2014 PLP 1018 (PTD)

NAZIR AHMAD, JUDICIAL MEMBER.

The above captioned departmental appeals pertaining to tax years 2004 to 2006 have been directed against the consolidated appellate order dated 9-12-2009 recorded by CIR(Appeals-II), RTO, Lahore, whereby the annulment of amended assessment framed under section 122(5A) of the Income Tax Ordinance, 2001 (hereinafter called the Ordinance') for the years under consideration has been agitated.

2. The facts in brief leading to the instant appeal are that returns were filed by the taxpayer disclosing net income at Rs.110,000, Rs.150,000 and Rs.205,000 for the tax years 2004 to 2006 respectively, which were taken to be assessment orders in terms of section 120(1) of the Ordinance. Later on, on the basis of examination of assessment record, it was observed by Taxation Officer/Additional Commissioner that the original assessments under section 120(1) of the Ordinance to be erroneous in so far as prejudicial to the interest of Revenue and amended the same by invoking the provisions of section 122(5A) of the Ordinance for the reasons as enumerated in the body of amended assessment order. Feeling aggrieved, the taxpayer preferred appeal before CIR(A) who annulled the amended assessment passed under section 122(5A) on legal point that assumption of jurisdiction by the Additional Commissioner while passing the order under section 122(5A) of the Ordinance was illegal. Against the treatment meted out by learned CIR(A), the department has come up in appeal before this Tribunal.

3. The learned DR has termed the action of learned CIR(A) to be arbitrary and contrary to facts of the case. He has elaborated his viewpoint by maintaining that while annulling the amended assessment orders passed under section 122(5A) of the Ordinance, the learned CIR(A) had ignored this material aspect of the case that at the time of passing the said order, the taxation officer was holding jurisdiction through delegation of power under section 210 of the Ordinance, by the Commissioner. It is also the contention of learned DR that Taxation Officer/Additional Commissioner was empowered to exercise jurisdiction under section 2(13) of the Ordinance. He, therefore, prays for vacation of the impugned order and restoration of the treatment meted out by the taxation officer.

4. On the other hand, learned counsel of the taxpayer has fully supported the action of learned CIR(A) simply by reiterating the basis evolved by him.

5. Arguments advanced by rival parties have been heard and relevant record perused. The assertions made by learned DR are forceful being supported by plausible reasons. Furthermore, the issue under consideration already stands resolved in favour of the department by the Honourable Islamabad High Court in Writ Petition No.2412/2009 dated 23-5-2012 in the case of Pakistan Tobacco Company Ltd. Islamabad v. Addl. Commissioner (Unit-II), Taxation Officer, Large Tax Payers Unit, Islamabad, wherein it has been held as under:- 10. "As far as delegation of powers is concerned, subsections (1) and (1A) of section 210 ibid, being relevant are reproduced herein below: "

210. Delegation.

(1) The Commissioner [subject to sub-section (1A),] may, by an order in writing, delegate to any [Officer of Inland Revenue; subordinate to the Commissioner] all or any of the powers or function conferred upon or assigned to the Commissioner under this Ordinance, other than the power of deletion. (1A) The Commissioner shall not delegate the powers of amendment of assessment contained in subsection (5A) of section 122 to [an officer of Inland Revenue below the rank of Additional Commissioner Inland Revenue.]" Subsection (1A) of section 210, is to be read with section 122(5A) of the Ordinance. The power of amendment is provided in section 122(5A) and this section does not bifurcate the power of amendment into powers and function. The exercise of this power is only subject to section 122(9) and it has been provided in subsection (5A) as well as in section 210(1A) ibid. Section 210(1A) provides that the Commissioner can delegate his powers of amendment as provided in subsection (5A) of section 122, to Additional Commissioner and since sub-section (5A) provides that the powers of amendments can be exercised only subject to subsection (9); so, functions of the Commissioner Income Tax, to provide an opportunity of hearing to the taxpayers also stands delegated to the, Addl. Commissioner. 11. "The objection that the Commissioner cannot delegate his authority to his subordinate again is not correct for the reason that section 211 of the Income Tax Ordinance, 2001 provides that the powers exercised by the Addl. Commissioner shall be deemed to be exercised by the Commissioner. As such by a deeming clause, the law provides that the order of Addl. Commissioner shall be considered as passed by the Commissioner. The conclusion thus would be that when the Commissioner delegates powers to amend the assessment to the Addl. Commissioner; the said powers would include the functions of the Commissioner i.e. scrutiny of the assessment, proper application of mind and the then amending the Assessment Order.

6. In the light of above mentioned ratio settled by the Honourable Islamabad High Court, since, the impugned order of learned CIR(A) annulling the amended assessment order passed under section 122(5A) on the legal point of jurisdiction, is not sustainable under the Law, therefore, we are left with no other alternative but to set aside the impugned order and remand the case back to him with the direction to decide the appeals of the taxpayer for the tax years under consideration on other grounds taken as per memo of appeal by way of passing a speaking order. We order accordingly. CMA/12/Tax(Trib.) Case remanded.