". If we read this definition alongwith the head note of the section, it would mean that house property only means that kind of building which is a house or a residential property. Obviously section 19 does not mean this. Under that head of income, income from house property includes the commercial property. It is therefore obvious that heading of a section in many cases is misleading and proper interpretation cannot be made if the head lines of sections are to be followed. The section itself has to be interpreted from the words used in the body of the section.

37. Now coming to the interpretation of section 65 there are some conspicuous words used which have to be differentiated. In clause (a) the word `income' has been used with reference to escapement of assessment. But in clause (b) the word `total income' has been used. Another distinguishing point is that in clause (a) it has not been mentioned as to whose income has escaped while in clause (b) it has been specifically mentioned that the total income of an assessee has been under assessed. Now word `income' and `total income' have been differently defined by the Legislature and these words carry different connotation. The word `income' is a larger concept and has not been defined exhaustively by the I.T. Ordinance. The `total income' is included in the larger word "income". It is for this reason that with reference to escapement the word `income' has been used while in case of under assessment etc. The word `total income' has been used. This distinction has been elaborately discussed in an earlier judgment of the Tribunal which is reported as 1988 P T D 88 and I can do no better than to reproduce paras. 10 and 11 from that judgment which reads as under:‑‑ Para 10: "According to this definition of the total income it is that kind of income, the total amount of which is computed in the manner laid down in the Ordinance. Therefore, the word `total income' is relatable to the computation of income for purposes of tax. It is for this reason that section 9, which is the charging section, talks about the total income. Keeping this definition in view clauses (a) and (b) of section 65 (1) become clear. Clause, (a) applies where the income is yet to be computed and therefore the word `total income' could not be used in that clause. On the other hand, where some kind of income had been assessed earlier, clauses `b' and `c' are applicable and, therefore, in those clauses the word `total income' has been used, because, in such cases, total income had already been determined and computed. Since it is discovered that there has been under assessment of the total income etc. reassessment can be made by invoking these clauses. As stated above, since the cases where clause 'a' is applicable income has not been earlier computed, therefore, the word `total income' is not used in that clause because the word `total income is relatable to the computation of income. Unless income is computed, it cannot become total income, because the total income is that part of the income, which is assessable under the Ordinance. In B.M. Kaundar in re: 14 ITR p. 10 a Full Bench of the Bombay High Court observed at p.21, "Secondly, that the manner of computation laid down by the Act, forms an integral part of the definition of `total income'. Computation, it is to be observed, does not form a part of the charging section, but is introduced into the definition of the total income to be brought to tax". There again at the same page of the report it was observed, "The correct method of approach, in any judgment is to treat nothing as being charged to tax until by the process of computation laid down by the Act, the status of income, profits and gains emerges". In cases where clause `a' is applicable, since the total income is not determined earlier, therefore, the word `income' has been employed which indicates that it applies to the total escapement of income which has not been assessed earlier". Para 11: "The word `assessee' has been defined in section 2(6) of the Ordinance according to which an assessee is a person by whom any tax etc. is payable under the Ordinance and it also includes a person .in respect of whom any proceedings under the Ordinance have been taken or a person who is required to file his return under section 55, 72 or under section 81 and who is deemed to be an assessee under any provision of the Ordinance. Therefore, it is clear that the assessee is a person who had either been already assessed to an income or who is required to file his return under section 55, 72 or section

81. This definition also makes it clear that the word `assessee' does not include a person whose income has escaped assessment. Now reverting to section 65(1) it is seen that in clauses `b' and `c' the word `assessee' has been used but this word is conspicuously absent in clause `a' which only talks about the escapement of income. If the interpretation placed by the learned D.R. was intended by the Legislature, the wording of clause `a' should have been "any income of an assessee chargeable to tax under this Ordinance has escaped assessment". What the learned D.R. wants us is to read the words `an assessee' between the word `income' and `chargeable' which cannot be done. The interpretation of the learned D.R. cannot be accepted without violence to the existing words in clause `a'. If the intention of the Legislature had been to apply clause `a' only to an existing assessee, the same wording would have been used as in clauses `b' and `c' where the words `total income of an assessee' have been used. Under no principle of interpretation the words which are not there in clause `a' can be added and without which the interpretation placed by the learned D.R. cannot be accepted. Now an objection can be raised that under section 65 it has been prescribed that a notice is to be issued to an `assessee' which could mean that using of the word assessee presupposes a person who is an existing assessee. However, this would be a misconception of law. There are two stages in the assessment proceedings under section

65. First stage is when some kind of inquiry on receipt of certain information etc. is conducted. The second stage is to issue notice under section

65. When the action is taken in the first stage the proceedings are started against a person and, therefore under the definition of an `assessee', the moment any proceedings are started, he becomes an assessee by fiction of law. It is for this reason that when the second stage comes and a notice is to be issued, the person concerned has already become an assessee because of the force of definition and therefore already that stage the word assessee has been used by the Legislature. It is, therefore, clear that a distinction has been kept in mind by the Legislature between clause `a' on the one hand and clauses `b' and `c' on the other. Both of these categories of cases cannot be placed on the same footing. The clear distinction is that in clause `a' the word `income' has been used instead of `total income' and the word `an assessee' has not been mentioned. On the other hand in clauses `b' and `c' the words `total income of an assessee' have been used. Therefore, logically clause `a' has to be placed on different footing than clauses `b' and `c'. The classes of cases falling in clause `a' have to be interpreted that it applies to cases of total escapement of income of a person for the earlier year and who had not been earlier assessed."

38. It has been argued by the learned Legal Adviser on behalf of the department that the words `person' and `assessee' used in section 65 are interchangeable. I fail to appreciate as to on what principle of law this argument has been advanced when the law has defined the two words differently in section 2 of the I.T. Ordinance. The words `person' and `assessee' have been defined in section 2(32) and in section 2(6) of the Ordinance which are respectively reproduced below:‑‑ "assessee' means a person by whom any tax or any other sum of money is payable under this Ordinance, and includes: (a) every person in respect of whom any proceeding under this Ordinance has been taken for the assessment of his income or the income of any other person in respect of which he is assessable or of the amount of refund due to him or to such other persons: (b) every person who is required to file return of total income under section 55, section 72 or section 81; (c) every person who is deemed to be an assessee, or any assessee in default, under any provision of this Ordinance:' Section 2 (32) "person" includes an individual, a firm an association of persons, a Hindu undivided family, a company a local authority and every other artificial juridical person;"

39. The Legislature has used the two words in section 65 which could not be regarded as interchangeable or without any meaning. Obviously some meanings have to be given to these two different words used in section 65.

40. There is still another reason against the application of section 56 for the past assessment years. Under section 56 the words `return' and `year' have been used in singular as it has been provided that the I.T.O. may call for "any income year to furnish `a return' of total income". It means that under section 56 return could be called for only for one year. Where the Legislature had intended to call for the returns for more than one year the Legislature has used plural for these words. In section 72 where the business is discontinued subsection (3) provided for calling for the return of income, which is reproduced below: "72(3). Notwithstanding any thing contained in subsections (1) and (2), the Income‑tax Officer may serve a notice on any person who, in his opinion, has discontinued, or is likely to discontinue, in any year, any business or profession, to furnish, within such time as may be specified in such notice, a return or returns of total income for the income year or years for which the assessee is required to furnish such return or returns under subsection (2)."

41. It is to be noted that in this provision the words used are "a return or returns of total income for the income year or years " Similarly, in subsection (3) of section 81 where a provision has been made for the assessment of a person who is likely to leave Pakistan, the assessing officer has been empowered to call for the return and the words again used are "a return or returns of total income for the income year or years". It is therefore, obvious that where the Legislature had intended to call for the returns for the earlier years as well then alongwith the singular, plural has also been used both for the `return' and the `year'. No such word has been mentioned in section 56 where the words used are "to furnish a return of total income for such year". The distinction in the wording used in section 56 and used in subsection (3) of section 72 and subsection (3) of section 81 is too obvious requiring any explanation.

42. Another argument has been advanced by the learned Legal Adviser that it was a general principle of law that all substantive provisions are applicable as they existed during the relevant assessment year and all the machinery provisions are applicable as they exist at the time of the assessment and therefore there was no necessity of having a similar provision in section

56. In support of his contention it was submitted that in section 65 as well only rates of tax prevailing in the relevant assessment year have been mentioned but there is no mention in regard to the exemptions, allowances and rebates etc., but still they are allowed as prevailing in the relevant assessment year. The argument therefore was, that when without any provision in section 65 in regard to other benefit and allowances, exemptions etc. are allowed for the past assessment years, then on the same principle the assessment is to be made in accordance with the law applicable in the relevant assessment years although it has not been so mentioned in section 56.

43. This contention is completely misconceived as the learned Legal Adviser perhaps has not applied his mind to the relevant provision of section

65. Section 65 does not provide for the applicability of rates alone but it also provides that the assessing officer may proceed to assess or to determine the total income of the assessee and the tax payable by him "and all the provisions of this Ordinance shall so far as may be, apply accordingly". The same provision has been made in subsection (4) of section 72 as well as in subsection (4) of section 81 as reproduced above. It is on the strength of these provisions that for the relevant assessment years whatever allowances, exemptions referred to by my learned brother are availed of. No such corresponding provision has been made in section

56. This therefore, does not leave the slightest' doubt that section 56 only empowers an assessing officer to call for a return of income in regard to a particular assessment year for which the assessee was to file a voluntary return and had not filed it.

44. There is still another argument against the view that section 56 is corollary or subsidiary to section

55. It has been argued that in section 56 there is no reference to section 55 and therefore, section 56 cannot be regarded as ancillary or subsidiary to section

55. In this regard I would like to quote an authoritative judgment of the Supreme Court of Pakistan in Muhammad Ayub v. Muhammad Yaqub reported as P L D 1960 S C 1003. In that case the question was as to whether section 498 of the Criminal Procedure Code was ancillary and subsidiary to section 497 of the same Code. A similar argument was advanced on behalf of the respondent that since in section 498 there is no reference to section 497 therefore section 497 was an independent section. The Supreme Court repelled this contention and at page 1011, stated the proposition in the following words: "the main question that calls for consideration is whether section 498 is only ancillary or subsidiary to the provisions of sections 496 and 497 of the Code, or in any sense, makes provision for situations and contingencies not covered by these sections". At page 1012 of the report the Supreme Court held as under:‑ "I am, therefore, inclined to the opinion that section 498 should be interpreted with reference to the context in which it occurs and should be held confined to the case of an accused person only." It may be noted here that in section 497 of the Criminal Procedure Code certain limitations are imposed for grant of bail but no corresponding limitations have been placed in section

498. It is in this context that the Supreme Court has held in the above‑cited case that the limitations provided in section 497 are to be read with section

498. Consequently, at page 1014 of the report the Supreme Court observed as under:‑ "The better view seems to me to be, that the policy of the law, in respect of bail to persons, accused of non‑bail able offences, is laid down in section 497 and the same policy should be kept in view, while considering the question of bail under section 498, Criminal Procedure Code. After all, judicial discretion has to be exercised, while granting bail arid the power conferred by Section 498 of the Code cannot be construed to be purely arbitrary. In this respect, therefore, section 498 of the Code seems to me to be "ancillary or subsidiary" to sections 496 and 497 of the Code, in the words of the Privy Council."

45. There remains only one point to be dealt with. My learned brother has cited a case of the Tribunal reported as 1984 P T D (Trib) 304 to hold that the Tribunal has already held that section 56 cannot be stretched beyond Ist July, 1979. That case has no relevancy in the facts and circumstances of the present case. The question in that case was as to whether a notice could be issued to an assessee for reopening of his case even in regard to those assessment years where action under section 34 of the repealed Income‑tax Act was barred by time before coming into force of the I.T. Ordinance. It is in this context that it was held that the provisions of the Ordinance could not be stretched beyond Ist July 1979, when the I.T. Ordinance had not come into force in regard to past and closed transactions.

46. Another argument has been advanced in regard to rates of tax being not mentioned in section 56 that section 166(2)(d) of the Ordinance takes care of it. With utmost respect again that has no relevancy in the facts of the present case. Section 166(2)(d) is applicable in regard to the assessment year (ending on or before 30th June, 1979) while we are considering the question in regard to the assessment years 1979‑80 onwards.

47. With utmost humility and respect it is also to be pointed out that conclusion arrived at by my learned brother in sub‑paras (b) and (d) in the concluding part of the order are contradictory. While conclusion in sub‑para (b) is that notice under section 56 could be issued at any time for any income year or to any person but in sub‑para (d) a limitation has been imposed and it has been held that notice can be issued only for such assessment years as are covered by the I.T. Ordinance, 1979 onwards.

48. Before parting with this judgment I would like to quote a recent Full Bench decision of the Tribunal reported as P T D (1988) page 437 where all the three members of the Tribunal unanimously held the same view as I have. At page 446 of that report it has been held: "Therefore, as a necessary corollary to it, we hereby conclude that service of notice under section 65 was a condition precedent for the assumption of jurisdiction for the charge years 1979‑80, 1980‑81, 1981‑82 and 1982‑

83. Since, notice under section 65 of the Ordinance was not issued in respect of the said years, assessments made in pursuance to section 56 of the Ordinance for the charge years 1979‑80,1980‑81,1981‑82 and 1982‑83 are hereby annulled."

49. Respectfully following the earlier order of the Tribunal reported as 1988 P T D 88 as well as the Full Bench decision reported as 1988 P T D 437 quoted above my conclusion is as under: (a) Section 56 of the I.T. Ordinance only empowers the I.T.U. to call for a return of income for the current assessment year where the assessee has failed to file voluntary return under section 55; (b) that in regard to past assessment years where income has escaped assessment, proceedings can only be started by issuing a notice under section 65 of the I.T. Ordinance and in the circumstances given in than section. (c) Since, no notice under section 65 of the I.T. Ordinance has been given in this case, therefore the assumption of jurisdiction by the assessing officer was without lawful authority and hence the assessment is liable to, be annulled.

50. Consequently, I would direct that the assessment for the assessment year under consideration be annulled.

51. FARHAT ALI KHAN (CHAIRMAN).‑‑I have the advantage of going through the learned .discourses of my learned brothers and with due respect I agree with my learned brother, Mr. Naqvi that the assessment order should be annulled. Though my learned brother, Mr. Naqvi has arrived at this conclusion in the light of several decisions of this Tribunal, including a Full Bench's decision, to which I am also one of the signatories, yet I feel tempted to express my own views on the point in issue in addition to what has been said by my learned brother, the Judicial Member. However, I will try to confine myself only to those points, which have not been either discussed by my learned brother, Mr. Naqvi, or on which I have a contrary view to offer.

52. I start my discussion with the concept of escapement of income. Income l is said to have escaped assessment when it has not been charged in the hands of an assessee in a proper assessment year. This could be either because he failed to file his return or the Department could not make him file it. Section 55 of the, Income‑tax Ordinance (hereinafter referred to as "the Ordinance") requires every person to file his return on or before the prescribed date, if his income is chargeable to tax during the relevant. assessment year. Similarly an‑ assessee who has been charged to tax for any of the four income years immediately preceding a particular income year is also required to file his return. However, in order to explain the concept of escapement of income take up a case of a person whose income is chargeable to tax. He may either file his return or may abstain from filing it. If he files the return, the I.T.O is required to frame assessment on the information supplied by such person. Now suppose, such person has not disclosed his income from a particular source and the I.T.O. assessed only that income which has been disclosed. There might be another possibility. Suppose, such person files a return but claims certain income as exempt from tax say for example being capital gain obtained from sale of a plot of land which according to him, was not the result of an adventure in the nature of trade. The I.T.O. accepts this position and frames assessment accordingly. Secondly, there might be a use in which such person does not file his return at all. Now, in case where no return is filed at all, it is a case of total escapement of income. However, the earlier cases provide the example of partial escapement. Thus, it is clear that escapement may be either partial or total.

53. Now, the question arises as to on what point of time escapement, whether partial or total, could be said to have been made? In those cases where the return is filed, the answer is obvious. In such cases, the income escapes assessment on the day when the assessment is framed. However, we are yet to examine the question in which the return is not filed at all.

54. If we read section 57, it appears that an assessee, who has not filed his return, can do so at any time and file it before the assessment is made. However, in the case where the return is not filed, the question would arise as to when the assessment would be deemed to have been made? This question came up for consideration before their Lordships of Indian Supreme Court in a case reported as (1965) 55 ITR 630, C.I.T. v. RAMAN CHETTIAR, and it was, inter alia, laid down by their Lordships that section 22(3) of the Income‑tax Act (section 57 of the Ordinance) permitted an assessee to furnish a return at any time, before the assessment was made, viz., before the time mentioned under section 34(3) of that Act expired. Subsection (3) of section 34 of the Indian Act was subsequently repealed. Moreover, the learned Editors of the celebrated work on "The Law and Practice of Income‑tax" By Kanga and Palkhivala, Vol. 1 1976 Edition, also dealt with this question at page 825 in the following words: "However, what is stated above may support subject to the time limit imposed by this subsection which provides that the belated returns should be furnished before the expiry of the prescribed period from the end of the assessment year to which the return relates. The period prescribed is four years for any assessment year commencing on or before 1st April 1967, three years for the assessment year 1968‑69, and two years for any subsequent year. There was no such time limit in the 1922 Act:" In support of this observation the learned Editors have, mentioned several decisions of various Indian High Courts which are riot cited for the sake of brevity. However, as pointed out earlier let me mention again that there was a provision in the Indian Income‑tax Act in shape of subsection (3) of section 34 which was subsequently repealed and which perhaps escaped the notice of the learned Editors. Be it as it may, here in Pakistan we also have subsection (1) of section 64 of the Ordinance, which lays down the period of limitation regarding framing of an assessment order after expiry of which the assessment becomes time‑barred. 55.Now reverting to the original discussion if we read section 57 with subsection (1) of section 64 it appears to us that an assessee who failed to furnish his return within the prescribed date could file it before the period of limitation for framing assessment expires. In other words, on the day when the period of limitation expires it would be deemed that the assessment order has been made. Whether a person filed or did not file his return it would be deemed that the assessment order if not made earlier was made in either case on the date when the limitation prescribed by subsection (1) of section 64 expired. Thus, for our purposes on such date the total or partial escapement, as the case may be, would be deemed to have taken place. Let me mention here that an assessee cannot file voluntary return after this date unless the legislature makes special provision to this effect as was done by introducing section 3C in the repealed Income‑tax Act.

56. Now before proceeding further let us deal with one more aspects of the issue under discussion. If a person files his return under section 57, of course after the prescribed date but before the expiry of period of limitation as provided by subsection (1) of section 64, the question arises as to under what provision of law such assessment would be made? This question has again been dealt with by their Lordships of Indian Supreme Court in the case reported as 75‑TTR‑18, .ATE OF ASSAM v. DEV PRASHAD BARUA, and their Lordships laid down that in such cases the assessment would be framed under section 143 or 144 (62 and 63 of our Ordinance) as the case may be. Thus, we are left with the cases of total or partial escapement, as discussed above, and let us now turn to the question as to under what provision of law assessment in such cases could be made? The answer to this question has again been provided by their Lordships of Indian Supreme Court in a case reported as 76‑ITR‑706, STATE OF ASSAM v. CHOUDHURI. According to their Lordships assessment proceedings can be initiated in such cases after issuing a notice under section 148 of the Indian Income‑tax Act (section 65 of the Ordinance). The learned Editors of "The Law and Practice of Income‑tax" by Kanga and Palkhivala, Volume 1, Seventh Edition, have also dealt with this issue at pages 902 and 903 in the following words:‑ "Income escapes assessment where no notice under section 139(2) is issued during the assessment year and no return is filed by the assessee during the assessment year; assessment proceedings can be initiated thereafter only by the issue of a notice under section 148 except in one case. The exceptional case is where an assessee who has not been served with a notice under section 139(2) himself voluntarily files a return after the expiry of the assessment year but within the period prescribed in section 139(4); in that case he should be assessed under section 143 or section 144 without calling in aid this section and no notice under section 148 would be necessary before making the assessment."

57. Thus, it is clear that in all those cases where the return is tiled within the prescribed limit as laid down by subsection (2) of section 55, or where a return is filed voluntarily before the expiry of period of limitation as laid down by subsection (1) of section 64, the assessment is to be framed under section 62 or 63, of the Ordinance, as the case may be. However, if a voluntary return is tiled after expiry of the period of limitation, it would not give rise to any right accruing in favour of such person and, on the contrary, it would serve as an information/definite information for the I.T.O. and he can issue notice under section 65 and frame assessment according to law. Let me mention here that Mr. Naqvi has very rightly pointed out that since section 65 was laid down to deal with the cases of escaped assessment, the legislature took care in providing for the rate or rates applicable to a particular assessment year for which the assessment was to be made which provision is conspicuous by its absence from section 62 of the Ordinance for the simple reason that it deals with a particular assessment year regarding which the income has not yet escaped assessment.

58. Before turning to sections 56 and 64 let me deal with the objection raised regarding the heading of section

65. To my mind, since subsection (1) of section 65 is dealing with both the cases of total escapement and partial escapement, the legislature has called it "Additional Assessment". Clause (a) of subsection (1) oil section 65 deals with cases of total escapement namely, where no return has been) filed at all though the income is chargeable to tax. But there may be cases of partial escapement also. Suppose an assessee had derived income from both from business and property but declared income from property only. The I.T.O. knew nothing about his business income and he framed assessment regarding property income. Now, if subsequently he gets information that during the relevant assessment year the assessee had concealed income from business, he would be empowered to issue notice under section 65 of the Ordinance subject to other provisions of same section, and if he finds the escapement, he would be entitled to frame additional assessment so as to bring to tax the totally escaped income from business, and here he would be framing additional assessment. But in such cases where no return has been filed at all and the I.T.O. learns about the escapement of income, he can again issue notice under section 65 and frame assessment according to law. Here, of course, he would not be framing additional assessment. However, since clauses (b) and (c) of subsection (1) of section 65 dealt with the cases of additional assessments in the sense that the I.T.O. had to frame fresh assessment in addition to an assessment which was completed earlier, the legislature in its wisdom decided to give this section heading of additional assessment.

59. Let me now turn to sections 56 and 64 of the Ordinance. Although it is well established from the discussion made above that in the case of escapement of income, either partial or total, it is section 65 of the Ordinance which applies, it therefore, necessarily follows that section 56 should not be meant for such cases. The legislature would not be and indeed cannot be so superfluous. In other words, section 56 would deal with those cases where the income has not yet escaped assessment, either partially or totally. Thus, if any person has neither filed his return under section 55 nor under section 57 of the Ordinance, the I.T.O. has powers to call upon him to do so, until the period mentioned in subsection (1) of section 64 expires, and such notice could only be issued under section 56 of the Ordinance. As such, it would not be correct to say that section 56 deals with cases of total escapement whereas section 65 is meant for partial escapement. As discussed earlier. section 65 deals with cases of escapement of income, whereas section 56 deals with those cases in which the income has not yet escaped. This conclusion is further fortified by the difference in language employed in both the sections. Under section 56 an Income‑tax Officer is empowered to issue notice where, in his opinion, the income is chargeable to tax, whereas in subsection (1) the language used is "has escaped assessment" or "has been under assessed" or assessed at too low a rate or has been the subject of excessive relief or refund under this Ordinance, or the total income of an assessee or the tax payable by him has been assessed or determined". Thus, it is clear that the legislature has used present indefinite tense in section 56 whereas present perfect tense has been used in section 65 though voices used are both passive and active. Thus, for this reason also it is clear that section 56 is dealing with that income year for which the tax is chargeable, whereas subsection (1) of section 65 deals with those assessments which stood completed sometime in the past. Thus, if we read section 56 with section 65, the inescapable conclusion would be that the I.T.O. would have power under it to issue notice regarding an income which is chargeable to tax and which has not escaped assessment either totally or partially.

60. With this background let me now turn to the use of expression "for any income year" and "at any time" in sections 56 and 64(3) of the Ordinance. These expressions appear to have been interpreted in such a way so as to make section 56 applicable to all earlier assessment years. The historical background of section 56 has also been highlighted to evince the departure made in use of expression "for any income year" in section 56 of the Ordinance as against the use of "previous year" in section 22 of the Act. I, therefore, start my discussion with subsection (2) of section 22 of the repealed Income‑tax Act, hereinafter refer to as "the Act", as it is the predecessor of section 56 of the Ordinance.

61. From perusal of section 56 it appears that the legislature had not used' the expression "previous year" in if though the same did find place in subsection (1) of section 22 of the Act. For the sake of convenience both subsections are reproduced hereinbelow:‑‑ "

22. Return of income. (1) Every person whose total income during the previous year exceeded the maximum amount which is not chargeable to tax and every person, whatever his income in the previous year who was assessed to tax for any year within five years preceding that year, shall furnish a return in the prescribed form and verified in the prescribed manner setting forth (alongwith such other particulars, statements or accounts as may be prescribed) his total income and total world income during the previous year: Provided that where the entire total income of an assessee during the previous year consisted of income chargeable under the head "Salaries" or any other income from which the full amount of tax payable by him has been deducted, he may, instead of furnishing a return as aforesaid, file a certificate in such form as may be prescribed and the said certificate shall be deemed for all purposes of the Act to be a return under this subsection. (1A) The return referred to in subsection (1) shall be filed:‑‑ (i) in the case of a person the major portion of whose total income consists of income to which the Sixth Schedule applies, by the 15th day of December next following; (ii) in the case of a company, by the fifteenth day of July next following the previous year or where the said fifteenth day of July falls before expiry of six months, from the end of the previous year before the expiry of the said six months; and (iii) in every other case:‑‑ (a) where the previous year of an assessee ends at any time between the first day of July and the thirty‑first day of December (both dates inclusive) by the fifteenth day of July next following; and (b) in other cases, by the fifteenth day of September next following: Provided that the Income‑tax Officer may on sufficient cause being shown, extend the date for the delivery of the return in the case of any person or class of persons: Provided further that no such extension of time for a period or periods amounting in all to more than three months shall be allowed except with the approval of the Inspecting Assistant Commissioner or the Commissioner. (2) In the case of any person whose total income is, in the Income‑tax Officer's opinion, of such an amount as to render such person liable to income tax, the Income‑tax Officer may serve a notice upon him requiring him to furnish within such period, as may be specified in the notice, a return in the prescribed form and verified in the prescribed manner setting forth (alongwith other particulars statement of accounts as may be prescribed) total income and total world income during the previous year: Provided that the Income‑tax Officer may in his discretion reduce or extend the period within which the return is required to be furnished."

62. Now, if we compare the provisions of section 22 of the Act with those of the Ordinance, we find that subsection (1) of section 55 and section 56 are reproduction, in substance, of aforesaid subsections (1) and (2) of section

22. Again, if we peruse subsections (1) and (2) of section 22, we find that the expression "previous year" has been used in subsection (1) only, whereas in subsection (2) it is conspicuous by its absence. On the other hand, we find that the expression "for any income year" finds place in both subsection (1) of section 55 and section 56 of the Ordinance. The reason for this repetition appears to be that since subsection (2) of section 22 was integral part of section 22, following its subsection (1) therefore, the legislature abstained from repeating the expression "previous year" in subsection (2). After‑all, subsection (2) was to be read in context of and with reference to subsection (1) of section

22. However, in the Ordinance the legislature enacted both subsections of section 22 separately as' sections 55(1) and 56, it therefore, repeated the expression "for any income year" in both sections of the Ordinance to make them complete and independent in themselves. Nevertheless, it appears that the expression "previous Year" as used in the Act had been replaced by expression "income year" in the Ordinance, but it is the addition "any" to expression "income year" in both sections, which appears to have actually given rise to a rather superficial controversy. Let me, therefore, examine this issue with some depth.

63. The expression "income year" has been defined by subsection (26) of section 2 of the Ordinance. However, before we refer to any definition contained in various clauses of section 2 of the Ordinance, we have to keep in mind the context in which a particular expression has been used in various provisions of the Ordinance. In other words, before a definition as given in section 2 of the Ordinance is adopted, it must be carefully noticed that it fits in the context in which it is used with particular reference to the general pattern of the section in which it is used together with legislative intent and purpose.

64. Now, from perusal of section 55 as a whole it appears that if the expression "for any income year" is interpreted to mean and include "any income year" in addition to or apart from the current income year, it would not only defeat the legislative intent behind enactment of section 55(1) but would also lead to head‑long collision with subsection (2) of the same section. If interpreted otherwise, it would serve as a licence for every person to file his return for any income year for which he did not file it earlier and, thus, provide an opportunity to make black money white. In past whenever the legislature wanted a free licence to be given to an assessee, the provision like section 3C of the repealed Act was provided which was in addition to section 22(1). I am, therefore, not prepared to interpret section 55(1) of the Ordinance as heterogeneous amalgamation of sections 3C and 22(1) of the Act. Nevertheless, the question remains as to why after all the legislature used the expression "for any income year" in section 55(1) of the Ordinance? To my mind, there are several reasons for this. Firstly, to my mind the expression "for any income year" means and implies an income year which is either a financial year, or which is equivalent to a calendar year as both financial year and calendar year fall within the definition of income year as given in subsection (26) of section 2 of the Ordinance. Secondly, the expression "any income year" means and implies an income year of a person relatable to his income earned in his individual capacity, or to an income year of his principal for whom he files his return as an agent. Again, the income year of the individual in his own capacity or as an agent could again be a financial year or a calendar year. Thirdly, since a person can file his return until the assessment has become time‑barred and since I.T.O. also has a corresponding power of calling upon him to file a return till the period of limitation expires, the expression "for any income year" refers to any income year which is falling in between current assessment year and the last date of the assessment year when the assessment becomes time‑barred. To my mind, since a person has an option of several types of income years for his both capacities, the legislature used the expression "for any income year". The word "any" is used when there are more than one things or persons and as discussed above, since several income years are possibly involved, in the use of expression "any income year" it therefore, covers all types of income years as discussed above. In my humble opinion, the word "any" has been prefixed before expression "Income year" to be precise and unambiguous; in language used. After all we have to interpret the expression "any income year" as used in subsection (1) in such a way that both subsections (1) and (2) of section 55 are reconciled with each other so as to advance the legislative purpose and intent instead of being defeated. Let me also mention here that section 55(1) does not empower any person, as pointed out earlier, to file a return regarding any income year other than the current income year, for the simple reason that section 57 deals with such right separately and this aspect has been discussed at some length earlier.

65. Now, with this background let us now turn to sections 56 and 64(3) of the) Ordinance. In my humble opinion, the expression "for any income year" as used in. section 56 and section 64, carries the same connotation which has been discussed regarding section 55(1). Here, the expression "for any income year" also refers to various types of various income years for which a person may have to file return but all of them must fall within the perimeter provided by subsection (2) of section 55 and subsection (1) of section

64. Similarly, the expression "any time" which finds place in section 56 also is to be interpreted in such a way that it oscillates in between the two points mentioned above.

66. Before summing up let me emphatically add that neither section 55 nor section 56 and nor section 64(3) deals with income which has escaped assessment. When the legislature made the provision for dealing with the escaped income, it has also laid down certain conditions in order to keep a check on the powers of an I.T.O. Before he could issue a notice under section 65, firstly he has to ensure that either he has definite information, or he has obtained the prior approval of his I.A.C. Secondly, he has also to ensure that the notice which he wants to issue was within ten years from the end of the assessment year in which the total income of the said income year was first assessable. Thirdly, his power regarding rate or rates has further been restricted. It is important to note that none of these precautions have been taken while enacting provisions of section

56. Thus, if it is held that section 56 deals with cases of total escapement and section 65 deals with cases of partial escapement, it would be quite ridiculous to say that in case of total escapement the I.T.O. enjoys unlimited and unfettered powers whereas in the case of partial escapement he has to fulfil certain conditions. I am, therefore, not prepared to concede to the I.T.O. such powers which the legislature in its wisdom has not given to him. My learned brother, Mr. Zuberi has however, imposed a restriction on the power of I.T.O. when he observed that he would not' be competent to issue notice under section 56 regarding income year falling beyond 1979‑

80. But what shall be the position after 20 years if this interpretation is accepted? 66‑A. Now before concluding let me also point out that the expression "income year", as used in subsection (3) of section 65 of the Ordinance; means and implies any income year which is falling anywhere on the canvass of ten years starting from the assessment year in which the total income of a particular income year was first assessable. This interpretation is also given with reference to the context.

67. Let me also mention at this juncture that section 64 with its three subsections deals with the returns which are filed under sections 55, 57 and

56. Let me also mention here that subsections. (1), (2) and (3) of section 64 deal with the limitation period for those assessments which are to be framed under sections 62 and 63 regarding returns filed under sections 55, 57 and 56 respectively. Let me also state that C.B.R. Circular No. 8 of 1982 dated 8th July. 1982 does not state the law correctly. However, I am not dilating on these points as they are not directly in issue in this appeal.

68. Now, to sum up I am of the view that, (1) an assessee has to file his return within the prescribed date but if he does not do so, he should voluntarily file it before the assessment for that year becomes time‑barred under section 64(1) of the Ordinance; (2) if an assessee has not filed his return within the; prescribed period, the I.T.O. can call upon him to furnish such return under section 56 of the Ordinance at any time before the assessment becomes time‑barred under section 64(1); (3) the day the assessment for a particular year becomes time‑barred and the income is not charged to tax, it becomes a case of escaped assessment and the proceedings can be initiated under section 65 irrespective of the fact that such escapement is total or partial; (4) if an assessee files a return after expiry of the period of limitation as laid down by section 64(1) of the Ordinance, it has no value in the eye of law, but the I.T.O, can take it as definite. information and after issuing notice under section 65, frame assessment accordingly. Similarly. if an assessee has filed a return after the prescribed date but before the assessment becomes time‑barred, the I.T.O. has no jurisdiction to issue notice under section 56, because in such case the proceedings shall be deemed to be pending before him; (5) if a return is filed under section 57, or in response to notice under section56, as discussed above, it would be assessable under sections 62 and 63, whereas a return filed in response to notice under section 65 will be assessed under that section of the Ordinance.

69. Thus, in view of the discussion made above and for the reasons given by my learned brother; Mr. Naqvi the Judicial Member, I agree with him that the assessment for the year under consideration be annulled.

70. However, before parting with this appeal let me mention here that I was very much reluctant to constitute a larger Bench consisting of five senior members particularly in view of the fact that several decisions of this Tribunal were available on the point in issue including a Full Bench decision, to which was also one of the signatories. However, feeling the warmth of conviction of the Department we sat together to dispose of the point in issue once again and, I am glad, that it has been now thrashed out in broader perspective and with a wider perimeter so as to conclusively set at rest the controversy regarding legislative intent and purpose of enacting sections 56 and 65 with reference to and in context of other sections of the Ordinance.

71. MIRZA MUHAMMAD WASIM (ACCOUNTANT MEMBER).‑--I have carefully considered the issues involved in the case and have been immensely benefited by the extremely erudite but differing views of my learned brothers, the Accountant Member (in paras. 1 to 27 above), the Judicial Member (in paras 28 to 50) and the Honourable Chairman (in paras 51 to 70). To re capitulate, the opinion of the learned Accountant Member is that where no return has been filed by the assessee a notice under section 56 of the Income‑tax Ordinance may be issued by the I.T.O. both in case where the current assessment year is involved and also in cases where the matter relates to an earlier assessment year but that no such notice can be issued for an income year prior to the coming into force of the Income‑tax Ordinance, 1979. The learned Judicial Member has, on the other hand, held that a notice under section 56 can be issued for the current assessment year only and that for all earlier years it is a notice under section 65 which has to be issued if the Income‑tax Officer wants an assessee to file a return of income which he has failed to furnish. The learned Chairman has held that if an assessee fails to file his return the I.T.O. can require him to furnish the return by issuing a notice under section 56 of‑ the Ordinance at any time within the period specified in subsection (1) of section 64 after which the assessment normally becomes time‑barred under the provisions of the said subsection. It has been further held by the learned Chairman that as soon as the assessment for a particular assessment year becomes time‑barred under the provisions of section 64(1) without any return having been filed for that year it becomes a case of escaped assessment and assessment proceedings can be initiated only under section 65 in such a case.

72. In my humble opinion the best way to consider the issue is to go primarily by the plain wording of section 56 in, order to determine its scope and meaning. We can then, of course, refer to the provisions of section 65 and also of other relevant sections if there can be any reason to believe that the provisions of section 56 cannot be interoperated to mean what a plain reading of the provisions would suggest. The said section has been reproduced both by the learned Accountant Member and the learned Judicial Member and need not be reproduced again. I can only say that in my opinion its important words in the present context are the words "at any time by notice in writing" and "for any income year". Now the words "at any time" cannot ordinarily be construed to mean "before the end of the relevant assessment year" because if the legislature had intended to confine the issue of notice under section 56 to only the current assessment year there is no reason why this would not have been clearly specified in the section. In this connection the reference by the Department to the provisions of section 139(2) of the Indian Income‑tax Act, 1961 is quite to the point. As we can see, there the intention of the Legislature was to confine the provisions of the said subsection to the relevant assessment year and it was therefore so specified in the subsection which reads as under:‑‑ "(2) In the case of any person who, in the Income‑tax Officer's opinion, is assessable under this Act, whether on his own total income or on the total income of any other person during the previous year, the Income tax Officer may, before the end of the relevant assessment year, issue a notice to him and serve the same upon him requiring him to furnish, within thirty days from the date of service of the notice, a return of his income or the income of such other person during the previous year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed." It may be added that in the scheme of the repealed Income‑Tax Act, 1922 a notice under subsection (2) of section 22, calling for a return of income, could be issued with regard to a previous year within the corresponding assessment year only and for earlier years there was a separate provision in section 34 for the issue of a notice to non‑filers without any limit of time. That is why in subsection (2) of section 22 there were no words even remotely corresponding to the words "at any time" or "for any income year" while in the relevant subsection (IA) of section 34 the words "at any time" were used. Thus I find it difficult to subscribe to any interpretation of section 56 of the Income‑tax Ordinance which on the one hand tends to ignore the importance of such unambiguous words as "at any time" etc. which obviously have been used very deliberately in the section and on the other hand seeks to read phrases such as "before the end of the relevant assessment year" into section 56 which simply are not there. In my opinion therefore section 56 means what it says, viz. that a notice calling for a return of income can be issued under that section without any restriction as to the Income year for which it can be issued or the point of time at which it may be issued. Any interpretation to the contrary could perhaps have been possible only if there were overwhelming reasons to believe that the intention of the legislature could not possibly have been that which appeared from a plain reading of the relevant provisions. This, however, is not so and in fact there is every reason to hold that the intention of the legislature was exactly the same as .the plain words of section 56 suggest viz that there is no limit on the time within which a notice under the said section can be issued for any assessment year. In this connection the learned Accountant Member has already in para. 15 above referred to the combined effect of the provisions of sections 22(2) and 34(IA) (a) of the repealed Income‑tax Act, 1922 which in short was that when an assessee failed to file a return of income which prima facie he should have riled, the Income‑tax Officer could call for the return from the assessee without there being any restriction on the time within which the relevant notice could be issued, which restriction otherwise existed in the case of other situations (including concealment of income) dealt with in section 34 of the repealed Act. Now if it is assumed that it is a notice under section 65 and not 56 which is to be issued to non‑filers in the case of assessment years other than the current assessment year, it would also mean that the Legislature intentionally brought about a substantive change in law because even at the time of the introduction of the Income‑tax Ordinance the limitation specified it section 65 regarding the issue of a notice under that section was ten years and there was of course no reference in that section to non‑filers or the absence of any time limit in their case which provisions were very explicit in section 34 of the repealed Act. In 1987 the time limit in section 65 was further reduced to five years. Thus the interpretation that it is a notice under section 65 which is to be issued in the situation under consideration means that the Legislature had with the introduction of the Ordinance imposed a time limit on the issue of notice to non 61ers when previously there was none. This in fact is the only practical implication underlying the whole controversy which otherwise would have remained purely academic and more or less pointless. Now, there is no indication whatsoever that there was any intention on the part of the law‑making authority to incorporate an important change of this nature in the Income‑tax Ordinance. The Ordinance did not, of course, have any explanatory memorandum or notes on clauses which normally accompany bills presented in Parliament but the Central Board of Revenue did issue its Circular No. 4 of 1979 dated 23rd August, 1979 which inter alia explained the important changes in law brought about by the Ordinance. The l Circular is quite detailed and it explains even such changes as were purely procedural in nature, but it nowhere indicates that the Ordinance had placed a time limit on the notice calling for a return of income when there was no such limit in the repealed Act. I have also failed to rind any hint of such a significant change in any speech, press statement etc. made by any concerned authority at that time. There is thus no reason to believe that there was any intention on the part of the Legislature to impose a hitherto non‑existent time limit on a notice calling for a return of income and thus the view of the learned Accountant Member that section 56 of the Ordinance only encapsulates the scope of both section 22(2) and section 34(IA)(a) of the repealed Act appears to be absolutely valid. Such combining of provisions amounted to a mere re‑arrangement of the sections in order to prescribe a notice under a single section (instead of two different sections as in the repealed Act) in situations where the Income‑tax officer required an assessee to file a return which he had failed to furnish for any year on his own. I am thus of the considered view that there is no basis for assuming that the intention of the Legislature in introducing a separate section 56 in the ordinance went any where beyond the desire to re-arrange the existing substantive provision in this regard Thus we would be perfectly justified in holding that the words in section 56 do nothing but reflect the exact legislative intent viz that a notice under section 56 can be issued at any time for any income year as under the repealed Act.

73. Having held thus with regard to both the content and intent of section 56, it would seem somewhat superfluous to go into the details of the provision of section 65 and other sections, but such a course seems hardly avoidable because of some of the observations of my learned brothers in the above paras and also because of the findings in this regard in some earlier decisions of this Tribunal. In this connection I would, however, point out that even if the interpretation of section 56 based on its plain meaning appears to render certain words in some other sections somewhat ambiguous or redundant we would still not be justified in holding that the clear words such as "at any time" etc. in section 56 mean something else in the context of the Income‑tax Officer's powers to call upon a non‑filer to file his return. In fact, however, I am of the view that even otherwise a straightforward interpretation of section 56 does not result in any problems with the other provisions of the Ordinance and that the other provisions support rather than negate such an interpretation. The view of my learned brother which emerges from paras 28 to 50 above, however, is that read with other sections of the Ordinance, the words "at any lime" and "for any income year" in section 56 can be interpreted to refer only to the current year. Since `with due deference' I do not agree with this view, I now turn to a discussion of the views in paras 28 to above. To begin with it may be pointed out that I would not fully agree even with the framing of the "precise question" in para. 28 above which is perceived to be involved in the case viz. "whether a case of an escaped or under assessed income could be reopened and assessed by issuing a notice under section 56 of the Income‑tax Ordinance or for that purpose it is necessary to issue a notice under section 65"? In my view it is actually unnecessary to think in terms of "escapement" of income or otherwise in the present context because by employing such terms we can be in danger of forcing ourselves to follow lines of reasoning which may not be strictly relevant. Now the question in context of section 56, in my opinion, is whether in the case of default of the provisions of section 55 the Income‑tax Officer can issue a notice under section 56 for any income year at any time or whether there is any restriction with regard such to the time within which it notice can be issued in respect of a particular income year. In resolving this question I do not think it is quite material whether we call the default an escapement of income" or give it some other name as long as it is clear that we are dealing with a default of the provisions of section

55. Having said this I now turn to the analysis of the provisions of sections 55 and 56 contained in para. 30 to 32 above. My learned brother has begun the analysis with the observation that "there is no dispute that section 55 of the Ordinance applies to the current year as is evident from various dates given in (its) subsection (2)". It has then been pointed out that although section 55 applies to the current year it employs the words "for any income year" and therefore the words "for any income year" used in section 56 do not mean all the past income years but are referable only to the current income year. I am afraid it is not possible for me to agree at all with this reasoning. To begin with, the statement that section 55 applies to the current year represents a slight inaccuracy or at least a somewhat misplaced emphasis. This actually is again the result of employing terms with some pre‑determined connotations to which I have referred earlier in this paragraph. In fact the term "current year" has not been used in any of the sections which we have considered although its use in common parlance is not denied. Now section 55 in fact places a legal obligation on every person whose total income for any income year exceeds the exemption limit or who has been charged to tax for any of the four preceding income years to furnish his return of total income by the dates specified in subsection (2) of the section. The dates depend on the assessment status of the person as also on the income year he has adopted. For instance the specified dates before the 1987 amendments were, in the case of a company, the first of August next following the income year or within fifteen days of the expiry of six months from the end of the income year or in other cases the First August or the first of October next following the income year depending on the persons' income year. It is true that these dates fall within the time span of the assessment year next following the relevant income year but it would not be accurate to say that section 55 applies to the current year instead of saying that it places an obligation on every person to whom its subsection (1) applies to file his return by the date specified in its subsection (2). It would thus be even more inaccurate tot infer that since the words "any income year" have been used both in section 55 and section 56, the latter necessarily applies only to what has been termed as the I "current year". It need hardly be pointed out that as in the case of any other word of the English language, the word 'any' has to be read in the context in which it is used. According to the Chambers 20th Dictionary (1983 Edition) the word "any means "one indefinitely; some; whichever, no matter which". Thus when section 55(1)(a) says that "Every person whose total income ..for any income year .......exceeds the maximum amount ." etc. it means that in "whichever" income year this happens the person has to file his return by the specified date. 1n section 56 the word "any" used in conjunction with the words "person", "income year" and "time" does not have an entirely different connotation but in paraphrasing the relevant provisions we could probably say, "the Income‑tax Officer may at whichever lime he chooses require whosoever, in his opinion, is chargeable to tax for some income year to furnish his return of income for that year". The point which I want to make is that the word `any' whether it is used in section 56 or 55, has to be read in its proper place and context and as a part of the sentence in which it is used. It would, therefore, not be right to ascribe any meaning to it which is not only quite alien to its context in section 56 but is also the result of a doubtful appreciation of the language because ordinarily if words such as "income year" appear even in consecutive sentences within the same paragraph a word such as "the" or "that" would be used with it in the second sentence to show that the reference in that second sentence is to the same "income year" as in the first sentence. In section 56 obviously no such word has been used to link the words "income year" with any similar words used elsewhere. Furthermore in section 56 the words "at any time" are perhaps even more crucial than the words "any income year" and are obviously meant to make it clear that there is no limit of time with regard to the issuance of a notice under that section. 73‑A. In para. 33 above, there is a reference to certain problems which in the arguments for the assessee were considered to be insurmountable if it were held that a notice under section 56 can be issued for not only the current year but for past years also. In my view, however, the questions posed do not represent any insurmountable problems and these again do not provide any real basis for putting a different interpretation on the provisions of section 56 than the meaning derived from their plain reading. The first problem pointed out with regard to the section of the Ordinance under which the assessment would be made after the return for an earlier year has been received in response to a notice under section

56. In my view, however, there is no problem in this regard. The assessment would obviously be made under section 62 or section 63 of the Income‑tax Ordinance. Here we may pause to review the scheme of Chapter VII of the Income‑tax Ordinance dealing with "Assessment". Section 55 is the first section of the Chapter and it deals with the legal obligation of every person to file a return of his total income in the circumstances specified in the section and by the dates prescribed in it. Section 56 then deals with the I.T.O's powers to call for a return of income at any time where a person has apparently failed to discharge the legal obligation imposed on him by section

55. Section 57 permits a person who has earlier failed to furnish a return of total income as required by law to furnish it voluntarily and also to revise a return already Filed by him provided that in either case the relevant assessment has not already been made. Section 58 deals with the filing of the assessee's statement of total' assets and liabilities which under a specified situation is again a legal obligation of the assessee. After this section the sections dealing with the actual assessment process commence. Section 59 deals with the acceptance under Self‑Assessment Scheme of a return filed under section 55 of the Ordinance. Section 59‑A deals with the acceptance of a return filed under section 55 without requiring the presence of the assessee. This section obviously deals with cases which are. outside the purview of section

59. Section 60 authorises the framing of a provisional assessment where no return of income has been furnished by the assessee for any income year. Such provisional assessment can be made prior to an assessment under section fit, 63 or 65 and is to be made on the basis of the assessment for the latest preceding assessment year. Section 61 then deals with the: situation where the I.T.O. does not intend to make an assessment on the basis of the assessee's own declared income. In such a situation the I.T.O. may "serve upon any person who has furnished a return of total income for any income year, or upon whom a notice has been served to furnish such return" a notice requiring him to attend at the I.T.O's office or to produce any evidence on which he may rely in support of the return or to furnish such accounts or documents as the I.T.O. may require. Section fit then follows section

61. According to this section the I.T.O., after considering the evidence on record and such other evidence as the I.T.O. may require shall by an order, in writing assess the total income of the assessee and determine the tax payable by him on the basis of such assessment. Section 63 then deals with best judgment assessments in the case of specified defaults by a person and section 64 deals with the limitation of time for making assessments under section 59‑A, 62 or

63. Then comes section 65 which deals with additional assessment in the case where for any reason any income has escaped assessment or the total income of an assessee has been under‑assessed or where the total income has been determined under) subsection (1) of section 59 of the Ordinance. 73‑B. It is obvious from the foregoing that sections 55 to 57 deal with the voluntary riling of returns or revised returns or the calling for of returns by the I.T.O. Sections 59 and 59A then deal with the acceptance of the returns whether under the Self‑Assessment Scheme or otherwise. It is important to note that as per their provisions these last mentioned two sections apply only in cases where returns have been filed under section

55. In fact in section 59(1) an Explanation was added in 1985 in which "for the removal of doubt" it has been "declared" that a return under section 55 does not include a return under section

57. Section 61 follows sections 55, 56 and 57 and it begins with the words "The Income‑tax Officer may serve upon any person who has furnished a return of total income for any income year, or upon whom a notice has been served to furnish such return, a notice etc. Now section 61 does not say that a notice can be issued under its provisions only where a return has been filed under section

55. In fact the reference to section 55 which is found in sections 59 and 59A has been clearly and deliberately omitted from section 61 which is therefore relevant where the return has been filed under any provision of law whether it is section 55, 56 or 57.Section 61 is actually applicable even when no return has been filed but only a notice calling for such return has been served upon a person. Section 62 then deals with assessment of total income of the assessee by an order in writing and it begins with the words "The Income‑tax Officer, after considering the evidence on record (including evidence, if any, produced under section 64 shall by an order in writing, assess the total income..." etc. Thus in framing an assessment under section 62 evidence obtained under section 61 is to .be considered and since section 61 does not apply only to returns under section 55 but also applies to returns obtained under section 56 or filed under section 57, it is obvious that for whatever year a return has been obtained under section 56 an assessment can be made under section fit in the light of the return. This view is further confirmed by the provisions of subsection (2) of section 64 which makes a specific reference to assessment under section 62 or 63 in case where returns have not been filed under section

55. In fact subsection (3) of the section 64 envisages the framing of assessment under these sections even in cases where no return is filed despite a notice under section

56. The said subsection has been reproduced in para. 77 below and it can be seen that its provision that no assessment under section 62 or 63 would be made after the expiry of two years from the end of the financial year in which the notice under section 56 is served suggests that the notice under section 56 need not necessarily be issued in the assessment year next following the relevant income year and that an. assessment under section 62 or. 63 can be made even if the notice under section 56 is issued after the said assessment year. Thus I am of the view that no problem arises with regard to the section under which the assessment is to be made if we hold that section 56 applies to the past income years as well.

74. The next question, which is seen as arising is with regard to the rate of tax to be charged in case section 56 is found to be applicable for earlier years. In this connection the assessee had challenged the Departmental view that the rate of tax would be the same as was applicable in the particular assessment year. I, however, think that the view of the Department is quite valid. It may be pointed out in this connection that section 9 of the Income‑tax Ordinance is the charging section and its subsection (1) reads as under: "

9. Charge of Income‑tax.‑‑(1) Subject to the provisions of this Ordinance, there shall be charged, levied and paid for each assessment year commencing on or after the first day of July, 1979, Income‑tax in respect of the total income of the income year or years, as the case may be, of every person at the rate or rates specified in the First Schedule:" It is quite obvious from the above that the rates for each assessment year are as per the First Schedule and these cannot be considered to vary with reference to the point of time at which the assessment is made. In connection with the view that section 56 applies only to the current year it has in para 35 above also been pointed out that section 56 is only with regard to the calling of a return and unlike section 65 it contains no reference to the processing of the return or the framing of an assessment or the applicable rate of tax. This of course is quite so but the reason for this seems to be that section 56, as we have already seen, precedes section 62 and is a part of the whole scheme of sections leading up to the framing of an assessment under section 62 or

63. There was thus no need to mention the processing of the return or the subsequent framing of an assessment in section 56 in the same way as there was no need for this in section 55 or

57. In the case of section 65 on the other hand the situation is quite different. This section comes after sections 59, 59A and 62 under which an assessment is normally made on the basis of returns filed by an assessee either voluntarily or otherwise. The section deals with "Additional assessment" and in cases of escaped assessment or under assessment etc. it empowers the Income‑tax Officer to issue a notice to the assessee "containing all or any of the requirements of a notice under section 56". But as the sections which deal with assessment in the normal course have already followed section 56 and have preceded section 65 it was essential that section 65 should also mention the next step after the issue of the notice viz that the I.T.O. may proceed to assess or determine the total income of the proviso to subsection (1) of section 65 viz. that tax is to, applicable to the relevant assessment year is also logical in so precaution to clarify that framing of an additional assessment does not authorise the levy of tax at any rates other than those application, assessment year for which the assessment is made. It may be added that if it was correct that the absence of a reference to assessment or rates of tax in section 56 meant that it did not apply to earlier years then a similar reference would have been required in section 57 but which as we have already seen was quite unnecessary.

75. Now I come to the views reflected in paras 37 to 40 above which in short are that notwithstanding the title of section 65 viz. "Additional assessment" there are certain words employed in clauses (a) and (b) of its subsection (1) from which it is evident that clause (a) is meant to cover situations where no return has been filed for an earlier year and it is, therefore, under this provision of section 65 that a return for an earlier year is to be called for. In this connection a reference has also been made to an earlier decision of the Tribunal reported as 1988 P T D 88. two paragraphs from which have been reproduced in para 37 above. In my humble opinion, however, the aforementioned interpretation of clauses (a) and (b) of section 65(1) is rather abstruse and I do not think that through such a reasoning the obvious meaning of the plain words used in section 56 can be dislodged. Even otherwise I do not find it possible to agree that the words "any income chargeable to tax under this Ordinance has escaped assessment" in clause (a) refer to a situation where no return has been filed. The phrase "any income chargeable to tax" can in fact refer to income under any of the heads specified in section 15 and not necessarily to the entire income of an assessee. Such a view would find support from a plain reading of sub‑clause (a) of clause (24) of section 2 of the Ordinance which reads as under:‑‑ "(24) income includes ‑‑

(a) any income, profits or gains, from whatever source derived, chargeable to tax under any provision of this Ordinance under any head specified in section 15." Section 15 of the Ordinance on the other hand begins other the words "All income" and goes on to read as under:‑‑ "

15. Heads of income‑‑‑

All income shall, for the purposes of the charge of tax and the computation of total income, be classified under the following heads namely:‑‑ (a) Salary; (b) Interest on securities..:" etc. The word `any' has subsequently been used in the context of various heads of income; for instance subsection (1) of section 16 reads as under:‑‑ "16 Salary.‑‑

(1)The following incomes shall be chargeable under the head "Salary", namely: (a) any salary due to the assessee from an employer in the income year, whether paid or not; and (b) any salary (including arrears or advances of salary) paid to the assessee in the income year by an employer:" The word `any' has been underlined above for emphasis in order to show that the words "any income" appearing in section 65(1)(a) should not be construed to refer to the escapement of the entire income of an assessee resulting from non filing of a return by him. Furthermore it may also be pointed out that the entire income of an assessee may escape although he may have tiled his return and may have been assessed by the I.T.O. Thus if an assessee files a `nil' return of income, say in pursuance of the requirements of section 55(1)(b) of the Ordinance the I.T.O. may accept the `nil' return on the basis of evidence or documents furnished by the assessee under section

61. Subsequently, however, the I.T.O. may discover that the assessee had in fact earned income during the year which had not been disclosed. In such a situation the entire income of the assessee would have escaped assessment but not because of the failure of the assessee to file a return. Thus we would not be right in assuming that section 65(1)(a) refers to a situation where no return has been filed. Similarly, a reference as also been made to para. 11 of this Tribunal's order 1.988 PTD page‑

88. Here it was observed that the definition of the word `assessee' appearing in section 2(6) of the Ordinance does not include "a person whose income has escaped assessment". It has also been pointed out in this connection that in clauses (b) and (c) of section 65(1) the word' `assessee' has been used while in clause (a) the word is conspicuously absent. It has been concluded from this that clause (a) applies in cases of persons other than `assessees' viz. persons who have not filed their returns. In my opinion, however, the absence of the word `assessee' in clause (a) of section 65(1) has no such implication. In fact it is obviously only a matter of drafting and the words "issue a notice to the assessee" in subsection (1) of section 65 go with clause (a) as well as clauses (b) and (c) of the subsection. In fact read as a whole the provisions of section 65(1) in the context of its clause (a) are as follows:‑‑ "If, in any year, any income chargeable to tax under this Ordinance has escaped assessment the Income‑tax Officer may, at any time, subject to the provisions of subsections (2), (3) and (4), issue a notice to the assessee containing all or any of the requirements of a notice under section 56:" It may be added that the word `assessee' has in fact a very wide meaning and has been defined in clause (6)(b) of section 2 to include "every person who is required to file a return of total income under section 55". Thus if a person has income which attracts the provisions of section 55 he automatically becomes an assessee under the definition of the term regardless of whether he has filed a return or not or whether any notice for filing of return has been issued to him or not. In my opinion, therefore, undue emphasis has been placed on the fact that the word `assessee' has not been used in the main body of clause (a) of section 65(1) and I do not think that it has been rightly concluded that the reference in the said clause is thus to a person who has not been assessed to tax or who has not filed his return. In fact under section 55(1)(b) a person who has been charged to tax for any of the four assessment years preceding the relevant income year has to file a return of income. There can hardly be any dispute that such a person would be an assessee although he may commit a default and not file his return. In para. 38 above a distinction has also been drawn between the words `person' and `assessee' in the context of section

65. This comparison may perhaps be based on a misconception because the word "person" has not been used anywhere in section 65 and in any case as I have endeavoured to show the word "assessee" has in fact not only been used in clauses (b) and (c) of section 65(1) but it has also been used in the context of clause (a) although not in the main body of the clause. Thus the comparison of the word "person" and the word "assessee" in no way supports the view that clause (a) of section 65(1) refers to cases of non‑filing of returns. Similarly, I do not find it possible to give much weight to the fact that the expression "any income year" has been used in the singular instead of plural in' section

56. It hardly needs reminding that in law the singular includes the plural and even otherwise if the I.T.O. is empowered to call for a return for "any income year" he can do so for any or all of the several preceding years and it cannot be said that he can call the return for any one of the preceding years merely because the expression has been used in the singular. .

76. In paras. 42 and 43 above a reference has been made to the Department's argument that according to the general principles of law all substantive provisions are applicable as they existed during the relevant assessment year and, therefore, there was no necessity in section 56 of a specific provision that the tax rate would be the same as applicable during the relevant assessment year. The Department's contention that even section 65 mentions only the rates of tax prevailing in the relevant assessment year but does not mention the exemptions, allowances and rebates etc. has also been considered but it has not been found to be acceptable. In this connection it has been pointed out that section 65 does not provide for the application of rates alone but it also provides that the assessing officer proceed to assess or determine the total income of the assessee and tax payable by him and "all the provisions of this Ordinance shall so far as may be, apply accordingly". It has been observed that it is on the strength of this provision that in making an assessment under section 65 only the allowances, exemptions etc. available during the particular assessment year are allowed. In my opinion, however, the words "all the provisions of this Ordinance shall so far apply accordingly' do not refer to the exemptions, allowances etc. because if this were so the provision would have been a part of the Proviso in which a reference has been made to the tax rates. These words actually refer to all the provisions which come into play during the assessment proceedings under section 65 and afterwards such as issue of a notice under section 61 or fit, issue of demand notice, payment of tax within the prescribed time, levy of penalty or additional tax for non‑payment of tax and right of appeal etc. The fact that such allowances and rebates etc. are allowed in accordance with the law prevailing during the relevant assessment year, therefore, is not because of the words used in section 65 but because this is logical in the whole scheme of the income‑tax Ordinance which, as pointed out earlier envisages the charge, levy and payment for each assessment year, "Income‑tax in respect of the total income of the income year at the rate or rates specified in the First Schedule". Thus in my opinion it is not possible to apply the rates of tax, exemptions or allowances in an income year which do not under the law relate to that year and as already pointed out earlier the reference to the rates of tax in the Proviso to section 65(1) is only a matter of abundant precaution resulting from the sequence in which section 65 has been placed and because of the reference in that section to the assessment of income and payment of tax when section 62 has already dealt with these matters earlier on. It may be added that Provisos are often inserted in this way to "allay fears or to remove misapprehensions" (Madan Lal Fakir Chand Dudhediva v. Shree Changdco Sugar Mills, Ltd. AIR 1962 SC 1543).

77. Now I come to the learned views in paras. 51 to 70 above, which, as we have seen, in short arc that in case of' a default of the provisions of section 55, the LT.O. can under section 56 call upon the assessee to furnish the return of income at any time before the assessment becomes time‑barred under section 64(1). It has thus been held that the notice under section 56 need not necessarily be issued during the assessment year relevant to the income year for which it is issued but since after the expiry of the period specified in section 64(1) it becomes a case of escaped assessment, proceedings in the said situation can only be initiated under section

65. In this connection, however, I have already submitted in para 73 above, that it dose not seem necessary to think in terms of escapement of income (or the point of time at which it occurs) because whatever expression we use for a default of section 55 (i.e. "escapement of' income" or some other term) the fact remains that section 56 by its plain reading is meant to deal with the default and the section clearly and to my mind, unambiguously, authorises the Income‑tax Officer to call for the return at any point of time at which the default in respect of any income year comes to his notice. Therefore, the notice under section 56 can relate to the income year relevant to the assessment year in which it is issued or to any income scar prior to the said come year. Thus in my view the mere fact that the situation arising from a non‑filing of return under section 55 (or later under section 57) may in general terms be described as escapement of income does not, necessarily mean that section 56 cannot be considered to deal with the situation on its own, when there the section which poses any such limitation on its scope. Even otherwise I think that the view that the applicability of section 56 ends when no return is filed under section 57 within the time specified in subsection (1) of section 64 does not find support from the provisions of subsections (2) and (3) of the said section

64. Both these subsections begin with the words "Notwithstanding anything contained in subsection (1)" and read as under:‑‑ "(2) Notwithstanding anything contained in subsection (1), where a return of total income has been filed after the end of the financial year in which the last date of filing of such return specified in section 55 falls, no assessment under section 59‑A, section 62 or section 63 shall be made after the expiration of two years from the end of the financial year in which the said return is filed. (3) Notwithstanding anything contained in subsection (1), where, for any income year, an assessee has failed to furnish the return of total income, no assessment under section 62, or section 63 shall be made after the expiration of two years of the end of the financial year in which notice under section 56, subsection (3) of section 72 or subsection (3) of section 81, as the case may be; was served:' Obviously subsection (2) above specifies the limitation for framing an assessment in cases where a return has been filed by the assessee but has been filed after the end of the financial year in which the date specified in section 55 falls. Such a return can either be filed under section 57 or in pursuance of a notice under section 56 but it can be seen that although for purposes of assessment there is a limitation, of two years from the end of the financial year in which the return is filed, there is no implication with regard to any limitation on the time within which a notice under section 56 can be issued or a return under section 57 can be filed. Similarly, subsection (3) deals with the situation where no return has been filed, say even after the issue of a notice under section 57 and here again though limitation for framing an assessment depends on the financial year in which the notice under section 56 has been served, no limitation whatsoever is implied with regard to the time within which the notice can be issued. Since the provisions of subsections (2) and (3) are to the exclusion of the provisions of subsection (1) the last mentioned subsection applies only in cases where returns have been filed within the financial year in which the date specified in section 55 falls and the limitation in that subsection cannot be considered as applying to the filing of a return under section 57 or to the issue. of a notice under section

56. We have also already seen that there is no such limitation in the provisions of section 56 itself nor is there any such restriction in section 57 which section allows the assessee to "furnish a return or revised return, as the case may be at any time before the assessment is made", Thus a return under section 57 can in my opinion be filed even after the period of two years mentioned in section 64(1). In my humble opinion, therefore, we would probably not be quite right in saying that a notice under section 56 cannot be issued after the expiry of the period specified injection 64(1) and it is only a notice under section 65 which can be issued the situation since at that point of time it has become a case of escaped assessment. It may be added that as regards the comments in the work "The Law and the Practice of Income‑tax" by Kanga and Palkhivala, reproduced in para 54, these are in the context of subsection (4) of section 139 of the Indian Income‑tax Act, 1961 which is quite different from section 57 of our Ordinance. The Indian provision reads as under:‑‑- "(4)(a) Any person who has not furnished a return within the time allowed to him under subsection (1) or subsection (2) may, before the assessment is made, furnish the return for any previous year at any time before the end of the period specified in clause (b), and the provisions of subsection (8) shall apply m every such case; (b) The period referred to in clause (a) shall be‑‑ (i) Where the return relates to a previous year relevant to any assessment year commencing on or before the 1st day of April, 1967, four years from the end of such assessment year; (ii) Where the return relates to a previous year relevant to the assessment year commencing on the 1st day of April, 1968, three years from the end of the assessment year; (iii) Where the return relates to a previous year relevant to any other assessment voar, two Years from the end of Such assessment year," Thus it is obvious that in the Indian Income‑tax Act, 1961 a time has been specified within which a return can be filed under subsection (4) of section 139 which section otherwise broadly corresponds to our section

57. Obviously section 57 of the Ordinance contains no such provisions. It can also be argued in this connection that if even otherwise no return could be filed after the period of limitation prescribed in section 153 of the Indian Income‑tax Act (which is comparable with our section 64) there would have been no need to incorporate a limitation in clause (b) of subsection (4) of section

139. In fact the last line of the comment reproduced in para 54 is to the effect that "there was no such limit in the 1922 Act". This further makes it clear that in the absence of the specific provisions of section 139(4) of the Indian Act there would have been no time limit on the filing of a return under that section as long as it was filed before the assessment wits made. As we have seen it has already been held as a result of the discussion in paras 51 to 70 above that a notice under section 56 can be issued for an income year other than the immediately preceding year but that this is subject the limitation contained in section 64(1). In the humble views expressed by me in the above paras I have, however, come to the conclusion that the issue of a notice under section 56 is not restricted by the provisions of section 64(1). Let me also mention here the comments in Kanga and Palkhivala's work reproduced in para 56 above in which it is inter alia said that income escapes assessment where no notice under section 139(2) of the Indian Act is issued during the assessment) year nor is a return filed by the assessee during the year. These comments are, of course, quite true for the Indian Income‑tax Act 1961 in which, as in the repealed Income‑tax Act, 1922 it has been made clear that a notice under section 139(2) which corresponds to section 22(2) of the repealed Income‑tax Act can be issued only during the relevant assessment year and after that only a notice under section 148 of the Indian Act (which corresponds to section 34 of the repealed Act) can be issued. In the case of Income‑tax Ordinance, 1979, the position as I have endeavoured to show, is different. Here there is a specific section for the calling of returns whether current or for past years and the question as to what constitutes escapement of income is no longer material in the context of section

56. I may again point out here that the vital difference between section 22(2) of the repealed Act and section 56 of the Ordinance is that section 22(2) does not say that a notice under that section can be issued at any time for any year whereas section 56 does clearly say so. As regards the possibility that following the reasoning advocated by the Department, section 55 may be construed to give a licence to every person to file his return for any income year for which he did not file it earlier, I am of the humble view that such a possibility is obviated by the provisions of subsection (2) of section 55 which clearly specify that the dates mentioned in that subsection are within the period next following the relevant income year. What, however, is important is that section 55 specifies the obligation of every person to whom that section applies and while section 108 provides the penalty for default section 56 also empowers the I.T.O to call for the return (which power is backed by the prosecution provisions of section 117) where the obligation is not fulfilled. That action can be taken at whatever time the default is noticed regardless of whether it pertains to the immediately preceding income year or some earlier income year. I have already dealt with this in greater detail in para 73 above. 77‑A. Now, lastly I come to the learned opinion emerging from the discussion in paras 1 to 27 above viz. that a notice under section 56 can be issued at any time for any income year but that such a notice can be issued only for such assessment years as are covered by the Income‑tax Ordinance, i.e. assessment year 1979‑80 onwards. Now again I find myself unable to see any such limitation in the scope of section

56. Actually as can be seen, the interpretation regarding the limitation is primarily based on the decision of the Supreme Court of Pakistan (reported as P L D 1974 SC 310) in a case involving the provisions of the repealed Business I. Profits Tax Act. The facts in this regard were that through section 12 of the Finance Act, 1947, section 34 of the Income‑tax Act, 1922 had been adopted for purposes of the Business Profits Tax Act and the question before the Honourable, Court was with regard to the time within which a notice under section 11(1) calling for a return under the Act could be issued. The Honourable Court in this regard held that the notice could be issued "within a reasonable time after the termination of the chargeable accounting year and this reasonable period should not extend beyond the period specified in section 34 of the Income‑tax Act". Now as has already been, pointed out in para 23 above the business profits assessment involved in the case related to a chargeable accounting period prior to the amendment in the repealed Income‑tax Act which removed any limitation with regard to the period within which a notice under section 34 calling for a return of income could be issued. We should not, therefore, construe the observations of the Honourable Court to mean that even when there was no longer any time limit on a notice under section 34 of the Income‑tax Act calling for a return of income, any limitation would still be operative in the context of section 11 of the Business Profits Tax Act. Furthermore, as we have already seen section 56 in the Income tax Ordinance is a separate section dealing exclusively with the I.T.O.'s powers to call for a return of income where a return has not been filed by the assessee for any current or past year. It would thus not be reasonable for us to consider the provisions of the section to be restricted by the provisions of any other sections unless clearly specified. It may also be pointed out that the limitation of about ten years resulting from the finding that a notice under section 56 cannot be issued for a year prior to the assessment year 1979‑80 may appear reasonable at the present point of lime but this would no longer be very material say after 20 years and similarly it would not have been very reasonable say after a year or two, of the passing of the Income‑tax Ordinance, 1979. Therefore, in my humble opinion there is again no reason here for us to give a finding deviating from the plain language of section 56. 78. 1n the light of the foregoing I would hold that a notice under section 56 of the Income‑tax Ordinance can be issued not only for the income year relevant to the assessment year in which it is issued but it can be issued for all past income years for which the assessee has failed to file any return under the. provisions of the law.

79. As a result the assessee's appeal would stand rejected subject to the observations contained in para 27 above.

80. MIAN ABDUL KHALIQ (JUDICIAL MEMBER).‑‑

I had the privilege of going through the draft orders proposed by my four learned brothers for resolving the controversy of the period for which notice under section 56 of the I.T. Ordinance, 1979 can be issued by the Assessing Officer. The issue involved in nutshell is:‑‑ (i) Whether notice under section 56 of the Ordinance calling for return of income can be issued for the current assessment year? (ii) Whether such notice can be issued from the date of commencement of the 17 Ordinance, 1979 i.e. 1‑7‑1979? (iii) Whether it can be issued for any period prior to the commencement of the Ordinance as well?

81. My learned brothers have differed in equal number for resolving the involved issue. A good deal of case‑law relevant for the proposition in dispute has been cited and discussed The proposed draft orders of my learned brothers contain exhaustive discussed of pros and cons of the issue under consideration as well as comparison of relevant provisions as contained m the repealed Income‑tax Act, 1922. I refrain from discussing the proposition and the case‑law as that will be nothing short of repetition of the discussion already existing in the orders of my learned brothers. The case before me is not of a difference of opinion; rather 1 am required to express my own views on the issue under discussion in the light of arguments advanced by the representatives of the parties and taking into consideration the earlier decisions of the Tribunal on this very issue. In these circumstances, I refrain from indulging in advancing any reasons for supplementing or demolishing the arguments given by my learned brothers and confine myself to the extent of agreeing with the reasons advanced therein. I have adopted this line of action just to avoid repetition of the facts and the case‑law already discussed.

82. Before coming to any conclusion on the issue involved I deem it appropriate to reproduce the final conclusions arrived at by all the four learned authors. My learned brothers the two Accountant Members have unanimously concluded that notice under section 56 of the Ordinance is not to be restricted for the current assessment year only; rather it can be issued for any period. My other two learned colleagues have confirmed the Tribunal's earlier decision reported as 1988 P T D (Trib) 88, 1987 P T D (Trib) 314 and 1988 P T D (Trib) 434, holding that notice under section 5fi, of the Ordinance cannot be issued for any year. The conclusions as arrived at by my learned brothers are:‑‑ (i) A.A. ZUBERI (ACCOUNTANT MEMBER.‑‑ Para.25. For the reasons spelled out hereinabove I have reached a conclusion which is in respectful disagreement with the earlier findings reported as 1988 P T D (Trib) 88, 1957 P T D (Trib) 314 and 1958 P T D (Trib)

432. It appears the judgments by the superior Courts (as examined now) which clinch the issue, were not cited at the Bar thus depriving the learned Members (who then constituted the Bench) the benefit of the opinion so unequivocally expressed by the supreme judicial forum of the realm Para.

26. The upshot of the foregoing discussion is that the guidance provided to us by the Supreme Court of Pakistan by decisions reported as P L D 1974 S C 310 (Dada Ltd); P L D 1974 S C 284 (Kohinoor Textile Ltd.); and P L D 1961 S C 375 (Hossain Kassam Dada); the legislative intent as expressed by amendments over the years; and the interpretation as placed by this Tribunal in decision reported as 1984 P T D 137; leads me to see no hazard to hold:‑‑ (a) It is not mandatory to initiate proceedings through issuance of notice under section 65 of the Ordinance in those cases where returns were not filed for so long that the assessment year relevant to the income year has elapsed. (b) A notice under section 56 can be issued at `any time' for `any income year' to `any person' who in the opinion of the I.T.O., is chargeable to tax but had not furnished a return of income. (c) It is not necessary that a notice under section 56 be issued only during the course of assessment year relevant to the income year, and not thereafter; and (d) A notice under section 56 can be issued only for such assessment years as are covered by the Income‑tax Ordinance (i.e. 1979‑80 onwards). The above findings result in the REJECTION of the appeal and settle the matter referred to the Full Bench on the legal issues relating to the scope of section 56 and section 65 of the Ordinance. Para.

27. As the merits of the quantum of additions made towards total income were not argued by any side, nor referred to the Full Bench, the appeal shall go back to the Division Bench for adjudication thereon. (ii) MIRZA MUHAMMAD WASIM (ACCOUNTANT MEMBER).‑‑

Para.78. In the light of the forgoing I would hold that a notice under section 56 of the Income‑tax Ordinance can be issued not only for the income year relevant to the assessment year in which it is issued but it can be issued for all past income years for which the assessee has failed to file any return under the provisions of the law. Para.79. As a result the assessee's appeal would stand rejected subject to the observations contained in para 27 above. (iii) A.H. NAQVI (JUDICIAL MEMEBER)

‑‑ Para.

49. Respectfully following the earlier order of the Tribunal reported as 1988 P T D Page 88 as well as the Full Bench decision reported as 1988 P T D Page 437 quoted above my conclusion is as under:‑‑ (a) Section 56 of the I.T. Ordinance only empowers the I.T.O. to call for a return of income for the current assessment year where the assessee has failed to file voluntary return under section 55; (b) That in regard to past assessment years where income has escaped assessment, proceedings can only be started by issuing a notice under section 65 of the I.T. Ordinance and in the circumstances given in that section. (c) Since, no notice under section 65 of the I.T. Ordinance‑has been given in this case, therefore, the assumption of jurisdiction by the assessing officer was without lawful authority and hence the assessment is liable to be annulled. Par a. Consequently, I would direct that the assessment for the assessment year under consideration be annulled. (iv) FARHAT ALI KHAN (CHAIRMAN). Par

68. Now, to sum up I am of the view that, (1) An assessee has to file his return within the prescribed date but if he does not do so, he should voluntarily file it before the assessment for that year becomes time‑barred under section 64(1) of the Ordinance; (2) If an assessee has not filed his return within the prescribed period, the I.T.O. can call upon him to furnish such return under section 56 of the Ordinance at any time before the assessment becomes time‑barred under section 64(1)' (3) the day the assessment for a particular year becomes time‑barred and the income is not charged to tax, it becomes a case of escaped assessment and the proceedings can be initiated under section 65 irrespective of the fact that such escapement is total or partial; (4) if an assessee files a return after expiry of the period of limitation as laid down by section 64(1) of the Ordinance, it has no value in the eye of law, but the I.T.O. can take it as definite information and after issuing notice under section 65, frame assessment accordingly. Similarly, if an assessee has filed a return after the prescribed date but before the assessment becomes time‑barred, the I.T.O. has no jurisdiction to issue notice under section 56, because in such case the proceeding shall be deemed to be pending before him; (5) If a return is filed under section 57, or in response to notice under section 56, as discussed above, it would be assessable under sections 62 and 63, whereas a return filed in response to notice under section 65 will be assessed under that section of the Ordinance. Para.

69. Thus in view of the discussion made above and for the reasons given by my learned brother, Mr. Naqvi, the Judicial Member, I agree with him that the assessment for the year under consideration be annulled.

83. Respectfully following the conclusions arrived at by me learned brothers, the Accountant Members, I agree with the same by adopting the reasons and arguments advanced therein.

84. The final ORDER OF THE FULL BENCH as per majority judgment is as under.‑‑

1. The above majority view results in the rejection of the appeals on the issue pertaining to the scope of sections 56 and 65 of the Ordinance as was referred to the Full Bench (majority view as per: A.A. Zuberi, AM; Mirza Muhammad Wasim, AM; and Mian Abdul Khaliq, JM).

2. As respects merit of the quantum of additions made towards total income, the appeal shall go back for adjudication to a Division Bench (majority view of A.A. Zuberi, AM; Mirza Muhammad Wasim, AM; and Mian Abdul Khaliq, JM). M.B.A./809/T Order accordingly