1996 PLP (Trib (PTD)

(Tariq Aziz), Accountant Member A controversy has arisen between the undersigned and my learned brother Mr. Tariq Aziz, Accountant Member with regard to signing and verification of Appeal Memo in the prescribed manner, as envisaged under section 134(5) of the Ordinance 1979. The facts which gave rise to the difference of opinion are that in my opinion the Appeal (memo) can only be signed/verified and filed by an Income Tax Officer as envisaged under subsection (2) of section 134 of the Income Tax Ordinance and the Appeal (memo.) signed/verified and filed by the I.A.C. stood incompetent. According to the learned Accountant Member the directives of the Commissioner of Income Tax to the Income Tax Officer for filing of appeal to the Income Tax Appellate Tribunal as envisaged under section 134(2) of the Income Tax Ordinance are of procedural nature and filing as well as signing/verification of Appeal other than Income Tax Officer cannot be considered as substantive failure on the part of the Department to reject the appeal as having been filed and signed/verified by an unauthorised person. This error could be rectified by returning the Memorandum of Appeal to the Appellant (I.T.O.) to bring in conformity with the manner specified under Rule 7 of the ITAT Rules read with subsections (2) and '(5) of section 134 of the Income Tax Ordinance. The above-stated position gave rise to the following questions of law, which arise out of the Tribunal's order, arid are placed before the learned Chairman, ITAT for sending it to a third Member with the object of evolving a majority opinion:

F6; (1) Whether on the facts and in the circumstances of the case the. Appeal Memo signed/verified by I.A.C. could be considered as 'competent' in terms of section 134(2) of the Income Tax Ordinance, 1979 read with Rule 9(2) of the Income Tax Appellate Tribunal Rules, 1981 wherein the legislature has unequivocally directed to file Appeals) by the concerned Income Tax Officer? (2) Whether on the facts and in the circumstances of the case the Appeal not filed and verified in the prescribed manner (signed by incompetent authority/person) is caught by the mischief of Rule 15 of the Income Tax Appellate Tribunal Rules, 1981 or not? (Sd.) (Rasheed Ahmad Sheikh) Judicial Member. (Sd.) (Tariq Aziz) Accountant Member CH. IRSHAD AHMAD (JUDICIAL MEMBER).

Consequent upon the difference of opinion between the members of the Bench seized of this appeal the Chairman of the Tribunal has referred this case to me for decision under subsection (7) of section 133 of the Income Tax Ordinance, 1979 (the Ordinance). The members' of the Bench have stated the following points on which they differ:

(1) Whether on the facts and in the circumstances of the case the Appeal Memo signed/verified by I.A.C. could be considered as 'competent' in terms of section 134(2) of the Income Tax Ordinance, 1979 read with Rule 9(2) of the Income Tax Appellate Tribunal Rules, 1981 wherein the legislature has unequivocally directed to file appeal(s) by the concerned Income Tax Officer? (2) Whether on the facts and in the circumstances of the case the Appeal not filed and verified in the prescribed manner (signed by incompetent authority/person) is caught by the mischief of Rule 15 of the Income Tax Appellate Tribunal Rules, 1981 or not? I have heard Mr. Pervez Akhtar, D.R. for the appellant. None has appeared for the assessee. . Subsection (2) of section 134 of the Ordinance provides that the Commissioner may, if he objects to any order passed by an Appellate Assistant Commissioner of Income Tax [A.A.C.] (the expression also includes Commissioner of Income Tax (Appeals) under section 132, direct the Income Tax Officer (the I.T.O.) to appeal to the Income Tax Appellate Tribunal (ITAT) against such order. The memorandum of this appeal has been signed and verified by the Inspecting Assistant Commissioner (the I.A.C.) and not by the ITO. The learned Judicial Member is of the view that since under subsection (2) of section 134 of the Ordinance only the I.T.O. can file appeal, therefore, he only can sign and verify the contents of the memorandum of appeal and the memorandum of this Appeal signed and verified by the I.A.C. and not by the I.T.O. is not valid and as such the appeal having been filed by an incompetent person is liable to be rejected. The learned Accountant Member on the other hand is of the view that the defect that the memorandum of appeal has been signed and verified by the I.A.C. in place of I.T.O. is of procedural, and not of substantive, nature and as such shall not affect the validity of the appeal. The Accountant Member has felt that the memorandum of appeal should be sent to I.T.O. under rule 15 of the ITAT Rules for the removal of the defect. In learned Accountant Member's opinion the substantive requirement of subsection (2) of section 134 of the Ordinance is the decision and the direction of the Commissioner regarding the filing of an appeal against the order of the Appeal Commissioner and- not who carries out the direction of the Commissioner. Once the Commissioner has decided and directed that the order of the Appeal Commissioner should be objected to it is immaterial who signs, verifies and files the memorandum of appeal in the Tribunal. The learned Accountant Member has supported his view by saying that this Tribunal while examining the effect of the non-compliance of the requirement of rule 12 of the ITAT Rules has held that it would not affect the validity of the appeal because the requirement was not substantive in nature and the appeal could be admitted after allowing the appellant to remove the defect. (Although. the learned Member has not cited the relevant decision of the Tribunal but probably the reference is to the Tribunal's five-member bench decision reported in. (1991) 63 Tax 220 (Trib.). Before addressing to the point on which the learned Members of the Bench have differed I would like to submit that the points stated by the learned Members on which they differ beg answer to the reasons on which each Member holds one view or the other. I would, however, refrain from expressing my approval or disapproval to the view of any Member. I would directly state my own reasons regarding the validity of this appeal of which the memorandum of appeal has been signed and verified by the I.A.C. and not by the I.T.O. The basic question is whether the filing of appeal by the ITO, under subsection (2) of section 134 of the Ordinance is a substantive provision' or is only a matter of procedure. Since we have not been able to lay our hand on any precedent providing direct answer to the question the answer to the question may perhaps be sought from the judicial authority on similarly worded provision of section 417 of the Code of Criminal Procedure (the Code) which so far as material provides that "the Provincial Government may direct Public Prosecutor to present any appeal to the High Court from an original or appellate order of acquittal passed by any Court other than a High Court". The provision of subsection (2) of section 134 of the Ordinance and of section 417 of the Code are similar in the sense that in each provision there are two actors. The one is the authority who decides whether an appeal should or should not be filed and if it decides to file an appeal to direct another authority to present the appeal. Under subsection (2) of section 134 of the Ordinance the two authorities are the Commissioner of Income Tax and the I.T.O. In section 417 of the Code the two authorities are the Provincial Government and the Public Prosecutor. There is enough and high judicial authority to answer the question regarding the validity or otherwise of an appeal filed under section 417 of the Code if such an appeal has been filed in which both of the authorities referred to in that section have not acted strictly in accordance with the provision of that section. The Supreme Court of Pakistan in a quite recent decision in State v. Hanif Ahmad and others, 1994 SCMR 749 has held that an appeal against acquittal under section 417 of the Code filed by 'a person who is not Public Prosecutor is not competent. The Court has also held that since the Code does not authorise the Government or the Public Prosecutor to delegate its function to any other person to act on behalf of the Government or the Public Prosecutor performed by any other person or authority is also impermissible. The Supreme Court while handing down the above holding has made reference to Qadir Bux and others v. The Crown PLD 1955 Federal Court 79, State v. Muhammad Hussain, PLD 1968 SC 265 and State v. Muhammad Nazim Beg 1989 PCr. LJ 1842. A brief survey of the above precedent is pertinent. In State v. Hanif Ahmad and others, the High Court had dismissed various appeals filed by the Assistant Advocate-General of the Province against the order of acquittal on the ground that the Assistant Advocate-General was not the Public Prosecutor referred in section 417 of the Code. The State sought leave to appeal from the Supreme Court against the order of the High Court. The Supreme Court refused to grant leave to appeal and maintained the High Court's order for the, reason that "the office of the Public Prosecutor is distinct and his functions of duties are different from the duties of the Assistant Advocate-General". In Qadir Bux and others v. The Crown PLD 1955 Federal Court 79 the appellants who were charged under section 302, P.P.C. were acquitted by the trial Court. The Advocate-General of the Province preferred an appeal against the order of acquittal passed by the trial Court in the Chief Court of Sindh. The appeal filed by the Advocate-General was accepted and the order of acquittal was set aside and the appellants were convicted under section 302, P.P.C. The issue was raised before the Federal Court whether the appeal filed by the Advocate- General in the Chief Court had been competently filed because the Advocate -General was not the Public Prosecutor within the meanings of section 417 of the Code. The Federal Court allowed the appeal, set aside the Chief Court's order for -the reason that the appeal against the order of acquittal filed by the Advocate-General had not been filed competently. The Federal Court held: It is quite clear that, having regard to the subject-matter to which section 417, Cr.P.C. relates as well as to the wording of section 417, Cr.P.C. itself, a person presenting an appeal under that section must act 'as a Public Prosecutor, eo nominee. He may occupy one or more other offices, but the only one of his functions which is relevant for the purpose of filing an appeal against an acquittal is the function of being a Public Prosecutor. In relating to section 492, Cr.P.C. it is even more obvious that no construction except the eo nominee construction can be permitted, for the section itself speaks of appointment of persons by the Provincial Government 'to be called Public Prosecutors'. It is entirely correct to say that, in relation to the function under section 417, Cr.P.C. the validity of the act of filing the appeal depends, in the first instance, upon the person who files the appeal being called a Public Prosecutor, in consequence of having been appointed as such by the Provincial Government. The argument raised on behalf of the respondent that the acts of a person pretending to be a Public Prosecutor become the acts of the Public Prosecutor, by the mere performance 4hereof, is clearly unsustainable". In State v: Muhammad Hussain, PLD 1968 SC 265 an appeal against an order of acquittal passed by a Special Judge appointed under the Pakistan Criminal Law Amendment Act 1958 was filed by the Assistant Advocate -General of the Province without receiving any direction from the appropriate Government for filing such an appeal as required by section 10(2) of the 1958 Act. The Court held that the appeal had not been competently filed. In Government of Pakistan v. Zardad Badshah 1985 PCr. LJ 14.19 the appeal against acquittal was filed by the Standing Counsel of the Federal Government on the directions of the said Government. In reply to the objection that the appeal had not been competently filed it was contended that although the Standing Counsel was not a notified Public Prosecutor but as he was authorised to conduct appeals the presentation of the appeal was proper. The Court repelled the contention and observed that the Standing Counsel has the right of audience in all the Courts of Pakistan but that right is not tantamount to of his appointment as Public Prosecutor to present appeals against acquittal. To the same effect are the observations of the High Court in State v. Munawaruddin and another 1985 PCr. LJ 1431. In State v. Muhammad Nasim Beg, 1989 PCr.LJ 1842 various appeals against acquittal had been filed by Mr. Sarfraz Ahmad, Assistant Advocate- General of the Province on the direction of the Federal Government. The memorandum of each appeal had been signed by Mr. Sarfraz Ahmad. A question was raised whether the appeals tiled by Mr. Sarfraz Ahmad had been competently filed. The High Court relying on the observations of the Federal Court in Qadir Bux and others v. The Crown, PLD 1955 Federal Court 79 that "the Crown if it wishes to move the Court against such an acquittal, must do so in strict compliance with the express requirements of law; non-compliance must be fatal" held that the appeals were incompetent. The High Court also quoted with the approval the observations of the Calcutta High Court in Deputy Legal Remembrance, Bengal v. Gaya Prosad, ILR 16 Cal. 425 to the effect "in appeal preferred against acquittal strict construction according to the very words of the statute should be given to the provisions of law". The survey of the precedents shows that if one of the actors responsible for preferring an appeal under section 417 of the Code has not acted the appeal would be incompetent and also that the filing of appeal in accordance with the provisions of section 417 of the Code is a matter of substantive law and not merely a matter of procedure. Thus if the provisions of section 417 of the Code and subsection (2) of section 134 of the Ordinance are taken as analogous with reference to the policy regarding the filing of appeals under each of the said provision this appeal filed by the I.A.C. and not by the I.T.O. shall be incompetent. We find that the Ordinance establishes quite a distinct offices of the I.A.C. and of the I.T.O. The duties and functions of the holder of the office of I_T.O. cannot be performed by the holder of the office of IAC. In the hierarchy of tax administration the office of I.A.C. is higher than the office of I.T.O. The contention may however, be raised that the IAC, who is higher in rank than the ITO, should be in a position to perform the duties and functions of the I.T.O. particularly the function of filing an appeal under section 134(2) of the Ordinance which primarily is a ministerial act on the principle of "the greater includes the less" above contention was raised before the Federal Court in Qadir Bux PLD 1955 FC 79 but was rejected. , The next question that arises is: whether the principle of criminal law conferring right of appeal on State against orders of acquittal can be equated with the Ordinance. Since the point that has arisen in this appeal is unprecedented or at least I have not been able to lay my hand on any such precedent the question cannot be answered by plain "no" or "yes". The authority is however, not lacking where it has been held that the provisions of law relating to levy income-tax or other pecuniary burden or charges or penalties on citizen are in the nature of penal law and are to be applied in the same strict sense and narrow manner in which the provisions of criminal law are applied. The income-tax law like any other law relating to charging and levying of pecuniary burden, penalties and fines on citizen is expropriation law. It takes -- property. Where a citizen has to be expropriated, the expropriation slaw is I required to be strictly construed and applied If a citizen can legitimately avoid the expropriation by way of paying tax or other charge no one should grudge his ability to avoid the expropriation. The rules of the law of nations relating to execution and enforcement of decrees and orders passed by the Courts and other authorities of one country in the territory of another country treat the orders relating to payment of taxes, charges and penalties akin to the orders relating to payment of penal fines and penalties. Like the orders relating to payment of fines and penalties, the orders relating to the payment of taxes and charges are not executable beyond the territories of the country in which they have been passed. The above rules of the law of nations is incorporated in domestic law of Pakistan in the form of section 44-A of the Code of Civil Procedure which provides that a decree passed by a superior Court of the United Kingdom or any reciprocating territory can be executed in, Pakistan. The section, however, explains that such a decree shall not include an order relating to payment of taxes, fines and penalties. The well known aphorism regarding the construction of income-tax statutes established by Rowlatt, J. in Copy Brandy Syndicate v. Inland Revenue Commissioner (1972) 1 KB 64: "the subject cannot be taxes unless he comes within the letter of the law"; "in a taxation statute one has to look merely at what is clearly said"; "there is no room for any intendment"; "nothing is to be read in, nothing is to be implied" also tend to show that where any provision of any law relating to income-tax would have the effect of burdening a citizen with any liability such provision must be strictly construed and full compliance with its provision would be required to be complied with. I would, therefore, conclude that the Commissioner's right to object to the order of the Appeal Commissioner under section 134(2) of the Ordinance is required to be strictly construed and his appeal' shall not be heard against the citizen unless it has been filed strictly in accordance with the provision of the law conferring on him the right of appeal. Without commenting on the efficacy of learned Accountant Member's feeling that the appeal can be heard after requiring the I.T.O. to sign the memorandum of appeal under rule 15 of the ITAT Rules, I would only like to submit that if the provision regarding filing of appeal by the LT.O on the direction of the Commissioner were a procedural matter the defect in signing the memorandum of appeal by an officer other than the I.T.O. could be removed. But as in my view the requirement of filing the appeal by the I.T.O. is a substantive provision rather than a matter of procedure, the non-compliance of substantive provision of law cannot be cured under the rules. Where a set of rules lays down certain requirements and also provides that any defect in the compliance of the requirements could be remedies or removed the remedial provision only relates to the requirements prescribed under the rules. Remedial provisions in rules cannot be applied to override the requirements provided by substantive law. For these reasons I hold that the memorandum of this appeal having not been signed and verified by the person authorised by law to file the appeal is invalid. The same is accordingly rejected. M.B.A./159/Trib Appeal rejected