2014 PLP 1137 (PTD)

CH. ANWAAR UL HAQ (JUDICIAL MEMBER).

The present appeal is directed against the ex parte order passed under section 63 of the repealed Income Tax Ordinance, 1979 on 28th June, 2005 by the Taxation Officer/Income Tax Officer, Circle-12, Daska Zone-19, Sialkot in respect of assessment year 2001-02 and the order of the first appellate authority viz. the Commissioner Inland Revenue (Appeal), Gujranwala vide Order No. 302 dated 15th January, 2011.

2. The facts in brief giving rise to the present appeal are that the appellant purchased property measuring 5-marlas and 8-sarsai at Daska on 26th February, 2001 co-sharing equally with his real brother for a total consideration of Rs.1,300,

000. While on receipt of the above information the taxpayer was brought to the tax net and proceedings were initiated by the Taxation Officer by issuing statutory notices under sections 56, 61 and 13(1)(aa) of the repealed Ordinance of 1979. Since none of the notices were complied with despite alleging proper service thereof, therefore the Taxation Officer proceeded ex parte and completed the assessment by making addition of Rs. 689,000 under section 13(1)(aa) of the Income Tax Ordinance, 1979 (now repealed) and created a tax demand of Rs.1,26,775 after obtaining approval from Additional Commissioner, Sialkot vide his letter No. 2238 dated 28th June, 2005.

3. The order dated 28th June, 2005 passed under section 63 of the Repealed Ordinance was impugned by the taxpayer in first appeal before the CIT (Appeals), who vide order dated 26th April, 2006 annulled the assessment on the ground that the same was barred by time. Consequent upon order dated 26th April, 2006, the department preferred appeal before this Tribunal, impugning the order of the first appellate authority. The Tribunal vide order dated 20th October, 2007 passed in I.T.A. No.1527/LB of 2008 held that the assessment was well in time and the case was remanded back to the Commissioner of Income Tax (Appeal) to decide the appeal on merits. In compliance to the order of the Tribunal, the CIT(Appeals) vide Order No. 512 dated 31st May, 2008 dismissed the appeal filed by the taxpayer. This treatment brought the taxpayer in second appeal before the Tribunal, the appeal so filed was decided by the Tribunal vide I.T.A. No. 1206/LB/2008 dated 24th October, 2009 and the case was again remanded back to the Commissioner of Income Tax (Appeal) with a direction to pass a speaking order. Consequent upon the aforesaid order of the Tribunal, the Commissioner of Income Tax (Appeal) again decided the said appeal against the appellant vide an order No. 302 dated 15th October, 2011. Now the order dated 15th October, 2011 has been impugned before the Tribunal in the third round of litigation.

4. The learned counsel appearing for the taxpayer submits firstly that, since assessment year 2001-2002 was involved in the present case, therefore in view of the judgment of the Hon'ble Supreme Court of Pakistan in the case reported as 2009 PTD 1392 (SC Pak), in re: Commissioner of Income Tax v. Messrs Elli Lilly Pakistan (Pvt.) Limited and others, the statutory notices under sections 56, 61 and 13(1)(aa) of the repealed Ordinance were legally and correctly issued and assessment was completed ex parte under section 63 of the Ordinance for the reason of alleged non-compliance and non-furnishing of documentary evidence, which resulted into addition under section 13(1)(aa) of the repealed Ordinance on account of unexplained investment, secondly he submits that the addition under section 13(1)(aa) of the repealed Ordinance was unlawful and despite the fact that the legality of addition made under section 13(1)(aa) was challenged on the touchstone of section 239 of the Income Tax Ordinance, 2001, but the CIT(Appeals) has failed to appreciate and consider the basic legal issue, thirdly he submits that proceedings in the present case were to be taken, keeping in view the saving provisions as contained under section 239(1) of the new Ordinance. He goes on to submit that according to the provisions of section 239(1) and (2) of Income Tax Ordinance, 2001, it has specifically been provided that while making any assessment in respect of any assessment year ending on or before the 30th June, 2003, corresponding to financial year ended on 30th June, 2002 the provisions of the repealed Ordinance, in so far as those relates to the computation of total income and tax payable thereon, were applicable, as if this Ordinance has not come into force. He further submits that according to subsection (2) of section 239 of the Ordinance supra, the assessment referred to in subsection (1) of section 239 shall be made by an income tax authority, which is competent under this Ordinance to make the assessment in respect of Tax Year ended on any date after the 30th June, 2002 and in accordance with the procedure specified in section 59 or 59A or 61 or 62 or 63 as the case may be of the repealed Ordinance, fourthly he argues that the income tax authorities have been provided in section 207 of the Income Tax Ordinance, 2001 whereas their appointment is regulated through section 208 of Ordinance ibid, while section 209 deals with the jurisdiction of the income tax authorities. In this view of the matter he argues that the authorities provided in section 207 are inter alia subordinate to each other in the manner provided in subsections (3), (3a), (4), (4a) and (5) of section 207 supra. While the jurisdiction and power is vested with the Commissioner of Income Tax under the new scheme of law, which find place in clause (e) of subsection (1) of section 208 of the new Ordinance and all the powers and functions of the Commissioner are to be governed by the provisions as contained in section 209 thereof. He goes on to submit that the Commissioner under section 210 of the Ordinance has the power to delegate his powers and functions to any officer of Inland Revenue, subordinate to him, which are conferred upon or assigned to the Commissioner, subject to subsection (1A) of section 210 thereof, with the exception that powers of delegation cannot further be delegated. He points out that it has specifically been provided under subsection (1A) of section 210 of the Ordinance that 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. In this context, he, firstly argues that originally whole of the powers and functions are to be performed and exercised by the Commissioner under the Ordinance, while in case, he delegates such powers or functions in terms of subsection (1) or (1A) of section 210 of the Ordinance, to a subordinate authority, than such delegatee of powers can exercise such powers or perform such functions or duties, on the basis of and remaining within the contours of Order of such delegation passed by the Commissioner. He goes on to submit that if the provisions of sections 207, 208, 209 and 210 of the Income Tax Ordinance, 2001 are read at an exjuxta position, with section 239 of the Income Tax Ordinance, 2001, it clearly follows that the competent authority under the new Ordinance has to make an assessment under the repealed Ordinance in the instant case, which shall be the Commissioner, who has to apply the provisions of the repealed Ordinance in their subsistence for the purposes of assessments for a period falling prior to the period of repeal. He submits that the Hon'ble Supreme Court of Pakistan in the case of Messrs Elli Lilly Pakistan (Pvt.) Limited, reported as 2009 PTD 1392, has held in unequivocal terms that the assessments in respect of financial year ending on 30th June, 2002 viz. assessment year 2002-03 shall be governed by the repealed Ordinance. Referring to the case reported as 2004 PTD 1173 in re: Messrs Allied Motors v. The Commissioner of Income Tax, he submits that in the said case the Commissioner of Income Tax, while revising an assessment in respect of a period falling under the repealed Ordinance, in consequence of an order of the Supreme Court exercised revisionary powers in accordance with the provisions of section 239(1) and (2) of the Income Tax Ordinance, 2001 without perse delegating such power to any subordinate authority, the question arose that whether Commissioner in the circumstances was competent to exercise powers of revision, without delegation. The Hon'ble Karachi High Court dealing with issue before it, held that all the pending matters at the time of commencement of Income Tax Ordinance, 2001 are required to be decided, in accordance with the provisions contained in the repealed Ordinance but by an income tax authority competent under the Income Tax Ordinance, 2001 and in this context of the facts and law involved in the case, the Commissioner of Income Tax was the authority competent under the new Ordinance to exercise the powers of Inspecting Additional Commissioner, of Income Tax. Although he is empowered to delegate his powers to an Additional Commissioner for the purposes of section 66-A of the repealed Ordinance, yet non-delegation of powers to an Additional Commissioner shall by no means frustrate the legality of action taken for the reason that as it is within the discretion of the Commissioner of Income Tax either to take action himself or by delegation of powers through a subordinate authority, while the discretion in law has been exercised by a competent authority, which is not open to exception. In nutshell, the learned AR submits that in the instance case the Commissioner was the person or the authority competent to pass an order vis-a-vis accord an approval of addition under section 13(1)(aa) of repealed Ordinance. He submits that power to complete an assessment in respect of assessment year 2001-2002 were delegated to the Taxation Officer in the case of the present taxpayer but the fact remains that in this case only the Commissioner was the competent authority to grant approval of the impugned addition under section 13(1)(aa) of the Ordinance. Further he has brought on record an order of jurisdiction issued by the Regional Commissioner Northern Region Islamabad dated 08th May, 2006 which has been issued in exercise of the powers conferred on him by clause (a) of subsection (1) of section 5 of the Income Tax Ordinance, 1979 read with section 6(e) of General Clauses Act, 1897. In the said order, it has been directed that powers conferred on the Inspecting Additional Commissioner of Income Tax under the repealed Ordinance for the purposes of sections 13, 65, 66-A and penalties under sections 108, 109, 110, 111, 112 and 114 of the repealed Ordinance in respect of cases or class of cases, persons or class of persons falling within the jurisdiction of Sialkot Zone, Sialkot shall be exercised by the Additional Commissioner of Income Tax, Sialkot Zone, Sialkot as Inspecting Additional Commissioner of Income Tax, till such time the limitation for initiation of action under the aforesaid sections of the repealed Ordinance expires. He further points out that the said order of jurisdiction was made on 8th May, 2006 while it was given a retrospective effect as from 1st day of August, 2005. In this regard he objects on the very outset that an executive order cannot be given retrospective effect on one hand and secondly if this jurisdiction order is considered as a proper and legal order, even then it cannot effect from 1st August, 2005 viz., prior to the date of its issuance. He submits that the said order is clearly indicative of the fact that prior to the said date which is according to him was 8th May, 2006, no such powers vested with the Additional Commissioner in terms of section 13 of the Income Tax Ordinance, 1979. The Learned Counsel referring to the impugned assessment order, submits, that at the bottom of the impugned assessment order, the assessing officer has recorded in un-equivocal terms that the amount in question is unexplained investment in terms of section 13(1)(aa) of the repealed Income Tax Ordinance, 1979 which has been added, with the prior approval of the worthy Additional Commissioner of Income Tax/Wealth Tax, Companies Range, Sialkot vide his letter No. 2238 dated 28th June, 2005. In this back ground he argues that perusal of the jurisdiction order would reveal, that at the relevant time of granting statutory approval for addition under section 13(1)(aa) viz. 28th June, 2005, no such powers was vested to an Additional Commissioner of Income Tax to act as Inspecting Additional Commissioner within the meaning of section 13 of the Income Tax Ordinance, 1979 (repealed). Therefore, he states that the power of statutory approval in respect of impugned addition was non existent and therefore, the same has been exercised by a person who was neither a delegate of such power nor competent to grant such approval rendering the same unlawful on the principle firstly that no power can be exercised without the authority of law and secondly that if initiation is bad whatsoever shall follow shall be bad in law. Consequently the addition made under section 13(1)(aa) supra strains down to the earth because of its legal efficacy and in absence of such powers, the statutory approval having being without delegation of power by the competent authority, therefore, without support of law. On the above basis he prays that the addition made under section 13(1)(aa) of the repealed Ordinance, be declared unlawful and of no legal consequence and therefore, demands its deletion.

5. The learned DR on the other hand has opposed the contentions raised by the taxpayer vehemently on the ground that the Additional Commissioner was the authority competent to accord approval in terms of section 13(1)(aa) of the repealed Ordinance, 1979 at the relevant time and subsequent to enforcement of the new Ordinance of 2001. He submits that the AR of the taxpayer has tried to take refuge from the technicalities and nothing has been submitted on merits of the case and therefore, he intends to escape incidence of tax by taking resort to unfounded legal objections.

6. It is important to note that the DR was unable to rebut the contentions of the learned AR on the issue of retrospective effect of the jurisdiction order issued by the Regional Commissioner of Income Tax, Northern Region Islamabad dated 8th May, 2006 and its retrospective application as from 1st August, 2005.

7. Parties have been heard at length and available record perused. After giving conscious consideration to the rival arguments, I am of the considered opinion that following legal propositions emerge for consideration and adjudication by this Tribunal:- (a) Whether the provisions of the repealed Ordinance shall apply in the instant case? (b) Who is the authority competent to make the impugned assessment subsequent to repeal of Income Tax Ordinance, 1979 (c) Who was the authority competent to grant statutory approval under section 13(1)(aa) of the Income Tax Ordinance, 1979 subsequent to its repeal and enforcement of the Income Tax Ordinance, 2001 (d) Whether the statutory approval granted for addition under section 13(1)(aa) of the repealed Ordinance of 1979 by the Additional Commissioner was lawful? (e) Whether the jurisdiction order issued by the then Regional Commissioner was lawful? (f) Whether the said jurisdiction order could be given retrospective effect being an executive order? (g) Whether any power of approval existed prior to the jurisdiction order empowering the Additional Commissioner to accord statutory approval as Inspecting Additional Commissioner for the purpose of addition under section 13(1)(aa) of the repealed Ordinance at the relevant time?; and (h) What should be the fate of the addition made under section 13(1)(aa) of the repealed Ordinance of 1979 in the circumstances of the present case.

8. To answer the questions at serial (a) above no long drawn arguments are required. This is a settled issued and has been laid to rest by the Hon'ble Supreme Court of Pakistan in case reported as 2009 PTD 1392 in re: Commissioner of Income Tax v. Messrs Elli Lilly Pakistan (Pvt.) Limited and others. The Hon'ble Apex Court while dealing with the identical issue in Para 54 at Page-1452 of the report has held in unequivocal terms as under:-- "the assessment upto the period ending on 30th June, 2002, would be governed by the relevant provision of the repealed Ordinance, as if this Ordinance had not came into force." Since the impugned assessment is related to the period ended on 30th June, 2001 relevant to assessment year 2001-02 the same shall be governed by the provisions of the repealed Ordinance of 1979 and for all intents and purposes it shall be considered that for the purposes of impugned assessment, the Income Tax Ordinance, 2001 had not came into force, therefore, I do not feel any hesitation in holding that the subject assessment has rightly and correctly been made by applying the provisions of repealed Ordinance.

9. Now coming to the question marked as (b) above. Lets examine the provisions of saving clause as contained in subsection (2) of section 239 of the Income Tax Ordinance, 2001. The said provision of law after substitution of subsections (1), (2) and (3) through Finance Ordinance, 2002 reads as under:-- "(2) The assessment referred to in subsection (1) shall be made by an income tax authority which is competent under this Ordinance to make an assessment in respect of a tax year ending on any date after the 30th day of June, 2002 and in accordance with the procedure specified in section 59 or 59A or 61 or 62 or 63, as the case may be, of the repealed ordinance. (Emphasis supplied) The provision as reproduced above, specifically hold that:- (a) The assessment referred to in subsection (1) of section 239 shall be made by: (i) An Income Tax Authority. (ii) Such Income Tax Authority must be competent to make an assessment; and (iii) Such competence must in relation to an assessment in respect of a tax year, which should end on any date after 30th June, 2002.

10. Having explained the above provision, one has to examine scope of the Income Tax Authorities as provided under section 207 of the Income Tax Ordinance, 2001, the Commissioner of Income tax (now of Inland Revenue) is an authority which find place in clause (c) of subsection (1) of section 207 of the Ordinance. It has also been provided in subsections (3), (3A), (4), (4A) and (5) of section 207 that all the authorities of income tax shall be subordinate to the Board, while the remaining authorities provided in Clauses (b) to (d) shall be subordinate to the authority first appearing in the serial. It is worth noting that the appointment of all the authorities referred to above is made by the Board and all such appointments are regulated under section 208 of the Ordinance, while the jurisdiction of Income tax authorities is governed by the provisions of section

209. The jurisdiction of the Commissioner of Inland Revenue has been provided under subsection (5) of section 209, which reads as under:- "(5) Within the area assigned to him, the Commissioner shall have jurisdiction:- (a) in respect of any person carrying on business, if the person's place of business is within such area, or where the business is carried on in more than one place, the person's principal place of business is within such area; or (b) in respect of any other person, if the person resides in such area." Subsection (8) of section 209 further elaborates the jurisdiction of the Commissioner as under:-- "(8) Notwithstanding anything contained in this section, every Commissioner shall have all the powers conferred by, or under, this Ordinance on him in respect of any income arising within the area assigned to him."

11. Part-II of Chapter-X of the Income Tax Ordinance, 2001 deals with assessments. The said part is spread over 11 different sections commencing from section 120 up till section 126 of the Ordinance. Perusal of section 120 of the Ordinance referred to above would reveal that the same deals with the original assessment on filing of returns by a taxpayer in terms of section 114 and in case a complete return is furnished in the manner provided under the law, the Commissioner shall be taken to have made an assessment of taxable income.

12. Section 121 of the Income Tax Ordinance, 2001 deals with best judgment assessment and the perusal of said section would reveal that the Commissioner has been empowered to make a best judgment assessment based on available information or material in the circumstances provided in the said section.

13. The provisions of section 122 of the Ordinance deals with amendment of an assessment and such power of amendment has been vested with the Commissioner who in turn has been empowered under sections 210(1) and 210(1A) to delegate his powers and functions to a subordinate authority for the purposes of this Ordinance.

14. The power of revision is vested in the Commissioner in terms of section 122-A of the Ordinance while the Commissioner has also been empowered to make provisional assessment in terms of sections 122(c) and 123 of the Ordinance, whereas section 124 of the Ordinance provide powers to the Commissioner to make an assessment giving effect to an order passed by the appellate authorities.

15. Similarly, the provisions of section 124-A of the Income Tax Ordinance, 2001 empower the Commissioner to modify orders on the basis of the decision of the higher appellate forums. Section 125 of the Ordinance empowers the Commissioner to make assessment in relation to disputed properties. Section 126 of the Ordinance provided that the copy of an assessment made by the Commissioner shall be conclusive evidence of the making of the assessment.

16. The examination of the provisions referred to above is clearly indicative of the fact that the powers of assessment, amended assessment, revision of assessment, best judgment assessment or making a provisional assessment in respect of Tax Year vests with the Commissioner. Therefore, in this view of the matter, the Commissioner is the authority competent under this Ordinance to make an assessment in relation to a Tax Year ending after 30th June, 2002 and consequently in view of the provisions of section 239(2) assessment in respect of pre-repeal period of the Income Tax Ordinance, 1979 shall fall within the authority of the Commissioner. However, the provisions of sections 210(1) and 210(1A) empowers the Commissioner to delegate his powers of assessment to the authorities subordinate to him but the fact remains that unless such delegation is made, no power can be exercised by his subordinate authority. Therefore, answer to the question at Serial (b) shall be that the Commissioner is the authority competent to make assessment impugned in this appeal.

17. In reaching the above conclusion, I am fortified by the principal laid down and ratio settled by the learned Division Bench of the Hon'ble Karachi High Court in the case reported as 2004 PTD 1173 in re: Allied Motors Ltd v. Commissioner of Income Tax and another. The facts leading to the above case are that proceedings were initiated against the taxpayer under section 66-A of the repealed Ordinance of 1979. The order was appealed against before Tribunal, who allowed the appeal. The appeal filed by the Revenue in High Court was dismissed. However, the appeal before Supreme Court was disposed of by consent, whereby the orders of the Appellate Tribunal and High Court were set aside. The Inspecting Additional Commissioner was directed to issue notice to taxpayer so as to explain its position with regard to capital receipts/ capital gain, while the taxpayer was allowed to raise all legal objections available in defence, resultantly the matter was remanded to the Inspecting Additional Commissioner to decide the same afresh on merits within stipulated time. Later on the Inspecting Additional Commissioner issued notices on 27th September, 2002 which were withdrawn on the ground that Inspecting Additional Commissioner had no power to proceed under section 66-A (it is important that by that time Income Tax Ordinance, 1979 was repealed and Income Tax Ordinance, 2001 had come into force as from 1st July, 2002). Therefore, the Commissioner issued notices under section 66-A on 28th October, 2010 and order was passed. In appeal before High Court, it was contended that the order passed by Commissioner was against the direction of Supreme Court. The learned court discussed the position at length and observed at page 1177 of the report as under:-- "From a bare perusal of the above provisions of law, we find substance and force in the contention of Mr. Aqeel Ahmed Abbasi. We agree with the proposition that, in order to arrive the correct conclusion, a scheme of law is to be examined in its totality and no provision of law is to be considered in isolation. We fully agree with the proposition of law veryably argued by Mr. Aqeel Ahmed Abbasi and hold that all the pending matters at the time of commencement of Income Tax Ordinance, 2001 are required to be decided in accordance with the provisions contained in the repealed Ordinance, but by an Income Tax Authority competent under the Income Tax Ordinance, 2001. In the context of the facts and law involved in this case, the Income Tax Authority competent under the Income Tax Ordinance, 2001, to exercise the power of IAC is the Commissioner of Income Tax. Although he is empowered to delegate his authority to an IAC but the non-delegation of power to IAC cannot be objected to, as it is within the discretion of Commissioner of Income Tax and when a discretion in law is exercised by competent authority, it is not open to any exception." Finally the learned court held as under:-- "Consequent, to above view it is held that the respondent No. 1, (Commissioner of Income Tax) has complied with directions of Hon'ble Supreme Court in accordance with law and has passed the order under section 66-A of the repealed Ordinance, in accordance with the substantive law contained in the said Ordinance in the capacity of IAC. Such order is open to appeal before the Income Tax Appellate Tribunal, where the appeal has been preferred and is pending. The Income Tax Appellate Tribunal shall decide the appeal on merits in accordance with law. The impugned order passed by the respondent No. 1, does not suffer from any lack of jurisdiction and consequently, the appeal stands dismissed in limine."

18. Next comes the question at Serial (c) above that who shall be the authority competent to grant statutory approval under section 13(1)(aa) of the Income Tax Ordinance, 1979 subsequent to its repeal and enforcement of the Income Tax Ordinance, 2001. In my considered opinion as has been said in the preceding paragraphs, the Commissioner was the authority competent to complete an assessment so long as the periods falling within the ambit and scope of the repealed Ordinance of 1979 are concerned. Therefore, in view of the scheme of section 13(1)(aa) of the repealed Ordinance, the supervisory authority to a Taxation Officer, being an Inspecting Additional Commission, is the statutory authority to grant approval for an addition made or sought to be made by the Taxation Officer under section 13(1)(aa) thereof. I am mindful of the provisions as contained in section 5 of the repealed Income Tax Ordinance, which deals with the jurisdiction of various Income Tax Authorities. Subsection (c) of section 5 provided that Inspecting Additional Commissioner and the Deputy Commissioner of Income Tax will perform their functions in respect of such persons or class of persons or such cases as the Commissioner to whom they are subordinate may direct. The Commissioner, under the repealed Ordinance, was allowed to make a general order directing that the powers conferred in Deputy Commissioner of Income Tax and Inspecting Additional Commissioner under the Ordinance in respect of all or any proceedings relating to specific cases or class of cases or specified persons or class of persons, be exercised by an Inspecting Additional Commissioner and the Commissioner respectively. The said provision further goes on to state that for the purposes of any proceedings in respect of such cases of persons referred to in the repealed Ordinance or in any rule made thereunder, the Deputy Commissioner and Commissioner shall be deemed to refer to as the Deputy Commissioner of Income Tax and Inspecting Additional Commissioner respectively.

19. It is, therefore held that where by virtue of a special or general order, the Commissioner empowers the Inspecting Additional Commissioner to perform the functions of a Deputy Commissioner, the authority for approval then automatically shifts on to the Commissioner under the repealed Ordinance.

20. It is of immense important to observe that under the scheme of law as contained under the new Ordinance, no such provision exists in law but for the provisions contained in section 209 of the Income Tax Ordinance, 2001 which holds that the Chief Commissioner, the Commissioner and the Commissioner (Appeals) shall perform all or such functions and exercise all or such powers under this Ordinance, as may be assigned to them in respect of such persons or class of persons or such areas as the Board may direct. It has specifically been provided in section 209 that the Board or the Chief Commissioner, as the case may be, may transfer jurisdiction in respect of cases of persons from one Commissioner to another. It has also been laid down in subsection (2) of section 209 that the Board or the Chief Commissioner may by an order confer upon or assign to any officer of Inland Revenue, all or any powers and functions conferred upon or assigned to Commissioner under the new Ordinance in respect of any person or persons or class of persons or areas as may be specified in the order, notwithstanding that such order has to be passed by the Chief Commissioner with the approval of the Board. It has also been provided that the Officer of Inland Revenue referred to in subsection (2) shall for the purposes of this Ordinance be treated to be a Commissioner. Therefore, it follows that wherever an assessment is required to be made, it is the sole prerogative and powers of the Commissioner and in case it is delegated to an authority subordinate to him by exercising powers as contained under sections 210(1) and 210(1A), the power as to grant of statutory approval shall vest with the Commissioner alone. Therefore, it follows that the authority competent to grant statutory approval under section 13(1)(aa) of the Income Tax Ordinance, 1979 subsequent to its repeal and enforcement of the Income Tax Ordinance, 2001 shall vest with the Commissioner. In the instant case the power of assessment in respect of pre-repeal period of Income Tax Ordinance, 1979 were delegated by the Commissioner to the Taxation Officer and therefore any addition sought to be made under section 13(1)(aa) of the repealed Ordinance, has to be subjected to statutory approval of the Commissioner, notwithstanding the fact that the Commissioner may have delegated such powers of approval to an authority subordinate to him other than the Taxation Officer.

21. In reaching the above conclusion, I am fortified by the judgment of Hon'ble Lahore High Court, Lahore reported as 2001 PTD 1467 in re-Messrs Sandal Engineering (Pvt.) Limited Faisalabad v. The Inspecting Additional Commissioner of Income Tax, Range-I, Companies Zone-7, Faisalabad and 2 others. The facts of the said case were that the assessment was completed by Inspecting Assistant Commissioner of Income Tax on assignment of jurisdiction under section 5 of the late Ordinance of 1979, without appointing him as a "Special Officer". Subsequently, the Inspecting Additional Commissioner initiated proceedings under section 66-A of the repealed Ordinance on the ground that order originally passed by the Inspecting Commissioner was erroneous and prejudicial to the interest of revenue. The action taken by the Inspecting Additional Commissioner under section 66-A supra was challenged in appeal under section 136, before the Hon'ble Lahore High Court, Lahore. The learned Division Bench of the Hon'ble Lahore High Court, Lahore at pages 1471, 72 and 73 of the report held:-- "

4. After hearing the learned counsel for both the parties it is our considered opinion that the I.A.C. wrongly rejected the defense put forth before him. The judgment of the Tribunal on the subject also does not appear to have stated the law correctly. Section 5 of the Income Tax Ordinance details the jurisdiction of various Income-tax Authorities. Sub-clause (c) of subsection (1) of section 5 provides that I.A.C. and the D.C.I.T. will perform their function in respect of such persons or classes of persons or such cases as the Commissioner to whom they are subordinate, may direct. The Commissioners are allowed to make a general or special order directing that the powers conferred on the D.C.I.T. and I.A.C. under the Ordinance in respect of all or any proceedings relating to specified cases or classes of cases or specified persons or classes of persons, be exercised by the I.A.C. and the Commissioner respectively. The provision further goes to state that "for the purpose of any proceedings in respect of such cases or persons references in this Ordinance or in any rules made thereunder the Deputy Commissioner and Inspecting Additional Commissioner shall be deemed to be references to I.A.C. and Commissioner respectively". To this extent the learned Tribunal goes along with the provisions of law and holds that in respect of all such proceedings the aforesaid reference interchanging one authority for the other holds good. However, the next part of their view is not correct. It is that once the proceedings or assessments for which a special direction had been made had come to an end the position will immediately revert to normal situation and general provisions of law will become applicable. In other words, if while framing an assessment an I.A.C. working as D.C.I.T in respect of a particular class of persons or cases intends to made an addition under section 13 of the Ordinance he would seek the approval of his Commissioner. To this extent we found no fault with the opinion of the learned Tribunal. However, their view that after completion of proceedings/assessments the position will automatically revert to general provisions does not appear correct. If special provisions were applicable during the continuation of the proceedings their coming to an abrupt end without reference to the circumstances and the legal background in which these were conducted cannot be readily accepted as correct. The provisions of section 5(1)(c) do not support this view. The use of word "for the purpose of any proceedings in respect of such cases or classes or persons" therein does not in any manner mean or include only the proceedings as long as they continued. The proceedings so contemplated include not only a pending assessment order but also a completed assessment order. Therefore, the reference to Deputy Commissioner and the Inspecting Additional Commissioner shall remain a reference to Inspecting Additional Commissioner and the Commissioner. (5) The provisions of section 66-A, DETAIL THE POWERS OF AN IAC. TO "REVISE" Deputy Commissioner's order. As a rule revisional jurisdiction is never exercised by the same authority. The power to revise, be it suo motu or on the application of an aggrieved party, necessarily involves the consideration of the impugned order by a person or authority placed higher in the hierarchy to adjudge its legality and propriety. The jurisdiction so conferred normally has a colour of supervisory power to correct mistakes on administrative side. Once an authority has passed an order it cannot sit in revision on the same order to pick up faults and to interfere with by taking a different view of the issues involved. The power to revise an order is clearly distinguishable from review and rectification. Besides these things, one common feature of them being that both review and rectification are normally made by the same authority which had earlier passed the order in question. (6) To us it also appears that the view adopted by the Tribunal on the basis of which the I.A.C. had rejected the objection of the assessee is contradictory. Their conclusion that provisions of section 5(1)(c) interchanging the original and the revisional authority remain effective only during the assessment proceedings is not supported from the plain words of the statute. There can hardly be a doubt that to frame an assessment under the Ordinance is the privilege of Deputy Commissioner of the Income Tax. However, this privilege can for certain reasons and in respect of certain classes of persons or assessees be exercised by a person higher in the hierarchy of Tax Administration. However, when such powers is exercised by a person higher in authority the order so framed continues to be that of the higher authority. An I.A.C. framing an assessment does not cease to remain an I.A.C. At best it can be said that he is both I.A.C. as well as Deputy Commissioner for a specific purpose and in respect of specific cases. An I.A.C. is certainly a persona designata as far as the provisions of section 66A are concerned, to revise the order of a "Deputy Commissioner". However, when an assessment or other order has been recorded by an 1.A.C. and not a Deputy Commissioner, the power can only be exercised, with reference to provisions of section 5(1)(c) of the Ordinance by a Commissioner. It is simple enough to understand the purpose of section 66A which inter alia provides for calling and examining of record of any proceedings under the Ordinance if the conditions stated in the provisions are answered. Obviously an authority equal in status cannot "call for" the record and "examine" the same. An assessment framed by an I.A.C. even though remains on the file of a D.C.I.T., still it continues to be the one framed by an I.A.C., and therefore, a person equal in authority cannot call for the same. The title of the provision supports our view that the power so conferred on I.A.C. is "to revise the Deputy Commissioner's order". As observed earlier an order recorded by an I.A.C. on being authorized under section 5(1)(c) of the Ordinance continues to remain that of an I.A.C. though acting as an Assessing Officer. It is not comparable nor it can be stated to be that of Deputy Commissioner of the income tax. The scheme of section 66-A also gives an exceptional situation when an I.A.C. while revising the order of the Deputy Commissioner can himself pass an assessment order substituting the earlier order. This is in addition to his power to cancel the assessment and to direct a fresh assessment to be made by D.C.I.T. If the interpretation of the learned Tribunal is accepted then one will also accept the possibility that an I.A.C. could exercise revisional powers for the second time in respect of his own orders which he had earlier under subsection (1) of section 66-A. That situation simply appears anomalous and outside the four corners of the assessment and other proceedings contemplated in the Ordinance. Therefore, we will agree with the appellants that powers conferred under section 5(1)(c) of the Ordinance simultaneously substitute an I.A.C. for the Commissioner of Income Tax. That transfer or substitution remains intact till the possibility of exercise of any jurisdiction conferred on an I.A.C. in respect of completed assessment remains intact. It does not end with the completion of assessment or other proceedings undertaken by the I.A.C. as D.C.I.T." The action taken under section 66-A by the Inspecting Additional Commissioner was declared not in accordance with law as under:-- "(7) The factual position as alleged at the bar also finds support from the record that I.A.C. who framed the original assessment in this case was never designated as special officer. According to order, dated 23-8-1995 passed by C.I.T. (Companies Zone), Faisalabad under section 5(1)(c) of the Ordinance, 1979 (with the prior approval of R.C.I.T. (Central Range) certain I.A. Cs. including the gentleman who framed the assessment in the case of the present appellant were directed to exercise powers conferred on Deputy Commissioner of Income Tax in respect of the classes of persons specified in the Schedule. The notification so made, it goes without saying did make the I.A.C., a D.C.I.T. or an Assessing Officer but it did not divest him to his position in the hierarchy as an I.A.C. The power given is in addition to his status and not in its derogation. (8) Therefore, we will allow these appeals by holding that framing of an order under section 66-A in the three assessment years involved in respect of the appellant on 29-6-1999 by the I.A.C. was not in accordance with law".

22. Now we come to examine the question whether the statutory approval granted for addition under section 13(1)(aa) of the Income Tax Ordinance, 1979 by the Additional Commissioner in the circumstances of the present case was lawful? As discussed above, it is clear that the powers to complete assessment under the repealed Ordinance were delegated to the Taxation Officer. Therefore, necessarily the approval for addition under section 13(1)(aa) was required to be granted by the Commissioner himself. However, where any such delegation has been made by the Commissioner then the Additional Commissioner may exercise powers of approval. Since in the instant case no such delegation was made by the Commissioner, therefore no approval was lawfully granted by the Additional Commission in absence of delegation of powers.

23. Now let us deal with the question that whether jurisdiction order issued by the Regional Commissioner Northern Region, Islamabad on 08th May, 2006 was lawful or otherwise? As explained earlier that the scheme of exercise of jurisdiction as contained in section 5 of the repealed Income Tax Ordinance, 1979 is quite distinguishable from the scheme of jurisdiction provided under the provision of section 209 of Income Tax Ordinance, 2001. Therefore, because of the repeals, the provisions of section 6(e) of the General Clauses Act, 1897 shall come into play. Therefore, keeping in view the powers contained under clause (a) of subsection (1) of section 5, the Regional Commissioner has issued the order No. SO-1-30(81)/2006/7416 which reads as under:-- "No. SO-1-30(81)/2006/7416 Islamabad, the 08 May, 2006 ORDER INCOME TAX In exercise of the powers conferred by Clause (a) of subsection (1) of section 5 of the Income Tax Ordinance, 1979 read with section 6(e) of the General Clauses Act, 1897, it is directed that powers conferred on the Inspecting Additional Commissioner of Income Tax under the Repealed Ordinance for the purposes of sections 13, 65, 66A and penalties under sections 108, 109, 110, 111, 112 and 114 of the aforesaid Ordinance shall, in respect of the cases or classes of cases, persons or classes of persons falling within the jurisdiction of Sialkot Zone, Sialkot be exercised by the Additional Commissioner of Income Tax (Audit), Sialkot Zone, Sialkot as Inspecting Additional Commissioner of Income Tax till such time, the limitation to initiate action under aforesaid sections of Repealed Ordinance expires. This order shall take effect from 1-8-2005. (QUDRATULLAH) REGIONAL COMMISSIONER"

24. In my considered opinion, the Regional Commissioner Northern Region has rightfully invoked the powers as contained under section 5(1)(a) of the repealed Ordinance in consonance with the provisions of section 6(e) of the General Clauses Act, 1897. Section 6 of the General Clauses Act, 1897 holds that where this Act or any central Act or Regulation made after the commencement of the General Clauses Act, 1897 repeals any enactment hitherto made or hereafter to be made then unless a different intention appears, the repeal shall not

(a) arrive anything not in force or existing at the time at which the repeal takes effect; or (b) affect the previous operation of any enactment so repealed or anything duly done or suffered hereunder; or (c) affect any right, privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed; or (d) affect any penalty, forfeiture or punishment incurred in respect of any offence committed against any enactment so repealed; or (e) affect any investigation, legal proceedings or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture, or punishment as aforesaid; And any such investigation, legal proceeding or remedy may be instituted, continued or enforced and any such penalty, forfeiture or punishment may be imposed as if the repealing Act or Regulation had not been passed.

25. Therefore, the provisions as contained in section 6(e) of the aforesaid Act supports the exercise of powers by the Regional Commissioner of Income Tax Northern Region under section 5(1)(a) of the repealed Ordinance. Therefore, it follows that the order reproduced above has lawfully been passed by the Regional Commissioner with the reservation as to its retrospective effect given as from 1st August, 2005.

26. After holding that the then Regional Commissioner of Income Tax, Northern Region had competently issued the aforesaid jurisdiction order dated 8th May, 2006, in exercise of powers conferred upon him under section 5(1)(a) of the repealed Ordinance of 1979 read with section 6(e) of the General Clauses Act, 1897, this court is confronted with the question as to whether the jurisdiction order dated 8th May, 2006 can lawfully be made retroactive and applicable retrospectively as from 1st August, 2005.

27. Before adjudicating this issue, I am inclined to examine the nature of the said order. As observed earlier jurisdiction of the Income Tax Authorities under the repealed Ordinance is regulated through the provisions of section 5 thereof whereby the competent authorities can assign jurisdiction to their respective subordinate authorities through a general order. Such order is primarily and predominantly for the purposes of administration and carrying out the purposes of the enactment under which their appointment was made. Therefore, through an administrative and an executive order, the superior authorities, assign, define and provide scope of job, assignment and the area of work to their incumbents. Therefore, such order is for administering and carrying out purpose of enactment vis- -vis appointment. Therefore, without any fear of contradiction it is held that the order in question is administrative and executive in nature.

28. Since I have observed that the order under reference is an administrative order/executive order, it would not take me long to hold that such order cannot be given retrospective effect for the simple reason that the superior courts have, by now settled that an administrative or executive order cannot be made retroactive or given retrospective effect. Reaching the above conclusion I am fortified from the ratio settled and law laid down by the superior courts reported as 2005 SCMR 492, 2004 PTD 2928 and 2011 PTD (sic) (Trib.).

29. Therefore, in the given circumstances, the jurisdiction order dated 8th May, 2006 shall be effective from the date of its issuance and not from 1st August, 2005.

30. Now I intend to proceed the question whether any power of approval existed prior to the jurisdiction order dated 8th May, 2006 empowering the Additional Commissioner to accord statutory approval as Inspecting Additional Commissioner for the purpose of addition under section 13(1)(aa) of the repealed Ordinance at the relevant time. Let me recall that in the instance case the ex parte assessment was made on 28th June, 2005 and the approval for making addition under section 13(1)(aa) was accorded by the Additional Commissioner, Sialkot vide his letter No. 2338 dated 28th June, 2005. Meaning thereby that at the relevant time the order of jurisdiction conferring jurisdiction on the Additional Commissioner to act as a statutory authority of approval as Inspecting Additional Commissioner of Income Tax in terms of section 13(1)(aa) of the Ordinance was not in the field. The power to grant approval was accorded by virtue of jurisdiction order on 8th May, 2006. Nevertheless, if it is presumed that jurisdiction order has taken effect from 1st August, 2005 even then the approval for addition having been accorded on 28th June, 2005 the same was not granted by a competent authority in absence of any such power and jurisdiction. Therefore, the statutory approval made by the Additional Commissioner in the case in hand is held to be without jurisdiction and hence not lawful.

31. As stated above, that the statutory approval as required under section 13(1)(aa) was granted by an authority without having such power of approval, the same is held to be granted unlawfully, without jurisdiction and consequently the addition made under section 13(1)(aa) of the repealed Ordinance by the assessing officer merits deletion for want of statutory approval from a competent authority. Therefore, I hereby order that the impugned addition made under section 13(1)(aa) be deleted because of non-observance of the statutory requirements.

32. The appeal succeeds to the extent indicated above. CMA/43/Tax(Trib.) Appeal accepted.